1. Directive 2011/7/EU on combating late payment in commercial transactions

2. The new directive on combating late payment
A recast of Directive 2000/35/EC
Scope: all payments made as remuneration for commercial transactions:
Between businesses (B2B)
Public authorities (PA) and undertakings
Delivery of goods or provision of services for remuneration

3. The revision of directive 2000/35/EC: Why?
Despite the Directive, late payment in commercial transactions is still a widespread practice in the EU
In general, payment periods in the public sector are longer than those in private sector contracts.

4. Late payment: the effect on SMEs
Late payment represents a significant cost to creditors, especially for SMEs:
SMEs are more exposed to variations in cash flow
SMEs often rely on a limited number of clients
The administrative costs of pursuing debts are disproportionately high for SMEs
Debtor companies and public authorities paying late get free trade credit

5. Late payment: the effect on SMEs (2)
Late payments have a negative impact on intra-EU trade:
The inability or unwillingness of the debtor to pay on time is one of the major commercial risks for creditors in cross-border trade, in particular for SMEs. Costs are higher due insecurity.
The debtor’s risk to reputation related to late payment is much lower when the creditor is established in another Member State

6. New rules: payment periods
Directive 2000/35
- Same treatment to all commercial transactions covered by the Directive
- does not harmonise payment period
-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-*-
New Directive 2011/7/EU
Different rules:
B2B Transactions: not harmonisation
PA2B: harmonisation of payment period

7. DIRECTIVE 2011/7/UE: payment period
B2B Commercial transactions
If there is no contract or no agreement on the date of payment: interest for late payment is due after 30 days
Date or period for payment is fixed in the contract? the day following the date fixed which may not exceed 60 days unless otherwise expressly agreed in the contract and provided it is not grossly unfair to the creditor
Level of interest: interest rate applied by ECB+ at least 8%

8. DIRECTIVE 2011/7/UE: payment period
2. PA2B Commercial transactions
Public authorities will have to pay for the goods and services that they procure within 30 days or, in exceptional circumstances, within 60 days.
Level of interest: interest rate applied by ECB+ at least 8%.
Public authorities are not allowed to fix an interest rate for late payment below.

9. Directive 2011/7/EU: novelties
Enterprises will automatically be entitled to claim interest for late payment and will also be able to obtain a minimum fixed amount of €40 as compensation for recovery cost
Possibility also to claim compensation for all remaining reasonable recovery costs.

10. Directive 2011/7/UE: novelties
Businesses will have more opportunities to challenge grossly unfair contractual clauses and practices
For example, an agreement between undertakings that expressly excludes interest for late payment will be considered as grossly unfair
More Transparency and awareness raising
MS will have to publish interest rates for late payment
MS are encouraged to establish prompt payment codes

11. Directive 2011/7/UE: novelties
Late payment information campaign
increasing the awareness of EU stakeholders on the new rights conferred by Directive 2011/7/UE.
September 2012-December 2013
27 Member States plus Croatia

12. Directive 2011/7UE : novelties
Even small amounts of interest for late payment may be charged. The possibility to exclude claims for interest of less than €5 is abolished
Member States may continue to adopt more favourable provisions for the creditor

13. Directive 2011/7/UE: novelties
The new measures are optional for enterprises insofar as they acquire the right to take action but are not obliged to do so.
The new measures are obligatory for public authorities. They should lead by example and show their reliability and efficiency by honouring their contracts.

14. 2000/35/EC 2011/7/EU SAME RULES FOR ALL
Non harmonisation of payment period:
- No contract: 30 days after receipt invoice or goods
-contract: the day after the date stipulate on it
DIFFERENT RULES
1. Harmonisation for PA: they will have to pay, as general rule, within 30 days
2. Freedom of contract for B2B:
No contract: 30 days
Contract:60 days unless otherwise agreed btw parties and provided it is not grossly unfair to creditor
Interest rate for LP:
- ECB reference + at least 7%
ECB reference+ at least 8%
PA can not apply an interest rate below this threshold
Enterprises entitled for interest for late payment
Enterprises entitled for interest for late payment + recovery costs
Enterprises better protected against abuses: grossly unfair terms and practices
More transparency and awareness raising

15. Directive 2011/7/UE: transposition
MS will have to transpose it into national law within 24 months: 16 March 2013
However…
current economic context requires much earlier measures enterprises survive a period of economic difficulties
early transposition and implementation!!!

16. Contact

17. Regulation (EC) No 1896/2006 of the European Parliament and of the Council of 12 December 2006 creating a European order for payment procedure
European Commission Justice

18. Purpose
Simplify, speed up and reduce costs of cross-border litigation concerning uncontested pecuniary claims
Permit free circulation of EOPs throughout MS
Optional procedure: Claimant can also pursue claim by using another national procedure

19. Scope of Application
Civil and commercial matters in cross-border cases
“Cross-border case“: At least one of the parties domiciled or habitually resident in MS other than MS of court
Regulation applies to all MS except Denmark

20. Applying for a EOP Form A:
Names and addresses of the parties and their representatives
Name and address of the court
Amount of claim
Cause of the action, including a description of circumstances invoked
Description of evidence supporting claim
Cross-border nature of the case
Submission: In paper form or by any other means of communication (including electronic ones) accepted by MS
Pecuniary claim: Must be for specific amount that has fallen due at time when application is submitted
Jurisdiction: Regulation (EC) No 44/2001 (Brussels I).

21. Examination of an application
Court examines as soon as possible (also through automated procedure):
- Requirements met (e.g. cross-border nature of case, jurisdiction of court, application form complete, etc.) ?
- Claim “appears to be founded and admissible” ?
If application form is not complete:
Court gives claimant opportunity to complete/rectify application, unless claim is clearly unfounded or application inadmissible. => Form B
If requirements are met for only part of claim:
Court may propose that application be amended. => Form C. Claimant is asked to accept or refuse proposed EOP for amount specified by court.
=> Claimant accepts : Court issues EOP for part of claim accepted by claimant. Remaining part: national law.
=> Claimant does not reply or refuses: Court rejects application.

22. Rejection of an application
Court rejects application if it:
Does not meet the necessary conditions;
Is not founded;
Applicant does not return completed or modified application in time;
Applicants does not reply within time limit, or refuses the court's proposed amendment.
Court informs applicant of reasons for rejection: => Form D (Annex IV). No right of appeal. However, rejection does not prevent claimant from pursuing claim through new application for EOP or using any other procedure available under national law

23. Issuing a European order for payment
If conditions for EOP are met: Court issues order as soon as possible(normally within 30 days of lodging application)=>Form E
EPO informs defendant: May either pay amount of claim, or contest EPO. To contest, defendant must lodge a statement of opposition (within 30 days of service of EOP).
EOP is issued solely on basis of information provided by claimant and not verified by court. EOP becomes enforceable, unless defendant lodges statement of opposition.
Regulation abolishes exequatur: EOP recognised/enforced in other MS
- without need for declaration of enforceability and
- without any possibility of opposing recognition.

24. Opposition to a EOP
Defendant may lodge statement of opposition with court that issued EOP within 30 days of service: => Form F. Defendant indicates in statement that claim is contested, without having to specify reasons
=> Proceedings continue before competent courts of MS of origin in accordance with rules of ordinary civil procedure (unless claimant has requested that proceedings be terminated in that event)

25. EOP Application COURT may propose that application is amended
Requirements only partly met
Form not complete
COURT gives claimant opportunity
to complete/rectify application
CLAIMANT
applies for EOP (Form A)
Requirements not met
Claim not founded
Form not completed
COURT rejects application
Requirements met
Claim „appears founded
and admissible“
COURT ISSUES EOP

26. Further procedure Ordinary civil procedure Defendant:
Statement of opposition (30 days)
Ordinary civil procedure
(Unless claimant has requested
termination)
EOP
served on defendant
Defendant:
No Statement of opposition
(30 days)
COURT declares EOP enforceable
(Form G)

27. European Small Claims Procedure
European Commission Justice

28. Objectives
Simplify, speed up and reduce costs of small claims litigation in cross-border cases
Eliminate intermediate proceedings (exequatur) necessary to enable recognition and enforcement
Procedure available to litigants as optional alternative to national procedures

29. Scope (Art. 2, 3) Civil and commercial matters
Value of claim does not exceed 2000 €
Cross-border case: At least one party domiciled or habitually resident in MS other than MS of seised court

30. NO APPLICATION TO:
Revenue, customs or administrative matters
Liability of State for acts and omissions in exercise of state authority (“acta iure imperii”)
Status or legal capacity of natural persons
Rights in property arising out of matrimonial relationship, wills and succession, maintenance obligations
Bankruptcy, proceedings relating to winding-up of insolvent companies or other legal persons, judicial arrangements, compositions and analogous proceedings
Social security
Arbitration
Employment law
Tenancies of immovable property, except actions on monetary claims
Violations of privacy and rights relating to personality, including defamation

31. Commencement of ESCP (Art. 4)
ESCP (V)
Commencement of ESCP (Art. 4)
Claim not within scope of ESCP
COURT
Informs claimant accordingly
Proceeds in accordance with natio-
nal law (unless claimant withdraws)
Information provided insufficiently
clear or adequate
Claim Form not completed properly
COURT gives claimant opportunity to
Supply supplementary information
Withdraw claim
Complete/rectify Claim Form
CLAIMANT
Completes Claim Form
Lodges Claim Form at
competent court
Claim Form not completed/rectified
Claim clearly unfounded
Application inadmissible
COURT
Dismisses application
OTHERWISE
COURT PROCEEDS WITH ESCP
(ART. 4)

32. ESCP (VI) Conduct of ESCP (Art. 5) DEFENDANT
Claims that value of a non-
pecuniary claim > 2000 €
COURT
Decides within 30 days whether
claim is within scope
DEFENDANT
Submits counterclaim
COURT
Counterclaim <= 2000 €: ESCP
Counterclaim > 2000 €:
National procedural law
COURT
Completes Answer Form
Serves Answer Form and
copy of Claim Form on
defendant (within 14 days)
DEFENDANT
Does not answer within 30 days
COURT
Delivers judgment
DEFENDANT
ANSWERS WITHIN 30 DAYS
COURT CONCLUDES ESCP
(ART. 5)

33. Conclusion of ESCP (Art. 7)
ESCP (VII)
Conclusion of ESCP (Art. 7)
Delivers Judgment
Demands further Details
concerning claim from parties (max. 30 days)
COURT
(Within 30 days of
receipt of response)
Delivers Judgment
(Within 30 Days
of Hearing or
after having
received all
Information
necessary
for Judgment)
Takes Evidence
Summons Parties to Hearing (max. 30 days)
if considered necessary by court or requested
by a party. The court may refuse request if with
regard to circumstances hearing is obviously
not necessary for fair administration of the case

34. Languages (Art. 6)
Claim Form, response, counterclaim, response to counterclaim, description of supporting documents:
=> Submission in language of court
Any other document received by court in language other than language of court:
=> Court may only require translation if translation appears to be necessary for judgment
If a party has refused to accept a document because it is not in official language of MS addressed or language addressee understands:
=> Court shall inform other party with view to supplying a translation

35. Hearing and Taking of Evidence (Art. 8, 9)
ESCP (IX)
Hearing and Taking of Evidence (Art. 8, 9)
Court
may hold hearing or take evidence through video conference or other communications technology if technical means are available
shall determine means of taking evidence and extent of evidence necessary for judgment under rules applicable to admissibility of evidence
may take expert evidence or oral testimony only if necessary for judgment. Court shall take costs into account
should select the simplest and least burdensome method of taking evidence

36. Other Important Procedural Rules
Representation by lawyer not mandatory
No legal assessment of claim required. Court informs parties about procedural questions if necessary
Documents served by postal service attested by acknowledgement of receipt
Judgment enforceable notwithstanding any possible appeal. Not necessary to provide security
Unsuccessful party bears costs of proceedings. However, court shall not award costs unnecessarily incurred or disproportionate to claim to successful party
Subject to the provisions of the Regulation, ESCP shall be governed by procedural law of the court

37. Areas of Improvement Knowledge of judges and court staff
Information to consumers
Organisation of assistance in filling the forms
Assistance in launching and participating in the proceedings
2000 euro threshold

38. What we are doing to improve
Guide for practitioners and citizens
Cooperation with ECC-Net
New interactive forms in European
e-Justice Portal with helpful wizard
Training modules to be provided to Member States to train judges and court officials

39. 1 January 2014
Report of the Commission reviewing the operation of the ESCP, including limit of 2000 euro
Assessment of the procedure as it has operated based on information from the Member States
Proposals for adaptation

40. Proposal for a Regulation creating a European Account Preservation order to facilitate cross-border debts recovery in civil and commercial matters COM (2011)445 final

41. UPCOMING REGULATION
Creating a EU Account preservation order to facilitates cross-border debt recovery in civil and commercial matter
To recover money within EU
More certainty and confidence for creditors

42. Upcoming REGULATION
A Court would issue an order to a bank obliging it to preserve a specific amount owed to a creditor
Only available in cross border cases
It will not provide for the actual payment of the money at the end of litigation: governed by national law

43. Upcoming Regulation
Aim: avoid debtors to move funds from MS to another or withdraw it to scape enforcement of a court order to pay back money owed
Companies could recover up to 600 million euros a year in debt that is currently written off.

44. Upcoming Regulation
currently under ordinary legislative Procedure Expected adoption: 2013

45. Thank you very much
for your attention!