The late payments directive

One of the functions to which I am giving importance is that of securing the transposition and implementation of particular European Union directives that could be of benefit to sectors of the Maltese and Gozitan community. Similarly, I try my best to seek the redress of other rules that could have an adverse effect.

After being approached by a number of members of the business community, especially small business operators, I have looked into the way in which the Maltese government is implementing EU Directive 2000/35/EC, commonly known as the Late Payments Directive.

The directive aims at tackling the problem of late payments in commercial transactions and which in many member states occurs primarily in the public sector. The text applies the principle of "freedom of contracting", that is the right of the contracting partners to agree on specific payment dates and on the interest to be paid in the case of late payments. Should such an agreement be deemed as biased towards the debtor, which many times is a public authority, the directive allows it to be dissolved and empowers the creditor to lodge a claim for damages.

The most important part of the directive is that relating to payment in cases where the contract does not specify them, thus encouraging the inclusion of such clauses. If no date is set in the contract, the directive stipulates that interest becomes payable 30 days after the receipt of the goods or services. The interest rate is set at the sum of the European Central Bank's main refinancing operation plus, at least, seven percentage points.

The directive allows member states to apply certain conditions to particular contracts. Nevertheless, the credit period cannot exceed 60 days.

As I said, a number of members of the commercial community have asked me to seek clarifications on the reason why this directive is not yet being properly implemented in Malta despite the fact that it is part of the acquis.

Currently, the local transposition of the directive excludes many of the smaller enterprises from its original scope.

I asked the European Commission for its official opinion on this issue. The Commission contacted the Maltese government and sought more information. On October 15, 2004, the Maltese government replied that national legislation would be amended to make it conform to the dispositions of the directive.

The European Commission examined the national legislation and concluded that the transposition does not reflect the scope of the directive. Thus, the Commission said it is keeping up the pressure on the Maltese authorities to seek a timely and adequate transposition of the directive.

The problem of late payments is not unique to Malta, though a number of studies, including the European Payments Habits Survey, conclude that it is more a characteristic of southern European member states.

There are a number of enterprises which are facing a problem in cashing in directly from the government. Medicine suppliers and building contractors are just an example. The government is not exempt from this directive.

Mr Muscat is a Labour member of the European Parliament.

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