Published: 2003-10-01
Key Benefits:
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
LATE PAYMENT OF COMMERCIAL DEBTS
(INTEREST) ACT 2003
Principal Act
Act. No. 2003-14 Commencement 1.10.2003
Assent 31.7.2003
Amending
enactments
Relevant current
provisions
Commencement
date
LN. 2013/050 Long title ss. 1(3) & (4), 2-15 & Sch. 16.3.2013
2014/097 ss. 3(1) & 9(2) 5.6.2014
EU Legislation/International Agreements involved:
Directive 2000/35/EC
Directive 2011/7/EU
English sources:
None cited
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
ARRANGEMENT OF SECTIONS
Section
1. Title, commencement and interpretation.
2. Scope.
3. Obligation to pay interest.
4. Period for which interest for late payment runs.
5. Public Authority: period for which interest runs.
7. Extension of time.
8. Ability to agree extension of periods.
9. Procedure for acceptance or verification of conformity.
10. Payments due by instalments.
11. Compensation for recovery of costs.
12. Jurisdiction of Supreme Court.
13. Powers of the Supreme Court.
14. Unenforceability of terms.
15. Retention of title.
16. Transparency and publicity of rights.
17. Establishment of codes.
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
AN ACT TO TRANSPOSE INTO THE LAW OF GIBRALTAR
EUROPEAN PARLIAMENT AND COUNCIL DIRECTIVE 2000/35 ON
COMBATING LATE PAYMENT IN COMMERCIAL TRANSACTIONS
AS RECAST BY DIRECTIVE 2011/7/EU OF THE EUROPEAN
PARLIAMENT AND OF THE COUNCIL ON COMBATING LATE
PAYMENT IN COMMERCIAL TRANSACTIONS.
Title, commencement and interpretation.
1.(1) This Act may be cited as the Late Payment of Commercial Debts
(Interest) Act 2003.
(2) This Act comes into operation on the day appointed by the Minister by
notice in the Gazette; and different days may be appointed for different
descriptions of contract or for other different purposes.
A notice under this subsection may specify a description of contract by
reference to any feature of the contract (including the parties).
(3) In this Act–
“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;
“applicable interest rate” means for the first 6 months of any year the
statutory interest prevailing on 1 January of that year and for the
second 6 months of any year the statutory interest prevailing on 1
July of that year;
“commercial transactions” means transactions between undertakings or
between undertakings and public authorities which lead to the
supply of goods or the provision of services for remuneration;
“debt” means any amount due from time to time under a relevant
contract;
“Directive” means Directive 2011/7/EU of the European Parliament and
of the Council on combating late payment in commercial
transactions, as the same may be amended from time to time;
“grossly unfair term” means any contractual term or practice−
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
(a) that is determined by the Supreme Court of Gibraltar to be
grossly unfair taking into account all the circumstances of any
case, including−
(i) any gross deviation from good commercial practice,
contrary to good faith and fair dealing,
(ii) the nature of the product or the service, and
(iii) whether the debtor has any objective reason to deviate
from the statutory interest, from the payment period as
provided for in sections 4(2), 6, 7 and 8 or from the fixed
compensation as provide for in section 11;
(b) that excludes interest for late payment;
(c) that excludes compensation for recovery of costs as provided
for in section 11,
and an agreement shall be deemed to be “grossly unfair” where it
includes such a term or practice;
“interest for late payment” means statutory interest or, subject to sections
13 and 14, interest at a rate agreed upon between undertakings;
“interest payment date” means, subject to the provisions of section 11,
which provisions shall apply in the circumstances defined in that
section, the date calculated in accordance with the provisions of
section 4 in the case of a relevant contract as between undertakings
and as determined in accordance with section 5 in the case of a
commercial transaction in which the debtor is a public authority;
“late payment” means payments that are not made within the contractual
or statutory period of payment under a relevant contract and where
the conditions laid down in section 3 are satisfied;
“Minister” means the Minister with responsibility for Commercial
Affairs;
“public authority” means any contracting authority as specified in
regulation 3 of the Procurement (Public Contracts) Regulations
2012, regardless of the subject or value of the contract;
“relevant contract” means any contract to which this Act applies;
“representative body” means an organisation falling within section 14(a)
or (b);
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
“retention of title” means the contractual agreement according to which
the seller retains title to the goods in question until the price has
been paid in full;
“statutory interest” means simple interest for late payment at the rate of
8% above the base rate set by the Gibraltar Savings Bank for
savings on the day the debt became due; if the base rate changes
thereafter, the Reference Rate shall also change to remain 8%
above the base rate; and
“undertaking” means any organisation, other than a public authority,
acting in the course of its independent economic or professional
activity and includes where the activity is carried out by a single
person.
(4) Any term used but not defined shall have the meaning given to it in
the Directive.
Scope.
2. This Act does not apply to debts that are subject to insolvency
proceedings instituted against the debtor, including proceedings aimed at
debt restructuring.
Obligation to pay interest.
3.(1) It shall be an implied term of any contract governing any commercial
transaction that the creditor shall be paid interest for late payment, without
the necessity of a reminder, at the applicable interest rate as from the interest
payment date on any debt if such contract is−
(a) between undertakings; or
(b) subject to sections 5, 6, 7 and 8, a commercial transaction in
which the debtor is a public authority;
subject to the creditor having fulfilled its contractual and legal obligations
under the relevant contract and not having received the debt on time, in the
latter case, subject to the delay not due being due to the debtor.
(2) Time shall be of the essence for the purposes of the implied term set
out in subsection (1).
Period for which interest for late payment runs.
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
4.(1) Interest for late payment shall be due and payable to the creditor on
the debt if the relevant contract is between undertakings−
(a) subject to subsection (2), in the event that the date of payment
of the sum due is fixed in the relevant contract, on the day next
immediately following that date; or
(b) in the event that the date of payment of the sum due is not fixed
in the relevant contract, on the expiry of any of the following
time limits−
(i) 30 calendar days immediately following the date of
receipt by the debtor of the invoice or an equivalent
request for payment;
(ii) in the event that the date of receipt of the invoice or an
equivalent request for payment is uncertain, 30 calendar
days immediately following the date of receipt of the
goods or services supplied by the creditor to the debtor;
(iii) in the event that the debtor receives the invoice or an
equivalent request for payment earlier than the goods or
the services supplied by the creditor to the debtor, 30
calendar days immediately following the date of receipt
of the goods or services supplied by the creditor to the
debtor;
(iv) subject to section 9, in the event that the relevant contract
or an applicable law provides a procedure of acceptance
or verification, by which conformity of the goods or
services with the relevant contract is to be ascertained
and if the debtor receives the invoice or an equivalent
request for payment earlier or on the date on which such
acceptance or verification takes place, 30 calendar days
immediately following that date;
(2) The period for payment fixed in any relevant contract shall not
exceed 60 calendar days, unless otherwise expressly agreed in the relevant
contract and provided that such agreement is not grossly unfair to the
creditor.
Public Authority: period for which interest runs.
5. In a relevant contract in which the debtor is a public authority−
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
(a) the date of receipt of the invoice shall not be made subject to
any contractual agreement between the debtor and the creditor;
and
(b) the creditor shall be entitled to interest for late payment on the
debt on expiry of the period defined in sections 6, 7 and 8.
Public Authority: period for payment.
6. Subject to section 7, in a relevant contract in which the debtor is a public
authority the period for payment shall not exceed any of the time limits
provided for in section 4(b)(i) to (iv) inclusive.
Extension of time.
7.(1) The time limits provided in section 6 shall be extended to 60
calendar days in the following cases−
(a) any public authority which carries out economic activities of an
industrial or commercial nature by offering goods or services
on the market and which is subject, as a public undertaking, to
the transparency requirements laid down in the Public Finance
(Control and Audit) Act;
(b) public entities providing healthcare which are duly recognised
for that purpose inclusive of the Gibraltar Health Authority.
(2) The Minister shall ensure that by 16 March 2018, a report is sent to
the European Commission in accordance with the second paragraph of
Article 4 of the Directive.
Ability to agree extension of periods.
8. The period for payment fixed in a relevant contract shall not exceed the
time limits provided for in section 6 unless otherwise expressly agreed in the
relevant contract and provided such other period agreed is objectively
justified in the light of the particular nature or features of the relevant
contract in question, and that it in any event does not exceed 60 calendar
days.
Procedure for acceptance or verification of conformity.
9.(1) In the event that a procedure of acceptance or verification, by which
the conformity of the goods or services with the relevant contract is
provided for in the relevant contract, the maximum duration of that
procedure shall not exceed 30 calendar days from the date of receipt of the
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
goods or services, unless otherwise expressly agreed in the relevant contract
and provided that it is not grossly unfair to the creditor.
(2) Where the debtor is a public authority any extension of the 30
calendar days referred to in subsection (1) must be expressly agreed in the
relevant contract and any tender documents.
Payments due by instalments.
10.(1) Notwithstanding any other provision of this Act and unless
otherwise restricted by any applicable law, the parties to any relevant
contract may agree a payment schedule providing for payments under any
relevant contract to be made by instalments.
(2) Any instalment which is not paid on its due date, shall attract the
interest and compensation provided for in this Act, and shall be calculated
solely on the basis of the overdue amounts.
Compensation for recovery of costs.
11.(1) Immediately that interest for late payment becomes payable in a
commercial transaction the creditor shall be entitled in addition to late
payment interest on the outstanding debt to the following fixed sums−
(a) for a debt not exceeding £999.99, the sum of £40;
(b) for a debt between £1000.00 and £9999.99, the sum of £70.00;
(c) for a debt of £10,000.00 or more, the sum of £100.00,
which sums are payable forthwith without any demand being made as
compensation for the recovery costs of the creditor.
(2) In addition to the compensation recoverable under subsection (1), the
creditor shall be entitled to recover from the debtor reasonable
compensation for any recovery costs exceeding the amounts provided for in
subsection (1), including the cost of instructing lawyers or employing a debt
collection agency, that are incurred due to late payment by the debtor.
Jurisdiction of Supreme Court.
12. The Supreme Court of Gibraltar shall have jurisdiction to determine
whether any term of or practice under a relevant contract is a grossly unfair
term on the application of any creditor under a relevant contract or of a
representative body as provided for in section 14.
Powers of the Supreme Court.
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
13.(1) If the Supreme Court of Gibraltar determines that any term of or
practice relating to−
(a) the date or period for payment;
(b) the rate of interest for late payment; or
(c) the compensation for the recovery of costs,
under a relevant contract is a grossly unfair term as regards the creditor, the
court may make a declaration to that effect and may either grant an
injunction against the debtor restraining him from using or relying on that
offending term or practice or it may grant an award of damages and costs to
be paid by the debtor.
(2) In the case of an application by a representative body under section
14, the effect of a determination by the court shall be that the unfair term or
practice shall cease to be capable of continued use in any contract governing
any commercial transaction and shall be unenforceable if used thereafter.
Unenforceability of terms.
14. For the purposes of sections 12 and 13−
(a) organisations officially recognised as representing
undertakings, or
(b) organisations with a legitimate interest in representing
undertakings,
may, in accordance with any applicable law, apply to the Supreme Court
under section 13 on the grounds that contractual terms or practices are
grossly unfair, so as to prevent their continued use.
Retention of title.
15. The Sale of Goods Act shall continue to apply to any question regarding
the retention of title in commercial transactions for the supply of goods.
Transparency and publicity of rights.
16. The Minister shall ensure transparency of the rights and obligations
under this Act, which shall include making the applicable statutory interest
publicly available including, where appropriate in the opinion of the
Minister, using professional publications, promotion campaigns or any other
Late Payment of Commercial Debts (Interest)
© Government of Gibraltar (www.gibraltarlaws.gov.gi)
2003-14
functional means to increase awareness of the remedies for late payment
among undertakings.
Establishment of codes.
17. The Minister may encourage the establishment of prompt payment codes
which set out clearly defined payment time limits and a proper process for
dealing with any payments that are in dispute, or any other initiatives that
tackle the crucial issue of late payment and contribute to a culture of prompt
payment in order to ensure the proper functioning of the market and
competitiveness.