January 27, 2026 4 min read
The Court of Justice of the European Union ruled[1] on a preliminary question referred by the Municipal Court in Bratislava in a case involving a Slovak law firm that sued its former client for unpaid fees for legal services rendered. The CJEU judgment provides an interpretation of key concepts – enterprise, commercial transaction, and consumer – for the application of the Directive on action against late payment in commercial transactions (2011/7/EU). In practice, it is particularly useful for clarifying when an attorney may claim a lump sum for the recovery of unpaid legal fees.
The defendant is an individual who allegedly (it is disputed whether a contract was entered into at all) made a contract with a law firm for the provision of legal services for the purpose of establishing a company. Although the law firm provided a memorandum of association and other documentation, the transaction was not ultimately completed. The law firm issued an invoice, which the individual refused to pay, and sought to recover the unpaid fee for legal services through the courts. In addition to interest on late payment, it also claimed compensation for the costs associated with recovering the debt.
The essence of the dispute is whether the relationship between a lawyer and an individual who has commissioned legal services to set up a company is a business-to-business transaction or whether it is a business-to-consumer relationship. The client claimed that he was acting as a consumer, while the law firm argued that the services were provided in connection with future business activities.
This raises the practical question of whether the law firm is entitled to a flat-rate reimbursement of the costs associated with recovering the debt in the amount of EUR 40, as stipulated by Directive 2011/7/EU.
The CJEU clarified that the nature and purpose of the service provided is decisive. Even if the contract contains elements of a business transaction, because the establishment of a company is a necessary step for conducting business activities in the future, the decisive factor is whether the person is entering into the specific transaction within the scope of their business activities.
The CJEU therefore concluded that the individual who used the services of the law firm to set up a company, in which he would be a co-founder, partner and managing director was not acting as an entrepreneur but was acting as a consumer. For this reason, Directive 2011/7/EU does not apply and the law firm is not entitled to reimbursement of the flat-rate costs associated with the recovery of the debt.
[1] Judgment of the Court of Justice of the EU of 13 November 2025 in Case C-197/24, Šiľarský
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