Introduction In order to protect European businesses, and in particular small – medium enterprises (SMEs), against late payment, the EU adopted a new directive known as the Late Payment Directive on 16 February 2011. The Directive is aimed at improving payment practices in commercial transactions between businesses, and between businesses and public authorities. The new measures are optional for enterprises (in B2B transactions businesses have the right to take action but are not obliged to do so) and obligatory for public authorities. Its main provisions include the setting of a maximum period for the receipt of payment for goods and services, payment. Under its provisions, debtors will be forced to pay interest and to reimburse all the additional recovery costs of their creditor if they do not pay for their goods and services on time (in principle 30 days for businesses and public authorities). The Directive is transposed into the national legal system with Law 4152/2013. What an enterprise involved in a commercial transaction with the State or public organizations need to know: 1. When signing the contract: According to the new rules, the State or the public organization must pay for the goods or services that they procure within 30 calendar days (following the receipt of invoice or after the date of receipt of the good/service). Only in very exceptional cases (expressly agreeing in the contract, objectively justified in the light of the particular nature of the contract) or for certain public the simplification of procedures for pursuing late payment, and the establishment of penalties for late organizations can the public authority extend this period to a maximum of 60 calendar days (for instance: public entities providing healthcare). Any contractual clause that establishes a payment period that exceeds 30 (or 60) days will be considered to be grossly unfair and will either be unenforceable or will give rise to a claim for damages. Any contractual term that excludes interest for late payment will be considered to be grossly unfair to the creditor and will either be unenforceable or will give rise to a claim for damages. Contractual terms that exclude compensation for recovery cost will also be presumed to be unfair. Verification and acceptance procedures should be expressly mentioned in the tender documents and in the contract. As a general rule, such procedures cannot exceed 30 calendar days unless otherwise expressly agreed and provided it is not unfair to the creditor. The late payment interest rate will be a minimum of 8 percentage points above the European Central Bank΄s reference (therefore the applicable for the current semester reference rate is 0,25% + 8% => public authorities are not allowed to fix an interest rate for late payment below 8,25%). Any rate below this threshold is in principle considered to be grossly unfair. 2. When facing late payment from a public authority: After the expiration of the payment period, which is 30 calendars days as a general rule, enterprises are entitled, without the necessity of a reminder, to impose the late payment interest rate plus all recovery costs related to late payment. In addition, they are able to obtain a minimum fixed amount of €40 (per late payment) as compensation for recovery cost. There is also the possibility to claim compensation for all remaining reasonable recovery costs. Any contractual term that excludes compensation for recovery cost is considered grossly unfair and inapplicable. 3. Therefore, by virtue of the Directive and Law 4152/2013

  • Businesses can challenge grossly unfair contract terms and practices more easily before courts.
  • Enforceable title must be obtained normally within 90 calendar days of the lodging of the creditor’s action or application at the court (this period does not include periods for service of documents or delays caused by the creditor).
  • More transparency and awareness: Member States will have to publish the interest rates for late payment so that businesses have easy access to information on these rates.
  • Member States are encouraged to establish voluntary codes of commitment for prompt payment.
  • Member States may maintain or bring into force laws and regulations which are more favorable to the creditor than the provisions of the directive.