July 24, 2017 Articles

Arbitration in Belgium

By Alexander Hansebout

Belgium is an arbitration-friendly jurisdiction and is a signatory to the New York Convention. Its national Arbitration Act (part VI of the Belgium Judicial Code) was reformed in 2013; and, with some exceptions and amendments, is now based on the United Nations Commission on International Trade Law (UNCITRAL) model law. The Arbitration Act was fine-tuned by the Act of 25 December 2016, which entered into force on 9 January 2017.

Arbitration Agreement and Arbitrability
Belgian law contains no formal requirements for arbitration agreements. Arbitration agreements can be verbal if proof of their existence can be established. However, public legal entities may enter into arbitration agreements only if the arbitration is intended to resolve disputes relating to an agreement.

The Belgian courts will refer the parties to arbitration unless:

  • there is no proof that an arbitration agreement exists;
  • one of the parties is incapable of entering into an arbitration agreement; or
  • the subject matter of the dispute cannot be arbitrated.

Pecuniary claims may be submitted to arbitration; non-pecuniary claims can be as well, to the extent that the parties are allowed to settle such claims. Other claims cannot be submitted to arbitration. Further, there are limits on the right to submit disputes to arbitration by virtue of law or case law regarding:

  • disputes falling under the labor court’s jurisdiction;
  • insurance disputes;
  • disputes regarding compulsory patent licenses;
  • consumer disputes;
  • disputes regarding the unilateral termination of exclusive distribution agreements (even though this Supreme Court case law remains highly disputed; a lower court recently confirmed the arbitrability of such a dispute as it involved an economic interest);
  • commercial agency disputes; and
  • personal and family matters.

Procedure
The parties are free to organize arbitration proceedings as they deem fit, except for certain provisions of the Arbitration Act that apply in spite of any clause to the contrary.

Constitution of the tribunal—challenges. The tribunal should consist of an odd number of arbitrators. A sole arbitrator is permitted.

The appointment of the arbitrator(s) is not subject to restrictions other than the general requirements of independence and impartiality. The parties are free to determine any qualification requirements that the arbitrator(s) must have. The parties can exclude a person from acting as an arbitrator by reason of his or her nationality.

The appointment of an arbitrator can be challenged if there are justifiable doubts about his or her independence or impartiality, or if he or she does not meet the qualifications agreed on by the parties. The parties are free to agree on a procedure for challenging an arbitrator (e.g., by referring to the rules of an arbitral institution).

If the parties do not agree on a procedure, then the law provides that within 15 days of becoming aware of the constitution of the tribunal, or of becoming aware of the grounds for its challenge, the challenging party must send a written statement of the reasons for its challenge to the relevant arbitrator, any other arbitrators, and the opposing party. Unless the arbitrator withdraws or the other party agrees to the challenge within 10 days of receiving the challenging statement, the challenging party must summon the arbitrator and the other parties within 10 days to appear before the president of the court of first instance. Pending a judgment on the challenge, the arbitral tribunal—including the challenged arbitrator—may continue the arbitral proceedings and make an award.

Jurisdiction. The principle of competence-competence is recognized in Belgium. The arbitral tribunal may rule on its own jurisdiction.

For the purposes of determining jurisdiction, including any objections regarding the existence or validity of an arbitration agreement, the latter must be treated as independent from the other terms of the contract. Any tribunal’s finding that a contract is null and void does not ipso jure entail the invalidity of the arbitration agreement.

Any objection to the arbitral tribunal’s jurisdiction must be filed no later than the date on which the asserting party communicated its first written pleas. The law does not set out the form of such objection(s). For evidentiary reasons, such an objection should be made in writing.

Choice of law. The arbitral tribunal must apply the rule of law chosen by the parties. If the parties have not designated an applicable law, then the arbitral tribunal should apply the conflict-of-law rules that they consider most appropriate. An arbitrator can decide ex aequo et bono (i.e. according to what is right and good) or as amiable compositeur (i.e. according to legal principles that he or she believes to be just, without being limited to any national law) only if the parties have expressly authorized him or her to do so.

Irrespective of whether the tribunal decides on the basis of rules of law, ex aequo et bono or as amiable compositeur, any decision must:

  • be made in accordance with the terms of the contract, if the dispute between the parties is contractual in nature; and
  • take into account trade practice, if the dispute is between commercial parties.

Adversarial proceedings. Arbitrators must comply with the procedural rules agreed upon by the parties. In the absence of such agreed-upon rules, the arbitrators must determine the procedural rules.

In any event, the arbitrators must ensure that both the principle of adversarial proceedings and the principle of fairness of the debates are respected. Regardless of any agreement to the contrary, the parties must be treated equally and each party must be given a full opportunity to present its case, pleas, and arguments.

Unless the parties agree that no hearings need to be held, the arbitrators must hold such hearings at an appropriate stage of the proceedings, if so requested by a party.

Language and seat. In the absence of an agreement on the language of the proceedings, the arbitral tribunal will determine the language or languages to be used in the proceedings.

Failing an agreement on the place of arbitration, the place will be determined by the arbitrators based on the circumstances of the case, including the parties’ convenience. If the parties or the arbitral tribunal have not determined the place of arbitration, then the place where the award is decided will be the place of arbitration.

Evidence. The law provides that the arbitral tribunal will set the necessary investigative measures. The parties can entrust that responsibility to one of the arbitrators. The law does not provide for an exhaustive list of measures to be taken by the arbitrators, but does set out certain rules regarding the power to:

  • hear persons;
  • order a party to disclose evidence; and
  • appoint and hear experts.

The arbitrators must freely assess the admissibility and weight of the evidence presented to them, unless the parties have agreed otherwise. The discretionary power of the arbitral tribunal is limited by the principle of adversarial proceedings and the principle of fairness of the debates.

Confidentiality
The law contains no provisions on confidentiality. The parties are free to agree on confidentiality and should do so or be subject to institutional rules providing for confidentiality if they would like to ensure confidentiality.

The arbitration rules of the Belgian Center for Arbitration and Mediation (CEPANI) expressly provide that arbitration under these rules is confidential unless the parties otherwise agree or unless there is a legal obligation to disclose.

The Award

Decision making. In arbitral proceedings with more than one arbitrator, any decision must be made by a majority of the arbitral tribunal, unless otherwise agreed by the parties. The parties can decide that the chair’s vote is decisive where no majority can be reached.

Requirements. Belgian law provides that awards must be made in writing and signed by the arbitrator. In arbitral proceedings with a panel of arbitrators, the signatures of the majority of the members of the tribunal will be sufficient, provided that the reason for any omitted signature is stated.

The award must be reasoned. The absence of any reasoning is grounds for nullifying the award.

Costs. The law provides that in the final award, the arbitrators must fix the costs of the arbitration and decide which of the parties will bear these costs or in what proportion they will be borne by the parties. Unless otherwise agreed by the parties, these costs must include:

  • the fees and expenses of the arbitrators;
  • the fees and expenses of the parties’ counsel and representatives;
  • the costs of services given by those in charge of the administration of the arbitration; and
  • all other expenses arising from the arbitral proceedings (e.g., costs for experts and court reporters).

Time limit. The law does not provide a time limit within which arbitral tribunals must make an award. In principle, the parties may determine a time limit or the terms for setting a time limit. In the absence of an agreement, if the arbitral tribunal is late in making its award and a six-month period has elapsed between the date on which the last arbitrator was appointed, the president of the court of first instance may impose a time limit on the arbitral tribunal, if so requested by one of the parties.

Correction. The law provides for a procedure to correct an award that contains errors in calculation, clerical or typographical errors, or any errors of similar nature. The arbitral tribunal may correct these errors on its own initiative within one month of the date of the award. Moreover, within one month of the communication of the award, a party may request the arbitral tribunal to correct an error. If the arbitral tribunal considers the request justified, then it should correct the award within one month of receipt of the request.

Setting Aside
The right to appeal exists only if the parties have provided for this option. The law contains no grounds to appeal an award.

The parties have the right to challenge an award on the basis of one of the grounds set out below.

If none of the parties is a natural person of Belgian nationality, or a natural person having his or her domicile or normal residence in Belgium or a legal person having its registered office, its main place of business, or a branch office in Belgium, then the parties may—by an explicit declaration in the arbitration agreement or by a later agreement—exclude any application for setting aside the arbitral award.

Grounds. An award can be set aside only if:

  • the party making the application can prove that:
    • a party to the arbitration agreement was under some incapacity, the arbitration agreement was invalid under the law chosen by the parties or, failing any such indication, under Belgian law;
    • due process was violated (except if it is established that the irregularity had no effect on the arbitral award);
    • the award relates to a dispute not provided for in the arbitration agreement or contains matters beyond the scope of the agreement (with the power to partially set aside an award if the relevant part of the award can be separated);
    • the award is not reasoned;
    • the composition of the tribunal or the proceedings were not made in accordance with the parties’ agreement or, failing such an agreement, conflicted with Part VI of the Judicial Code (except if it is established that the irregularity did not affect the award); or
    • the tribunal exceeded its powers; or
  • the court of first instance (ex officio) finds that:
    • the subject matter of the dispute cannot be arbitrated;
    • the award is in conflict with public policy; or
    • the award was obtained by fraud.

However, if the party learns of reasons (a), (b), (c) or (e) above during the course of proceedings but fails to address them at that time, the award will not be set aside.

Procedure. If an award can no longer be contested before the arbitrators, it may be contested before the court of first instance by means of a writ of summons.

An application to set aside an award may not be made after three months have lapsed from the date on which the award was communicated to the parties. An arbitral tribunal’s decision that it has jurisdiction may be contested only alongside an award on the merits and in the course of the same proceedings.

When asked to annul an award (where appropriate and if so requested by a party), a court may suspend the setting-aside proceedings to give the arbitral tribunal time to resume the arbitral proceedings or to take any other actions that will eliminate the grounds for setting aside.

Enforcement

Procedure. Belgium is a creditor-friendly jurisdiction to the extent that it is relatively easy to proceed to a conservatory attachment on the basis of a(n) (foreign) arbitral award.

Foreign arbitral awards are fairly easy to enforce as Belgium is a party to the New York Convention. Moreover, Belgian law does not distinguish between local and foreign awards.

A party can apply to enforce a foreign or local award only if the award can no longer be contested before the arbitrator(s) or where it is declared provisionally enforceable. An application to enforce an award must be introduced and dealt with by a unilateral request and must contain the original copy or a certified copy of the award.

The grounds for refusal of the recognition or enforcement of an award are limited to those listed in the Judicial Code, i.e. where:

  • the party against which the award is invoked can prove that:
    • a party to the arbitration agreement was under some incapacity, the arbitration agreement was invalid under the law agreed by the parties or, failing any such indication, under the law of the country where the award was made;
    • due process was violated (except if it can be established that the irregularity had no effect on the arbitral award);
    • the award relates to a dispute not provided for in the arbitration agreement or contains matters beyond the scope of the agreement (with the power to recognize or enforce an award partially, if the relevant part of the award can be separated from the rest);
    • the award is not reasoned (if such reasons are set out by the rules of law applying to the arbitral proceedings);
    • the composition of the tribunal or the proceedings were not made in accordance with the parties’ agreement or, failing such agreement, conflicted with the law of the country where the arbitration took place (except if it is established that such an irregularity did not affect the award);
    • the award is not yet binding or has been set aside by a court of the country where or under the law of which it was made; or
    • the tribunal exceeded its powers; or
  • the court of first instance (ex officio) finds that:
    • the subject matter of the dispute is not capable of settlement through arbitration; or
    • the recognition or enforcement of the award would be contrary to public policy.


Alexander Hansebout is a dispute resolution partner at ALTIUS in Brussels, Belgium.


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