Paris, 2019-02-08

In France, debt collection and interest on unpaid invoices are mostly regulated by the provisions of article L441-6 of the Commercial Code as well as by additional rules which apply to judicial decisions and rules of civil procedure.

Regarding the wording of the invoices, article L441-3 of the Commercial Code stipulates that an invoice must mention payment date, rate of penalties chargeable passed the due date as well as the flat rate of recovery costs for late payment.

Nevertheless, the parties’ freedom for establishing invoices is limited by article L441-6 of the Commercial Code which is public order and which underlines the following:

• The Parties have agreed that the applicable payment period cannot exceed 45 days end of the month or 60 days from the date of issue of the invoice,
• The interest rate for late fees shall not be lower than 3 times the legal interest rate, a figure corresponding to 0.98% in 2018. Except as otherwise provided, this legal interest rate corresponds to the rate applied by the European Central Bank for its most recent refinancing operation increased by 10 points. In 2018, the ECB rate was 0%, therefore the rate to apply is 10%,
• Each and every professional with late payment is indebted, ipso jure, towards the creditor of a flat rate allowance corresponding to recovery costs which amount is set to EUR 40 as specified by decree,
• A compensatory allowance may be granted by the judge in case the expenses incurred – for example, fees and expenses of a collection company or attorney fees by means of a fixed or hourly rate – exceed EUR 40 per invoice.

The “Court of cassation” has considered that penalties for non-payment of invoices as well as debt collection regulated by article L 441-6 of the Commercial Code shall apply automatically, without reminder or necessity to mention them under the General conditions of the contracts (Cass. com., march, 3rd 2009, n° 07-16.527).

The above-mentioned penalties and fees shall, therefore, be paid as part of the amicable debt recovery.

It is observed that the issue of the implementation of these provisions to the international contract has not been determined by the French law.

In the framework of the judicial recovery of the debt, judges apply automatically late fees as well as the flat rate recovery cost mentioned on article L 441-6 of the Commercial Code, even if they are not mentioned under the General conditions of the contracts or if they were not agreed between the Parties.

Requests corresponding to a compensatory allowance are, in practice, hardly ever claimed by the debtor. Nevertheless, the Court of Appeal of Paris confirmed the order of the judge (interim measures) from the Paris Court of First Instance who held that the creditor is entitled to get an allowance which amount corresponds to the total attorney fees – fixed or hourly rate – spent for the recovery of the claim (CA Paris, June 9th 2016, RG 16-16967).

Finally, under articles 695 and following of the French Civil Procedure Code, the jurisdiction before which the request for recovery of an unpaid invoice has been seized condemns the debtor to pay all court costs, i.e., court fees, bailiff’s fees as well as a flat fee which the amount is decided at the sole discretion of the judge. An amount which is intended to cover the total amount of attorney fees spent on the case.

Author: Marc Olivier-Martin, Avocat au barreau de Paris

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