DLT for procedural EU law
At the University of Luxembourg, we are currently conducting research on the use of Distributed Ledger Technologies (DLTs) to address the late payment problem in the European Union.
The delay of payment in commercial transactions is a pressing problem for SMEs operating in the European single market. The late payment is defined as a breach of contract whereby the creditor does not have the sum owed by the debtor at her disposal on the due date provided that she has fulfilled his obligations. The external evaluation of Directive 7/2011/EU estimates that each day of reduction in payment delays could result in 158 million euros saved by EU companies in financial costs.
We are studying the possibility of implementing a DLT system to address the problem above by streamlining the judicial claim in the late payment procedure. The proposed system include three modules. The first module hashes the invoice and appends it to a transaction in distributed ledger data structure. The second module implements a smart-contract environment where the invoice becomes the object of a function where some of the parameters are: due date, amount, recipient. The smart contract will then query an oracle to check the status of the invoice and notify the issuer and the recipient as well as the courts. In this architecture the nodes operated by the courts are considered to be trusted and to provide truthful information to the system. The third module consists of a document generator to automatically produce a notice to comply, the application for the court order of payment and eventually a court order of payment.
In light of the recent opening to digitalization and automation of certain procedures made by the EU legislators, the combination of DLT and smart contract technology, can streamline and partially automate the process of issuance of orders of payments for both national and European claims, thereby addressing the issue of late payment in commercial transactions.