On 1 February 2024, the bill containing Book 6 of the Civil Code ‘Extracontractual Liability’ was adopted by the plenary committee of the Chamber of Representatives. The new Book 6 will have a profound influence on both extracontractual and contractual liability law. Its impact should not be underestimated because the change means that subcontractors, directors, self-employed service providers and employees can now also be targeted by creditors and held liable.
Current law: Concurrence ban
Since the famous Stuwadoorsarrest, also known as the Müller-Thomsen ruling, there has, in principle, been a ban on the so-called “concurrence” of contractual and extracontractual claims under current Belgian law. Concurrence occurs when a party breaches not only a contractual obligation, but also the general (or extracontractual) duty of care incumbent on everyone. As a result of this ban, the other party, who suffers loss or damage, cannot generally use the rules of extracontractual liability and can only refer to contractual obligation (and breach thereof). In other words, our current law ensures that so-called “executing agents” or “auxiliary agents” cannot, in principle, be held directly liable by their principal’s creditors.
An executing or auxiliary agent is the person entrusted by the debtor with the actual performance of the debtor’s contractual obligations, so the definition is very broad. It may include employees, representatives, (self-employed) service providers or subcontractors, directors of companies, and so on. This principle is known as the “quasi-immunity of the executing agents” and is crucial in our current law for the protection of these persons in the performance of their assignment or employment contract. Under the present law, the quasi-immunity doctrine also plays a role in directors’ liability. For example, if a third party enters into an agreement with a company and suffers damage during its performance, it cannot sue the director of the company personally. There are, however, exceptions to this principle, such as a situation where the contractual default is also considered a criminal offence. It is because of these limited exceptions that the term “quasi-immunity” is used.
New Book 6 Civil Code: basic possibility of concurrence
The newly approved bill provides for the abolition of this quasi-immunity and completely reverses the principle. Instead of a basic ban on concurrence, there will be a basic possibility of concurrence, unless the law or a contract provides otherwise. The new Book 6, then, does allow for extra-contractual claims against executing or auxiliary agents. Directors, subcontractors, (self-employed) service providers, representatives and, in some cases, even employees are therefore directly exposed by this new legislation to liability claims by creditors, who can sue them based on breaches of the general standard of care or specific legislation (which is more often much broader than purely contractual liability).
When an executing agent is sued directly, it will also be able to invoke the same defences as its principal (based, for example, on the principal’s contract with the opposing party). However, it will be possible to enforce immunity and a concurrence ban contractually. The importance of contractual provisions that contractually exclude the application of this legislation cannot be underestimated.
Conclusion
This change will have far-reaching consequences, since almost every contract in our economic life is performed by executing agents. Moreover, the new Book 6 will give rise to a possibly remarkable expansion of directors’ liability. The change significantly increases the importance of well drafted agreements. It is therefore important to take a close look at your agreements with clients, suppliers, directors, self-employed service providers and employees and make the necessary adjustments before the new legislation comes into force.
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This article was written by Katrien Ver Elst.