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One of the most frequently asked and trickiest questions posed by the law is to determine if the maximum payment deadline was also applicable in international trade relations. Is it possible in an international contract to get around the maximum payment deadlines by agreeing on the application of a foreign law and giving jurisdiction to a foreign court?
Should the administrative sanctions provided …

Payment deadlines in international commercial relations

In France, the payment periods for goods and services are longer than in other EU Member States, and this has a serious impact on the competitiveness of undertakings. It can also lead to bankruptcy for some operators in the production or distribution chain. For this reason, legislative action over the past twenty years, framed by EU Directive No 2011/7 of 16 February 2011, has been aimed at reducing payment periods. Reformed by the LME, Lurel, Hamon, Macron and Sapin 2 Laws, the legislation has been completely overhauled by the Ordinance of 24 April 2019 to ensure a much clearer and more comprehensible presentation than before. Until now dispersed in four different articles also dealing with other matters, the rules relating to payment deadlines are now grouped together in a specific sub-section, without any major substantive changes , in Articles L. 441-10 to L. 441-16 of the Commercial Code. The new subsection addresses in a logical manner the general substantive provisions (Article L. 441-10), the derogations relating to perishable goods, transportation, agreement derogations, to exports and overseas territories (Articles L. 441-11, -12 and -13), the obligations of statutory auditors (Article L. 441-14), the option of a rescript i.e. an interpretative ruling by the administration (Article L. 441-15)  and the applicable sanctions (Article L. 441-16).

Some technical clarifications have been made, such as the methods for calculating the applicable legal rate, the fact that the export exemption applies to both agreed and regulated deadlines, and the scope of application of the rescript option.

The scope of this procedure, which allows the professional to ask the DGCCRF to formally take a position on the methods of calculating payment periods and the legality of commercial warranties, was set by Decree  No 2018-1227 of 24 December 2018. The sectors concerned are the automotive and construction industries (current Article R. 441-7. of the Commercial Code). An Order (arrêté) of 19 May 2019 establishes the list of information required for the application. The procedure is defined in Articles R. 441-8 et seq. of the Commercial Code.

Harm to the competitiveness of undertakings

Back in 2000 , the Commission adopted a directive on combating late payment in commercial transactions, which it amended and replaced in 2011 . Directive No 2011/7 applies to all payments made as remuneration for commercial transactions (Art. 1), i.e. all transactions between undertakings  or between undertakings and public authorities leading to the supply of goods or the provision of services for remuneration (Art. 2), irrespective of how the activity is financed  and whether or not the commercial transaction in question is cross-border in nature . This applies in particular to insurance contracts under which the insurer makes a commitment to an undertaking to provide a specific service in the event of a claim under the contract, and the undertaking makes a commitment to the insurer to pay the insurance premium , contracts for the lease of business premises concluded between undertakings  or between undertakings and public authorities or public works contracts .  On the other hand, a commercial transaction does not include a situation in which the public authorities are creditors of an undertaking, notably in respect of the fee payable for the perpetual usufruct of a plot of land  or use of measuring instrument referencing services provided by the national measurement office . The directive makes a distinction,, with regard to the applicable time limits, between transactions between undertakings and those between undertakings and public authorities.

In the context of transactions between undertakings, Article 3 provides for an additional payment period of thirty calendar days, which runs from the date of receipt by the debtor of the invoice or equivalent demand for payment or, where these dates are uncertain, from the date of receipt of the goods or provision of the services or, where the debtor receives the invoice or equivalent demand for payment before the goods or services, from the date of receipt of the goods or provision of the services. Where a procedure of acceptance or verification - enabling the conformity of the goods or services with the contract to be verified - is provided for by law or in the contract, and if the debtor receives the invoice or equivalent request for payment earlier or on the date of acceptance or verification, the payment period is 30 calendar days after that date. The maximum duration of the verification procedure must not exceed thirty calendar days after the date of receipt of the goods or provision of the services, unless expressly stipulated otherwise by contract and provided that this does not constitute a manifest abuse with regard to the creditor. However, the parties also have the option of agreeing on a contractual deadline, which may not exceed sixty calendar days, unless otherwise expressly stipulated by contract and provided that this does not constitute a manifest abuse vis-à-vis the creditor.

In relations between undertakings and public authorities, the same 30-calendar-day time-limit applies under Article 4 of the directive, with the same starting points. However, Member States have the option of extending these periods up to a maximum of sixty calendar days for the benefit of any public authority carrying out economic activities of an industrial or commercial nature consisting in offering goods and services on the market and subject, as a public undertaking, to the transparency requirements laid down in Directive No 2006/111, as well as public entities providing healthcare, duly recognized for this purpose. A conventional payment period of more than thirty days may be stipulated if objectively justified by the particular nature or certain details of the contract, and provided that it does not in any case exceed sixty calendar days.  According to the Court of Justice, Directive No 2011/7 imposes on Member States not only the obligation to lay down payment periods which comply with its provisions, but also an enhanced obligation to ensure that those periods are actually observed by their public authorities in commercial transactions between them and undertakings. Whether or not the situation is in the process of improving, and the scale or frequency of the offending situations, are irrelevant factors in assessing the infringement . Consequently, a Member State which fails to ensure that its public entities providing healthcare effectively comply with the maximum payment period of sixty days is in breach of its obligations under Article 4 . Similarly, a national rule may not generally provide for a up to sixty calendar days for all commercial transactions between undertakings and public authorities, even where this period is made up of an initial period of thirty days for a procedure of acceptance or verification of the conformity of the goods or services supplied with the contract, followed by a further period of thirty days for payment of the agreed price .

Exceeding contractual or statutory payment deadlines constitutes late payment. The text thus aims to combat the practice of “supplier credit”, when this is abusively imposed on suppliers or subcontractors (on grossly unfair conditions: Art. 3(5) and (7) . Member States must ensure that default interest is payable without the need for a reminder when the creditor has fulfilled his obligations, without having received the “amount due”  on time (Art. 3) ,  that there is a flat-rate compensation of EUR 40 for recovery costs incurred in the event of late payment , even if the duration of the delay or the amount of the debt is low , reasonable compensation for all other recovery costs over and above that fixed sum and incurred as a result of late payment by the debtor  (Art. 6) , and the establishment of rapid and effective recovery procedures for creditors (Art. 10). According to the Court of Justice, however, Directive No 2011/7 does not preclude national legislation which allows the creditor, after conclusion of the contract, to waive the right to claim interest for late payment and compensation for collection costs in return for immediate payment of the principal amount of claims due, provided that such a waiver is given freely . Member States must also provide, in compliance with national law and private international law, for a retention of title in favor of the seller until full payment has been made (Art. 9). 

Directive No 2000/35 of 29 June 2000, OJEC L 200 of 8 August 2000, 35.

Directive No 2011/7 of 16 February 2011, OJUE L 48 of 23 February 2011, 1.

Case C-279/23 , Skarb Państwa ‑ Dyrektor Okręgowego Urzędu Miar w K. c. Z. sp.j., Judgment of 11 July 2024 aff. , LawLex202400005242JBJ.

Case C-487/23 Commission v Portugal, Judgment of 11 July 2024, Commission  not yet available in English.

Case C-412/23 Commission v Slovak Republic, Judgment of 19 September 2024, not available in English.

Case C-543/24 European Commission v Kingdom of Belgium, Judgment of 5 June 2025, not available in English, in which the Court held that by failing to effectively ensure that its local authorities comply with the 30-day payment deadlines laid down in Article 4(3)(a) of Directive No 2011/7, a Member State fails to fulfill its obligations under that provision.

CJEU Case C-677/22 Przedsiębiorstwo Produkcyjno, Judgment of 6 February 2025, LawLex202500000950JBJ: Article 3(5) of Directive No 2011/7, under which Member States must ensure that the payment period fixed in the contract does not exceed 60 calendar days, unless otherwise expressly agreed in the contract and provided that such agreement is not grossly unfair to the creditor within the meaning of Article 7, must be interpreted strictly insofar as it allows for a derogation from the maximum contractual payment period of 60 calendar days.

On the concept of “amount owed” ”, see Case C-725/23 M. sp. z o.o. I. S.K.A. c. R. W, Judgment of 12 December 2024, LawLex202400009671JBJ, stressing that, in addition to the amount which the debtor is obliged to pay in return for the principal performance, this amount includes the sums which he is contractually obliged to reimburse to the creditor in respect of the costs incurred by the latter and relating to the performance of the contract.

For an  application see Case C-303/23, Powszechny Zakład Ubezpieczeń (SA) v Volvia sp. zoo, Order of 11 December 2023, LawLex202400006045JBJ, cited above, specifying that the requirement for the creditor to have fulfilled his contractual and legal obligations, in order to be able to claim interest for late payment without the need for a reminder, is satisfied, in the context of an insurance contract, when the insurer provides insurance cover to the other party, independently of the payment to the latter of compensation in the event of the occurrence of the loss covered by the contract.

Case C-78/22 ALD Automotive s.r.o, Judgment of 4 May 2023, LawLex202300006200JBJ, emphasizing that where a contract provides for periodic payments, each of which must be made within a specified time-limit, the minimum fixed sum of EUR 40 for collection costs is payable to the creditor for each late payment, and not just once in respect of the performance of the contract, irrespective of the number of payments not made on time and the small sums involved. See previously, along the same lines - emphasizing that where a contract provides for periodic payments, each of which must be made within a specified time-limit, the minimum fixed sum of EUR 40 for collection costs is payable to the creditor for each late payment, and not just once in respect of the performance of the contract, irrespective of the number of payments not made on time and the negligible amounts involved. 

Case C-279/23 JUE, 11 juillet 2024, Skarb Państwa ‑ Dyrektor Okręgowego Urzędu Miar w K. c. Z. sp.j., aff. C-279/23, LawLex202400005242JBJ.

Case C-131/18 Gambietz v Ziegler, Judgment of 11 April 2019, LawLex202000000298JBJ,  stating that the fixed amount of EUR 40 is to be deducted from the reasonable compensation for all collection costs to which a creditor who has exceeded payment time-limits is entitled. Cf. Case C-287/17 Ceská pojitovna a.s. v WCZ, spol. s r.o.,. Judgment of 13 September 2018,  LawLex201800001292JB, holding on the contrary that these two indemnities can be cumulated.

On the concept of “undertaking”, see Case C-643/23 Agenciart - Management Artístico Lda v CT, Judgment of 14 November 2024, LawLex202400008875JBJ, stressing that it is not necessary for the person concerned to have an organized structure with means such as its own installations, personnel and tools or equipment assigned to that activity, but only that it carries out its activity in a habitual manner, so that the status of undertaking can be applied to a natural person who exercises the profession of actor on a self-employed basis and in a habitual manner for remuneration.

Case C-555/14  IOS Finance EFC SA, Judgment of 16 February 2017, LawLex201700000339JBJ. Also see Case C-406/21 A Oy, Judgment of 20 October 2022, LawLex202200010002JBJ.

Case C-722/18 KROL - Zaklad Robót Wodno-Kanalizacyjnych sp. z o.o., sp.k. c. Porr Polska Construction SA, Judgment of 28 November 2019, LawLex202400006039JBJ, ruling that the directive applies to all commercial transactions, even those financed in whole or in part by resources from the EU's Structural Funds and the EU Cohesion Fund.

Case C-643/23 Agenciart - Management Artístico Lda v CT, Judgment of 14 November 2024, LawLex202400008875JBJ, above.

CJEU, Case C-303/23, Powszechny Zakład Ubezpieczeń (SA) v Volvia sp. zoo, Order of 11 December 2023, LawLex202400006045JBJ.

CJUE, Case C-725/23 M. sp. z o.o. I. S.K.A. c. R. W.Judgment of 12 December 2024, LawLex202400009671JBJ.

CJEU, Case C-199/19 RL sp. z o.o. Judgment of 9 July 2020, LawLex202400006046JBJ.

CJEU, Case C-299/19 Techbau SpA v Azienda Sanitaria Locale AL, Judgment of 18 November 2020, LawLex202000003111JBJ.

CJEU, Case C-327/20 Skarb Państwa – Starosta Nyski v New Media Development & Hotel Services sp. z o.o, Judgment of 13 January 2022, LawLex202400006047JBJ

Directive on combating late payment in commercial transactions

One of the most frequently asked and trickiest questions posed by the law is to determine if the maximum payment deadline was also applicable in international trade relations. Is it possible in an international contract to get around the maximum payment deadlines by agreeing on the application of a foreign law and giving jurisdiction to a foreign court?

Should the administrative sanctions provided for by French law apply where there is an effect in France where payment deadlines do not comply with the French rules or should the contractual intention of the parties prevail?

Those questions have not been resolved in the courts as yet but have been the subject of successive - and not particulary consistent - opinions isssued by the French Commercial Practices Review Commission .

The CEPC was initially asked whether it was possible to set aside the payment period ceilings imposed by former Article L. 441-6 of the Commercial Code in an international contract for the sale of goods between a French supplier and a foreign buyer from another EU Member State. Insofar as the text was an overriding mandatory provision (loi de police), and as excessively long payment terms imposed by foreign customers on French suppliers were likely to have negative effects in France, it considered that “in the current state of positive law, it is conceivable that the administrative sanctions which accompany the exceeding of mandatory payment terms could be implemented in relations between a French seller and a foreign buyer despite the submission of the contract to the national law of a foreign State, particularly when the entire commercial relationship takes place in France” .

It subsequently ruled on the opposing scenario i.e. a foreign seller and a French buyer, where the sale was governed by the Vienna Convention of 11 April 1980 (CISG) . It held that “contracts for the international sale of goods governed by the Vienna Convention of 11 April 1980 are not subject to the payment ceiling provided for in Article L. 441-6, I, para. 9 Commercial Code”, but mitigated the scope of this statement by noting that ‘through the combined application of the Convention, the general principles on which it is based and Directive No 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions, the time-limits for payment agreed between the parties should not constitute a manifest abuse vis-à-vis the creditor, i.e. reflect a clear departure from sound commercial practice and custom, contrary to good faith and fair dealing, taking into account the nature of the productt”.

Finally, in its latest case concerning the same situation of a foreign supplier and its French resellers, in which the contract was subject to foreign law and the CISG, it reiterated the solution of the inapplicability of the time-limits for payment provided for by the legislation in its version resulting from the Ordinance of 24 April 2019 and that according to which the agreed time-limits must not constitute a manifest abuse. In this case, it ruled that the creditor's staggered payment terms, common to all the contracts of sale concluded with its European customers, did not appear to constitute such an abuse .

Commission d'examen des pratiques commerciales. See Opinions No 16-1 and 16-12.

CEPC, Opinion No 16-1 of 14 January 2016, LawLex201600000005JBA.

CEPC, Opinion No 16-12 of 16 June 2016 concerning a request for an opinion from a lawyer on the application of the statutory time-limit for payment in an international context, LawLex201600000015JBA.

CEPC, Opinion No 21-9 of 8 July 2021, LawLex202100000008JBL.

French Competition Law

164. Payment deadlines in international commercial relations

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164. Payment deadlines in international commercial relations

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Les notions juridiques connexes

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