How a 'non-commercial' contract can still qualify as a commercial transaction and be subject to statutory commercial interest
Statutory commercial interest is substantially higher than the ordinary statutory interest. Whether statutory commercial interest is due, depends on the qualification of the relationship between the parties as a commercial contract under Article 6:119a DCC. In its decision of 16 February 2024, the Supreme Court decided that 'commercial contract', must be interpreted in line with the notion of 'commercial transaction' in Directive 2011/7/EU. Relationships that are usually not perceived as commercial contracts may therefore trigger an obligation to pay statutory commercial interest after all.
On 16 February 2024 the Dutch Supreme Court decided a dispute about, among other things, statutory commercial interest and the question whether the relationship between the parties involved qualifies as a commercial contract under Article 6:119a of the Dutch Civil Code (DCC) (ECLI:NL:HR:2024:241). Qualification as a commercial contract implies that the compensation for delay in payment of a sum of money is fixed at the statutory commercial interest rate. The statutory commercial interest rate is considerably higher (now 12.5%) than the ordinary statutory interest rate (now 7%).
The dispute was between a milk cooperative (DOC Kaas) and several of its members (dairy farmers) that had cancelled their membership of the cooperative. A cooperative is a particular type of association whose object is meeting the needs of its members. In the case of a milk cooperative, members offer their milk to the cooperative in return for a fee, the milk money. The cooperative in turn runs a facility for the processing of milk into dairy products and sells these products to supermarkets and the like. The members of a cooperative are generally also its owners.
The legal relationship between DOC Kaas and the dairy farmers is governed by the cooperative's articles of association, by-laws and terms of delivery derived from them.
Following the cancellation of their membership, DOC Kaas purported to have a claim against those dairy farmers and therefore set off the milk money that it owes those dairy farmers against its claim. The dairy farmers contested the claim and were vindicated by both the District Court and the Cour of Appeal. DOC Kaas should have paid the milk money instead of setting it off against its unfounded claim. The dairy farmers thus claimed payment of their milk arrears plus statutory commercial interest. DOC Kaas argued that ordinary statutory interest was due rather than commercial interest. It argued that the legal relationship that formed the basis for the delivery of the milk and the payment of the milk money did not qualify as a commercial transaction.
The District Court and subsequently the Court of Appeal ruled against the cooperative. The Supreme Court upheld the Court of Appeal's decision, finding that Article 6:119a DCC describes a commercial contract as:
"[…] an agreement for consideration which obligates one or more parties to deliver or to do something and which is entered into between one or more natural persons acting in the exercise of a profession or business, or legal entities."
The Supreme Court reminded the reader that Article 6:119a DCC was introduced to implement Directive 2000/35/EC (now Directive 2011/7/EU) on combating late payment in commercial transactions. Article 1(2) of Directive 2011/7/EU states that the directive applies to all payments made as remuneration for commercial transactions. According to Article 2(1) of Directive 2011/7/EU, commercial transactions are transactions between undertakings, or between undertakings and public authorities, which lead to the delivery of goods or the provision of services for remuneration.
The Supreme Court found that the concept of 'commercial transactions' is to be interpreted autonomously and uniformly. Although not explicitly mentioned in the Supreme Court's judgment, this follows from the requirements of the application of both EU law and the principle of equality. Referring to the European Court of Justice's decision of 1 December 2022, C-419/21, ECLI:EU:C:2022:948, no. 20 and 23, the Supreme Court found that the concept of 'commercial transactions' must also be interpreted broadly and does not necessarily coincide with the concept of 'contract'. For a transaction to qualify as a commercial transaction:
- it must have been carried out between undertakings or between undertakings and public authorities; and
- the transaction must lead to the supply of goods or the provision of services for remuneration.
According to the Supreme Court, the Court of Appeal therefore had to assess whether the amounts payable by DOC Kaas to the dairy farmers were based on a commercial transaction within the meaning of Article 2(1) of Directive 2011/7/EU and therefore on a commercial contract within the meaning of Article 6:119a DCC.
The Court of Appeal ruled that the claims related to milk money, and thus to payment for the milk delivered by the dairy farmers (natural persons acting in the exercise of a profession or business, or legal entities) to DOC Kaas under the terms of delivery. According to the Supreme Court, this meant that the conditions for qualifying as a commercial transaction, and therefore as a commercial contract within the meaning of Article 6:119a DCC, had been met. It therefore decided that the Court of Appeal' decision did not display an error of law.
This case clarifies that 'commercial contract' under Article 6:119a DCC must be interpreted in line with the notion of 'commercial transaction' in Directive 2011/7/EU.
Consequently, legal relationships that are usually perceived as internal because they are not based on a contract but rather on articles of association, by-laws or delivery terms derived from them could still be classified as commercial transactions and therefore be subject to statutory commercial interest.
