Richard Bruton (Dublin North Central, Fine Gael)
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Question 1097: To ask the Minister for Enterprise, Trade and Employment if he has studied the arrangements whereby small businesses can recover bad debts through the legal system; his views on quicker, cheaper and more effective methods which are operated in other jurisdictions such as the UK; and if he will make a statement on the matter. [43768/06]

Micheál Martin (Cork South Central, Fianna Fail)
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There are well established procedures for enforcement of bad debts through the civil courts. Issues arising in relation to these procedures are a matter for my colleague Mr. Michael McDowell, T.D., Tánaiste and Minister for Justice, Equality and Law Reform.

In addition, the Bar Council of Ireland has recently introduced a Small Claims Arbitration System, on a trial basis, for claims up to €7,500, which is aimed at reducing the administration costs for all parties involved. The cost of the arbitrator is limited to €750. This scheme allows businesses to claim small amounts, which might otherwise be written off, because of the time and costs associated with court proceedings. Under the scheme, the decision of an arbitrator, selected and agreed by both sides from a trained pool of barristers, is binding.

My Department is responsible for the European Communities (Late Payment in Commercial Transactions) Regulations 2002 (S.I. No. 388 of 2002). These regulations came into operation in 2002, on foot of EU Directive No. 2000/35/EC. The Regulations apply to all commercial transactions with the following exceptions:

Contracts made before 7th August 2002

Claims for payment of late interest of less than €5

Transactions with consumers

Debts that may be subject to legislation other than these Regulations.

In accordance with the Regulations, it is an implied term of every commercial transaction that where a purchaser does not pay for goods or services by the relevant payment date, the supplier shall be entitled to interest ("late payment interest") on the amount outstanding. Interest shall apply until such time as payment is made by the purchaser. (The current interest rate is 10.5% per annum or 0.028% on a daily basis. It is calculated at 7 percentage points above the European Central Bank interest rate to its most recent main refinancing operation carried out before 1st January and 1st July each year). In the absence of any agreed payment date between the parties late payment interest falls due after 30 days has elapsed. The 2002 Regulations also provide for compensation for debt recovery costs.