CJEU: Public institutions have only 30 days to settle their invoices

The individual Member States of the European Union ought to strive towards a state of affairs in which their public institutions settle payments due to private enterprises within 30 days or, in certain cases, within 60 days. This is the essence of the judgment handed down by the Court of Justice of the European Union in a recent Italian case. Seen in this light, compliance of applicable Polish laws with EU law comes into question.

On Tuesday, 28 January 2020, the Court of Justice of the European Union handed down a judgment of considerable relevance for public institutions and for business enterprises dealing with them. “We have just now witnessed the coming into force of the new Polish laws designed to counteract excessive delays in payments in commercial transactions, and the Court of Justice is now providing guidance on the role of Member State in enforcing observance of payment deadlines by their public authorities”, comments Bernadeta Kasztelan-Świetlik, partner in GESSEL. “As it turns out, enactment of laws itself is not enough; the EU Member States must ensure that their public institutions do not abide payment arrears vis a vis private entities”, she adds.

What did the Court of Justice of the European Union consider ?

In this case the Court of Justice addressed the complaint by the European Commission alleging violation by Italy of art. 4.3 and 4 of the Directive on combating late payment in commercial transactions, whereunder the deadline for payment of invoices issued to public entities by suppliers of goods and services may not exceed 30 days, or 60 days in the case of entities from the health care sector. The European Commission had lodged this complaint at the request of various Italian enterprises and of an Italian business association; as the Commission saw it, the Italian public authorities were persistently and significantly settling for business transactions with private entities past the applicable deadlines. Data collated on 22,000 Italian public entities and approximately 13 million invoices received by them indicates that, in the first half of 2016, the average time of payment was 50 days (or 47 days, if the weighted average is considered); also, for all of 2016, the average delay in payment was 10 days, and 8 days for health care entities (…)

The full article (in Polish) is available at www.prawo.pl