From quasi-immunity to liability in principle
The new Book 6 of the Belgian Civil Code[1] fundamentally alters the legal position of auxiliaries (“hulppersonen” in Dutch / ”auxiliaires” in French) regarding their extra-contractual liability. An auxiliary person (“A”) assists a contractual debtor (“B”) in the performance of the latter’s contractual obligations vis-à-vis a principal (“C”). While A and B on the one hand and B and C on the other hand are bound by contract, it is important to note that there is no contractual relationship between A and C. Typical examples of auxiliaries are company directors, employees, subcontractors, mandate holders and public officials.
Traditionally, Belgian case law took the view that an auxiliary (“A”) could not be held liable towards the principal (“C”) on an extra-contractual basis for a breach of the head contract (between “B” and “C”), unless under very specific and narrowly defined circumstances, being:
(i) When (a) the actions or inactions of the auxiliary qualify as a failure in the performance of the contractual obligations of the debtor (“B”) vis-à-vis the principal (“C”); and (b) such actions or inactions of the auxiliary are held to be a criminal offence by a court; or
(ii) When (a) the actions or inactions of the auxiliary not only qualify as a failure in the performance of the contractual obligations of the debtor (“B”) vis-à-vis the principal (“C”) but also qualify as a failure to observe a general duty of care or a specific regulatory obligations, i.e. a “mixed fault”; and (b) the auxiliary’s (“A’s”) fault has caused damage other than damage attributable to the poor performance of the contractual obligations of the debtor (“B”) vis-à-vis the principal (“C”), i.e. “non-contractual damage”.
In practice, the above circumstances sub (i) and (ii) are often not met, leading to “quasi-immunity” of the auxiliary (“A”) vis-à-vis extra-contractual claims from the principal (“C”).
Abandoning this position, the new Book 6 provides the very opposite by stating that the principal (“C”) has an extra-contractual claim against the auxiliary (“A”) of the principal’s debtor (“B”) in case the auxiliary (“A”) commits an extra-contractual breach in the context of its performance of the debtor’s (“B’s”) contractual obligations towards the principal (“C”).
The underlying idea of this new approach is to broaden the claim possibilities of the principal (“C”), as a victim of a contractual non-performance, in particular where a contractual claim by the principal (“C”) against its direct contracting party/debtor (“B”) is not possible or is ineffective, e.g. in the case of bankruptcy of the debtor (“B”).
Defences available to the auxiliary
The new Book 6 of the Belgian Civil Code takes into account the specific contractual setting in which the principal (“C”) could make an extra-contractual claim against the auxiliary (“A”).
More specifically, the auxiliary (“A”) can invoke against the principal (“C”) the defences that the debtor (“B”) can invoke against the principal (“C”) arising from (i) the head contract (between “B” and “C”, although the auxiliary (“A”) is not a contracting party to such head contract); (ii) the legislation on specific contracts as applicable to such head contract; and (iii) the special statutes of limitation rules as applicable to such head contract.
Furthermore, in principle, the auxiliary (“A”) can invoke against the principal (“C”) the defences that the auxiliary (“A”) can invoke against the debtor (“B”) arising from (i) the subcontract (between “A” and “B”, although the principal (“C”) is not a contracting party to such subcontract); (ii) the legislation on specific contracts as applicable to such subcontract; and (iii) the special statutes of limitation rules as applicable to such subcontract.
By law, the auxiliary cannot invoke the applicability of the contractual defences from the head contract, nor from the subcontract, in its defence against a direct extra-contractual liability claim for contractual damage:
(i) if the damage results in an impairment of the physical or psychological integrity; or
(ii) if the damage results from a fault committed by the auxiliary with the intent to cause harm, i.e. a "fraudulent fault".
Non-mandatory law
The statutory provisions on extra-contractual liability of the auxiliary are, as a general rule, non-mandatory in nature, meaning that the parties can derogate from it by contract.
It can be expected that it will become practice for the parties to exclude the extra-contractual liability of each other’s auxiliaries (“A”) vis-à-vis the principal (“C”) in the head contract (between “B” and “C”).
On the other hand, legal authors have expressed doubts over the ability to validly exclude fully the extra-contractual liability of an auxiliary (“A”) vis-à-vis the principal (“C”) in the subcontract (between “A” and “B”) by stating in the subcontract that the liability under the subcontract is contractual only, thereby fully excluding the extra-contractual liability between A and B.
Directors of a Belgian company
A director can be an auxiliary of its company, being a debtor for the performance of contractual obligations vis-à-vis a principal (e.g. a customer of the company). As a result, directors are subject to the provisions of Book 6 Civil Code on auxiliaries.
The provisions of Book 6 Civil Code may[2] need to be combined with the specific provisions under the Belgian Code on Companies and Associations, including (i) the principle of marginal control / limited judicial review of the director’s actions; (ii) the financial caps on director’s liability for incidental minor shortcomings by a director for its management duties; and (iii) the prohibition to go beyond the statutory limitations of liability through contract, the articles of association or a unilateral statement.
Employees subject to Belgian law
An employee can be an auxiliary of its employer, being a debtor for the performance of contractual obligations vis-à-vis a principal (e.g. a supplier of the employer). Accordingly, employees are covered by the provisions of Book 6 Civil Code on auxiliaries.
However, these provisions of Book 6 Civil Code are to be combined with the specific mandatory protection granted under the Belgian Employment Contracts Act. Pursuant to this Act, employees can only be held liable extra-contractually if the aggrieved principal can establish that the employee-auxiliary committed a fault that was (i) minor but frequent; (ii) gross; or (iii) fraudulent.
Entry into effect of Book 6 and some initial practical recommendations on auxiliaries
Book 6 Civil Code enters into effect on 1 January 2025 in relation to facts occurring as of 1 January 2025. As a result, the extra-contractual liability of auxiliaries vis-à-vis principals fundamentally alters as of said date. It is reasonable to argue that the new statutory regime on extra-contractual liability of auxiliaries also applies to facts occurring as of 1 January 2025 pursuant to contracts concluded prior to 1 January 2025, but future case law will need to confirm this.
Parties can prepare for this change by carefully drafting limitation and exclusion of liability clauses in favour of their auxiliaries and including these clauses in future contracts, having effect from 1 January 2025 and beyond. Furthermore, existing contracts may need to be reviewed and amended, if applicable beyond 31 December 2024. In addition, directors could seek specific protection under a hold harmless commitment. Obviously, such contractual mechanisms all need to observe applicable law, in particular as regards validity.
Finally, it may be worthwhile to verify the terms and conditions of the insurance contracts currently in place (public liability insurance, D&O insurance, etc.) and determine whether and how these would apply to auxiliaries’ actions and inactions as from 1 January 2025.
Disclaimer: This newsletter is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. This newsletter is based on legislation and/or draft legislation as publicly available on 1 September 2024. AKD BV does not intend to create an attorney-client relationship by offering this information and anyone's review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention.
[1] Belgian Act of Parliament dated 7 February 2024, introducing Book 6 "Extra-Contractual Liability" of the Civil Code, published in the Belgian State Gazette of 1 July 2024.
[2] The precise liability provisions applicable to a person appointed as a director depend on the capacity in which such person is claimed to have committed an extra-contractual breach. Such analysis goes beyond the scope of this general newsletter.
From quasi-immunity to liability in principle
The new Book 6 of the Belgian Civil Code[1] fundamentally alters the legal position of auxiliaries (“hulppersonen” in Dutch / ”auxiliaires” in French) regarding their extra-contractual liability. An auxiliary person (“A”) assists a contractual debtor (“B”) in the performance of the latter’s contractual obligations vis-à-vis a principal (“C”). While A and B on the one hand and B and C on the other hand are bound by contract, it is important to note that there is no contractual relationship between A and C. Typical examples of auxiliaries are company directors, employees, subcontractors, mandate holders and public officials.
Traditionally, Belgian case law took the view that an auxiliary (“A”) could not be held liable towards the principal (“C”) on an extra-contractual basis for a breach of the head contract (between “B” and “C”), unless under very specific and narrowly defined circumstances, being:
(i) When (a) the actions or inactions of the auxiliary qualify as a failure in the performance of the contractual obligations of the debtor (“B”) vis-à-vis the principal (“C”); and (b) such actions or inactions of the auxiliary are held to be a criminal offence by a court; or
(ii) When (a) the actions or inactions of the auxiliary not only qualify as a failure in the performance of the contractual obligations of the debtor (“B”) vis-à-vis the principal (“C”) but also qualify as a failure to observe a general duty of care or a specific regulatory obligations, i.e. a “mixed fault”; and (b) the auxiliary’s (“A’s”) fault has caused damage other than damage attributable to the poor performance of the contractual obligations of the debtor (“B”) vis-à-vis the principal (“C”), i.e. “non-contractual damage”.
In practice, the above circumstances sub (i) and (ii) are often not met, leading to “quasi-immunity” of the auxiliary (“A”) vis-à-vis extra-contractual claims from the principal (“C”).
Abandoning this position, the new Book 6 provides the very opposite by stating that the principal (“C”) has an extra-contractual claim against the auxiliary (“A”) of the principal’s debtor (“B”) in case the auxiliary (“A”) commits an extra-contractual breach in the context of its performance of the debtor’s (“B’s”) contractual obligations towards the principal (“C”).
The underlying idea of this new approach is to broaden the claim possibilities of the principal (“C”), as a victim of a contractual non-performance, in particular where a contractual claim by the principal (“C”) against its direct contracting party/debtor (“B”) is not possible or is ineffective, e.g. in the case of bankruptcy of the debtor (“B”).
Defences available to the auxiliary
The new Book 6 of the Belgian Civil Code takes into account the specific contractual setting in which the principal (“C”) could make an extra-contractual claim against the auxiliary (“A”).
More specifically, the auxiliary (“A”) can invoke against the principal (“C”) the defences that the debtor (“B”) can invoke against the principal (“C”) arising from (i) the head contract (between “B” and “C”, although the auxiliary (“A”) is not a contracting party to such head contract); (ii) the legislation on specific contracts as applicable to such head contract; and (iii) the special statutes of limitation rules as applicable to such head contract.
Furthermore, in principle, the auxiliary (“A”) can invoke against the principal (“C”) the defences that the auxiliary (“A”) can invoke against the debtor (“B”) arising from (i) the subcontract (between “A” and “B”, although the principal (“C”) is not a contracting party to such subcontract); (ii) the legislation on specific contracts as applicable to such subcontract; and (iii) the special statutes of limitation rules as applicable to such subcontract.
By law, the auxiliary cannot invoke the applicability of the contractual defences from the head contract, nor from the subcontract, in its defence against a direct extra-contractual liability claim for contractual damage:
(i) if the damage results in an impairment of the physical or psychological integrity; or
(ii) if the damage results from a fault committed by the auxiliary with the intent to cause harm, i.e. a "fraudulent fault".
Non-mandatory law
The statutory provisions on extra-contractual liability of the auxiliary are, as a general rule, non-mandatory in nature, meaning that the parties can derogate from it by contract.
It can be expected that it will become practice for the parties to exclude the extra-contractual liability of each other’s auxiliaries (“A”) vis-à-vis the principal (“C”) in the head contract (between “B” and “C”).
On the other hand, legal authors have expressed doubts over the ability to validly exclude fully the extra-contractual liability of an auxiliary (“A”) vis-à-vis the principal (“C”) in the subcontract (between “A” and “B”) by stating in the subcontract that the liability under the subcontract is contractual only, thereby fully excluding the extra-contractual liability between A and B.
Directors of a Belgian company
A director can be an auxiliary of its company, being a debtor for the performance of contractual obligations vis-à-vis a principal (e.g. a customer of the company). As a result, directors are subject to the provisions of Book 6 Civil Code on auxiliaries.
The provisions of Book 6 Civil Code may[2] need to be combined with the specific provisions under the Belgian Code on Companies and Associations, including (i) the principle of marginal control / limited judicial review of the director’s actions; (ii) the financial caps on director’s liability for incidental minor shortcomings by a director for its management duties; and (iii) the prohibition to go beyond the statutory limitations of liability through contract, the articles of association or a unilateral statement.
Employees subject to Belgian law
An employee can be an auxiliary of its employer, being a debtor for the performance of contractual obligations vis-à-vis a principal (e.g. a supplier of the employer). Accordingly, employees are covered by the provisions of Book 6 Civil Code on auxiliaries.
However, these provisions of Book 6 Civil Code are to be combined with the specific mandatory protection granted under the Belgian Employment Contracts Act. Pursuant to this Act, employees can only be held liable extra-contractually if the aggrieved principal can establish that the employee-auxiliary committed a fault that was (i) minor but frequent; (ii) gross; or (iii) fraudulent.
Entry into effect of Book 6 and some initial practical recommendations on auxiliaries
Book 6 Civil Code enters into effect on 1 January 2025 in relation to facts occurring as of 1 January 2025. As a result, the extra-contractual liability of auxiliaries vis-à-vis principals fundamentally alters as of said date. It is reasonable to argue that the new statutory regime on extra-contractual liability of auxiliaries also applies to facts occurring as of 1 January 2025 pursuant to contracts concluded prior to 1 January 2025, but future case law will need to confirm this.
Parties can prepare for this change by carefully drafting limitation and exclusion of liability clauses in favour of their auxiliaries and including these clauses in future contracts, having effect from 1 January 2025 and beyond. Furthermore, existing contracts may need to be reviewed and amended, if applicable beyond 31 December 2024. In addition, directors could seek specific protection under a hold harmless commitment. Obviously, such contractual mechanisms all need to observe applicable law, in particular as regards validity.
Finally, it may be worthwhile to verify the terms and conditions of the insurance contracts currently in place (public liability insurance, D&O insurance, etc.) and determine whether and how these would apply to auxiliaries’ actions and inactions as from 1 January 2025.
Disclaimer: This newsletter is intended to provide information of general interest to the public and is not intended to offer legal advice about specific situations or problems. This newsletter is based on legislation and/or draft legislation as publicly available on 1 September 2024. AKD BV does not intend to create an attorney-client relationship by offering this information and anyone's review of the information shall not be deemed to create such a relationship. You should consult a lawyer if you have a legal matter requiring attention.
[1] Belgian Act of Parliament dated 7 February 2024, introducing Book 6 "Extra-Contractual Liability" of the Civil Code, published in the Belgian State Gazette of 1 July 2024.
[2] The precise liability provisions applicable to a person appointed as a director depend on the capacity in which such person is claimed to have committed an extra-contractual breach. Such analysis goes beyond the scope of this general newsletter.