Council of Ministers Approves Bill to Implement New Late Payment Directive in Belgian Law

On 22 March 2013, the Council of Ministers approved a bill (the “Bill”) that implements Directive 2011/7/EU of 16 February 2011 on combating late payment in commercial transactions (the “Late Payment Directive”) into Belgian law. Once adopted, the Bill will bring about changes to the Law of 2 August 2002 on combating late payment in commercial transactions (Wet van 2 augustus 2002 betreffende de bestrijding van de betalingsachterstand bij handelstransacties/Loi du 2 août 2002 concernant la lutte contre le retard de paiement dans les transactions commerciales), which implemented former Directive 2000/35/EC of 29 June 2000 on combating late payment in commercial transactions in Belgian law.

The Bill has not yet been made public. However, the Council of Ministers already disclosed key elements of the Bill in a press release. According to the press release, the Bill provides, in accordance with the Late Payment Directive, for a payment term of 30 days for invoices between (i) companies; and (ii) companies and public authorities. The parties may contractually agree on a different payment term, provided that such agreed term is not clearly abusive. For agreements between companies and public authorities, the payment term may be extended, upon justification by the public authorities, to a maximum of 60 days.

In case of a delay in payment, no notice of non-performance will be required to obtain compensation. Once the (agreed) payment term has elapsed, the creditor will automatically be entitled to (i) an interest for late payment that is at least 8 percent points higher than the reference interest rate of the European Central Bank; and (ii) a fixed sum of minimum EUR 40 as compensation for administrative and other expenses. Finally, the Late Payment Directive provides that the creditor should also be entitled to obtain reasonable compensation from the debtor for any recovery costs exceeding the fixed sum of EUR 40 and incurred due to the debtor’s late payment (e.g., legal expenses). It remains to be seen how this additional compensation will be implemented in the Bill.

The most novel concept in the Late Payment Directive is that of “grossly unfair contractual terms or practices” in relations between companies or between companies and public authorities. All circumstances of the case will be considered in determining whether a contractual term or a practice is "grossly unfair" to the creditor, including (i) any gross deviation from good commercial practice, contrary to good faith and fair dealing; and (ii) the nature of the product or the service. Pursuant to the Late Payment Directive, any contractual term or practice which excludes interest for late payment will always be considered as grossly unfair. Further, a contractual term or a practice which rules out compensation for recovery costs will be presumed to be grossly unfair. Again, it will be interesting to see how the Bill implements this novel concept.

In principle, the Late Payment Directive was to be implemented in Belgian law by 16 March 2013.