Belgium

Jurisdiction

Commercial claims fall under the general jurisdiction of the commercial court.

Pursuant to Article 573(1) of the Belgian Judicial Code (BJC), the commercial court has jurisdiction over all disputes between enterprises, within the meaning of Article I.1, 1 of the Code of Economic Law, irrespective of the amount in dispute, in so far as the dispute does not fall within the exclusive jurisdiction of another court.

The judgment of the commercial court may be subject to appeal, only where the initial claim (before the first judge) exceeded the monetary value of EUR 2,500. In that case, the appeal is lodged with the Court of Appeal.

Structure and organisation

Belgium has a total of nine commercial courts, namely those of Antwerp, Brussels (Dutch-speaking), Brussels (French-speaking), Leuven, Ghent, Eupen, Liège, Hainaut, and Walloon Brabant.

A commercial court may have one or more divisions.

Each commercial court has one or more chambers. In each chamber, one professional judge sits together with two so-called “lay judges in commercial matters”. These are not professional judges, but businesspeople, company directors, accountants, statutory auditors, and similar professionals. They assist the professional judge by contributing their practical experience from the business world.

Commercial litigation procedure is primarily governed by general civil procedure rules (as laid down in the BJC). There is no separate legislation on commercial procedure.

There are no mandatory pre-action considerations before starting legal proceedings in Belgium.

However, before initiating court proceedings, it may be necessary and often advisable to formally put the counterparty on notice of default. Under Belgian law, a debtor is in principle only in default after having been formally notified of the breach. This will require a written notice of default which identifies the contractual breach, requests performance within a specific deadline, and reserves the right to initiate legal proceedings and claim damages.

The main ADR methods used are arbitration, mediation, collaborative negotiation and binding third-party decisions.

Arbitration. Governed by Articles 1676–1723 of the BJC.

• A method of dispute resolution whereby the parties confer authority on one or more arbitrators to finally resolve an existing or future dispute.
• By choosing arbitration, the parties therefore waive the right to resort to the judicial courts.
• Arbitration can only constitute a legally valid alternative to state courts if it is based on the parties’ consent. Arbitration is thus founded on the principle of party autonomy.

Mediation. Provided for in Articles 1724–1737 of the BJC.

• Mediation is a structured and confidential negotiation process in which opposing parties seek to resolve a dispute through dialogue, with the assistance of a neutral third party, without that third party imposing a decision.
• The law specifies the disputes eligible for mediation, which include, amongst others, international disputes.

Collaborative negotiation. Governed by Articles 1738–1747 of the BJC.

• Collaborative negotiation is a specific form of confidential dispute negotiation in which the parties aim to reach binding settlement agreements. The parties are assisted by specially trained collaborative lawyers, openly share all relevant information, and commit to resolving the dispute without going to court.
• They take into account the rules of the law, as well as needs and wants of the parties.

Binding third-party decision. One of the so-called alternative methods of dispute resolution that is not regulated by legislation, but has been shaped through case law and legal doctrine.

• It is generally defined as a resolution method whereby the parties delegate the determination of their legal relationship (or a part thereof) to one or more third parties. The third-party decision will be binding upon them.
• Its primary legal basis lies in contract law, more specifically in the principle of contractual autonomy and binding force of contracts.
• In addition, the Belgian Code of Companies and Associations refers to the possibility to appoint a binding third-party “decider” in its provisions relating to price determination of:
  • shares in the event of a pre-emption right;
  • shares in the event of withdrawal; and
  • the size of a share.
• The general advantage is that companies may need to continue their business relations after the binding third-party decision, which is a less adversarial process.
• It differs from arbitration because the arbitrator exercises a jurisdictional function and applies the law, whereas a third-party decision-maker acts on the basis of contractual authority and decides according to reasonableness and fairness.

The average time to reach trial is highly dependent on the complexity of the case, the number of rounds of written submissions, and procedural incidents.

• A relatively simple dispute concerning an unpaid invoice may take approximately six months to one year.
• Longer proceedings may take one to two years to reach a hearing at first instance.
• Appeal proceedings (particularly in Brussels) generally take about three to five years.

The “default rule” (Article 870 of the BJC) applies. By default, parties must only submit evidence of the facts they allege. Under exceptional conditions and by reasoned judgment, the court may shift the burden of proof to the other party. In addition, parties have the obligation to participate to the administration of the evidence in the case

A party submitting an ex parte application has a duty of candour and must provide the judge with all factual elements and documents that are relevant to the determination of both the admissibility and the merits of the ex parte request. However, it is generally accepted that this duty does not encompass an obligation to disclose evidence or factual elements that are detrimental to the party’s own case.

Article 871 of the BJC provides, in general terms, for the possibility (not the obligation) for the court to order a party to produce any element of proof available to it.

• This possibility refers back to the so-called “right to evidence”; that is, the right to submit and obtain evidence as well as the principle of the duty of the parties to cooperate in the administration of evidence.
• The request of the court on the basis of this article solely relates to “elements of proof”.

Article 877 of the BJC provides for the right to request the judge to order that a document (or a certified true copy) be produced where there are “serious and specific indications” that a party or a third party is in possession of a document containing “proof of a relevant fact”.

Witness evidence is not common or the norm in Belgian judicial proceedings. Proceedings are mainly conducted based on documentary evidence.

However, there are ways to request testimonies, and a statutory obligation to testify for anyone who is summoned as a witness in legal proceedings. In this sense, the witness has a genuine civic duty which contributes to the “finding of the truth” and constitutes an essential pillar of the administration of justice, as the witness’s role in the taking of evidence may, in certain cases, be decisive.

Belgian law does not provide for cross-examination. After the witness has given their testimony/evidence, there is only an indirect right of questioning or intervention. A party may neither interrupt the witness nor question the witness directly, but must direct all remarks to the judge. The examination of witnesses ultimately rests with the judge.

In Belgium, courts have only limited discretion when making costs orders, as the allocation of legal costs is largely governed by statutory rules.

Legal costs

Legal costs are a contribution to lawyers’ fees, calculated on the amount claimed in the proceedings. The applicable amounts (basic, minimum and maximum) of the recoverable legal costs are provided by Royal Decree. The judge must apply the standard (basic) amount ex officio unless a party explicitly requests the minimum or maximum amount, and if the judge agrees. Jurisdictional discretion in this area is very limited; only a small portion of actual legal costs will be recoverable.

Other recoverable costs

These include Bailiff’s fees, summons costs, court registry fees, etc. These are true costs that are considered and will be awarded.

Costs orders

Under Article 1017 of the BJC, the losing party normally bears the costs. However, Belgian courts do have some discretion to depart from this principle in specific situations, including:

• Article 1017(2) of the BJC — where useless or manifestly unnecessary procedural acts have been carried out, those costs may be charged to the party who caused them.
• Article 1017(4) of the BJC — where there is no clearly identifiable losing party, the court may discretionarily divide the costs between the parties according to a distribution it deems appropriate.

Before issuing its judgment, the court may, at any stage of the proceedings, order a preliminary measure in order to investigate the claim or to resolve an interlocutory issue relating to such a measure, or to provisionally regulate the situation of the parties, pursuant to Article 19(3) of the BJC. Typical examples are:

• the appointment of a technical expert or accountant;
• the order of a witness examination;
• the production of documents;
• an order requiring a party to take, or to abstain from taking, a specific action until the merits of the case are decided (i.e. an injunction); and
• if the defendant unlawfully stopped performing a contract, an order to provisionally comply with its contractual obligations or an order for the payment of a provisional sum of money.

Belgian courts are generally pro-arbitration. The legal provisions on arbitration were adopted through the Belgian Arbitration Law of 24 June 2013, and form part of the BJC. The legislation is largely based on the UNCITRAL Model Law.

Article 1691 of the BJC provides that, unless the parties agree otherwise, the arbitral tribunal has the power, at the request of a party, to order interim or conservatory measures. Certain conditions apply:

• The requested measure must be directed against another party to the arbitration, as the arbitral tribunal in principle has no jurisdiction over third parties who are not parties to the arbitration.
• The tribunal may only order measures that are temporary and sufficiently connected to the claim on the merits, but may not prejudge the merits of the case.
• No “urgency” requirement, although the tribunal may take the “urgency” element into account if present.

Unlike an application made to the judge in summary proceedings, a party requesting interim or conservatory measures from the arbitral tribunal is not required to (but may) demonstrate or allege urgency.

However, pursuant to Article 1691(2) of the BJC, the arbitral tribunal may not order conservatory garnishment.

Some examples of interim measures include, amongst others:

• the appointment of an expert;
• the preservation of evidence; and
• an order to provide security for costs.

Appeal

As a general rule, an arbitral award is rendered at first and final instance. Pursuant to Article 1716 of the BJC, an appeal is only available if the parties have expressly provided for it in their arbitration agreement. The timeline in which the award should be appealed is one month from the notification of the award, unless the parties have agreed otherwise in the agreement.

The appeal is an arbitral appeal, meaning that it will be handled by another differently constituted arbitral tribunal, not by a national court.

Annulment/setting aside

An action for annulment of an arbitral award should be brought before the Court of First Instance and will only be admissible when the award can no longer be challenged before the arbitral tribunal. Pursuant to Article 1717 of the BJC, annulment can only take place on the following (exhaustive) grounds.

When the party bringing the action provides evidence that:

• A party lacked capacity, the arbitration agreement was invalid under the applicable law, or the arbitral tribunal unjustifiably declined jurisdiction despite a valid arbitration agreement.
• The party was not properly notified of the appointment of an arbitrator or the arbitral proceedings, or was otherwise unable to present its case, unless the irregularity had no impact on the award.
• The award deals with a dispute not provided for in, or not falling within, the terms of the arbitration agreement, or contains decisions on matters beyond the scope of the arbitration agreement.
• The arbitral award is not reasoned.
• The arbitral tribunal or proceedings did not comply with the parties’ agreement or mandatory provisions of Part 6 of the Judicial Code, unless the irregularity had no impact on the award.
• The arbitral tribunal exceeded its powers.

The Court of First Instance may raise certain grounds of its own motion. An award will be annulled if the court finds that:

• The subject matter of the dispute is not capable of settlement by arbitration.
• The award is contrary to public policy.
• The award was obtained by fraud.

As a basic principle, an action for annulment should be brought within three months of the notification of the award to the party bringing the action.

Judgments

Belgium is a party to:

• The Hague Convention on Choice of Court Agreements of 2005.
• The Lugano Convention of 2007 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
• Regulation (EU) No. 1215/2012 of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (“Brussels I bis Regulation”).

Arbitral awards

Belgium is a party to:

• The Geneva Convention of 26 September 1927 on the enforcement of foreign awards.
• The New York Convention of 10 June 1958 on the recognition and enforcement of foreign arbitral awards. Belgium made only one reservation under Article I(3). Accordingly, Belgium applies the convention only to the recognition and enforcement of awards made in the territory of another contracting state.
• The European Convention on International Commercial Arbitration and appendices, signed in Geneva on 21 April 1961, and the arrangement concerning the application of this convention, signed in Paris on 17 December 1962.
• The Convention for the Settlement of Investment Disputes between States and Nationals of Other States, concluded at Washington, on 18 March 1965.

Belgium is a party to a number of bilateral treaties concerning the recognition and enforcement of arbitral awards, for example, with France, Germany, and Switzerland. These treaties are older than the New York Convention, so they are no longer often relied upon.

In principle, all final judgments (with res judicata) are enforceable.

Decisions rendered before a ruling on the merits, such as interim measures, do not have res judicata effect but are equally enforceable per se pursuant to Article 1397(3) of the BJC.

Foreign judgments

There is no process of “registration” as such in Belgium. The process is as follows, according to the applicable legal instrument.

Judgments from EU Member States: Brussels I bis Regulation

• Judgments rendered in one of the EU Member States are automatically recognised and enforceable in all other EU Member States (no exequatur procedure required). A party wishing to invoke a judgment in another Member State shall produce:
  • a copy of the judgment which satisfies the conditions necessary to establish its authenticity; and
  • a standard certificate from the court of origin (as in Annex I of the Regulation).
• Article 45 of the Brussels I bis Regulation provides that the recognition of a judgment can only be refused on the application of any interested party and on the following grounds:
  • If such recognition is manifestly contrary to public policy (ordre public) in the Member State addressed.
  • Where the judgment was given in default of appearance, if the defendant was not served with the document which instituted the proceedings or with an equivalent document in sufficient time and in such a way as to enable him to arrange for his defence, unless the defendant failed to commence proceedings to challenge the judgment when it was possible for him to do so.
  • If the judgment is irreconcilable with a judgment given between the same parties in the Member State addressed.
  • If the judgment is irreconcilable with an earlier judgment given in another Member State or in a third state involving the same cause of action and between the same parties, provided that the earlier judgment fulfils the conditions necessary for its recognition in the Member State addressed.
  • If the judgment conflicts with specific protective jurisdictional rules provided for in the regulation.

Judgments from non-EU Member States: Belgian Code of Private International Law

• No automatic recognition, but an exequatur application must be filed before the competent Belgian court.
• Such application must be accompanied by the following documents:
  • An authentic copy of the decision which, under the law of the state in which it was rendered, satisfies the conditions required for its authenticity.
  • In the case of a default judgment, the original or a certified true copy of the document evidencing that the document instituting the proceedings, or an equivalent document, was served on or notified to the non-appearing party in accordance with the law of the state in which the decision was rendered.
  • Any document establishing that the decision is enforceable under the law of the state in which it was rendered and that it has been served on or notified to the parties.
• The grounds of refusal as per the Belgian Code of Private International Law are (“Code”):
  • The effects of recognition or enforcement would be manifestly incompatible with public policy; in assessing such incompatibility, particular account shall be taken of the degree to which the case is connected with the Belgian legal order and of the seriousness of the consequences thereby caused.
  • The rights of defence have been infringed.
  • The decision was obtained solely in order to evade the application of the law designated by this Code, in a matter in which the parties are not free to dispose of their rights.
  • Without prejudice to Article 23(4), the decision is, under the law of the state in which it was rendered, still subject to an ordinary appeal.
  • The decision is irreconcilable with a decision rendered in Belgium or with an earlier decision rendered abroad that is capable of being recognised in Belgium.
  • The proceedings abroad were instituted after proceedings had already been brought in Belgium between the same parties and concerning the same subject matter, and those proceedings are still pending.
  • The Belgian courts had exclusive jurisdiction to hear the claim.
  • The jurisdiction of the foreign court was based solely on the presence of the defendant or of assets, without a direct connection with the dispute, in the state of that court.
  • Recognition or enforcement would be contrary to the grounds for refusal referred to in other instances (Articles 39, 57, 72, 95, 115 and 121 of the Code) referred to. For example, grounds for refusal of recognition of a foreign change of name, a foreign deed dissolving a marriage, a foreign decision relating to adoption, etc.

Arbitral awards

Foreign arbitral awards are governed by the BJC (Articles) and the New York Convention.

Pursuant to Article 1719(1) of the BJC, an arbitral award rendered by an arbitral tribunal seated in Belgium or elsewhere, may only be enforced in Belgium after it has been declared as enforceable, either fully or partially, by the Court of First Instance.

The Court of First Instance may grant enforcement only if the award can no longer be challenged before the arbitrators, or if it has been declared provisionally enforceable by them notwithstanding an appeal (Article 1719(2) of the BJC).

The procedure in front of the Court of First Instance is regulated in Article 1720 of the BJC.

The application is brought by way of unilateral application (ex parte application), and should be accompanied by either the original award, or a certified true copy of the award.

The grounds of refusal are similar, but not identical to the grounds for annulment of an arbitral award. The grounds of refusal as listed in Article 1721 of the BJC are:

• At the request of the party against whom it is invoked, where that party provides evidence that:
  • A party to the arbitration agreement lacked capacity, or that the agreement is not valid under the law to which the parties have subjected it or, failing any choice of law, under the law of the country in which the award was made.
  • The party against whom the award is invoked was not given proper notice of the appointment of an arbitrator or of the arbitral proceedings, or was otherwise unable to present its case; in such cases, however, recognition or enforcement of the arbitral award may not be refused if it is established that the irregularity had no effect on the arbitral award.
  • The award deals with a dispute not contemplated by or not falling within the terms of the arbitration agreement, or contains decisions on matters beyond the scope of that agreement; provided, however, that if the decisions on matters submitted to arbitration can be separated from those on matters not submitted to arbitration, only the part of the decisions concerning matters submitted to arbitration may be recognised and enforced.
  • The award is not reasoned, where such reasoning is required by the legal rules applicable to the arbitral procedure under which the award was made.
  • The composition of the arbitral tribunal or the arbitral procedure was not in accordance with the agreement of the parties, or, failing such agreement, with the law of the country where the arbitration took place; such irregularities may not lead to refusal of recognition or enforcement of the arbitral award if it appears that they had no effect on the award, except in the case of an irregularity concerning the composition of the arbitral tribunal.
  • The award has not yet become binding on the parties, or has been set aside or suspended by a court of the country in which, or under the law of which, it was made.
  • The arbitral tribunal exceeded its powers.
• The Court of First Instance may raise certain grounds of its own motion. The Court of First Instance will refuse the recognition and enforcement of the award where it finds that:
  • The subject matter of the dispute is not capable of settlement by arbitration.
  • Recognition or enforcement of the award would be contrary to public policy.
  • The award was obtained by fraud.

The grounds of refusal provided for in the BJC reflect the grounds of refusal as in Article V of the 1958 New York Convention, as well as Article 36 of the UNCITRAL Model Law.

Under Belgian law, judgments are primarily enforced through attachment (movable, immovable, or under third parties), supplemented by other instruments such as penalty payments. It does not recognise charging orders or receivership as autonomous enforcement methods.

One available method of execution is executory garnishment:

• Under Belgian law, it is possible to lay attachments on immoveable properties, moveable properties (including cars and trucks), intangible assets (including bank accounts, claims, dividends and shares) and vessels.
• A party can apply for attachment measures via separate legal proceedings before an attachment judge.
• The following conditions apply:
  • The debtor must have an enforceable title. Belgian judgments and judgments from EU Member States are immediately enforceable. For foreign judgments from non-EU Member States or arbitral awards, it is necessary to first obtain the exequatur of the judgment/award.
  • The claim must be certain, fixed, and payable (see Question 17, below).
• The creditor must first issue a payment order, as a last warning for the debtor. There is a minimum waiting period of one day (for moveable goods) and 15 days (for immoveable goods) before the goods can be attached, which happens by a bailiff.

The garnishment order can also be served in the hands of third parties, such as employers or someone’s tenant. The most common example is banks where the party maintains accounts:

• As from the moment of the service of the order on the banks, the banks are compelled to freeze all assets of the debtor until the garnishment is either lifted by a court’s decision or converted into a payment by the debtor.
• Within eight days of the service of the order on the garnishees, the garnishment order will have to be served on the debtor.
• Within 15 days of the garnishment order on the banks, the banks must issue a statement declaring all the assets that they owe to the debtor. These assets must eventually be transferred to the bailiff in charge of their distribution, subject to the debtor who may bring recourse against the garnishment order.

Pending enforcement in Belgium, a creditor who does not yet have (or cannot yet use) an enforceable title may rely on interim protective measures designed to preserve assets and prevent frustration of future execution. These measures are not aimed at recovery, but at maintaining the status quo until enforcement becomes possible.

Conservatory garnishment (Articles 1413 et seq. of the BJC) is subject to strict substantive conditions:

• There must be a claim. The debtor must be an actual debtor of the creditor; solely having an interest in having someone else’s goods attached is not satisfactory.
• The creditor must show that its claim is certain, fixed and payable.
  • Certain. It is sufficient that the claim appears prima facie to be “genuine’, that is, that it shows a sufficient appearance of validity or certainty or is not open to reasonable dispute. This is, for example, the case where the claim is based on a due and undisputed invoice.
  • Fixed. The claim must be established or, at a minimum, susceptible to provisional quantification, in the sense that its amount must be fixed or determinable.
  • Payable. A claim is payable once it has fallen due and may be lawfully demanded, regardless of whether an enforceable title has already been obtained.
• There must be a need for “celerity”. The need for speed lies in the creditor’s demonstrable fear that the debtor may become insolvent, or deliberately render itself insolvent, thereby jeopardising enforcement.

Proceeding on the assumptions outlined in the Model Answer, would a court in this jurisdiction recognise and enforce the arbitral award under the New York Convention?

In particular:

• Does the award fall within the scope of Article V(1) of the Convention, or would any of the grounds in Article V(1) justify refusal on the assumed facts?
• Is the subject matter of the dispute capable of settlement by arbitration under domestic law for the purposes of Article V(2)(a)?
• Would recognition or enforcement of the award be contrary to public policy within the meaning of Article V(2)(b)?

Response

Article V(1) – scope and validity

On the stated facts, the parties agreed that the non-payment of a judgment would constitute a contractual obligation to pay. In addition, the parties agreed to limit the scope of the Tribunal’s mandate to: (a) confirming that the Judgment is final and unpaid after 28 days; and (b) ordering payment of the (contractual) sum and interest, without investigation or re-litigating the underlying merits of the original court dispute. In addition, the arbitration clause provides against double recovery for the judgment and the award.

The facts therefore practically assume that the arbitration agreement is valid under the law governing it and the law of the seat. On that basis, Article V(1) would likely not justify a refusal of the enforcement and recognition of the final award.

Article V(2)(a) – arbitrability under Belgian law

Belgian courts accept that parties are free to define the scope of arbitral jurisdiction. However, not all disputes are arbitrable. Objective arbitrability relates to the subject matter of the dispute and concerns whether it may lawfully be submitted to arbitration. Where a non-arbitrable dispute is nonetheless decided by arbitration, the resulting award may be set aside or denied recognition and enforcement.

Arbitrability of non-payment of a monetary obligation and/or security for the award:

• Article 1676(1) of the BJC provides that disputes of a patrimonial/monetary nature may be the subject of arbitration, as well as non-patrimonial disputes that are capable of settlement.
• In general, this includes all claims that have an active or passive monetary value for the parties, or, in other words, that represent, for at least one of them, an interest capable of being assessed in monetary terms.

In principle, the non-payment of the contractual obligation is of course an arbitrable dispute. However, under Belgian law, the obligation to pay damages for breach of contract is not the same as an obligation to pay an amount under the contract. The judgment creates a distinct liability arising from the breach. As such, the parties’ contractual provision that the non-payment of a judgment constitutes a contractual breach may not be sufficient to consider that the matter in dispute is equivalent to a contractual non-payment.

Another objection would be that, in the scenario presented, there is no “dispute” (or disagreement) (arising from the contract). In the scenario, the “dispute” has already been decided by the competent jurisdiction, and it would be necessary to demonstrate that there remains a dispute to be adjudicated. In the case study, the subject matter of the final award is not the underlying dispute as adjudicated by the court. This may not be sufficient to convince a court that there remains a dispute that is arbitrable under Belgian law.

For these reasons, Belgian courts could refuse recognition and enforcement of the award in Belgium on the basis of Article V(2)(a) if the matter was found to be non-arbitrable on account of the existence of a prior judgment.

Article V(2)(b) – public policy

Under Belgian law, international public policy (“public order”) concerns legal rules or principles that are “essential for the moral, political or economic order.” Public order includes rules and principles of Belgian law, but also of European and international law.

Court judgments deciding contractual disputes are not equivalent to contractual obligations in Belgium. For instance, a contract breach gives rise to a contractual liability which is distinct from the performance of the primary contractual obligation. It is uncertain at this stage whether parties can determine that a judgment between them will be considered as a contractual obligation, and what effect that would have on the underlying judgment.

The finality of court decisions is a principle of Belgian law. If the sole purpose of the parties is to provide for a different enforcement avenue for their obligations, this could be found to be contrary to the rules on the finality of decision and enforcement of judgments in Belgium. The situation might be likened to the principle of “exequatur on exequatur is not permitted”. In Belgium and the EU, this principle seeks to ensure that only decisions on the substance of the merits of the underlying rights can cross borders. An arbitral award which would only dress up a court judgment in a different manner might be found to be contrary to the rationale of the exequatur principle.

For these reasons, it is possible that a final award such as the one described in the case study would be refused recognition and enforcement in Belgium on the basis of Article V(2)(b).

Conclusion

On the stated facts, it appears more likely than not that a Belgian court would refuse the enforcement of the foreign award on the basis of Article V(2)(a) and/or (b) given the objective of the arbitration clause, which is to enforce a foreign judgment through the use of mechanisms specific to the enforcement of arbitral awards.