Out-Law News | 23 Jun 2016 | 10:38 am | 2 min. read
Ruling on a dispute between two pharmaceuticals companies, the Court of Justice of the European Union (CJEU) said that Flemish legislation rendering invoices "null and void" unless they were drawn up in Dutch infringed EU law. Although the CJEU agreed that there were legitimate public policy reasons for the law, it went "beyond what was necessary" to give effect to those policies, it said.
"In depriving the traders concerned of the possibility of choosing freely a language which they are both able to understand for the drawing-up of their invoices and in imposing on them to that end a language which does not necessarily correspond to the one they agreed to use in their contractual relations, legislation such as that at issue in the main proceedings is likely to increase the risk of disputes and non-payment of invoices, since the recipients of those invoices could be encouraged to rely on their actual or alleged inability to understand the invoices' content in order to refuse to pay them," the court said in its judgment.
"Conversely, the recipient of an invoice drawn up in a language other than Dutch could, given that such an invoice is null and void, be encouraged to dispute its validity for that reason alone, even if it were drawn up in a language he understands," the court said.
New Valmar, a company based in Belgium's Dutch-speaking Flemish region, had begun proceedings in the Belgian courts against Italian company Global Pharmacies Partner Health (GPPH) over alleged non-payment of invoices. The invoices had been worded in Italian, and so GPPH had attempted to argue that they were null and void because they had not been drawn up in Dutch, as required of New Valmar by the Flemish legislation.
Although New Valmar supplied GPPH with a Dutch translation of the invoices during the course of the proceedings, the Belgian courts have continued to hold them void by virtue of the legislation. The CJEU heard that the purpose of the law, which applies only to invoices and not to other forms of contractual documentation, was to ensure that local tax authorities were able to check the documents as well as to promote the general use of Dutch when drafting official documents.
The Belgian government attempted to argue that the legislation could not be considered an illegal restriction on the free movement of goods as the parties were still able to contract in the language of their choice. The CJEU disagreed, finding that even limiting the language restrictions to invoices only created "legal uncertainty [which produces] restrictive effects on trade".
The CJEU also referenced its advocate general's opinion, given to the court on an advisory basis ahead of the main proceedings. The advocate general had said that a Dutch language requirement which also "permitted an authentic version of [the invoice] to be drawn up in a language known to the parties concerned" would be "less prejudicial to the free movement of goods" than the requirement actually in force.
"In light of [this], it must be held that legislation such as that at issue in the main proceedings goes beyond what is necessary to attain the objectives referred to in ... this judgment and cannot therefore be regarded as proportionate," the CJEU said.