On 3 July 2013, the Bill amending the Law of 2 August 2002 on combating late payment in commercial transactions (Wetsontwerp tot wijziging van de Wet van 2 augustus 2002 betreffende de bestrijding van de betalingsachterstand bij handelstransacties/Projet de loi modifiant la Loi du 2 août 2002 concernant la lutte contre le retard de paiement dans les transactions commerciales – the “Bill”) was made public. The Bill implements Directive 2011/7/EU of 16 February 2011 on combating late payment in commercial transactions (recast) (the “New Late Payment Directive”), which should have been transposed in Belgian law by 16 March 2013. The content of the final Bill has seen several changes since it was first adopted by the Council of Ministers on 22 March 2013 (See, VBB on Belgian Business Law, Volume 2013, No. 3, p.2, available at www.vbb.com).
The Bill proposes several significant changes to the current 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 - the “Late Payment Law”). The Late Payment Law applies to commercial transactions either between businesses (B2B) or between businesses and certain public authorities.
Definition of public authorities
With regard to non-consumer transactions, and as in the current Late Payment Law, the Bill makes a distinction between either (i) transactions between businesses; or (ii) transactions between businesses and public authorities. The Bill proposes to define public authorities in the same way as in the Public Procurement Directives (See, Directive 2004/17/EC of 31 March 2004 coordinating the procurement procedures of entities operating in the water, energy, transport and postal services sectors and Directive 2004/18/EC of 31 March 2004 on the coordination of procedures for the award of public works contracts, public supply contracts and public service contracts). A public authority is any “body” meeting all three of the following criteria:
- 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, with more than half of the members appointed by the State, regional or local authorities, or by other bodies governed by public law.
Public entities in special sectors, such as the Belgian Post (bpost) and the National Railway Company of Belgium (Nationale Maatschappij der Belgische Spoorwegen/Société nationale des chemins de fer belges) are not considered to be public authorities for the purposes of the Bill, but are considered as businesses.
Payment terms
The Bill states that the payment term for invoices between businesses, or between businesses and public authorities, should not exceed 30 days. In case the payment term does exceed 30 days, it must not be “grossly unfair”. Grossly unfair clauses may be annulled or may give rise to compensation. For agreements between businesses and public authorities, the Bill additionally proposes that public authorities will have to justify payment terms longer than 30 days which, in any case, must never exceed 60 days.
With regard to dealings with recognised hospitals or nursing homes in particular, the Bill sets the default payment term at 60 days, unless a shorter term is agreed.
Interest rate
While the interest rate currently applicable to commercial transactions is the ECB base rate of +7%, the Bill increases the interest rate to the ECB base rate of +8%. In the case of commercial transactions between businesses and public authorities, the Bill prohibits any clause providing otherwise.
Additional penalties
The Bill provides that, unless agreed otherwise, any debtor who is late in paying will be penalised automatically with a standard penalty payment of EUR 40. In addition, the creditor may claim a reasonable indemnity for other recovery expenses, such as the procedural indemnity provided for in the Judicial Code.
The concept of “manifest imbalance”
None of the clauses that deviate from the default rules set out in the Late Payment Law may “manifestly imbalance” the relationship between the contracting parties and must be objectively justifiable. The Bill implements this principle by providing that any provision which excludes the entitlement to interests will be considered manifestly imbalanced. Moreover, the Bill provides that any clause which excludes the entitlement to the additional penalties set out above will be considered to create a manifest imbalance, unless proven otherwise.
Effect on agreements as of 16 March 2013
As the New Late Payment Directive should have been implemented in Belgian law by 16 March 2013, the Bill will be given a limited retroactive effect. The Bill stipulates that it will apply to all commercial agreements concluded, renewed or extended from 16 March 2013.
The Bill was approved by the House of Representatives on 17 July 2013 but may still be taken up for review by the Senate.
The attached annexes give an overview of the current regulatory framework governing late payments and summarise the changes described above.
