BELGIUM:: URGENT NEED TO ADAPT CONTRACTUAL DOCUMENTS IN VIEW OF THE NEW BOOK 6 OF THE CIVIL CODE
This new Book 6 introduces fundamental changes to the framework governing extra-contractual liability, which has already sparked significant discussion.
The new legislation will have a substantial impact on the transport sector. Notably, the so-called "quasi-immunity of the performing agent," which is recognized under the current legal framework, will be abolished.
Below, we illustrate with a practical example what is meant by this "quasi-immunity of the performing agent" and the consequences of the its elimination:
Sender A engages Carrier B for thetransportation of its goods from Sender A's registered office to a designatedfinal destination. Carrier B, in turn, subcontracts the assignment toSubcontractor C.
Subcontractor C in this triangular relationship is the “performing agent”. A contractual relationship exists between the contracting parties A and B, but for the execution of the contract, B engages another party, namely C, the performing agent.
If Subcontractor C causes damage to Sender A,under the current legislation, Sender A must in principle seek compensation from its contractual counterparty (Carrier B), even if this contractual counterparty is not the actual causer of the damage. Sender A generally cannot directly claim against the “performing agent”, Subcontractor C. After being held liable by Sender A, Carrier B must, in turn, seek recourse from Subcontractor C.
Only in exceptional circumstances and under very strict conditions can Sender A directly claim against Subcontrator C.
This (quasi-)impossibility of bringing a direct claim against a subcontractor/performing agent of one’s own contractual counterparty is referred to as the “quasi-immunity of the performing agent”.
For subcontractors/performing agents, this provided a certain level of protection, while it limited recourse options for principals.
The New Book 6 of the Civil Code simplifies rules and abolishes this regime. The revised rules in the new Book 6 of the Belgian Civil Code enable the injured party to directly hold the actual causer of damages liable on extra-contractual grounds in many cases.
Returning to our example, Sender A can now directly hold Subcontractor C liable for damages on extra-contractual grounds. This means A now has two options for seeking compensation: either pursuing Carrier B on contractual grounds or Subcontractor C on extra-contractual grounds.
In other words, the principal’s options for recourse are expanded, while the subcontractor/performing agent may now face claims from multiple parties.
However, contractual arrangements can provide various defenses and indemnity mechanisms among the involved parties. These contractual agreements can influence the ability to pursue claims or the defenses available to the parties.
For instance, Subcontractor C could agree withCarrier B to exclude direct claims from Sender A. This would limit Sender A’s rights. Additionally, Subcontractor C may invoke the contractual arrangements and defenses agreed upon between Sender A and Carrier B.
From Sender A’s perspective, it is crucial to ensure that its agreement with Carrier B prohibits the exclusion of its directright of action against Subcontractor C. If such exclusion is allowed, it must be stipulated that Carrier B will indemnify Sender A.
Reviewing and amending existing contracts and terms& conditions will be crucial. This is essential for companies acting as principals or main carriers, as well as those operating as subcontractors. Depending on your role, tailored clauses will need to be drafted.
Important note: The abolition of the“quasi-immunity of the performing agent” could also have significant implications for company directors. A director of a company could, undercertain circumstances, be regarded as a “performing agent” of the company.
In the aforementioned example, the company is Party B, and the director is Party C. When the company has a contractual relationship with a Client A, this Client A could potentially bring an extra-contractual claim directly against Director C personally.
For company directors, this implies increased personal liability, as they can no longer “hide” behind corporate structures.
The importance of establishing a directors’ agreement between the company and its directors is thus underscored.
Contact your specialist at ITL Attorneys Belgium to draft, review, and amend your contracts and general terms &conditions, ensuring you can start 2025 worry-free, with all risks contractually covered.