To this purpose, we have recently noticed a legislative shift in the European Union law towards promoting prompt payments in commercial transactions. We are referring in particular to the European Union Directive 2011/7/EU of 16 February 2011 on combating late payment in commercial transactions (“Directive 2011/7/EU”), which applies equally to the public and private sectors and provides an automatic entitlement to interest if payment for commercial transactions is late. The Directive covers all debts resulting from commercial transactions among public and/or private entities.
According to the Directive, if the contract is silent on the payment term in business-to-business contracts, payment must be made within 30 calendar days after the latest of the customer receiving the supplier’s invoice, receiving the goods or services, or verifying or accepting the goods or services. If the contract contains an express payment term, the parties can agree on payment within up to 60 days from the date of invoice, receipt of goods or services or verification or acceptance of the goods or services. The parties can agree on an extension to this limit and go above 60 days as long as this is in writing and not “grossly unfair”. It is considered “grossly unfair” anything that is a gross deviation from good commercial practice and contrary to good faith and fair dealing, considering the goods and services in question, and provided the buyer has any objective reason to deviate from the standard 60-day period.
In case of late payment, the creditors are automatically entitled to claim interest and are also able to obtain a minimum fixed amount of €40 as a compensation for recovery costs from their debtor. They can also claim compensation for all remaining reasonable recovery costs.
Most of EU countries have implemented the said Directive and transposed it into their national laws.
When does a payment become late in Moldova?
Currently, Moldovan law does not contain any mandatory timeframe when contractual parties should observe their payment obligations (except for privatization agreements). The parties are free to determine the term for payments by their mutual agreement.
If the agreement is silent on this issue, the payment obligation is observed any time by the debtor, or upon creditor’s notice of payment. If no term has been provided within creditor’s notice, payment shall be performed within 7 days, except if immediate payment results from the nature of the obligation, parties’ agreement or legal provisions.
Should the creditor be entitled to calculate and claim interest once the 7 days period has expired? There are different interpretations in Moldovan case law in this respect, in particular because of the legal requirement for the creditor to “declare the debtor in delay”. Thus, once the payment obligation has not been duly observed, the creditor will have to send the debtor a special notice in order to declare him in delay of observing the contractual obligations. The debtor will be considered in delay upon expiry of 30 days from the day of creditor’s notice.
As mentioned above, Moldovan case law gives different interpretations to these 7 days and 30 days rules. Thus, in some cases the courts declared that no additional creditor’s notice on delay is necessary, while others consider that the creditors are not allowed to calculate interest for late payment in the absence of creditor’s notice on debtor’s delay and prior to the expiry of 30 days term.
To avoid misinterpretations leading to pecuniary damages for the parties, private entities entering into agreements governed by Moldovan law are recommended to expressly provide the calendar date of payment obligations in their written agreements. Such express stipulation will overrule default rules of 7 and 30 days specified above.
Taking into account the current trend of Moldovan laws harmonization, the European practice on late payment regulation might be implemented in Moldova as well in order to encourage public and private entities to improve their speed of payment. We are not aware at the moment of any legislative initiative in this respect, but do not exclude such possibility in future.
It is rather premature to make a current assessment of the impact of the Directive 2011/7/EU upon the business environment, since most of the EU member states have implemented it quite recently. However, for Moldova this is a matter worth keeping an eye open on and promote for implementation, as it might be educating public authorities and private enterprises to promptly perform their payment obligations.
