Statutory Interest on Late Payments

European Directive 2000/35/EC on combating late payments in commercial transactions was enacted into Irish Law by The European Communities (Late Payment of Commercial Transactions) Regulations 2002, (SI No. 388 of 2002). The Regulations apply to all commercial transactions in both the public and private sectors from the 7th of August 2002. They provide that any money overdue under a contract will now incur interest and this will be implied in every contract where interest is payable if the invoice is not paid on time. Late payment of an invoice is said to occur if it is not paid within 30 days or paid by an agreed payment date. The interest payable on late payments is the European Central Bank main refinancing rate plus 7 percentage points unless otherwise agreed. The Regulations also provide that compensation may be claimed for debt recovery costs.

If a contract purports to waive the relevant payment date and the supplier considers this to be unfair, they may apply to the Circuit Court or to an arbitrator for an order that the terms concerned are grossly unfair to the supplier and/or that the terms are unenforceable. These Regulations only apply to commercial transactions and do not affect transactions with consumers, defined as natural persons acting outside their trade, business or profession.

Summer 2002

Germany: A new ruling permits debt collection agencies to give legal advice to their clients in respect of debt collection matters. Following a recent Judgement of the German Federal Supreme Court (BVerfG), debt collection agencies may now give legal advice to clients in respect of debt collection matters. Debt collection agencies require an official permit to operate their business which is based on a requirement of having a thorough understanding of the law. For this reason, previous Judgements which denied the relief sought in lawsuits taken by debt collection agencies on the basis of illegal legal advice, were deemed to violate the constitutional rights to the freedom of profession of such debt collection agencies.