On 1 February 2024, Book 6 of the New Civil Code was approved by parliament. This new book reforms Belgian extra-contractual liability law. The increase of the liability of 'auxiliary persons', such as directors of companies and associations, subcontractors and employees, is particularly striking. For these individuals, it is crucial to proactively take measures to protect against potential future claims that may be brought against them.
We briefly explain the consequences for practice below and also propose a number of protective measures that can (partially) contain these consequences.
An 'auxiliary person' (in current practice called an 'execution agent') is a natural or legal person who is entrusted by the debtor of a contractual obligation with the full or partial performance of that obligation, regardless of whether he performs this obligation on his own behalf and in his own name, or on behalf and/or in the name of the debtor.
Directors of companies and associations, subcontractors, but also employees are 'auxiliary persons'.
Some common examples:
In the following, 'principal' refers to the person for whom the auxiliary person works, and the contracting party of the 'principal' is referred to as 'co-contractor', with whom the auxiliary person therefore has no direct contractual relationship.
Under current law, the auxiliary person ('execution agent') has an elaborate protection vis-à-vis the co-contractor of his principal: as a rule, the co-contractor cannot hold the auxiliary person accountable for the latter's defective performance of the agreement between the principal and its main co-contractor. This is established case law (of Belgium’s highest civil court) and is in practice referred to as the 'quasi-immunity of the auxiliary person/execution agent'.
The auxiliary persons are therefore extensively protected against non-contractual claims by the contracting parties of their principal pursuant to the wrong, late or non-performance of the principal's contractual obligations.
Some common examples:
The only exception to this immunity under current law is that auxiliary persons can be held liable if the fault attributed to them constitutes a criminal offence (e.g. involuntary assault and battery, bribery, abuse of trust, forgery, fraud) or if this fault relates not only to the contractual obligation, but also to the general duty of care incumbent on them. In addition, that fault must have caused damage that was not solely attributable to the poor performance of the main contract, meaning, in practice, only in very exceptional circumstances such event gives rise to liability on the part of the auxiliary person.
The new Civil Code[1] puts an end to the quasi-immunity of the auxiliary person:
'Unless otherwise provided by law or by contract, the provisions of law on non-contractual liability shall apply between the damaged party and the auxiliary person of his or her co-contractors.'
On the basis of the aforementioned article, an auxiliary person can henceforth be held directly (non-contractually) liable by the co-contractor of his principal.
Some common examples:
First and foremost, of course, it must still be proven that the auxiliary person has actually committed a foul that has caused damage to the principal's co-contractor.
It is also important to note that the provisions of Book 6 are, in principle, of supplementary law: the contracting parties can therefore deviate from them contractually, for example by stipulating that a co-contracting party shall refrain from bringing non-contractual liability claims against the auxiliary persons of its contractual partner (i.e. the principal).
Moreover, the provisions of Book 6 are without prejudice to other legislation that regulates the non-contractual liability of certain actors. For example, employees will also be protected in the new situation by Article 18 of the Employment Contracts Law, meaning that also in the future, they can only be held liable by third parties, including their employer's co-contractor, for gross faults or repeatedly occurring minor faults. This is evident from various passages in the parliamentary preparations.
In our opinion, the foregoing should apply in a similar way to the limitations of liability laid down in the Code of Companies and Associations[2] (CCA) with regard to directors' liability. This means that directors can still invoke the restrictions provided for in the CCA[3] for errors committed in the performance of their mandate as directors. However, in the opinions published to date, we also find divergent views (see below).
Also in our opinion, there is certainly no doubt that, on the basis of Book 6, directors can be held liable on non-contractual grounds for their faults that have nothing to do with the performance of their directorship mandate, without them being able to invoke the limitations of Article 2:57 of the CCA (after all, this is no case of 'directors' liability').
The new Civil Code[4] also provides that the auxiliary person “may invoke the same means of defence as" the defences that his principal can invoke against his co-contracting party on the basis of the latter’s (main) agreement with the principal. Limitations of liability stipulated by the principal in the (main) agreement with the co-contracting party will therefore apply to claims brought by the co-contracting party against the auxiliary person.
The same article also provides that the auxiliary person “may also invoke [against the co-contractor] the means of defence which he himself may invoke in this regard against his [own principal]” on the basis of their contract, which thus acquires third-party operation (‘derdenwerking’). Limitations of liability stipulated by the auxiliary person in his contract with his principal will therefore apply to claims brought by the co-contracting party against the auxiliary person.
Auxiliary persons may also make use of defences arising from the legislation on special contracts (e.g. the rules on purchase and sale, rent, deposit, hotel contracts, etc.), including the limitation rules applicable to the contract.
It is important to note that the Belgian Civil Code[5] stipulates that the possibility of invoking the aforementioned defences never applies to damage resulting from (i) a violation of the physical or psychological integrity of the injured co-contracting party of his principal or (ii) a fault committed by the auxiliary person with the intention of causing damage.
In the opinions published to date, it is sometimes stated that the invocation of the aforementioned defences for damage resulting from a violation of the physical or psychological integrity of the injured party, also applies to damage that is the result of a fault that falls under the directors' liability (as a result of which in such cases the limitations[6] might be exceeded). We do not share this view because we believe that Article 2:57 of the CCA is a statutory regulation comparable to Article 18 of the Employment Contracts Act and we see no reason to allow these two statutory regulations to interact differently with Book 6 of the Civil Code. Hopefully, the legislator or the case law will soon provide more clarity on this matter.
The new rules will enter into force on the first day of the sixth month following the month in which the law is published in the Belgian Official Gazette. Since this has not yet happened, we do not yet know the exact date on which the new rules will enter into force, although we assume that the aim is for them to enter into force on 1 January 2025.
The law introducing the new Book 6 explicitly stipulates that the new rules will only apply to facts that occur after the law enters into force.
Thus, if the harmful event occurs before the entry into force, the auxiliary person will still be able to benefit from quasi-immunity, even if the claim for damages is brought to court after the entry into force of the new rules.
Conversely, if the harmful event occurs after the entry into force, the auxiliary person will no longer be able to benefit from quasi-immunity, even if his contractual relationship predates the entry into force of the new rules. In this way, the new rules also have an impact on the performance of existing contracts.
The foregoing makes it clear that immediate action is required to protect the auxiliary persons. The following measures can be considered:
The above shows that the abolition of the quasi-immunity of the auxiliary person increases the liability risk of many actors in the business world (and beyond). After all, most of us qualify as 'auxiliary person' in one way or another relationship, be it in a director's mandate, as consultant, employee, subcontractor,...
Good contractual provisions, in combination with comprehensive insurance, can protect you against this to a large extent. It is therefore important to prepare yourself for this new reality as soon as possible by reviewing your commercial toolbox (customer contracts, consultancy agreement, general terms and conditions, etc.) and your insurance policies and adapting them where necessary.
[1] Article 6.3, § 2
[2] Article 2:57
[3] Article 2:57
[4] Article 6.3, § 2
[5] Final sentence of Article 6.3, §1 in fine
[6] Article 2:57 of the CCA
