Contributed By Clifford Chance LLP
Arbitration is a widely known and recognised form of dispute resolution in Belgium. Although the "default option" for national disputes is still court litigation, the popularity of arbitration clauses in international contracts, especially in corporate and (international) commercial contracts, is high and increasing.
Arbitration remains widely established and popular in the framework of mergers and acquisitions and international commercial contracts. Parties to international arbitration increasingly provide for document disclosure in these proceedings (which is less evident in national court proceedings).
Meanwhile, it remains to be seen what the impact will be of the recent judgment of the Court of Justice in Slowakische Republik v Achmea BV (C-284/16), where the Court found that the investor-State dispute settlement mechanism (ISDS) in the Slovakia-Netherlands bilateral investment treaty does not ensure full effectiveness of EU law and is thus not compatible with the provisions of the Treaty on the Functioning of the European Union. As a result of this ruling, investment arbitration tribunals may first of all start declining to hear claims brought by investors under intra-EU bilateral investment treaties on the basis that the provisions of these treaties are contrary to EU law. The national courts may furthermore refuse to enforce any arbitration awards rendered on the basis of such treaties. While commercial arbitration is unlikely to be affected by the ruling of the European Court of Justice, it is unclear whether arbitration proceedings conducted pursuant to multilateral treaties (such as notably the European Charter Treaty, but also possibly CETA and TTIP) might likewise be affected. With regard to CETA in particular, Belgium has requested the European Court of Justice to opine on whether the dispute resolution mechanism contained therein is compatible with EU law. The same question as to the compatibility with EU law arises regarding arbitration awards based on extra-EU bilateral investment treaties.
Another noteworthy development is the initiative of the Belgian legislator to create the "Brussels International Business Court" (BIBC) in an attempt to attract international litigation after Brexit. The relevant bill, which has been heavily criticised and is currently pending before parliament, creates a new type of commercial court which is competent to hear international disputes. A dispute will be considered to be international if it arises between parties established in different Member States, if it relates to the performance of obligations in another member state or where the resolution of the dispute is based on foreign law. The draft bill provides that proceedings before the BIBC will be conducted in the English language and that its decisions will not be subject to appeal. The court would be composed of both professional judges and layman judges, selected based on their special knowledge of certain legal topics. The parties will be able to voluntarily submit a dispute to the BIBC, provided that one of them is an international company. The BIBC might be seen as a worthy alternative for arbitration, considering more particularly the fact that its judgments will be recognised and enforceable in other EU Member States without exequatur. Much will depend, however, on whether the BIBC will be able to gather sufficient resources to finance its operations, and whether it would overcome any potential constitutionality concerns.
Lastly, a new law on mediation strengthening the promotion of alternative forms of dispute resolution was adopted on 18 June 2019. The law, which amends various provisions of the Judicial Code, requires legal counsel to advise their clients proactively on the possibility of mediation. The courts will likewise be under an obligation to seek to reconcile the parties in all matters. If a court finds that there is room for mediation, it may, either at the request of one of the parties or where it deems this fit, postpone the treatment of the case in order to give the parties the opportunity to further explore the possibility of an amicable solution. The court itself can also mediate a dispute between the parties (although the parties cannot be compelled to attempt to resolve the dispute through mediation). Lastly, as from 1 January 2019, in every stage of the proceedings and save for cases pending before the Court of Cassation and the district courts (arrondissementsrechtbanken), the judge will furthermore be able, at the request of the parties, to order that the case is resolved through collaborative negotiations. These negotiations, which are confidential, must be conducted by attorneys specifically recognised for these purposes with the aim of reaching a satisfactory, balanced and sustainable solution in the interest of all the parties concerned.
Arbitration clauses are common in M&A transactions, joint ventures, (international) commercial contracts and real estate transactions. The use of arbitration clauses for intra-company disputes (eg disputes between a company and its shareholders or between shareholders) is becoming more and more frequent. Lastly, disputes between companies and senior management pursuant to management contracts are often settled through arbitration.
ICC and CEPANI arbitration are widely used in Belgium. The Chamber of Mediation and Arbitration is also used, but mostly for real estate-related matters. There are furthermore a number of smaller arbitration institutions which are used less frequently, as well as some foreign institutions such as LCIA (although less frequently as these are more expensive).
Belgian law does not distinguish between domestic and international arbitration. Both types of arbitration are governed by the provisions of Chapter Six of the Judicial Code (as adopted on 24 June 2013). The Belgian arbitration provisions are based to a large extent on those of the UNCITRAL Model Law, with some exceptions intended to foster arbitration. Arbitration is possible for a wide range of matters and is not limited to commercial matters. It is also possible for foreign parties to renounce the possibility of setting aside an arbitral award (Article 1718 Judicial Code). Furthermore, the grounds for the setting aside and the refusal of the recognition and enforcement of an arbitral award are more extensive and include, eg, the lack of motivation of the award. It is, however, possible to avoid setting aside proceedings on this basis if it concerns a foreign arbitral award which is not subject to such any motivation requirement (Article 1721, §1, (a), (iv) Judicial Code).
Belgium is also a party to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958, the European Convention on International Commercial Arbitration of 1961, the Washington Convention on the Settlement of Investment Disputes between States and Nationals of Other States of 1965, the Energy Treaty Charter and close to 100 bilateral investment treaties.
The most recent change to the provisions of the arbitration law dates from 2016. There have been no more recent changes, and no changes are currently envisaged.
Arbitration agreements are consensual agreements. As such, they are not subject to any specific formalities under Belgian law (Article 1681 Judicial Code). Although an arbitration agreement need not be in written form, the party invoking the existence of such an agreement must be able to provide proof thereof. The existence of an arbitration agreement can be evidenced by all possible means, including, eg, through witness testimony.
Like any other type of agreement, an arbitration agreement must satisfy the basic requirements for an agreement to be valid under Belgian law. The parties must more particularly have validly consented to enter into the agreement, ie, their consent must not be vitiated by error, fraud or violence. They must also have entered into the agreement for legitimate purposes. The parties must have the necessary standing to enter into the agreement, meaning that they must, inter alia, have reached majority and must have control over their assets (Article 1676, §2 Judicial Code). The validity of the arbitration clause will be assessed independently from the validity of the underlying agreement (Article 1690, §1 Judicial Code). The applicable law governing the agreement and that governing the arbitration clause can therefore be different.
An arbitration clause can validly be included in the articles of incorporation of a company. Arbitration clauses can be incorporated into an agreement by means of general terms and conditions provided that the counterparty was aware of them and has accepted their application (either expressly or implicitly). These conditions might not be satisfied if the clause is included on the back of an invoice without further reference to it, or where the invoice is contested. Towards consumers, arbitration clauses included in general terms and conditions might be held to be abusive and inoperable if they have been entered into prior to a dispute having arisen and exclude the opportunity to have recourse to the courts.
Public entities can also enter into arbitration agreements unless they are prohibited from doing so by law. They will generally not be capable of entering into arbitration agreements relating to matters belonging to the sovereign prerogatives of the State but can opt for arbitration if the dispute concerns a (commercial) agreement or for matters set out by law or royal decree (Article 1676, §3 of the Judicial Code). Pursuant to the provisions of the European Convention on International Commercial Arbitration of 21 April 1961, the Belgian State can submit to arbitration for disputes arising from international commercial transactions.
Clauses which offer a party the option of referring a dispute to arbitration will not be regarded as an actual arbitration agreement under Belgian law. They could, however, be analysed as a promise to arbitrate which, if accepted, becomes binding.
Disputes are arbitrable under Belgian law provided solely that they are pecuniary in nature or, if they are not pecuniary in nature, provided that it is legally permitted to settle them (Article 1676 Judicial Code). Examples of the latter category of non-pecuniary claims which may be submitted to arbitration are, eg, claims for recognition of liability in cases of sexual abuse or certain disputes regarding trade marks and names. Disputes concerning the organisation of family relations (eg divorce) or disputes relating to the capacity or standing of natural persons are generally not arbitrable as they are not pecuniary in nature and, due to the public policy nature of the rules concerned, cannot be settled.
A number of disputes are subject to the restriction that they cannot be submitted to arbitration prior to a dispute having arisen. Examples of these disputes are:
Other disputes are subject to restrictions to the extent that the arbitration would lead to rules of a mandatory or public policy nature being circumvented. Notably:
Company law disputes are, in principle, arbitrable provided that the articles of incorporation of the company contain an arbitration clause and that clause is not merely part of the company's internal rules. Intellectual property disputes relating to domain names and copyrights are arbitrable. Disputes relating to patents are, in principle, also arbitrable, subject to certain exceptions such as mandatory licences and disputes relating to the expiry of a patent. The same arguably applies to disputes concerning trade marks and designs.
Aside from the above-mentioned subject-matters, there is abundant case law on the arbitrability of a number of other matters, including, inter alia, disputes concerning competition law, public goods, taxes, the civil consequences of criminal offences, etc.
As also set out in 3.1 Enforceability, public entities can only subject a dispute to arbitration if it relates to a contract or the matters defined by law or royal decree (Article 1676, §3 of the Judicial Code).
The Belgian courts will only refuse to enforce an arbitration agreement where the dispute cannot legally be submitted to arbitration, where the arbitration agreement has not been validly concluded or where the party having concluded it was not authorised to do so, or where the arbitration agreement has been terminated (Article 1682 Judicial Code, combined with Article 1676 Judicial Code).
An arbitration agreement is not considered automatically terminated if the underlying agreement is terminated, and will, in principle, bind legal successors of the deceased party or entity, as well as a bankruptcy receiver (save for matters which arise from the bankruptcy and which must be resolved on the basis of the Belgian insolvency rules).
If the arbitration agreement is governed by foreign law, the national courts must refuse to enforce an arbitration clause if the dispute is not arbitrable under the domestic rules.
The plea that a dispute must be submitted to arbitration must be raised before any other defence arguments in order to be admissible (Article 1682 Judicial Code).
The principle under Belgian law is that of separability of the arbitration clause from the underlying agreement. The validity of an arbitration agreement will therefore be assessed independently from that of the underlying agreement (Article 1690, §1 Judicial Code). This is also in line with the rule of severability which generally applies under Belgian contract law (Cass. 10 January 2014).
The parties are free to determine the procedure for designating an arbitrator (including by reference to the application of the CEPANI or ICC arbitration rules), provided that they respect the requirements of independence and impartiality (Article 1685, §2 Judicial Code). None of the parties may have a privileged position where the appointment of the arbitrators is concerned.
The parties are likewise free to determine the number of arbitrators. The arbitral tribunal must, however, be composed of an odd number of arbitrators (Article 1684, §1 Judicial Code). If the number of arbitrators is even, this does not, however, render the agreement invalid. The parties can simply apply to the competent President of the Court of First Instance to designate an additional arbitrator (Article 1684, §2 Judicial Code).
Unless the parties have agreed otherwise, an arbitrator cannot be prevented from serving as an arbitrator based on his/her nationality (Article 1685, §1 Judicial Code).
By default, an arbitral tribunal will consist of three arbitrators, with each party designating one arbitrator and the two party-appointed arbitrators choosing a third arbitrator (Article 1684, §3 Judicial Code combined with 1685, §3, a) Judicial Code).
In cases where the tribunal consists of three arbitrators, if a party fails to designate an arbitrator within one month from the request of the other party, or the two party-appointed arbitrators fail to reach an agreement on the designation of a third arbitrator within one month of the appointment of the second arbitrator, the parties can apply to the President of the Court of First Instance of the place of arbitration to appoint an arbitrator (Article 1685, §3, a) Judicial Code).
The same procedure applies in case the parties fail to reach an agreement on the appointment of the sole arbitrator, or of one of the arbitrators in case there are more than three (Article 1685, §3, b) and c) Judicial Code). Similarly, the President of the Court of First Instance of the place of arbitration can intervene where one of the parties does not act in accordance with the agreed procedure for the appointment of an arbitrator, if the parties or the two arbitrators fail to reach an agreement in accordance with the agreed procedure or if an arbitral institution fails to complete the mission entrusted to it in that procedure (Article 1685, §4 Judicial Code).
When appointing an arbitrator, the court must take into account all the contractual requirements and all considerations which are relevant for the independence and the impartiality of the arbitrator (Article 1685, §6 Judicial Code).
The decision of the court will be rendered in first and last instance and is not subject to appeal, save if it refuses to designate an arbitrator.
An arbitrator can be challenged if circumstances exist which give rise to justifiable doubts as to his or her independence or impartiality, or if he does not satisfy the contractual qualifications (Article 1686, §2 Judicial Code). A challenge will only be possible on grounds of which a party becomes aware after the appointment has been made (Article 1686, §2 Judicial Code). Both at the outset of the arbitration, and at any stage during the arbitration proceedings, a (potential) arbitrator has an obligation to disclose any circumstances which could put into question his or her impartiality or independence.
As far as the grounds for a challenge are concerned, these are not specifically set out in the Judicial Code. Case law confirms, however, that an arbitrator must satisfy the same requirements as a judge in accordance with Article 6 of the European Convention on Human Rights. The IBA Guidelines on Conflicts of Interest in International Arbitration are widely used to determine whether an arbitrator meets the required standards of independence and impartiality (see also 4.5 Arbitrator Requirements).
The parties are free to agree on the relevant procedure to challenge the appointment of an arbitrator. If they do not, the Judicial Code provides for a specific procedure for doing so which is subject to short deadlines. If the challenge is not resolved (either by a withdrawal of the arbitrator in question or by agreement of the parties), the dispute can ultimately be brought before the President of the Court of First Instance who will rule on the issue (Article 1687 Judicial Code). Pending the challenge, the arbitral proceedings can continue.
The appointment of an arbitrator can in principle not be withdrawn once notified. If an arbitrator is de facto or de jure unable to complete his or her mission or if he or she fails to act with undue delay, his or her mandate can terminate if he or she withdraws with the consent of the parties of the President of the Court of First Instance or if the parties otherwise agree to terminate his or her mandate (Article 1688 Judicial Code). Any controversies must be brought before the President of the competent Court of First Instance.
In all cases where an arbitrator's appointment is terminated before a final arbitral award has been rendered, he or she must be replaced in accordance with the agreed procedure or, in the absence of such an agreement procedure, by the President of the competent Court of First Instance (Article 1689 Judicial Code).
The general rule under Belgian law is that arbitrators must be independent and impartial (Article 1685, §2 Judicial Code) and that their appointment can be challenged in the case of justifiable doubts in that respect. The Judicial Code does not, however, further detail how the independence and impartiality of an arbitrator must be assessed. Case law confirms that an arbitrator must satisfy the same requirements as a judge in accordance with Article 6 of the European Convention on Human Rights. Legal scholars consider that an arbitrator must refuse his or her appointment if he or she has any affinity with or interest which is connected with either party or their respective counsel, or with anyone to which the outcome of the arbitration has some relevance. The IBA Guidelines on Conflicts of Interest in International Arbitration are widely used as a benchmark to determine whether an arbitrator meets the required standards of independence and impartiality.
Facts which have led parties to challenge the appointment of arbitrators in the past (and which must therefore be considered obligatory to disclose) are, among others:
Members of the judiciary cannot accept a remunerated mandate as an arbitrator (Article 298 Judicial Code). Temporary judges are not, however, subject to the same restriction.
As set out under 3.2Arbitrability, matters that are not pecuniary in nature and cannot be settled may not be referred to arbitration. Typical examples of such matters are those relating to the capacity and standing of natural persons and the organisation of family relations. These matters include disputes regarding a person's name, descent, nationality, the essential rights and obligations of spouses, parental authority, divorce, termination of cohabitation, custody, nullity of marriage, inheritance, etc.
There are a number of matters which can be referred to arbitration, subject to certain exceptions. Please refer to 3.2 Arbitrability for a more detailed analysis of these provisions.
The principle under Belgian law is that the arbitral tribunal rules on its own competence (Kompetenz-Kompetenz) Article 1690, §1 Judicial Code).
The argument that the arbitral tribunal lacks competence must be raised in the first written submissions of the relevant party (Article 1690, §2 Judicial Code). If submitted later on in the proceedings, such plea will only be admissible if the arbitral tribunal considers the delay to be justified. The lack of competence of the tribunal can be raised even if the party raising it has appointed an arbitrator or co-operated with the appointment of one.
In order to combat delaying tactics, an arbitral tribunal can decide to bifurcate the proceedings in order to deal with its own competence separately or can decide on this matter in its final award (Article 1690, §3 Judicial Code). Regardless of how the tribunal decides to deal with the issue of its own competence, its decision can only be challenged together with the final award (Article 1690, §4 Judicial Code).
If a party raises the objection that a dispute is subject to an arbitration clause, a court must decline to hear the case if it finds that the arbitration clause is valid, that the dispute concerns a matter which is arbitrable and that the arbitration clause has not been terminated. In order to be admissible, the plea or exception of arbitration must be raised before any other defence arguments (Article 1690, §2 Judicial Code).
If a dispute is brought directly before an arbitral tribunal and this tribunal considers that it has jurisdiction to hear the claim based on the principle of Kompetenz-Kompetenz, the court will only be able to address the issue of the arbitral tribunal's competence in subsequent setting-aside proceedings (Article 1690, §4 Judicial Code combined with Article 1717, §3, a), 1)). A national court will also be able to assess jurisdiction issues in the context of enforcement proceedings of (Belgian and foreign) arbitral awards (Article 1721, §1, a), 1)).
If the arbitral tribunal rules that it is without jurisdiction, the competent Court of First Instance can rule on the merits of that decision at the request of one of the parties (Article 1690, §4 Judicial Code). As an arbitral tribunal is not bound by the assessment of the state courts in relation to its competence, it is somewhat unclear what the value of a decision of the court is and whether an arbitral tribunal must defer to the court's assessment with regard to its jurisdiction or not.
In order to avoid parallel arbitration and setting-aside proceedings, a decision of the arbitral tribunal that it has jurisdiction can only be challenged together with the final award (Article 1690, §4 combined with Article 1717 Judicial Code).
A decision of the arbitral tribunal that it is without jurisdiction to hear a claim can, by contrast, be challenged immediately before the competent Court of First Instance (Article 1690, §4 Judicial Code).
The review by the Belgian courts of jurisdictional issues is a de novo review. This creates a certain tension in the scenario where the arbitral tribunal has ruled that it is without jurisdiction to deal with a case, but the court accepts a challenge of this decision ruling that the arbitral tribunal does have jurisdiction. It is unclear how the issue must, in the end, be resolved as the arbitral tribunal has issued a final award and thereby completed its mission. It is debated in legal doctrine whether a freshly constituted arbitral tribunal would again be competent to assess its own competence, or whether it must then defer to the court's assessment.
If a party initiates court proceedings in violation of a contractual arbitration agreement, its opponent will be able to raise a plea before the Belgian court that the latter is without jurisdiction to hear the claim. This plea must be raised before any other defence arguments in order to be admissible. If the court's review reveals that the arbitration clause is valid, concerns a dispute which is arbitrable and has not been terminated, it must refuse to hear the claim (Article 1682, §1 Judicial Code).
The fact that court proceedings are pending will not prevent arbitration proceedings from being initiated or continuing and an arbitral award from being rendered (Article 1682, §2 Judicial Code).
Proceedings to obtain an anti-suit injunction prohibiting a party from commencing court proceedings on the basis that such proceedings would violate an arbitration clause cannot be brought before the Belgian courts. Foreign anti-suit injunctions are furthermore unlikely to be enforced in Belgium.
In the absence of a valid arbitration agreement, parties cannot be compelled to participate in arbitration proceedings. However, legal successors will be bound by arbitration clauses validly entered into by their predecessor. Likewise, a bankruptcy receiver will (subject to certain exceptions) be bound by arbitration clauses entered into by the bankrupt entity.
Furthermore, it is possible for interested third parties to make an application to join the proceedings, and for a party to call upon a third party to join the proceedings (Article 1709, §1 and §2 respectively Judicial Code). In such A case, there must be a valid arbitration agreement between the parties and the arbitral tribunal must unanimously consent to the joinder (Article 1709, §3 Judicial Code).
The rules of arbitration institutions such as CEPANI and ICC contain relevant provisions dealing with the intervention and the joinder of third parties to arbitration proceedings.
Unless they have agreed otherwise, the parties can apply to the arbitral tribunal for conservatory measures or interim relief (article 1691, §1 Judicial Code). In contrast to a request for interim relief from the domestic courts, a party requesting interim or provisional measures from an arbitral tribunal is not required to demonstrate the urgency of its request. The lack of urgency can of course be taken into account by the arbitral tribunal in its assessment of whether the measure is justified. The arbitral tribunal will need to make a careful assessment as to its prima facie competence, the prima facie merit of the case, the opportunity and necessity of the requested measure and whether the measure is proportionate. The measure can only deal with the situation of the parties provisionally and cannot affect the merits of the case.
There are no specific procedural requirements for the arbitral tribunal to deal with a request for conservatory measures or interim relief. The procedure followed will, however, need to comply with the requirements of due process and equal treatment of the parties (article 1699 Judicial Code).
There are few limitations to the type of preliminary relief or conservatory measures which can be requested from or granted by an arbitral tribunal, save that an arbitral tribunal cannot order a conservatory attachment (article 1691, §2 Judicial Code), a verification of the authenticity of notarial deeds (article 1700, §5 Judicial Code) or ex parte interim measures. An arbitral tribunal can, inter alia, order the appointment of an expert, impose measures to secure evidence, award a provisional payment, impose a prohibition to dispose of certain goods, etc.
The decision of the arbitral tribunal will be binding. Its enforcement will, however, be subject to the recognition and enforcement of the decision by the Court of First Instance, who will deal with the request in ex parte proceedings. A party who seeks or obtains recognition or enforcement of an interim or conservatory measure must inform the arbitrator or the chairman of the tribunal of this and of any termination, suspension or modification of the measure (article 1696, §2 Judicial Code).
The arbitral tribunal can provide for a penalty in case of non-compliance with its award (article 1713, §7 Judicial Code). The party having requested the measure enforces it at its own risk and will be liable if the arbitral tribunal later determines that it should not have been granted. At the request of one of the parties, the arbitral tribunal can amend, suspend or terminate the conservatory measures and interim relief (article 1692 Judicial Code). Although an arbitral tribunal cannot annul or overturn the interim relief awarded by the domestic courts, it could de facto take measures to neutralise any relief obtained from the domestic courts.
The CEPANI arbitration rules provide for the possibility to request the appointment of an emergency arbitrator to rule on a request for interim relief pending the constitution of the arbitral tribunal. Such an emergency arbitrator must render an award on the requested interim relief within 15 days from the receipt of the file.
Aside from applying to the arbitral tribunal, the parties can also apply to the courts for interim relief or conservatory measures. Such a request does not imply a waiver of the arbitration agreement (article 1683 Judicial Code). It is contested whether the parties can exclude the possibility for the domestic courts to order interim relief and conservatory measures in connection with arbitration proceedings.
The domestic courts, ruling in summary proceedings, have the same powers as they would have in relation to court proceedings, meaning that, in contrast to the arbitral tribunal, they can authorise, e.g., an attachment or garnishment.
Interim measures can be requested both prior to or after the constitution of the arbitral tribunal. The request will need to comply with the provisions of the Judicial Code. In case emergency relief is requested prior to the constitution of the arbitral tribunal, the applicant will more particularly need to demonstrate the urgency of its request and the need for interim measures in order to prevent irreparable harm. In case of absolute necessity, interim measures can be obtained by way of ex parte proceedings.
If interim relief has been granted by an arbitral tribunal, the order will be recognised an enforced by the Court of First instance in ex parte proceedings irrespective of the nationality of the award ordering the interim relief. The courts may only refuse to order the enforcement of an interim or conservatory measure based on the limited grounds set out in article 1697 Judicial Code (which include, e.g., a failure to comply the decision on security for costs, termination or suspension of the order and a number of grounds which warrant a refusal of the recognition and enforcement of an award, as further detailed in 12.2 Enforcement Procedure).
The arbitral tribunal can, either of its own motion or further to the request of any of the parties, make the requested relief subject to the provision of appropriate security (article 1693 Judicial Code). The most common type of security consists of a bank guarantee or an escrow of funds on a blocked bank account. The domestic courts have the same power in case they order interim measures or are requested to recognise and enforce an arbitral award imposing interim measures (article 1696, §3 Judicial Code).
The parties are free to determine the rules governing the arbitration procedure (article 1700 Judicial Code), whether by opting to have the proceedings governed by a specific set of arbitration rules or otherwise. The only limit to the autonomy of the parties to regulate the proceedings is that they must respect the principle of due process and the equality between the parties (article 1699 Judicial Code). These principles imply that the parties must be given a full and equal opportunity to present their case. This more particularly entails (i) that the parties must be duly informed of the commencement of arbitration proceedings and of all further important steps in the procedure, (ii) that they must be timely and duly notified of all claims evidence and legal arguments, (iii) that they have the right to legal representation, (iv) that there must be reasonable deadlines for them to prepare for and to present their arguments and evidence, (v) that the arbitral tribunal must be independent and impartial, (vi) that decisions based on ex parte communications or unilateral investigation by the tribunal are not permitted and, lastly, (vii) that the parties must be protected against unexpected decisions from the tribunal which are not based on legal and factual elements and where the parties have not been able to present their arguments. In light of these principles, the parties can, e.g., provide for multiple rounds of submissions, for the use of multiple languages, for multiple days of witness testimonies, etc. They cannot, however, exclude the possibility for one of the parties to plead.
In the absence of an agreement between the parties, the arbitral tribunal is free to determine the procedural rules, provided always that it complies with the principles of due process and equal treatment.
It will moreover be up to the arbitral tribunal to safeguard the loyalty of the debates, and to ensure that the parties act reasonably in the exercise of their rights and do not abuse them. It more particularly has an obligation to supervise the swift and efficient conduct of the proceedings. The arbitral tribunal could therefore intervene if one of the parties employs delaying tactics.
Lastly, the parties and the arbitral tribunal must respect the provisions of the Judicial Code on arbitration which are mandatory in nature. The relevant provisions are set out in article 1676, §8 Judicial Code and include, inter alia, the provisions relating to the assistance of the domestic courts for interim and provisional measures and the taking of evidence, the rules on the recognition of arbitral awards, the objection to the court's jurisdiction based on an arbitration agreement, etc.
There are no compulsory steps in arbitration proceedings. It is, e.g., not mandatory under Belgian law to draft Terms of Reference or to organise oral hearings. The parties are free to organise the proceedings as they see fit (as the case may be by agreeing to apply the rules and procedures of an arbitration institution), subject always to the principles of due process and equal treatment (article 1700 Judicial Code).
In the absence of an agreement between the parties, the provisions of the Judicial Code will apply. These are not very detailed when it comes to the various steps in arbitration proceedings. They do specify, however, that the arbitration proceedings will commence on the date on which an arbitration application is received (article 1702 Judicial Code). The parties must then develop their pleas and arguments in support of their claim or defence within the agreed deadlines or the deadlines set by the court. In the absence of an agreement of the parties that there will be no oral treatment of the case, the arbitral tribunal will organise oral pleadings at the appropriate time when a party requests for this (article 1705, §1 Judicial Code). An arbitral award must in principle be rendered within six months as from the date of the appointment of the last arbitrator (article 1713, §2 Judicial Code), by a majority of the members of the arbitral tribunal (article 1711, §1 Judicial Code).
The powers of arbitrators are comparable to those of court judges, provided that they cannot order certain types of measures, such as attachments, verification of the authenticity of notarial deeds and other authentic instruments, and ex parte interim measures. They can furthermore not compel a person to perform a certain action. Their decisions cannot be enforced without exequatur.
The mission of the arbitrators is essentially to resolve the dispute between the parties in accordance with the terms of the arbitration agreement (as the case may be as supplemented by the provisions of the Judicial Code and the rules of the relevant arbitral institution) in a swift and efficient manner. The arbitrators must ultimately render a written and motivated award which will withstand scrutiny and be upheld in any subsequent setting aside proceedings and which is capable of enforcement. Whereas the arbitrators must, in principle, resolve the dispute based on the applicable legal principles and in compliance with the legal requirements, they can also decide "ex aequo et bono" or as "amiable compositeur" if the parties have agreed upon this (Article 1710, §4 Judicial Code).
In the absence of a specific agreement between the parties, it will be up to the arbitral tribunal to determine the procedural rules for conducting the proceedings. In doing so, they must respect the principles of due process and equal treatment (Article 1699 Judicial Code). These principles imply that, notwithstanding any agreement between the parties to the contrary, the parties must be given a full and equal opportunity to present their case.
The arbitral tribunal will moreover need to safeguard the loyalty of the debates and ensure that the parties act reasonably in the exercise of their rights and do not abuse them. It more particularly has an obligation to supervise the swift and efficient conduct of the proceedings. The arbitral tribunal could therefore intervene if one of the parties employs delaying tactics or attempts to frustrate the proceedings.
The parties' representatives need not satisfy any specific legal requirements. This applies to the appearance of both local and foreign legal representatives (which is not subject to any specific restrictions). Contrary to what is the case for litigation before the Belgian domestic courts, however, legal counsel will not be presumed to have a mandate to represent a party in the proceedings. The arbitral tribunal will therefore in practice usually require that it is presented with a power of attorney authorising the relevant legal counsel to represent the party in question throughout the arbitration proceedings.
Although, save for certain limited exceptions, the conduct of legal representatives in arbitration proceedings is not specifically regulated, it is generally assumed that the relevant representative's professional rules apply. In addition, the IBA Guidelines on Party Representation in International Arbitration are a common standard for the behaviour of legal representatives. There are, however, some discrepancies with the local ethical rules and the latter will most likely prevail in case of conflict.
For international arbitration, the Code of Conduct for European Lawyers also expressly provides that the lawyer's relations with the arbitrators are subject to the same rules as those applying to its relations with the court. By way of exception to the rules of Conduct of the Belgian Bar Associations that lawyers cannot contact and prepare witnesses both the French and the Dutch-speaking Bar authorise prior contacts with witnesses in international and domestic arbitration. Contacts with witnesses must, however, still be handled with care, especially in domestic arbitration with legal representatives of the Dutch-speaking Bar, as it is not permitted to exercise any undue influence on them.
The arbitral tribunal has no power to sanction a violation of the ethical rules by one of the parties' representatives. This is a matter to be handled by the disciplinary authorities. In practice it is, however, possible for the arbitral tribunal to exercise some measure of control over the behaviour of the parties and their representatives based on the requirement for it to safeguard the loyalty of the debates. It can therefore intervene if a party would resort to delaying tactics or attempt to frustrate the proceedings by, e.g., refusing requests for an extension or a supplementary procedural deadline, or by ordering a party to disclose certain evidence it holds. In addition, the arbitral tribunal might take the behaviour of a particular party into account when deciding on the allocation of costs.
The parties have significant freedom to organise the proceedings, including with regard to the collection and submission of evidence. They can, e.g., provide for elaborate document production and/or witness testimonies and hearings, provided always that the principles of equal treatment and due process are complied with. If the parties do not provide for any specific rules, it will be up to the arbitral tribunal to determine them.
In practice, the IBA Rules on the Taking of Evidence in International Arbitration are commonly referred to as the point of reference for the collection and assessment of the evidence in (international) arbitration. For domestic arbitration, it used to be more common to refer to the local rules on the taking of evidence, but the lines are becoming more and more blurred, with parties in domestic arbitration increasingly opting for document disclosure and witness testimonials influenced by common law rather than civil law traditions.
The arbitral tribunal is free to assess the admissibility and the evidentiary value of the evidence adduced (article 1700 Judicial Code).
The arbitral tribunal can furthermore order practically any investigative measures it deems fit. Some of these measures are detailed in the Judicial Code. The arbitrators have significant freedom, however, to order other measures (such as, e.g., site visits, a decisive or supplemental oath, etc).
The arbitral tribunal can, more particularly, decide to hear witnesses (article 1700, §4 Judicial Code). No distinction is made between the various types of witnesses which the arbitral tribunal could hear. Testimony can be given by factual witnesses, but also by experts or representatives of a party. It will of course be up to the tribunal to assess the probative value of the testimony taking into account the type of witness. Witnesses need not testify under oath in Belgium (although it arguably is technically possible that they would do so). Witness testimonies have become almost standard practice in international arbitration but also, although perhaps less frequent, in domestic arbitration. There are no set rules on how witness testimonies must be organised. The arbitral tribunal therefore has an important role to play in that regard and must in particular ensure that the rules of due process are complied with.
The arbitral tribunal can furthermore order a party to produce the evidence it holds, as the case may be subject to a penalty in case of non-compliance (article 1700, §4 Judicial Code). Again, no specific rules exist on the concrete organisation of a document disclosure process. The parties can therefore agree on or, in the absence of an agreement, the arbitral tribunal can impose specific rules, e.g., to deal with the confidential nature of documents. An arbitral tribunal is not bound by the restrictive rules on document disclosure which apply in proceedings before the domestic courts which require that there are clear, precise and concurring indications that a party holds evidence which is useful to resolve the dispute. In practice, however, arbitral tribunals will often be inspired by these rules, especially in domestic arbitration.
The arbitral tribunal can also verify and rule on the authenticity of documents, save for notarial deeds or other authentic acts (article 1700, §5 Judicial Code). If a party questions the authenticity of these types of documents, the arbitral tribunal can suspend the proceedings in order to give the parties the opportunity to bring their claim before the regular courts.
Lastly, the arbitral tribunal can, either of its own motion or at the request of one of the parties, decide to appoint one or more experts to opine on certain well-defined aspects of the case (article 1707 Judicial Code). It could, e.g., ask for advice on factual aspects of the case, or even to clarify the law of a country, without delegating its power to rule on the relevant legal issues to that expert. The expert can be heard subsequent to or, as the case may be, at the same time as any party-appointed experts to allow for witness conferencing or "hot-tubbing" of experts.
The arbitral tribunal can make its document disclosure orders subject to the payment of a penalty in case of non-compliance (article 1700, §4 Judicial Code).
It does not, however, have the power to compel a person, and more particularly witnesses or third parties, to perform a certain action. These types of measures, e.g. an order summoning a witness to appear, can be obtained from the Court of First Instance. A party must, however, first obtain leave from the arbitral tribunal before seeking such measures (article 1708 Judicial Code).
The Judicial Code does not provide that arbitration proceedings are confidential. It is, however, common for the parties, especially in international arbitration, to agree that the proceedings will remain confidential.
If the parties opt for institutional arbitration, the applicable rules might provide that the proceedings will be confidential. This is the case for arbitration conducted under the CEPANI arbitration rules which is in principle confidential, unless the parties agree otherwise or there is a legal obligation to disclose them.
If the arbitration proceedings are ad hoc, then it is advisable for the parties to expressly provide that the proceedings will remain confidential. Both in case of institutional and ad hoc proceedings, it is likewise advisable to obtain confidentiality undertakings from parties who are not bound by the terms of the arbitration agreement, such as experts and witnesses.
To the extent that, in the context of arbitration proceedings, parties apply to the courts for assistance, these proceedings will not be confidential.
The arbitrators have a duty of professional secrecy towards the parties which is criminally sanctioned (article 458 Criminal Code). The arbitral institution will also be held to respect the confidentiality of the proceedings.
The arbitral award must be in writing and must be signed by the arbitrator or the majority of the members of the arbitral tribunal (if there is more than one). If not all arbitrators have signed the award, the award must state the reason for this.
The award must also state the reasons on which it is based (article 1713, §4 Judicial Code). This motivation must, more particularly, be clear, precise, complete and adequate. The reasons on which the arbitral award is based must therefore not leave any doubt as to their interpretation, the parties must have been able to present their legal arguments with respect to these motives, the reasons invoked must be sufficient, and they cannot contradict one another.
Aside from the motivation, the arbitral award must furthermore contain certain information, notably the identification of the arbitrators, the parties, the object of the dispute, the date on which it is rendered and the place of arbitration and the place where the award is rendered (if different). There is, however, no real sanction if this information is not mentioned.
There is no express legal provision on the requirements as to the substance of the award. An award must, however, resolve the dispute between the parties or, in the case of an interim award, a point of contention. It must on the one hand respect the agreement between the parties and, on the other hand, respect the applicable laws unless the parties have dispensed the tribunal from complying with these laws. The award will in any event need to comply with any rules of a public policy nature to withstand any setting-aside proceedings or to be capable of enforcement in Belgium.
The Belgian Judicial Code does not specify what types of remedies an arbitral tribunal can award. The types of remedies which the arbitral tribunal can award will, in principle, be determined by the local law applicable to the dispute. The question as to whether the award will be enforceable if it stipulates a certain type of remedy (such as, e.g., punitive damages) might also be a relevant consideration.
If the dispute is governed by Belgian law, the tribunal will not be able to award punitive damages. It can, however, award compensatory and liquidated damages.
There are no specific limits on the powers of an arbitral tribunal to order remedies such as rectification or to enjoin parties to perform certain actions, subject to a penalty payment, provided always that an arbitral tribunal has no power to compel a person to perform a certain action.
Whether the parties will be entitled to recover interest is a matter of applicable law. Under Belgian law, a party may, depending on the nature of the claim, be entitled to compensatory interest or late payment interest. Under Belgian law, a party may, however, not receive compensation which is higher than the actual damages suffered. The allocation of compounded interest is also limited under Belgian law to interest which has accrued for at least one year and which has been formally claimed in writing.
The arbitral award must fix the costs (article 1713, §11 Judicial Code). In the absence any agreement between the parties, it will be up to the arbitral tribunal to decide in which proportion the parties will bear these costs. The costs to be allocated include the fees and expenses of the parties’ counsel and representatives, the costs of services rendered by the instances in charge of the administration of the arbitration and all other expenses arising from the arbitral proceedings.
In line with the principles applicable to court litigation, arbitral tribunals tend to condemn the losing party to pay the costs (or a reasonable part thereof). Depending on the circumstances, they may, however, also decide that each party will pay its own costs. In practice, the allocation of costs could also be used as a means to sanction abusive behaviour of a party.
An arbitral award will in principle be final and binding and not subject to appeal, save in case the parties have expressly provided for the possibility to appeal the arbitral award (article 1716 Judicial Code). In such case, the appeal must be brought before another arbitral tribunal. It is rare for parties in arbitration proceedings to provide that the arbitral award will be subject to appeal.
Further to a recent judgment of the Constitution Court a third party can oppose an arbitral award if it is prejudiced by an arbitral award (Constitutional Court, 16 February 2017). This ruling will require a legislative amendment.
An award will furthermore in principle be subject to setting-aside proceedings unless the parties to the arbitration proceedings are foreign and have expressly excluded this possibility. Awards dealing only with the arbitral tribunal's competence can only be challenged together with the final award (article 1690, §4 Judicial Code).
If setting-aside proceedings are possible and the arbitral award is no longer subject to appeal, these must be initiated within three months from the date of notification of the award by means of a writ of summons to be brought before the competent Court of First Instance. This deadline for filing setting-aside proceedings applies to all grounds for the setting aside, including cases where the award was obtained by fraud (even if this fraud would only be discovered after the expiry of this deadline). This constitutes a major change compared to the previous regime.
The competent Court of First Instance is the court of the relevant judicial district where the arbitration has its seat. Setting-aside proceedings can in principle only be initiated by the parties to the arbitral award, save in case of fraud where third parties can also seek the setting aside of the award.
The grounds for initiating setting-aside proceedings are the following (article 1717 Judicial Code):
(1) The arbitration agreement was not valid (including as a result of the incapacity of a party);
(2) The award was made without a partyhaving been duly notified of the proceedings or having been able to present its case;
(3) The award exceeds the scope of the arbitration agreement;
(4) The award is not motivated;
(5) The composition of the arbitral tribunal or of the arbitral proceedings was irregular;
(6) The arbitral tribunal has exceeded its powers;
(7) The dispute is not capable of settlement by arbitration;
(8) The award is against public policy; or
(9) The award was obtained by fraud.
The grounds referred to in points 1, 2, 3 and 5 above can no longer be invoked if the party has become aware of the relevant irregularity in the course of the proceedings. The irregularities referred to in point 2 and point 5 can moreover only be invoked if they have had an effect on the arbitral award (unless there was an irregularity in the composition of the arbitral tribunal). Only the last three grounds can be invoked by the arbitral tribunal ex officio. The first three must be invoked by one of the parties.
Setting-aside proceedings can be suspended in order to give the arbitral tribunal the possibility to resume the arbitral proceedings or to take such other action as it deems will eliminate the grounds for annulment (article 1717, §6 Judicial Code).
If an award is set aside, the arbitration must be redone, as the case may be before a newly composed arbitral tribunal. The court having set aside the award cannot refer the case to another arbitral tribunal. Depending on the circumstances, the setting aside of the award can trigger the arbitrators' liability, although the fact that an award has been set aside does not necessarily imply that they have committed any wrongful behaviour.
The judgment of the Court of First Instance on the petition for setting aside is not subject to appeal. It is, however, subject to review by the Court of Cassation only on legal grounds.
Aside from the above-mentioned possibility of appeal or setting-aside proceedings, the parties can, furthermore, within one month of the receipt of the award request the arbitral tribunal to correct in the award any errors in calculation, any clerical or typographical errors or any errors of a similar nature or request the arbitral tribunal to give an interpretation of a specific point or part of the award (article 1715, §1 Judicial Code). If the arbitral tribunal considers the request to be justified, it shall make the correction or give the interpretation within one month of receipt of the request. The interpretation shall form part of the award. The arbitral tribunal may also decide to correct any of the above-mentioned errors on its own initiative within one month of the date of the award (article 1715, §2 Judicial Code).
The parties can furthermore, within the same one-month timeframe, request that the arbitral tribunal makes an additional award as to claims presented in the arbitral proceedings but omitted from the award (article 1715, §3 Judicial Code). If this claim is justified, the arbitral tribunal will need to render its award within two months as from the date of the request.
Parties who do not have Belgian nationality or do not have their domicile, normal residence or, in the case of legal persons, their registered office, main place of business or branch officein Belgium can provide that an arbitral award will not be subject to setting-aside proceedings (article 1718 Judicial Code). The waiver must be sufficiently specific in order to avoid any doubt as to the intentions of the parties in this regard. If the parties have waived the possibility of setting-aside proceedings, the scope for challenge of an award will be limited to any proceedings required under local law in order to obtain the enforcement of the arbitral award. In practice, foreign parties rarely waive the opportunity to initiate setting-aside proceedings.
The grounds for legal challenge of an award cannot legally be extended beyond the grounds set out in 11.1 Grounds for Appeal.
If the parties have provided for the possibility of an appeal, the review by the arbitral tribunal of the award will in principle be a review of the merits of the case. It is, however, rare for the parties to provide that an arbitral award will be subject to appeal.
In the default situation, where the award is not appealable, the review of the courts of the award in setting-aside proceedings is limited to the legal grounds set out above. The courts will therefore not be able to review the merits of the case, save if these grounds allow for a limited review thereof (e.g. if a party invokes a violation of rules of a public policy nature, or if it invokes an insufficient motivation of the award).
Belgium is a signatory to the New York Convention, which was ratified on 18 August 1975 and entered into force on 16 November of that same year. It has made a reciprocity reservation and therefore only applies the Convention to the recognition and enforcement of arbitral awards rendered in one of the contracting states.
There is no information relevant to this section.
Belgium is an arbitration-friendly country. As a general rule, arbitration awards will be recognised and enforced in Belgium. The grounds for refusal of the enforcement of an award are limited and are interpreted in a restrictive manner.
As far as the public policy grounds are concerned, the notion of "public policy" is interpreted so as to cover only those grounds which are considered to be part of "international" public policy. It is rare for an arbitral award to be set aside or for the courts to refuse the enforcement of an arbitral award on these grounds.