Application of Directive 2011/7/EU to services provided on behalf of state legal authorities (the judiciary)

Subject: Application of Directive 2011/7/EU to services provided on behalf of state legal authorities (the judiciary)

Directive 2011/7/EU on combating late payment in commercial transactions aims to assist creditors dealing with late payments from businesses and public authorities. The directive does not restrict the definition of ‘commercial transactions’ to business-to-business transactions, but also includes ‘transactions between undertakings and public authorities’. A ‘public authority’ is described in Article 2(2) of the directive as a ‘contracting authority’ within the meaning of the European public procurement directives.

1. Does the definition of a ‘public authority’ as a ‘contracting authority’ in Article 2(2) limit the scope of Directive 2011/7/EU as regards the provision of services on behalf of state legal authorities? If so, does the judiciary (which calls on the services of, for example, sworn translators and interpreters, judicial experts, insolvency practitioners) fall within the scope of the directive?

2. If the aforementioned commercial transactions do not fall within the scope of the directive, how does the Commission intend to close this loophole and ensure that public authorities lead by example?

3. If the aforementioned commercial transactions do fall within the scope of the directive, how does the Commission intend to ensure that public authorities can enforce it effectively?

Answer given by Mr Breton on behalf of the European Commission

(28 June 2021)

The Late Payment Directive (1) ‘shall apply to all payments made as remuneration for commercial transactions’ between undertakings and between undertakings and public authorities (2).

The Court of Justice has clarified that this principle should be interpreted ‘broadly’ (3). Moreover, while the directive includes in its scope payments for services rendered by ‘liberal professions’, it also identifies the type of transactions that are excluded, such as transactions with consumers, or payments made as compensation for damages (4).

In view of the above, the services referred to in the question, which are provided to public authorities by undertakings in exchange of payment, constitute commercial transactions for the purposes of the directive. The providers of these services are often small and medium-sized enterprises, who rely on timely payments not only for their profitability, but also for their survival.

Public authorities bear a ‘special responsibility’ in fostering a legal and business environment supportive of prompt payments (5).

Therefore, the Commission cooperates closely with the Member States for the correct and effective application of the directive and closely monitors its implementation and enforcement in Member States.

⋅1∙ Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions

⋅2∙ See in particular Recital 9 and Article 1 (2) of the directive

⋅3∙ C-299/19 Techbau paragraph 42, C-722/18 Krol paragraphs 31 and 32

⋅4∙ Recitals 8 and 10

⋅5∙ Recital 6