The governing laws relevant to the Belgian construction market vary as to whether the construction project has a public or private origin. Often specific law arrangements apply to civil works such as some agreements relating to residential projects.

General Legislative Framework

Public projects (ie, construction projects for public entities) are governed by the Act of 17 June 2016 on public procurement (the “Public Procurement Act”) and the Royal Decree of 14 January 2013 regarding the rules for the implementation of public procurements (the “Public Procurement Execution Decree”). 

Private projects are governed by the general rules and principles of the Belgian Civil Code, which is currently being recodified and modernised. The recently adopted Book 5 of the Belgian Civil Code, on Belgian contract law, and the rules on contracting in the old Belgian Civil Code (which are currently still applicable but will be reformed) are particularly relevant to the construction market. While some of these rules and principles are mandatory, others are only applicable to the extent that they are not regulated by contract. 

Specific Legislation

Other specific legislation may be applicable depending on the parties or works concerned, such as: 

• the Act of 9 July 1971 (the “Breyne Act”) for the divestment of residential real estate under development (hereinafter the “Sale on Plan of Residential Projects Act”); and
• both the B2B and B2C-regimes of the Code of Economic Law (including a list of unlawful clauses).

In addition, the location of the construction project may affect the applicable rules. Certain legal domains relevant to the building sector, such as permitting and energy, are organised at the regional level, resulting in different legislative regimes in the Flemish, Brussels-Capital and Walloon Regions. 

To conclude, the Belgian construction market has to abide by several safety standards (eg, the appointment of a safety co-ordinator), protective measures for the public (eg, the obligation to engage an architect for works subject to a building permit pursuant to the Act of 20 February 1939 on the profession of architect), social security and tax provisions (such as the Act of 4 August 1996 on the wellbeing of workers during the performance of their obligations and the Royal Decree of 25 January 2001 on temporary or mobile sites), as well as comply with the increasingly influential and topical regulations on sustainability, energy and ESG.

Belgian legislation can be consulted online in the national languages Dutch, French and German: https://www.ejustice.just.fgov.be/cgi_wet/wet.pl. 

Private Projects

Construction contracts in Belgium are usually tailor-made, taking into account the size of the construction project and the type of works to be executed. Standard contracts are seldom in the domestic development market.

However, for larger industry and infrastructure construction projects involving international actors, the International Federation of Consulting Engineers (FIDIC) Silver Book (1999 edition) EPC template is sometimes used (to date, there has not been any tick-up of the newer 2017 edition). More recently (driven by a renewed interest of contractors in cost-reimbursable contracts) but to a much lesser extent, elements of the new engineering contracts (NEC3 and NEC4) have been used.

Public Projects

For public procurements, standard contracts are much more common. In general, the execution of a public procurement contract is governed by the provisions of the Public Procurement Execution Decree (eg, regarding the delivery of the works). These traditional public procurement contracts are therefore fairly standardised, although the specific tender rules may deviate from some of these provisions in certain circumstances.  

For Design-Build-Finance-Maintain (and Operation) (DBFM(O)) projects and concession contracts, a template contract is generally used, subject to further negotiations between the public and private partners during the tender procedure. It is worth noting that the different governments (federal and regional) in Belgium all have their own templates, under which certain concepts are treated somewhat differently (eg, use of different categories of supervening events with different consequences in Flemish DBFM(O)s versus a more general employer risk concept in certain federal DBFM(O)s.

Type of Employers

Employers under Belgian development projects are typically public entities or private developers and investors (either acting in their own name or through special-purpose vehicles specifically set up to realise, and sometimes subsequently divest, the construction project. To observe in this respect that (the divestment of development projects through) share deals are, in principle, not subject to any form of real estate transfer tax). 

General Contractor Versus Delegated Developer

Two set-ups are frequent under Belgian development projects: either a general contractor set-up whereby the employer has one contractual relationship with a general contractor, who in turn appoints, co-ordinates and controls subcontractors per type of specialised works; or a project management/delegated development set-up whereby the employer appoints a delegate, the delegated employer, managing the construction project on behalf of the employer, assuming certain of its obligations including appointing, negotiating, supervising and co-ordinating with contractors. 

Employer’s Central Obligations

As set out in 3.4 Construction, the employer’s central obligations include:

• allowing and enabling the contractor(s) to perform the works by granting access to the construction site; 
• paying the agreed price; and 
• accepting the works (provided that they correspond to the contractual specifications and are absent of defects obstructing the contemplated use of the property).

Obligation to Appoint an Architect

For works requiring a building permit, the employer will in principle and subject to certain exceptions have to appoint an architect. This is mandatory and of public order. The architect performs its duties independently, signs off on the design (and the building permit) and supervises the execution of the work (although the supervising architect need not be the same as the one who drew up the design).

Free Choice of Contracting Parties

The choice of architect and contractor is done freely by the employer, except if the employer is a public entity in which case the public procurement legislation will, in principle, be applicable, as well as the general public principles of equality and transparency. Certain type of works, however, required specialised contractors, such as for example for the performance of asbestos removal works.

Financing

It is rare for the employer to finance major construction projects itself. External sources of funding offered by banks, insurance companies or private equity funds are often involved.

Type of Contractor

The contractor is usually a private company, having the necessary entrepreneurial skills and technical knowledge to execute a construction project. For public works that fall within the scope of the Public Procurement Act, the contractor will have to be accredited and – pursuant to the public procurement rules – present the most favourable terms regarding the execution of the works in accordance with the criteria set out for the project. 

Contractor’s Central Obligations

As set out in 3.4 Construction, the contractor has a general information duty and is responsible for carrying out the works within the scheduled timing and in compliance with the contractor agreement and the specifications referred to therein. Moreover, the contractor ensures the safety of the construction site.

Co-ordination Mission of the General Contractor

For more comprehensive construction projects, the employer will usually designate a general contractor, who will co-ordinate the project and appoint subcontractors in return for a coordination fee.

In principle, the general contractor is free to choose the subcontractors of its choice. However, the employer and general contractor can also contractually stipulate how the subcontractors should be selected, for example by deciding that certain subcontractors may only be assigned by mutual agreement between the employer and the general contractor, or even that the employer may impose certain subcontractors on the general contractor.

For public procurements the general contractor’s liberty to appoint subcontractors is limited, as the appointed subcontractors should already be identified in its offer.

The general contractor will, despite the delegation of works to subcontractors, remain fully responsible and liable towards the employer for the completion of the works.

There is no direct relationship between the employer and the subcontractor, except for the direct claim under the Belgian Civil Code, which allows the subcontractor to receive what the employer owes to the general contractor in case the latter fails to comply with its obligations towards that subcontractor.

Private Construction Projects

Private construction projects are commonly financed through traditional financing by banks offering mortgage loans. Foreign banks, notably German banks, are actively involved in this type of financing of Belgian construction projects. In addition, in more recent years, direct lenders increasingly finance private construction projects, through both senior and mezzanine financing structures.

Public Construction Projects

Public construction projects are usually financed via public private partnerships (PPPs), consisting primarily of domestic financiers, such as Belgian banks, but increasingly also insurance companies and funds.

Third Parties

In principle, the financiers are third parties to the key project contracts and their involvement beyond the funding of the construction works is limited. However, financing agreements will usually contain specific undertakings to be fulfilled by the borrower, such as information obligations or the obligation to take out certain insurances for the works. In addition, for large-scale construction projects, the borrower and lender may opt for a direct agreement, to enhance the lender’s security in the construction project and to allow them to step into the borrower's contractual relationships to a certain extent.

Typically, contractor agreements define the scope of the works by reference to technical specifications (with measurement statement), the building permit and architect plans. This is complemented by referring to compliance with the applicable laws, the applicable technical norms and good construction practices.

Typically, contractor agreements provide the right for employers to request changes to the agreed works subject to respecting a concertation procedure. During such procedure the contractor will typically have to submit to the employer a proposal for the implementation of the requested works, including the required changes to the technical specifications, the price and the timing. The scope and price of the requested variations would subsequently be the object of good faith negotiations between parties.

Architect

The responsibility for the design process lies with the architect. It is the architect who will design, ie, create and materialise in a graphic and written way all instructions necessary for the realisation of the project compliant with the requirements of the employer.

The design process will include (i) preliminary studies, such as the examination of the applicable legal and urban planning constraints and the state and stability of the (sub)soil. Such studies can be outsourced to external engineering agencies (be it that, in such case, the architect will remain liable for the choice of the external engineering agency and the co-ordination of the conception of the constructions); and (ii) the establishment of complete plans and description of the required materials.

Employer

The employer is responsible for the overall planning and execution of the design process, including hiring the architect and the contractor(s).

General Contractor

General information duty

The (general) contractor has a duty to inform, warn and advise the employer prior to and during the execution of the works (relating to risks, safety measures, construction methods, materials, pricing, and misconducts (of employees, other contractors or third parties), etc). This information duty also applies, to a certain extent, to other intervening parties in the construction process (ie, the architect and other contractors).

Due and proper execution and delivery of the works

The (general) contractor is, of course, responsible for the due and proper execution of the works in compliance with the contractor agreement (and the specifications referred to therein) and the good construction practices. As a result, they have a control duty, and are responsible for the delivery of the construction materials (free of defects) and labour force. 

The works have to be finalised and delivered by the (general) contractor, within the agreed execution timing.

Custody and return duty

The (general) contractor has a duty of custody, and a duty of return on equipment and materials given into custody.

Safety duty

The (general) contractor has a safety obligation derived from its general duty of care, such as surveying the site (to prevent theft) and securing it against accidents.

Architect

The employer is required by law (subject to certain exceptions) to appoint an architect for the execution of the construction works requiring a building permit. This obligation is of public policy considering that the architect has to survey the safety of the works in the public interest.

General advisory role and surveyance of the budget

The architect has to advise and assist the employer, including with respect to the establishment and monitoring of the budget.

Conception (design)

The architect is responsible for the conception (design) of the constructions (ie, presenting in a graphic and written form all instructions necessary for the realisation of the constructions). See 3.3 Design.

Supervision of the works

The architect is responsible for supervising the works and their compliance with the prescriptions of the architect (as set out in the plans, specifications, directives, legal and urban planning prescriptions, the permit and the good construction practices). It will also verify the compliance of the contractor’s invoices as opposed to the executed works.

Employer

The employer:

• designates the (general) contractor(s) and the architect (it being understood that the employer might also directly award certain “lots” of work (eg, HVAC) to contractors other than the general contractor);
• is entitled to effect coercive measures against the contractor(s) and the architect;
• has to ensure that the works can be executed (eg, ensuring that the site is free of use and providing their contract parties with the information required for the execution of the works, such as the existing plans etc); and
• has to accept the works (provided that they correspond to the contractual specifications and are absent of defects obstructing the contemplated use of the property, see 3.10 Completion, Takeover, Delivery).

The allocation of responsibilities with respect to the status and conditions of the project site (such as underground obstacles, geotechnical conditions and archaeological finds) generally remain with the employer under Belgian construction contracts, even if the contract was entered into on the basis of a fixed lump-sum price (forfait).

This does not apply, however, to foreseeable conditions that render the construction process more burdensome for the (general) contractor, such as an increase in the cost of materials or wages if the contract was entered into on the basis of a fixed lump-sum price (forfait).

The risk allocation between the employer and the contractor is not governed by mandatory or regulatory law.

Principle

In principle, a building permit for the construction of the building and an environmental permit for the operation of the building are required. Each region (ie, the Flemish, Walloon and Brussels-Capital Regions) has adopted its own regulations. In the Flemish Region both permits have been combined in a single permit covering both the former building and environmental permit. In the Walloon Region, certain projects also require a single permit, covering both the environmental and the building permit. In the Brussels-Capital Region there is no integrated, single permit and the two permits remain separate, it being understood that for certain projects the permitting procedures are connected.

Responsible Party

The building permit is connected with the building (not the permit requesting party). As a result, the permit request can, in principle, be submitted by any involved party, although typically this will be the employer. 

For the environmental permit, the request should be submitted by the (actual) operator of the building. It is common practice, however, that the employer/owner of the building will also request the environmental permit for the main technical installations located in the building, which are not specific to the operator of the building (eg, heating and cooling installations). In such case, the operator of the building can request an additional single permit to cover the installations/activities related to the specific use of the building. 

The (general) contractor will be responsible for the state of the constructions (hence including maintenance and repairs) until the provisional delivery of the constructions to the employer (duty of care). After provisional delivery, the contractor remains liable for defects remediation during the (contractually agreed) defects liability or warranty period(s), as well as for structural defects under the statutory decennial (ten-year) liability (see 3.11 Defects and Defects Liability Period).

Subsequently, throughout the life of the constructions (other than residential real estate), in a letting context, the owner/landlord’s responsibilities will typically be limited to gross repairs, while the occupiers will be responsible for all other maintenance and repairs. The owner/landlord’s maintenance and repair responsibilities are more comprehensive in residential occupation agreements.

Other functions in the construction process such as operation, finance, transfer or safety are usually addressed between the employer and third parties, not the contractor.

The responsibility for and the cost of tests, inspections and approvals, will in general be assumed by the (general) contractor (yet, included in the contract price). If no general contractor is appointed, this will typically be outsourced to an expert third-party consultant. The test responsibility does not prejudice the employer’s obligations in relation to (provisional and final) acceptance of the works (and the related tests and inspections).

The completion process typically occurs in two stages: provisional and final acceptance.

Provisional Acceptance

Provisional acceptance will occur when the works reach a final stage, being a stage where the works have been finalised and are free of any (visible) defects or, at least, any defects other than “minor” defects or “punch items” that do not obstruct the contemplated use of the property. 

To determine such state and compliance with the contractual specifications, the employer will be invited by the general contractor for one or more acceptance visits, enabling the employer to inspect the constructions, as the case may be assisted by the architect and technical advisors. 

Provided no or only minor defects are identified, parties will proceed with the provisional acceptance (listing the minor defects or punch items to be remedied by the contractor) by adopting provisional acceptance minutes. The provisional acceptance corresponds to the handover of the constructions and implies the acceptance of the property in its visible state (ie, visible defects that are not enacted in the provisional acceptance minutes are deemed accepted and cannot, in principle, be brought up later). Parties can nonetheless deviate from this through specific warranty provisions.

Final Acceptance

Upon remediation of the minor (visible) defects identified during the provisional acceptance and any (hidden) defects identified during the warranty period (see 3.11 Defects and Defects Liability Period), parties will proceed with the final acceptance of the works by adopting final acceptance minutes. A minimum of one year (or two years for the acceptance of special techniques) usually needs to expire between provisional and final acceptance, corresponding to the defects liability/warranty period (see 3.11 Defects and Defects Liability Period), to enable the employer to discover any (hidden) defects and test the proper remediation of the minor (visible) defects/punch items.

Particularities for Residential Development Projects

Particular mandatory acceptance rules are applicable to residential real estate projects falling within the scope of the Sale on Plan of Residential Projects Act (see 1.1 Governing Law).

Statutory Decennial (Ten-Year) Liability: Structural Defects

The Belgian Civil Code provides for a statutory decennial liability of the contractor, the architect and stability engineer (and potentially other technical study agencies) for hidden or apparent defects affecting the structural soundness of the building or a significant portion thereof. The ten-year liability period starts from acceptance (agréation/aanvaarding) of the constructions. Such acceptance in a traditional two-step acceptance is considered to correspond to the final acceptance. However, it is possible (and rather common) to contractually provide that this period starts earlier (ie, upon provisional acceptance). 

“Minor” Defects and Warranty Period 

The contractor is responsible for “minor” defects or “punch items” (see 3.10 Completion, Takeover, Delivery). Visible defects should be remedied within the defects liability period, ie, the period between provisional and final acceptance (the employer can withhold final acceptance until all punch items have been resolved). Often a distinction is made between defects in relation to technical equipment (HVAC, lifts and other) and other defects, the first category benefitting from a longer (generally, two-year) defects liability period.

The contractor furthermore remains liable for hidden defects that are discovered even after final acceptance. The statute of limitation for such liabilities correspond to ten years as from the final acceptance of the works, be it that the liability should be invoked within a “reasonable time period” as from the discovery of the hidden defect. The starting point and the duration of the “reasonable time period” are a question of fact assessed by the courts on a case-by-case basis. 

This liability can be adjusted (excluded, limited or increased) by contract. It is usual that contracts limit (or at least, clearly specify) the period in which the guarantee for “minor” hidden defects can be invoked.

Transfer of Warranties

These warranties are automatically transferred to the purchaser in case of sale (as an accessory to the property). Other third parties (such as banks or tenants) do not have any legal action against the contractor, except on the basis of the traditional extra-contractual liability under Article 1382 of the old Belgian Civil Code (therefore, they will have to demonstrate a breach of the general obligation of prudence and diligence, the damage suffered and the causal link between the fault and the damage).

Pricing Models

The following price models are most commonly used in the Belgian construction market:

• a “forfait” – an absolute fixed lump-sum price (no changes to the works can be requested unilaterally by the employer);
• a “relative forfait” (relatief forfait/forfait relatif) – a lump-sum price subject to variations in case of changes to the works requested by the employer; and
• a cost-reimbursable (or “cost-plus”) model – the contract price is based on the contractor’s actual costs (on an open book basis), subject to certain disallowed costs, plus a co-ordination fee.

The “relative forfait” was the rule until the surge in inflation and cost of construction materials in 2022. Currently, for these reasons, contractors are now pushing for cost-reimbursable contracts (ie, hybrid models with a lump-sum and a cost-reimbursable component), as well as price revision formulae (see next).

Price Revision

In addition, the contract price is regularly subject to revision (“indexation”) clauses, necessarily limited by the limitations imposed by the Belgian Act of 30 March 1976 on economic recovery measures providing that price revision clauses have to comply with the following conditions: (i) no more than 80% of the contract price can be subject to revision (ie, at least 20% should be fixed), and (ii) the revision clause can only refer to parameters representing actual costs relating to the performance of the contract (eg, labour rates or construction materials) and each parameter should be applicable only to the part of the price corresponding to the costs it represents. This means price adjustment formulae that are solely based on a general index (such as the health) index are null and void and will be unenforceable (mandatory law prohibition).

In public procurement contracts on the other hand, the Public Procurement Act and Public Procurement Execution Decree provide for mandatory price revision based on the evolution of wages and one or more other relevant parameters (eg, prices of construction materials) and the limitations imposed by the Belgian Act of 30 March 1976 do not apply. 

Usual Remedies

In Belgium, contractor agreements customarily provide for the following remedies in case of late payment or non-payment of the contract price:

• late payment interests; and
• termination or suspension of the works (usually only in case of repeated and material non-payments).

Interim and Advance Payments

Interim payments are rare in practice, given that the invoicing is usually done on the basis of progress reports or the reaching of milestones (see 4.3 Invoicing). 

Up to recently, advance payments have been rare; however, there is currently an increase in advance payments in connection with rising inflation, in order to allow contractors to make orders as from the commencement of the contract (which then has an impact on the contract price). A two-step notice to proceed mechanism can be another way to address this.

Warranty/Price Retention

Delayed payments may be included in construction contracts in order to allow the employer to withhold part of the contract price at provisional acceptance, until the final acceptance (ie, the remediation of all punch items) has occurred. A commonly used alternative is a bank guarantee (performance or warrant bond). Retention amounts are sometimes used at the start of construction works as well, to bridge the gap until the contractor has provided a performance bond.

Payment Terms

Belgian law provides for a maximum payment term of 60 days as from the receipt by the employer of the invoice or payment request, or as from the delivery of the goods or services if the invoice or payment request is undated or if the employer receives the invoice or payment request prior to the delivery of the goods or services. If no payment term is specified, the default rule under Belgian law is a payment term of 30 days. If there is a certification/acceptance procedure of the goods or services, this procedure should be included in the  60/30-day period. 

In the case of public procurement contracts, Belgian law provides for a verification period of 30 days, followed by a payment period of 30 days following the completion of the verification process.

In terms of payment, the following two methods are typically used in Belgian construction contracts:

• invoicing on the basis of progress reports (certified by an architect or construction manager); or
• invoicing on the basis of achieved milestones (certified by an architect or construction manager).

In a project finance context, additional verification and certification by the lenders’ technical advisor (LTA) is usually required before an invoice can be sent.

Invoicing on the basis of milestones is mandatory for residential real estate projects falling under the scope of the Sale on Plan of Residential Projects Act.

Parties are free under Belgian law to determine and agree the timing and planning for the performance of the works. 

The employer generally dictates the deadline (for overall completion and for intermediate steps, ie, so-called milestones), while the contractor establishes and proposes a detailed planning programme calculated in days accommodating the imposed deadline (in so far as possible). The architect will review and advise the employer with respect to the planning programme.

Upon agreement of a planning programme, the contractor is obliged to perform the works within the agreed timeframe. Compliance with the agreed planning programme is usually contractually backed by specific provisions on delays and liquidated damages. In practice, the project planning process regularly give rise to renegotiations in the execution phase of the works.

Should the construction planning programme not have been contractually determined, the contractor will be obliged to complete the construction works within a reasonable and useful time considering the concrete circumstances.

Contractual Arrangements

Construction agreements will typically provide for late delivery penalties, time extensions (in particular as a result of force majeure events whereby the events that can, or cannot, lead to such situations are generally defined in open- or close-list definitions, or as a result of the employer’s acts or omissions and agreed changes) and, in case of substantial delays, a right to substitution (by a third-party contractor) or termination. In the absence of specific contractual provisions, the provisions of the Belgian Civil Code apply. See also 9.1 Remedies.

Contractual language on potential delays should carefully describe the events justifying delays and if so in what circumstances.

To be observed that in case of delay, the contractor will – first of all and given its duty to execute the contractor agreement in good faith – have to promptly inform the employer thereof.

Specific Legislation

With respect to public procurement contracts, the Public Procurement Execution Decree contains specific provisions related to penalty payments in the event of delay. 

The Sale on Plan of Residential Projects Act also contains specific rules on delays in the context of property development contracts.

Different remedies are available to the employer in the event of delays (provided that the event of delay does not qualify as a force majeure event, see 5.5 Force Majeure). Their application will typically be set out in detail in the contractor agreement. See 9. Remedies and Damages for a more detailed and complete overview of contractual remedies.

Price Suspension

The employer may suspend the payment of the price as long as the contractor does not comply with its contractual obligations.

Delay Penalties

The employer may claim penalties corresponding to the loss suffered as a result of such delay. Since the employer will bear the burden of proof for such loss, construction contracts usually provide for lump-sum penalties per day or week of delay as liquidated damages. Such penalties are typically contractually capped as a portion of the contract price. It is worth noting that, under Belgian law, a judge can reduce liquidated damages that are considered disproportionate or punitive. Employers therefore have an interest in setting delay (and other) liquidated damages at a reasonable level (typically 5-10% of the contract value per started week of delay).

Substitution

The employer could replace the contractor with a third party at the contractor's risk and expense. 

Termination

If the delay constitutes a manifest breach of contract, the employer could also rescind the contractor agreement at the contractor's expense.

As a rule, contractors must inform employers without delay of any event of delay. Any request for an extension of time will typically have to be notified to the employer, with the necessary, supporting documentation, in accordance with the modalities imposed in the contractor agreement.

The execution period may be extended in the event of:

• a contractual extension mechanism (other than in accordance with the below four bullets);
• force majeure (as defined, as the case may be, in the contractor agreement);
• unforeseen circumstances (such as hardship) (as defined, as the case may be, in the contractor agreement);
• change requested by the employer; or
• by mutual agreement.

With respect to changes to the execution period in the framework of a public procurement contract, stricter legal or regulatory conditions might apply, taking also into account the principles of equality and the so-called Pressetext case law of the Court of Justice of the European Union on modifications of a public contract.

The Belgian Civil Code provides a general force majeure regime, suspending or releasing a debtor of its obligations as a result of unforeseeable and unavoidable circumstances or events temporarily or permanently impeding performance. 

Typically, contractor agreements in Belgium modify the statutory force majeure regime. Parties can define an open- or closed-ended list of circumstances and events that are to be considered force majeure for the execution of the contractor agreement and they can regulate applicable modalities and the concrete effects of it. Parties may also decide which of them shall bear the risk of its occurrence.

The Belgian Civil Code provides (since the recent reform of the Code) the right for a party to demand the renegotiation of a contract, in the event of an unforeseeable change in circumstances, not imputable to one of the contracting parties, that would render the performance of the contract excessively onerous, to such an extent that its performance can no longer reasonably be required (so-called hardship).

The strictly cumulative application requirements for hardship are:

• a change in circumstances that makes the performance of the contract excessively onerous, to such an extent that its performance can no longer reasonably be required;
• a change that was unforeseeable at the time the contract was concluded;
• a change that is not attributable to the debtor;
• that the debtor did not assume this risk; and
• that neither the law nor the contract excludes that possibility.

Upon rejection or failure of the renegotiations within a reasonable time, parties may submit their request for amendment to the courts, which will be entitled to either amend the contract to bring it in line with what the parties would reasonably have agreed at the time of the conclusion of the contract if they had taken into account the change of circumstances or terminate all or part of the contract.

In the framework of public procurement contracts, the Public Procurement Execution Decree already included mandatory hardship provisions (including specific rules and limitations) prior to the Belgian Civil Code reform.

Parties are free, within certain limits, to exclude or modify the statutory application of hardship. It is expected that contractor agreements will, systematically, limit or adjust the statutory hardship regime (see also the Belgian Trends & Developments chapter in this guide.

In Belgium, disruptive events can either constitute force majeure events (justifying the temporary or definitive suspension of obligations and, possibly, termination in the event of long-lasting force majeure) or an unforeseen change of circumstances (ie, hardship) opening a right for the parties to renegotiate the contractual terms or otherwise terminate. See 5.5 Force Majeure and 5.6 Unforeseen Circumstances.

Both statutory regimes can be contractually limited or modified.

Parties are free to contractually exclude, modify or limit their liability; it being understood that parties cannot exclude liability:

• for wilful misconduct (opzettelijke fout/faute intentionelle), for personal injury or death;
• that would constitute an erosion of a characteristic obligation under the contract; and

• in breach of rules of Belgian public policy or mandatory law.

As regards the breach of rules of Belgian public policy or mandatory law, it should be noted that under the Belgian mandatory regime governing B2B relationships (Articles VI.91/1-VI.91/10 of the Belgian Code of Economic Law), clauses which exclude liability for wilful misconduct and/or heavy breach (zware fout/faute lourde) or for the non-performance of the essential obligations that form the subject of the agreement are presumed to be unfair contract terms and therefore null and void, unless proof of the contrary can be demonstrated. In addition, contract clauses generally (including exoneration clauses) may be held null and void in case it can be demonstrated that such clauses create a significant (kennelijk/manifeste) imbalance between contract parties.

The concepts gross negligence (grove nalatigheid/negligence grave), heavy breach (zware fout/faute lourde) and wilful misconduct (opzettelijke fout/faute intentionelle) are applicable under Belgian law (eg, in the Belgian Civil Code and the Belgian Code of Economic Law) and, as a result, to contractor agreements.

Construction contracts in Belgium usually provide for limitations on the liability of the contractor for damages in connection with the contract (which is in principle allowed, subject to legal restrictions as set out in 6.1 Exclusion of Liability).

In terms of the amount of liability, parties often include a cap on the total liability of the contractor, which may be expressed as a fixed amount or as a percentage of the contract price. Parties may also contractually exclude certain damages from such cap (eg, damages resulting from gross negligence).

Furthermore, construction contracts commonly provide limitations on the liability of a party to certain types of damages, eg, parties may exclude liability for indirect or consequential damage and/or loss of profit or business and limit the duration of the contractor’s liability for “minor” defects (see 3.11 Defects and Defects Liability Period).

Indemnity clauses can be, and usually are, included in Belgian construction agreements.

Such indemnity clauses typically cover a delay in the execution of works, in the form of lump-sum compensations per day or week of delay. Indemnity clauses can be reduced by the courts, should they be considered manifestly unreasonable or punitive (taking into account the damage and specific circumstances). 

Typically, construction contracts in Belgium provide for the delivery of a performance bond in the form of a bank guarantee warrantying the proper execution of the works by the contractor. The performance bond can typically be reduced or replaced by a (lower) warranty bond on provisional acceptance, with the remaining obligations of the contractor secured by a lower amount. Conditions regarding the release of the guarantee may vary but can, for example, be triggered upon reaching certain milestones (such as a release of half of the guarantee upon provisional acceptance of the works and the other half upon the final acceptance of the works). Other types of guarantees can be agreed between the parties, such as parent company guarantees, letters of credit, performance guarantees and insurance policies.

Clauses of retention of ownership pursuant to which a supplier of materials used in the context of a construction shall remain owner of such materials until the payment in full of their price can also be provided for (see 9.5 Retention of Suspension Rights).

The Sale on Plan of Residential Projects Act provides an obligation for contractors to put a security in place, depending on the type of contractor. Certified contractors must constitute a security equivalent to 5% of the price of the works with the Deposit and Consignment Office. Non-certified contractors must provide a completion guarantee covering in addition the reimbursement of sums paid in the event of termination of the agreement. 

The Public Procurement Execution Decree provides that, in the context of public procurement contracts, a security of 5% of the amount of the public procurement contract must be set up by the contractor.

Construction All risk (CAR) Liability Insurance

The (general) contractor, or the employer on behalf of the (general) contractor, shall subscribe a construction all risk (alle bouwplaatsrisico’s/tous risques chantier) insurance that primarily covers material damage to structures, existing property and site equipment and materials (without discussion of liability and regardless of cause). All construction parties are insured herein. These insurances shall generally include a waiver of recourse against the employer.

Decennial (ten-year) Liability Insurance

Contractors, architects and other intervening parties in the construction process can take out an insurance to cover their statutory decennial liability (see 3.11 Defects and Defects Liability Period). Such insurance is often required by banks and is mandatory for residential real estate projects.

Other Liability Insurance

Contractors may be required by law or contractually to take out further insurance cover, amongst other things, against the risk of third-party claims resulting from workers or motor vehicle accidents, professional and civil liability (including for nuisance to neighbours under Article 3.101 of the Belgian Civil Code).

Belgian law provides a bankruptcy procedure (faillissement/faillite) and a procedure for judicial restructuring (gerechtelijke reorganisatie/réorganisation judiciaire). 

It is common for construction agreements to provide that, in the case of bankruptcy of the contractor, the employer will have the right to terminate the agreement. The contract can provide that the bankruptcy can be a trigger event to call upon the bank guarantee. Clauses providing a right to termination as a result of a judicial restructuring procedure of the contractor are typically included but are prohibited by mandatory law and thus not enforceable. 

As far as bankruptcy procedures are concerned, construction agreements are sometimes deemed to be intuitu personae (such as architect agreements). In the absence of specific contractual provisions, such intuitu personae agreements automatically terminate in the event of bankruptcy. 

In the context of bankruptcy procedures, the curator has the right to terminate or pursue the performance of agreements entered into before the declaration of bankruptcy, provided that the administration of the bankruptcy estate requires it. The co-contracting parties can also request the curator to take position regarding the termination of an agreement within 15 days. In the absence of decision from the curator upon expiry of this period, the agreement is deemed to be terminated.

It is common practice in construction contracts in Belgium to equitably allocate the responsibility for certain risks. Such sharing of responsibility usually translates into contractual provisions relating to, for example:

• the capping of liability for (certain) damages;
• change orders;
• force majeure events and corresponding time extensions;
• the clear definition of defects falling under the contractor’s post-delivery warranty obligation; and
• the limitation of the warranty period for hidden defects.

Absence of Hierarchical Link Between Employer and Contractor’s Personnel

Typically, construction contracts explicitly confirm the absence of hierarchical link between, on the one hand, the employer and, on the other, the contractor and its personnel and, hence, the absence of an employment agreement between the employer and the contractor(‘s personnel). 

Joint Liability for Tax , Non-tax and Social Security Debts

Employers (or contractors) appointing (sub)contractors are jointly liable for the payment of any Belgian tax, non-tax and social security debts (in the sense of the Code of amicable and enforced collection of fiscal and non-fiscal debts) of the (sub)contractor, up to an amount of maximum 35% of the price for the works.

Hence, an employer (or contractor) should verify and monitor the absence of such debts via a governmental platform (www.checkhoudingsplicht.be). 

Would an employer (or contractor) make payments to a (sub)contractor while the latter has such outstanding debts, it should withhold 15% of such payments (excluding VAT) and transfer them to the relevant administration.

Joint Liability for Incomplete Payment of Wages

Four systems of joint liability for incomplete payment of wages exist in Belgium.

In the general system, employers and (sub)contractors can only be liable for the wages of contractor employees after having been formally notified by the social security administration that the contractor has a severe payment problem regarding payment wages (future deficits) and having decided to proceed working with the contractor nevertheless. 

A specific joint liability system for contracting parties in construction works exists as well, which is more severe than the general system and includes joint liability for historic salary debts of contractor staff and is unlimited in time. An employer can be exempt from this liability by obtaining a written declaration of the contractor in the contractors' agreement that wages are paid correctly and will continue to be paid correctly, and by including a reference to the website of the federal government where the minimum wages are listed. If such a declaration or clause exists, liability is in principle only possible for future salary debts of the contractor’s employees and after a similar procedure as the general system is respected, ie, after a notification by the social security administration and in case the employer decided to continue working with the contractor after the notification. It should be noted that, in some instances, even such declaration or contractual provision shall not prevent the application of the joint liability regime.

The third and the fourth systems only apply in specific cases of non-compliance with Belgian employment and social criminal law, ie, in the case of illegal employment on-site and in the case of "prohibited labour leasing", whereby the employer of the construction contract exerts forbidden employer’s authority over the staff of a contractor.

Other Provisions

Other typical contractual provisions relating to personnel in a construction context include:

• clauses on international employment, such as contracting parties confirming all (international) contractor staff on-site are in possession of valid work permits and social security documentation (for example, A1- and LIMOSA-declarations in the case of posting of employees, single permits if contractors use non-EEA citizens);
• compliance with Belgian working time, minimum wage and health and safety legislations; and
• clauses which ensure contractors warrant compliance with social security registration of staff on-site (checkinatwork).

Subcontracting is, as a rule, authorised unless provided otherwise in the contractors' agreement. 

Even when subcontracting is not excluded, the contractors' agreement will typically explicitly provide that the (general) contractor has to control the works carried out by the subcontractor and remains solely liable towards the employer for the works, and define rules for the appointment of subcontractors.

It should also be noted that due to certain recently mediatised cases of social dumping in Belgium, various legislative reforms are being considered to combat non-compliance with Belgian employment law which frequently occurs in projects relying heavily on the use of subcontractors employing foreign staff on Belgian construction sites.

Contractors' agreements typically provide for the transfer of intellectual property rights to the employer. Consequently, it is not unusual for a (general) contractor to impose its subcontractors to assign all intellectual property rights on materials, analysis, design and others to the contractor. If such transfers are not possible, for any reason, the subcontractor may grant a licence to the (general) contractor, with sublicensing rights, on this intellectual property.

In architecture agreements, however, the architects will typically keep their intellectual property (copyright on its plans, studies, designs, including the rights to make copies thereof). When redeveloping existing construction works, compliance with the intellectual property rights of the architect is hence to be taken into consideration.

The remedies available under Belgian law in the event of a breach of contract have been slightly extended as a result of the recodification of the Belgian Civil Code, with the adoption of the new Book 5, which entered into force on 1 January 2023. Consequently, for construction contracts that have been concluded after that date, additional remedies are available to the parties. The remedies from the old Belgian Civil Code have been taken over in the recodification process. 

As a result, parties dispose in essence of the following remedies (unless contractually provided otherwise). 

Suspension of the Contract

A creditor of an obligation may suspend the performance of its obligation should the debtor fail to perform its corresponding obligation. Anticipative suspension is allowed: the creditor may suspend performance when it is clear that its debtor will not have performed its obligation by the end of the performance period, provided that the consequences of non-performance would be sufficiently severe. 

Performance 

A creditor has the right to claim due performance by the debtor of its obligations (except if this would be impossible or abusive). The creditor may also request authorisation in court to perform the obligation themselves or to have it performed by a third party at the debtor’s expense. In case of urgency or other exceptional circumstances, the creditor may, at their own risk, even substitute the debtor by means of a simple written notice.

Damages 

A creditor can seek for remedy by way of compensation of the damages, both in cash and in kind. This concerns full compensation but limited to reasonably foreseeable damage when the contract was concluded. The court must determine this compensation in light of the positive interest, ie, the hypothetical situation wherein the creditor would have been if the contract had been duly executed. With respect to a contractors' agreement, the judge can estimate this positive interest in two ways (depending on the claim): (i) by ordering the contractor to reimburse the repair costs, or (ii) by ordering the contractor to compensate the difference in value between the agreed and performed works. The compensation of damages in the event of an attributable non-performance can be contractually arranged in a damages clause imposing a lump-sum compensation. 

Termination 

The contract can be terminated if the debtor’s non-performance is sufficiently serious or if the contract provides that it justifies termination. Anticipative termination of the contract is allowed, at the creditor’s risk, when it is clear that the debtor, after having been reminded to provide adequate assurances of the proper performance of their obligations within a reasonable time, will not timely perform their obligations and that the consequences of such non-performance would be sufficiently severe. See also 9.6 Termination as regards different means of termination. 

Price Reduction 

In the case of a non-performance that is not sufficiently serious to justify termination of the contract, the creditor can claim a price reduction in court or apply it, at their own risk, by means of a simple written notice. 

The new Belgian Civil Code made the remedies arsenal shift from an opt-in to an opt-out system. Parties need to expressly exclude them from contracts should they want to exclude them.

It is common practice in Belgium to contractually limit and modify the available remedies, especially since the introduction of new remedies as a result of the Belgian Civil Code reform. 

Examples of common contractual limitations of remedies include: 

• modifying or limiting the situations to be considered a serious breach of the contract that justify termination of the agreement; 
• caps on liability, limiting the damages to be paid in the event of certain types of breaches (for example a cap on delay penalties); and
• excluding and/or modulating certain types of remedies, such as the (anticipatory) suspension right, the termination by notice, renegotiation or termination of the contract as a result of hardship or the right to replace the debtor by a third party. 

In order to comply with the applicable mandatory B2B legislation imposing a certain economic balance, it is advisable to make such limitations reciprocal.

Sole remedy clauses are occasionally used in construction contracts, usually in the context of a penalty clause for delays in the completion of the works, or for intermediary delays to agreed milestones under the construction contract that are attributable to the contractor (see 5.2 Delays). Generally, the penalty clause provides for a certain amount per day or week of delay but capped as a portion of the contract price. A judge has the right to reduce excessive penalty clauses.

In Belgian construction contracts indirect or consequential damage, as well as loss of profit or business, are often excluded from liability. 

Since the entry into force of the new Pledge Act on 1 January 2018, the retention of title has become an interesting security tool for a contractor under a contractors' agreement, as it can reserve its ownership rights to certain installations or materials even though they have been incorporated during the works, as long as this retention of title has been registered in the national pledge register. However, such retention of title clauses are not very common in practice. If included in construction contracts, it concerns mostly residential assignments.

The explicit right for the contractor to suspend the execution of the works in case of default of payment by the employer is often excluded in construction contracts (or at least during a certain period). Recent contractors' agreements tend to expressly exclude the anticipative suspension right (see 9.1 Remedies). Since this suspension right is generally only excluded for the contractor, it might entail a B2B legislation issue (see 9.2 Restricting Remedies). 

The legal possibilities for contract termination include the following.

• In the event of a sufficiently severe breach of the contract, the creditor can terminate the contract in court or by written notice, also anticipatory under certain conditions. 
• The employer may terminate the fixed-price construction contract, even if the works have already started, provided that it compensates the contractor for all their (reasonable) expenses actually incurred, labour, and everything they could have gained from that contract (termination for convenience). 
• A contractor agreement is automatically terminated by the death of the contractor (in case the latter is a private person). 

In addition to or deviating from the above, contractual possibilities for termination of a construction contract can include the following. 

• Automatic termination clause: for example, in the event of bankruptcy of the contractor. Judicial reorganisation, on the other hand, may not legally constitute grounds for termination of the contract, and any such provision is unenforceable (see 7.4 Insolvency). 
• Termination for breach: the contract can provide an (exhaustive) list of breaches that are considered constituting serious breaches justifying the termination of the contract, subject to a reasonable remedy period. 

As a construction contract is a duration contract (ie, a contract with subsequent performances), the termination of the contract will operate for the future only, in which case the termination with accompanying restitution obligations will only take effect (depending on the court՚s judgment) at the time of the default by the other party, the date of the procedural act by which the termination claim was brought or the date of the judgment ruling the termination. Only the services performed since that day will lead to restitution obligations. 

The creditor is, in addition to the termination of the contract, entitled to additional damages, aiming to put the creditor in the situation they would have been in if the contract had been performed by the debtor.

With respect to public procurement contracts, the Public Procurement Execution Decree includes the possibility for the public entity to take mandatory measures in case of non-compliance by the contractor of their obligations, including the right to unilaterally terminate the contract.

Construction disputes are mainly brought before the courts, either the civil courts of first instance or the enterprise courts, depending on the quality of the parties. Most construction contracts contain a jurisdiction clause determining the competent court. 

In construction project disputes, the courts will often appoint an expert ex officio or at the request of the parties. Experts decide on factual issues within their area of expertise. Although not strictly binding, the findings of the experts are generally followed by the courts. Court chambers specialised in construction disputes have been set up in most districts (such as in Brussels, Antwerp and Liège).

Arbitration of construction disputes is not common, except in large and international projects. The multi-layered character of construction disputes (several parties and contracts involved) is often an obstacle for effective arbitration clauses. Parties freely determine the arbitration institution (such as the ICC or its Belgian equivalent CEPANI) as well as the seat of arbitration and the language used. The parties are still allowed to turn to courts for urgent interim and conservatory measures.

Over the last few years, under the impetus of the legislator to promote ADR mechanisms, courts increasingly encourage the parties to resort to a judicial mediation or a judicial conciliation, mostly at the beginning of the proceedings. Both ADRs are a voluntary process that can be terminated by the parties. 

Other available ADR mechanisms are:

• out-of-court amicable settlement (be it named mediation, conciliation or negotiation);
• binding expert decision on technical issues such as the impact of a variation order or the cause and impact of delays; and
• ADR mechanisms provided for in standard contracts (such as contracts produced by the International Federation of Consulting Engineers (FIDIC) or other standard engineering contracts).