Ms Valerie Vandermeersch National expert, Ministry of Justice

10 June 2014Late Payment Campaign Event3 1/ Transposition of Directive 2011/7/EU on combating late payment in commercial transactions Transposition of Directive 2011/7/EU by amending the Act of 2 August 2002 combating late payment in commercial transactions  Act of 22 November 2013 amending the Act of 2 August 2002 combating late payment in commercial transactions  Publication Belgian Official Journal: 10 December

1/ Transposition of Directive 2011/7/EU on combating late payment in commercial transactions  Aim of the new Act of 2 August 2002 is to enforce the competition and financial situation of businesses, and in particular of SME’s, by improving the legal framework 10 June 2014Late Payment Campaign Event4

2/ New Act of 2 August 2002 combating late payment in commercial transactions : Scope and definitions Applicable to all payments made as remuneration for two types of commercial transactions (Art. 2, 1°, Act 2 August 2002) :  Commercial transactions between undertakings (B2B)  Commercial transactions between undertakings and public authorities (B2PA) Where the debtor is a public authority Only to the extent that the specific provisions on public procurement are not applicable (i.e. Royal Decree of 14 January 2013 concerning the determination of the general rules of execution of public procurement contracts and concessions for public works) (Art. 3/1, Act 2 August 2002) 10 June 2014Late Payment Campaign Event5

2/ Commercial transactions between undertakings : Definition ‘undertaking’ “ Any organisation, other than a public authority, acting in the course of its independent economic or professional activity, even where that activity is carried out by a single person” (Art. 2, 2°, Act 2 August 2002) 10 June 2014Late Payment Campaign Event6

2/ Commercial transactions between undertakings and public authorities : Definition ‘public authority’ “ Any contracting authority, as defined in point (a) of Article 2(1) of Directive 2004/17/EC and in Article 1(9) of Directive 2004/18/EC, regardless of the subject or value of the contract” (Art. 2, 3°, Act 2 August 2002)  Definition brought in line with Directive 2004/17/EC and Directive 2004/18/EC 10 June 2014Late Payment Campaign Event7

2/ Commercial transactions between undertakings and public authorities : Definition ‘public authority’  “Contracting authority” : Art. 2(1), (a), Directive 2004/17/EC - Art. 1(9), Directive 2004/18/EC: "Contracting authorities" are State, regional or local authorities, bodies governed by public law, associations formed by one or several such authorities or one or several of such bodies governed by public law. "A body governed by public law" means any body: established for the specific purpose of meeting needs in the general interest, not having an industrial or commercial character, having legal personality and financed, for the most part, by the State, regional or local authorities, or other bodies governed by public law; or subject to management supervision by those bodies; or having an administrative, managerial or supervisory board, more than half of whose members are appointed by the State, regional or local authorities, or by other bodies governed by public law” 10 June 2014Late Payment Campaign Event8

3/ Period of payment 1/ Commercial transactions between undertakings (Art. 4, §1, Act 2 August 2002)  Statutory period of payment: 30 calender days following : The date of receipt by the debtor of the invoice or an equivalent request for payment The date of receipt of the goods or services, when the date of receipt of the invoice or the equivalent request for payment is uncertain or the debtor receives the invoice or equivalent request for payment before the goods or services The date of an acceptance or verification procedure to ascertain the conformity of the goods or services with the contract, if such a procedure is provided for by statute or in the contract and if the debtor receives the invoice or equivalent request for payment earlier than the date of acceptance or verification Maximum duration of acceptance or verification procedure: 30 days from the date of receipt of the goods or services, unless otherwise agreed in the contract and provided it is not grossly unfair to the creditor 10 June 2014Late Payment Campaign Event9

3/ Period of payment  Parties can agree on a longer payment period, provided it is not grossly unfair to the creditor Payment period determined in the contract may in principle not exceed 60 calender days, since such payment term seems to be acceptable taking into account common commercial practices in different sectors However, there may be circumstances in which undertakings require more extensive payment periods  in such circumstances a contractual payment period longer than 60 calender days is allowed, provided it is not grossly unfair to the creditor 10 June 2014Late Payment Campaign Event10

3/ Period of payment 2/ Commercial transactions between undertakings and public authorities (Art. 4, §2, Act 2 August 2002)  Statutory period of payment: 30 calender days following: The date of receipt by the debtor of the invoice or an equivalent request for payment The date of receipt of the goods or services, when the date of receipt of the invoice or the equivalent request for payment is uncertain or the debtor receives the invoice or equivalent request for payment before the goods or services The date of an acceptance or verification procedure to ascertain the conformity of the goods or services with the contract, if such a procedure is provided for by statute or in the contract and if the debtor receives the invoice or equivalent request for payment earlier than the date of acceptance or verification Maximum duration of acceptance or verification procedure: 30 days from the date of receipt of the goods or services, unless otherwise expressly agreed in the contract and any tender documents and provided it is not grossly unfair to the creditor 10 June 2014Late Payment Campaign Event11

3/ Period of payment  Parties can agree on a longer payment period, provided it is not grossly unfair to the creditor If objectively justified in the light of the particular nature or certain elements of the contract Contractual payment term may never exceed 60 calender days (>< commercial transactions between undertakings)  Special regime for certain health care organisations Statutory period of payment: 60 calender days Difficulties in obtaining financial resources call for a more flexibel statutory payment period to prevent cashflow problems Not possible to agree on a longer payment period 10 June 2014Late Payment Campaign Event12

B2B commercial transactions Act of 2 August 2002Act of 2 August 2002 as amended Period of payment Statutory period of payment: 30 days, unless otherwise agreed and not grossly unfair Verification/acceptance procedure Not regulatedStatutory period: 30 days, unless otherwise agreed and not grossly unfair B2PA commercial transactions Act of 2 August 2002Act of 2 August as amended Period of payment Statutory period of payment: 30 days, unless otherwise agreed and not grossly unfair Statutory period of payment: 30 days, unless otherwise agreed and not grossly unfair ( ! absolute maximum 60 days) Verification/acceptance procedure Not regulatedStatutory period: 30 days, unless otherwise agreed (in contract and in tender documents) and not grossly unfair 10 June 2014Late Payment Campaign Event13

4/ Interest for late payment (Art. 5, Act 2 August 2002)  The creditor is entitled to interest for late payment, when the creditor has fulfilled its contractual and legal obligations, and the creditor has not received the amount due on time, unless the debtor is not responsible for the delay  Upon expiry of the statutory or contractual payment period, and without the necessity of a reminder 10 June 2014Late Payment Campaign Event14

4/ Interest for late payment  Statutory interest rate is the interest rate applied by the ECB to its most recent main refinancing operations plus 8 percentage points, rounded up to the next half percentage point Commercial transactions between undertakings: parties may agree on a different interest rate, provided it is not grossly unfair to the creditor Commercial transactions between undertakings and public authorities: statutory interest rate applies; parties may not agree on another interest rate 10 June 2014Late Payment Campaign Event15

5/ Compensation for recovery costs (Art. 6, Act 2 August 2002)  Where interest for late payment is due, the creditor is also entitled to claim from the debtor, without the need for a reminder, a fixed amount of EUR 40 as compensation for recovery costs  In addition, the creditor can also claim compensation for all other reasonable recovery costs exceeding this amount, including the procedural indemnity, in accordance with the provisions of the Judicial Code (Art. 1022, Judicial Code) 10 June 2014Late Payment Campaign Event16

6/ Unfair contractual terms and practices (Art. 7, Act 2 August 2002) The Act of 2 August 2002 upholds the freedom of contract  Limits to this contractual freedom : prohibition of abuse of freedom of contract to the creditor’s disadvantage  no grossly unfair contractual term of practice  Concept of grossly unfair : manifest imbalance between the rights and obligations of parties to the detriment of the creditor Example 1: a contractual term or a practice which excludes interest for late payment shall be considered as grossly unfair Example 2: a contractual term of practice which excludes compensation for recovery costs shall be presumed to be grossly unfair  Judge has the right to verify whether a contractual term or practice is grossly unfair, upon the request of the creditor  If grossly unfair -> court can adjust the contractual terms to the legal standard or to a level it deems appropriate 10 June 2014Late Payment Campaign Event17

7/ Entry into force (Art. 14, Act 2 August 2002) The Act of 2 August 2002 applies retroactively to all contracts that are concluded, renewed or prolonged as of 16 March 2013 It applies in any case to payments made as remuneration for commercial contracts currently in force two years from 16 March June 2014Late Payment Campaign Event18

8/ Conclusion  An explicit delimitation of payment terms and duration of verification/acceptance procedure  B2PA transactions: stricter rules (maximum period of payment 60 days)  B2B transactions: rules are more nuanced by taking into account common commercial practices and diverse business models  Increase of statutory interest rate (7% -> 8%)  Amplification of notion of ‘grossly unfair’  Fixes minimum amount for compensation of reasonable recovery costs 10 June 2014Late Payment Campaign Event19