CELEX: 62022CJ0078
Reference for a preliminary ruling
Directive 2011/7/EU
Combating late payments in commercial transactions
Article 6
Fixed minimum sum of EUR 40 as compensation for the recovery costs incurred by the creditor
Late payment regarding contracts for successive performance
Fixed compensation due in respect of each late payment
Obligation to give full effect to EU law
Obligation of interpretation in compliance with EU law
General principles of national private law

This request for a preliminary ruling concerns the interpretation of Article 6(1) of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions (OJ 2011 L 48, p. 1).
The request has been made in proceedings between ALD Automotive s.r. o. (‘ALD’) and DY, acting as insolvency administrator of GEDEM-STAV a.s. (‘Gedem’), the debtor company, concerning a claim for fixed compensation for recovery costs incurred by ALD as a result of late payments relating to five contracts for successive performance concluded between that company and Gedem.

Legal context

European Union law
Recitals 3 and 19 of Directive 2011/7 state:
‘(3)      Many payments in commercial transactions between economic operators or between economic operators and public authorities are made later than agreed in the contract or laid down in the general commercial conditions. Although the goods are delivered or the services performed, many corresponding invoices are paid well after the deadline. Such late payment negatively affects liquidity and complicates the financial management of undertakings. It also affects their competitiveness and profitability when the creditor needs to obtain external financing because of late payment. …
…
(19)      Fair compensation of creditors for the recovery costs incurred due to late payment is necessary to discourage late payment. Recovery costs should also include the recovery of administrative costs and compensation for internal costs incurred due to late payment for which this Directive should determine a fixed minimum sum which may be cumulated with interest for late payment. Compensation in the form of a fixed sum should aim at limiting the administrative and internal costs linked to the recovery. …’
Article 1 of that directive, entitled ‘Subject matter and scope’, provides, in paragraphs 1 and 2:
‘1.      The aim of this Directive is to combat late payment in commercial transactions, in order to ensure the proper functioning of the internal market, thereby fostering the competitiveness of undertakings and in particular of [small and medium-sized enterprises (SMEs)].
2.      This Directive shall apply to all payments made as remuneration for commercial transactions.’
According to Article 2 of that directive:
‘For the purposes of this Directive, the following definitions shall apply:
(1)      “commercial transactions” means transactions between undertakings or between undertakings and public authorities which lead to the delivery of goods or the provision of services for remuneration;
…
(4)      “late payment” means payment not made within the contractual or statutory period of payment and where the conditions laid down in Article 3(1) or Article 4(1) are satisfied;
…
(8)      “amount due” means the principal sum which should have been paid within the contractual or statutory period of payment, including the applicable taxes, duties, levies or charges specified in the invoice or the equivalent request for payment;
…’
Article 3 of that directive, entitled ‘Transactions between undertakings’, provides, in paragraph 1:
‘Member States shall ensure that, in commercial transactions between undertakings, the creditor is entitled to interest for late payment without the necessity of a reminder, where the following conditions are satisfied:
(a)      the creditor has fulfilled its contractual and legal obligations; and
(b)      the creditor has not received the amount due on time, unless the debtor is not responsible for the delay.’
Article 6 of Directive 2011/7, entitled ‘Compensation for recovery costs’, provides:
‘1.      Member States shall ensure that, where interest for late payment becomes payable in commercial transactions in accordance with Article 3 or 4, the creditor is entitled to obtain from the debtor, as a minimum, a fixed sum of EUR 40.
2.      Member States shall ensure that the fixed sum referred to in paragraph 1 is payable without the necessity of a reminder and as compensation for the creditor’s own recovery costs.
3.      The creditor shall, in addition to the fixed sum referred to in paragraph 1, be entitled to obtain reasonable compensation from the debtor for any recovery costs exceeding that fixed sum and incurred due to the debtor’s late payment. This could include expenses incurred, inter alia, in instructing a lawyer or employing a debt collection agency.’
Article 7 of the directive, entitled ‘Unfair contractual terms and practices’, states, in paragraph 1:
‘Member States shall provide that a contractual term or a practice relating to the date or period for payment, the rate of interest for late payment or the compensation for recovery costs is either unenforceable or gives rise to a claim for damages if it is grossly unfair to the creditor.
In determining whether a contractual term or a practice is grossly unfair to the creditor, within the meaning of the first subparagraph, all circumstances of the case shall be considered, including:
…
(c)      whether the debtor has any objective reason to deviate from … the fixed sum as referred to in Article 6(1).’
…’

Czech legislation
Paragraph  2(3) of zákon č. 89/2012, občanský zákonik (Law No 89/2012 establishing the Civil Code) provides:
‘The interpretation and application of legislation shall not run counter to accepted principles of morality and shall not result in cruelty or ruthlessness offending ordinary human sensibilities.’
Paragraph 3 of nařízení vlády č. 351/2013 Sb., kterým se určuje výše úroků z prodlení a nákladů spojených s uplatněním pohledávky, určuje odměna likvidátora, likvidačního správce a člena orgánu právnické osoby jmenovaného soudem a upravují některé otázky Obchodního věstníku, veřejných rejstříků právnických a fyzických osob a evidence svěřenských fondů a evidence údajů o skutečných majitelích (Government Decree No 351/2013 setting the amount of default interest and the costs of recovery of a debt, establishing the remuneration of court-appointed liquidators and members of the administrative body of the legal person, and clarifying certain questions relating to the Official Bulletin of Civil and Commercial Announcements and public registers of legal and natural persons, trust funds and beneficial owners; ‘Decree No 351/2013’) provides:
‘In the case of reciprocal obligations on undertakings, or when the contents of the reciprocal obligation between an undertaking and a public contracting entity pursuant to public procurement law is the responsibility to deliver goods or provide a service to a public contracting entity in exchange for consideration, the minimum amount of costs associated with making each claim shall be 1 200  [Czech koruny (CZK) (approximately EUR 50)].’

The dispute in the main proceedings and the questions referred for a preliminary ruling
ALD and Gedem, companies governed by Czech law, concluded five contracts for the lease of movable assets (‘the contracts in question in the main proceedings’). Under the general terms and conditions applicable to those contracts, ALD was required to issue individual invoices for the amounts due as remuneration for the services provided to Gedem under those contracts. Gedem was required to pay those amounts by the deadline set out in the invoices.
By the set deadlines, Gedem had not, however, paid 25 amounts due under the contracts in question in the main proceedings, corresponding to a total of CZK 206 799.13 (approximately EUR 8 750) in respect of periods between 27 April 2016 and 30 September 2016.
By an order of 12 April 2017, the Krajský soud v Hradci Králové – pobočka v Pardubicích (Regional Court, Hradec Králové – Pardubice Division, Czech Republic) found Gedem insolvent, declared bankruptcy over its assets, and appointed DY as its insolvency administrator.
In the context of those proceedings, ALD applied for payment of its remaining debt, together with default interest, and, as recovery costs, a fixed sum of CZK 1 200 for each of the 25 amounts due under the 5 contracts in question  in the main proceedings, that is, CZK 30 000 (approximately EUR 1 250) in total, on the basis of Article 3 of Decree No 351/2013.
Further to an opposition brought by DY against payment of that fixed sum, ALD brought an action before the Krajský soud v Hradci Králové – pobočka v Pardubicích (Regional Court, Hradec Králové – Pardubice Division) seeking a ruling that it was entitled to fixed compensation for the recovery costs incurred in respect of each of the 25 amounts due under the five contracts in question  in the main proceedings.
By a judgment of 28 May 2018, that court granted ALD’s application in part by awarding it fixed compensation for the recovery fees in the amount of CZK 1 200  in respect of the amounts due under each of the five contracts, that is, CZK 6 000 (approximately EUR 250), and dismissed the action as to the remainder.
ALD appealed against that judgment before the Vrchní soud v Praze (High Court, Prague, Czech Republic), the referring court, which upheld that judgment. That court held that, in the present case, the fixed compensation for the recovery fees was due only once in respect of each of the five contracts, irrespective of the number of payments that had not been made by the deadline.
ALD brought an action against those judgments before the Ústavní soud (Constitutional Court, Czech Republic) which, by a judgment of 24 November 2020, set aside the judgment of the Vrchní soud v Praze (High Court, Prague) and referred the case back to it, while dismissing the appeal as to the remainder. The Ústavní soud (Constitutional Court) considered that, given that the referring court had failed to examine whether  it was necessary to refer a question for a preliminary ruling to the Court under Article 267 TFEU, even though ALD had raised the need to interpret national legislation in accordance with EU law, the referring court infringed the right of that company to a fair trial, guaranteed by the Czech Constitution.
In so far as the contracts in question  in the main proceedings involve the payment of successive remuneration, the referring court is uncertain whether, in order to achieve the objective pursued by Directive 2011/7, the creditor must obtain the fixed sum provided for in Article 6(1) of the directive for each late payment occurring in the context of the performance of a single contract, including where the payments that have not been made by the deadline concern amounts that are low, or lower than that fixed sum, or whether it is sufficient for the creditor to obtain a single fixed sum  in respect of all the delays in payment that have occurred in the context of the performance of that contract. The court is also uncertain whether it is possible for a national court to reject an application on the basis of the first interpretation, should the application ‘run counter to accepted principles of morality (Paragraph 2(3) of [Law No 89/2012])’.
In those circumstances, the Vrchní soud v Praze (High Court, Prague) decided to stay the proceedings and to refer the following questions to the Court of Justice for a preliminary ruling:
‘(1)      On the basis of what criteria does the entitlement to obtain the fixed sum of at least EUR 40 arise pursuant to Article 6(1) of Directive [2011/7] in the case of agreements with recurring or ongoing performance?
(2)      Can the claim pursuant to Article 6(1) of [Directive 2011/7] be refused by Member State courts on the grounds of the application of general private-law principles?
(3)      If the response to the second question is in the affirmative, subject to what conditions can Member State courts refuse to award the amount of the claim under Article 6(1) of [Directive 2011/7]?’

Consideration of the questions referred

The first question
By its first  question, the referring court asks, in essence, whether Article 6(1) of Directive 2011/7, read in conjunction with Article 3 thereof, must be interpreted as meaning that, where a single contract provides for periodic payments, each of which must be made within a specified period, the fixed minimum sum of EUR 40 provided for in Article 6(1) is payable for each late payment, by way of compensation for the creditor’s recovery costs, or whether that fixed sum is payable only once in the context of the performance of a single contract, irrespective of the number of payments that have not been made within that period.
In the first place, Article 6(1) of Directive 2011/7 requires Member States to ensure that, where interest for late payment becomes payable in commercial transactions, within the meaning of Article 2(1) of the directive, the creditor is entitled to obtain from the debtor, as a minimum, a fixed sum of EUR 40. Furthermore, under Article 6(2), Member States are obliged to ensure that that fixed minimum sum is payable automatically, even without a reminder to the debtor, and as compensation for the creditor’s own recovery costs. Lastly, Article 6(3) recognises that the creditor is, in addition to the fixed minimum sum of EUR 40, to be entitled to obtain reasonable compensation from the debtor for any recovery costs exceeding that fixed sum and incurred due to the debtor’s late payment.
The concept of ‘late payment’, which gives rise to the creditor’s entitlement to obtain from the debtor not only interest under Article 3(1) of Directive 2011/7, but also a fixed minimum sum of EUR 40 under Article 6(1) of that directive, is defined in Article 2(4) of that directive as payment not made within the contractual or statutory period of payment. Since Directive 2011/7 covers, in accordance with Article 1(2) thereof, ‘all payments made as remuneration for commercial transactions’, that concept of ‘late payment’ is applicable to each individual commercial transaction (judgment of 1 December 2022,
DOMUS-SOFTWARE
, C‑370/21, EU:C:2022:947, paragraph 21 and the case-law cited).
In the second place, Article 6(1) of Directive 2011/7 defines the conditions under which the fixed minimum sum of EUR 40 is to become payable by reference, as regards commercial transactions between undertakings, to Article 3 of that directive. That article provides, in paragraph 1, that Member States are to ensure that, in such commercial transactions, a creditor which has fulfilled its obligations and has not received the amount due on time is entitled to interest for late payment without the necessity of a reminder, unless the debtor is not responsible for that delay (judgment of 1 December 2022,
DOMUS-SOFTWARE
, C‑370/21, EU:C:2022:947, paragraph 22 and the case-law cited).
It follows that, similarly to the entitlement to interest for late payment provided for in Article 3(1) of Directive 2011/7, the entitlement to a fixed minimum sum provided for in Article 6(1) of that directive, which also arises from a ‘late payment’ within the meaning of Article 2(4) of that directive, is linked to individual ‘commercial transactions’. That interest, like that fixed sum, is to become payable automatically upon expiry of the period for payment laid down in Article 3(3) to (5) of that directive, provided that the conditions set out in paragraph 1 thereof are satisfied (see, to that effect, judgment of 1 December 2022,
DOMUS-SOFTWARE
, C‑370/21, EU:C:2022:947, paragraph 23 and the case-law cited).
Article 6(1) and (2) of Directive 2011/7 must, accordingly, be interpreted as meaning that the fixed minimum sum of EUR 40 is payable, by way of compensation for recovery costs, to a creditor which has fulfilled its obligations for each payment that is not made on time as remuneration for a commercial transaction, as evidenced by an invoice or equivalent payment demand, including where several periodic payments made under a single contract are late, unless the debtor is not responsible for those delays (judgment of 1 December 2022,
DOMUS-SOFTWARE
, C‑370/21, EU:C:2022:947, paragraphs 24 to 26 and the case-law cited).
In the third place, that interpretation of Article 6 of Directive 2011/7 is confirmed by its aims. It follows from Article 1(1) of that directive, read in the light of recital 3, that it is intended not only to discourage late payment by preventing it from being financially attractive for the debtor because of a low rate or lack of interest being charged in such a situation, but also to protect the creditor effectively against such delays by ensuring that the creditor is afforded the fullest possible compensation for recovery costs incurred. In that regard, recital 19 of that directive makes clear, first, that recovery costs should also include the recovery of administrative costs and compensation for internal costs incurred due to late payment and, second, that compensation in the form of a fixed sum should aim at limiting the administrative and internal costs linked to the recovery (judgment of 1 December 2022,
DOMUS-SOFTWARE
, C‑370/21, EU:C:2022:947, paragraph 27 and the case-law cited).
The fact that a debtor is responsible for a number of delays in making periodic payments under a single contract cannot therefore have the effect of reducing, to a single fixed sum, the fixed minimum sum payable by way of compensation for the recovery costs in respect of each late payment. Such a reduction would effectively deprive Article 6 of Directive 2011/7 of any practical effect, the objective of that directive being, as has been pointed out in the preceding paragraph of the present judgment, not only to discourage late payment but also for those sums to serve as compensation ‘for the creditor’s own recovery costs’, costs which tend to rise in proportion to the number of payments and amounts which the debtor fails to pay on time. That reduction would moreover be equivalent to granting the debtor a derogation from the entitlement to the fixed sum referred to in Article 6(1) of that directive, which would effectively exempt the debtor from part of the financial burden arising from the debtor’s obligation to pay, in respect of each payment not paid on time, the fixed sum of EUR 40, without that derogation being justified by any ‘objective reason’ within the meaning of point (c) of the second subparagraph of Article 7(1) of that directive (see, to that effect, judgment of 1 December 2022,
DOMUS-SOFTWARE
, C‑370/21, EU:C:2022:947, paragraph 28 and the case-law cited).
In its written observations, the Czech Government submits, however, that the creditor’s receipt of more than one fixed sum where several periodic payments arising from a single contract are late runs counter to the objective pursued by Article 6(3) of Directive 2011/7, which is to offer fair compensation of the costs actually incurred by that creditor, in order to discourage late payment. According to that government, such receipt is equivalent to granting the creditor, for overall costs incurred in the event of recovery of several debts from a single debtor arising from the same contract, fixed compensation which goes beyond the administrative and internal costs actually incurred and linked to the recovery. Compensation by way of a fixed sum, laid down in that provision, is intended to reflect the costs actually incurred by the creditor and is not punitive.
In that regard, the Court has previously held that the right to ‘reasonable’ compensation provided for in Article 6(3) of Directive 2011/7 ‘for any recovery costs exceeding that fixed sum and incurred due to the debtor’s late payment’ covers recovery costs, whatever they may be, which exceed the minimum sum of EUR 40 to which the creditor is automatically entitled under Article 6(1) of that directive, where interest for late payment becomes payable in a commercial transaction, in accordance with, inter alia, Article 3 of that directive. Such compensation cannot therefore cover either the part of those costs which is already covered by the fixed minimum sum of EUR 40 or costs which appear to be excessive in the light of the facts of the case in point as a whole (judgment of 20 October 2022,
BFF Finance Iberia
, C‑585/20, EU:C:2022:806, paragraph 39).
It follows that  Article 6(3) of Directive 2011/7 cannot be relied on to limit the creditor’s right to receive the fixed sum provided for in Article 6(1) of that directive. However, it is possible to take into consideration, subject to the limits set out in the preceding paragraph of the present judgment, inter alia, the fact that the remuneration for commercial transactions which that debtor did not pay on time gave rise to a single claim, for the purpose of assessing the reasonableness of the compensation for other recovery costs incurred due to the debtor’s late payment (judgment of 20 October 2022,
BFF Finance Iberia
, C‑585/20, EU:C:2022:806, paragraph 40).
In the light of the foregoing, the answer to the first question is that Article 6(1) of Directive 2011/7, read in conjunction with Article 3 of that directive, must be interpreted as meaning that, where a single contract provides for periodic payments, each of which must be made within a specified period, the fixed minimum sum of EUR 40 provided for in Article 6(1) is payable, by way of compensation for the creditor’s recovery costs,  in respect of each late payment.

The second question
By its second question, the referring court asks, in essence, whether Article 6(1) of Directive 2011/7, read in conjunction with Article 6(3), and point (c) of the second subparagraph of Article 7(1) of that directive, must be interpreted as precluding a national court from refusing or reducing the fixed sum provided for in the first of those provisions, on the basis of the general principles of national private law, where delays in payment which have arisen in the context of a single contract relate, inter alia, to amounts that are low, or lower than that fixed sum.

Admissibility
The European Commission expresses doubts as to whether the second question is admissible, on the ground that it is hypothetical in nature. In the main proceedings, the total sum of the principal claim is much higher than the total sum of the fixed compensation applied for under Article 3 of Decree No 351/2013, which transposes Article 6(1) of Directive 2011/7 into national law.
In that regard, it should be noted that, in the context of the cooperation between the Court and the national courts provided for in Article 267 TFEU, it is solely for the national court before which a dispute has been brought, and which must assume responsibility for the subsequent judicial decision, to determine, in the light of the particular circumstances of the case, both the need for a preliminary ruling in order to enable it to deliver judgment and the relevance of the questions which it submits to the Court. Consequently, where the questions submitted by the national court concern the interpretation of EU law, the Court of Justice is, in principle, bound to give a ruling (judgment of 8 December 2022,
Google (De-referencing of allegedly false information)
, C‑460/20, EU:C:2022:962, paragraph 41 and the case-law cited).
The Court may refuse to rule on a question referred by a national court for a preliminary ruling only where it is quite obvious that the interpretation of EU law that is sought bears no relation to the actual facts of the main action or its purpose, where the problem is hypothetical, or where the Court does not have before it the factual or legal material necessary to give a useful answer to the questions submitted to it (judgment of 8 December 2022,
Google (De-referencing of allegedly false information)
, C‑460/20, EU:C:2022:962, paragraph 42 and the case-law cited).
Admittedly, in the present case, as pointed out by the Commission, the total amount of the principal sum is higher than the total amount of the fixed compensation applied for. However, it does not follow that the question asked is hypothetical. It cannot be ruled out that, failing an express reference to that effect in the order for reference, certain payments among the 25 payments in question in the main proceedings that were not made by the deadline are low or lower than the fixed sum laid down in Article 3 of the decree, in compliance with Article 6(1) of the directive.
The substance of the question must therefore be examined.

Substance
It must be borne in mind from the outset that the principle of the primacy of EU law requires, inter alia, national courts, in order to ensure the effectiveness of all provisions of EU law, to interpret, to the greatest extent possible, their national law in conformity with EU law (judgments of 13 November 1990,
Marleasing
, C‑106/89, EU:C:1990:395, paragraph 8, and of 18 January 2022,
Thelen Technopark Berlin
, C‑261/20, EU:C:2022:33, paragraph 26).
More specifically, a national court, when hearing, as in the present case, a dispute which is exclusively between private individuals, is required, when applying the provisions of national law adopted for the purpose of transposing a directive, to interpret them in the light of the wording and purpose of the directive in order to achieve an outcome consistent with the objective pursued by that directive, without prejudice to certain limits such as, inter alia, the prohibition on interpretation of national law
contra legem
(see, to that effect, judgment of 18 January 2022,
Thelen Technopark Berlin
, C‑261/20, EU:C:2022:33, paragraphs 27 and 28 and the case-law cited).
In the present case, although the referring court has relied on general principles of national private law, including the prohibition on interpreting and applying a legal provision in a manner that runs counter to accepted principles of morality, it has not stated that those principles prevent it from interpreting the applicable principles of national law in compliance with Article 6(1) of Directive 2011/7, read in conjunction with Article 6(3), and point (c) of the second subparagraph of Article 7(1) of that directive.
In those circumstances, acknowledging that a national court may refuse or reduce the fixed sum referred to in Article 6(1) of Directive 2011/7 is tantamount to allowing it to derogate from its obligation to give full effect to that provision as interpreted by the Court in the judgments of 20 October 2022,
BFF Finance Iberia
(C‑585/20, EU:C:2022:806), and of 1 December 2022,
DOMUS-SOFTWARE
(C‑370/21, EU:C:2022:947).
Having regard to the foregoing considerations, the answer to the second question is that Article 6(1) of Directive 2011/7, read in conjunction with Article 6(3), and point (c) of the second subparagraph of Article 7(1) of that directive, must be interpreted as precluding a national court from refusing or reducing the fixed sum provided for in the first provision, on the basis of the general principles of national private law, including where late payments which have arisen in the context of a single contract relate, inter alia, to amounts that are low or lower than that fixed sum.

The third question
Having regard to the answer given to the second question, there is no need to answer the third question.

Costs
Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.
On those grounds, the Court (Eighth Chamber) hereby rules:
1.
Article 6(1) of Directive 2011/7/EU of the European Parliament and of the Council of 16 February 2011 on combating late payment in commercial transactions, read in conjunction with Article 3 of that directive,
must be interpreted as meaning that, where a single contract provides for periodic payments, each of which must be made within a specified period, the fixed minimum sum of EUR 40 provided for in Article 6(1) is payable, by way of compensation for the creditor’s recovery costs, in respect of each late payment.
2.
Article 6(1) of Directive 2011/7, read in conjunction with Article 6(3), and point (c) of the second subparagraph of Article 7(1) of that directive,
must be interpreted as precluding a national court from refusing or reducing the fixed sum provided for in the first provision, on the basis of the general principles of national private law, including where late payments which have arisen in the context of a single contract relate, inter alia, to amounts that are low or lower than that fixed sum.
[Signatures]
*
Language of the case: Czech.