Source: https://www.globallegalinsights.com/practice-areas/international-arbitration-laws-and-regulations/belgium
Timestamp: 2019-01-16 08:00:22
Document Index: 157240504

Matched Legal Cases: ['Art. 1676', 'Art. 1681', 'Art. 1684', 'Art. 1690', 'Art. 1699', 'Art. 1710', 'Art. 1716', 'Art. 1719', 'Art. 1722', 'Art. 7', 'Art. 1678', 'Art. 877', 'Art. 877', 'Art. 25']

International Arbitration 2018 | Belgium | Laws and Regulations | GLI
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International Arbitration 2018 | Belgium
Due to the early adoption of industrialisation, its central location and highly skilled work force, Belgium has always been an attractive nation to trade with. Its economy today is mostly service-based, but many industries are still active in Belgium, such as steel, textile, chemicals, pharmaceuticals, automobiles, electronics and IT. Those industries rely heavily on imports of raw materials. In turn, exports account for over two-thirds of Belgian GNP.
It is, therefore, not surprising that Belgium has a strong tradition of implementing measures to reinforce its position as a reliable trade partner and to stimulate international trade. Most notably, Brussels is the capital of the EU and home to many international institutions. Over time, this has allowed Belgium and Brussels to develop into the international business hubs they are today.
The Belgian legislation and customs in relation to arbitration reflect this tendency. Belgium has had modern arbitration legislation in place since 1972 and parties generally face few problems when enforcing arbitration agreements and arbitral awards through the Belgian courts.
As a result, arbitration in Belgium and/or involving Belgian parties has flourished and has become the most common method of dispute resolution in M&A and other large international business transactions and projects.
The Belgian arbitration community has evolved along with the market, with a growing number of Brussels-based law firms having dedicated and sophisticated arbitration teams. Belgium is also home to a vast base of experienced, multilingual and internationally acclaimed arbitrators.
To consolidate the growth of recent years, the Belgian arbitration legislation was entirely replaced by a new Arbitration Act in 2013 (inserted in Part VI of the Belgian Civil Procedure Code), which is based on the UNCITRAL Model Law and is entirely in line with modern international practice.
The Belgian Arbitration Act in Part VI of the Civil Procedure Code (“BAA”) is applicable to all arbitration proceedings initiated on or after 1 September 2013, where the seat of arbitration is located in Belgium. Parties to foreign arbitrations may also expressly choose to apply the BAA, regardless of the seat of arbitration. Some of the provisions of the BAA, most notably the provisions on the exceptio arbitri, interim relief by the state courts and recognition and enforcement of arbitral awards, are applicable whenever such issues are brought before a Belgian court.
The key objectives of the reform were to:
make arbitration more efficient;
provide more flexibility to the parties;
limit court intervention; and
centralise arbitration-related litigation before a limited number of courts, mostly deciding on expedited proceedings.
The BAA is a close rendition of the UNCITRAL Model Law on International Commercial Arbitration, and as such does not make a distinction between domestic and international arbitrations.
The structure of the BAA mirrors the structure of the Model Law and adds one chapter on time limitations:
general provisions (Art. 1676-1680);
arbitration agreement (Art. 1681-1683);
composition of the arbitral tribunal (Art. 1684-1689);
jurisdiction of the arbitral tribunal (Art. 1690-1698);
conduct of the arbitration (Art. 1699-1709);
the arbitral award and closing of the proceedings (Art. 1710-1715);
challenge of the arbitration award (Art. 1716-1718);
recognition and enforcement of arbitral awards (Art. 1719-1721); and
statute of limitations (Art. 1722).
An English translation of the BAA is available on the website of CEPANI at http://www.cepani.be/en/arbitration/belgian-judicial-code-provisions.
In addition, arbitration in Belgium may be governed by a number of multilateral and bilateral treaties. If and when a treaty is applicable, its provisions supersede the BAA. Most notably, it concerns:
the Geneva Convention of 26 September 1927 on the Execution of Foreign Awards;
the New York Convention of 10 June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards (but application in Belgium subject to reciprocity);
the European Convention of 21 April 1961 on International Commercial Arbitration; and
bilateral enforcement and recognition treaties with France, Germany, Switzerland, the Netherlands and Austria.
Arbitration institutions and ad hoc arbitration
While ad hoc arbitration still occurs frequently, the majority of arbitrations in Belgium are administered by arbitral institutions.
There are a number of arbitral institutions in Belgium, the leading institution being CEPANI, the Belgian Centre for Arbitration and Mediation. CEPANI was founded in 1969 by the Federation of Belgian Enterprises and theBelgian National Committee of the International Chamber of Commerce and currently is the most widely used and most sophisticated arbitral institution in the country. The CEPANI Arbitration Rules have been redrafted in 2013 at the inception of the new BAA and remain largely inspired by the ICC Arbitration Rules.
Belgian parties regularly also opt for arbitration under the ICC Arbitration Rules. A choice of other arbitral institutions, such as NAI, DIS, LCIA and VIAC, is less common but not unheard of.
Finally, there are a number of other, typically sectoral or regional, arbitration institutions (e.g., for rental disputes, in the diamond industry and in the grains and seeds industry).
An arbitration agreement within the meaning of the BAA is “an agreement by the parties to submit to arbitration all or certain disputes which have arisen or which may arise between them in respect of a defined legal relationship, whether contractual or not”. That is a verbatim adoption of Art. 7 of the Model Law.
Formalities in relation to the arbitration agreement
Like all agreements under Belgian law, arbitration agreements require: (i) a valid object; (ii) a valid cause; (iii) parties that are capable to contract; and (iv) valid consent. There are no further requirements or formalities in relation to arbitration agreements. In particular, it is no longer required that an arbitration agreement is evidenced in writing. That approach deviates from Art. II of the New York Convention, but is permissible under the more favourable law provision of Art. VII of that Convention.
An arbitration agreement can only be enforced if the subject matter thereof is arbitrable. In that respect, the new BAA has put in place a two-step test for arbitrability:
(i) Does the dispute involve a monetary claim?
(ii) If not, could the dispute be validly settled by the parties?
Only disputes that fall under neither of these two criteria are not arbitrable.
Exceptions to this step may still derive from specific legislation. For instance, the following disputes are in principle not arbitrable under Belgian law, or only under certain limitations: most employment claims; disputes concerning exclusive distributorship contracts; consumer rights disputes; and most insurance disputes. For most of those exceptions, the arbitrability issue only applies where the arbitration agreement was entered into prior to the emergence of the dispute, and parties are usually free to refer a dispute to arbitration once the dispute has arisen.
Public entities can, in principle, take recourse to arbitration, but only under certain circumstances.
Kompetenz-Kompetenz and severability
When a claim is governed by a valid arbitration agreement, the Belgian courts must decline jurisdiction. However, the courts cannot raise the existence of an arbitration agreement ex officio. The fact that a dispute is pending before the courts despite the existence of an arbitration agreement, does not prevent ongoing arbitration proceedings from moving forward and does not limit the right to initiate new arbitration proceedings.
In accordance with the principle of ‘Kompetenz-Kompetenz’, the arbitral tribunal shall decide on challenges to its jurisdiction. Such challenges must, at the latest, be raised in the first written submission of the objecting party. The arbitral tribunal’s decision that it has jurisdiction may only be contested together with the award on the merits.
The principle of severability of the arbitration clause is also enshrined in the BAA. Hence, the invalidity or nullity of the agreement in which the arbitration clause is embedded shall not affect the validity of the arbitration clause.
Joinder of third parties and consolidation of proceedings
Under the BAA, third parties may join or may be joined to an existing arbitration, provided that all parties and the arbitral tribunal agree on the joinder.
The point of departure is different in relation to consolidation. As there are no provisions in the BAA pertaining to consolidation, a tribunal will not have the power to so order unless the parties agree to that effect. Such agreement may follow from the institutional rules that the parties have chosen.
Procedural rules in the BAA
The BAA provides a set of procedural rules which apply in cases where the parties have not made other arrangements. These statutory procedural rules do not apply if and to the extent the parties have opted for the rules of an arbitral institution.
However, the BAA provisions on impartiality and independence of the tribunal, equality of the parties and the right to be heard are mandatory in all cases.
If the parties did not agree on a seat of arbitration, it is for the arbitral tribunal to determine the place of arbitration, taking into account all the facts and circumstances of the case before them. If the tribunal does not determine the seat of arbitration, the place in which the award is rendered is deemed to be the seat of the arbitration.
The seat of arbitration is merely a legal concept and does not prevent the tribunal from conducting hearings or other procedural activities elsewhere. The main purpose of the seat is to determine the applicable lex arbitri. As mentioned above, the BAA is applicable when the seat of arbitration is located in Belgium.
The parties have wide discretion as to the applicable law on the merits. They may select the laws of a particular country or another body of law (e.g., the UNIDROIT principles). They may also allow the tribunal to decide as an amiable compositeur or ex aequo et bono. The choice for a specific national law does not include the private international law of that jurisdiction.
In the absence of choice by the parties, the tribunal may apply the law it considers most appropriate.
In any event, the arbitral tribunal must decide in accordance with the terms of the agreement in contractual disputes, and with any trade usages when the parties involved are commercial entities.
The commencement date of the arbitration is the date on which the request for arbitration is communicated, in accordance with Art. 1678 of the Civil Procedure Code. The commencement of the arbitration interrupts the statute of limitations for the underlying claims. The arbitration rules selected by the parties may add requirements for the valid commencement of the arbitration (e.g., payment of a filing fee).
The parties and/or the tribunal have wide discretion as to the rules of evidence they wish to apply. Most commonly, the IBA Rules on the taking of evidence in international arbitration are applied.
(a) Document production
Belgium is a civil law jurisdiction and there is no common law style (pre-trial) discovery, disclosure or other far-reaching document production before the Belgian courts. The production of specific documents before the Belgian courts can only be obtained in accordance with the conditions set out in Art. 877 of the Civil Procedure Code and this usually excludes requests for categories of documents.
In arbitration, the BAA allows a tribunal to order the production of documents without further qualifications. Arbitral tribunals can and regularly do order the production of (categories of) documents which, in the same circumstances, probably could not be obtained through the courts. Usually, such orders are based on the aforementioned IBA Rules.
Contrary to arbitral tribunals, Belgian courts also have the power to order third parties to produce certain documents on the basis of Art. 877 of the Civil Procedure Code.
(b) Witness evidence
While written witness statements are frequently encountered, oral witness evidence remains highly exceptional before the Belgian civil courts, notably because the Civil Procedure Code puts forward onerous procedural requirements in that regard.
This is in stark contrast with the practice that has developed in arbitration in Belgium and that has left questions of witness evidence largely to party autonomy and/or the tribunal’s discretion. The new BAA reaffirmed the existing practice and included a few additional provisions aimed at further enhancing the parties’ and tribunal’s discretion in this respect. For instance, the BAA now specifically provides that “any person” may be heard by the tribunal, whereas the previous arbitration act still distinguished between parties (and their representatives) and witnesses sensu stricto.
The new BAA also abolished the requirement that unwilling witnesses be deposed by the courts only: a witness can now still only be compelled to give testimony by court order, but the courts may order the witness in question to appear directly before the tribunal.
(c) Expert evidence
The arbitral tribunal may appoint (ex officio or upon party request) experts to report on specific issues of a technical or factual nature. The tribunal cannot delegate legal questions to an expert and, in any event, the expert’s opinion shall only serve as a non-binding advice to the tribunal. The parties may exclude the tribunal’s power to order an expert appraisal.
The parties may request or the tribunal may order ex officio that the expert witness(es) attend the hearing and be subjected to questioning.
Experts can be challenged in much the same way as arbitrators (see below).
Contrary to the courts, arbitral tribunals are not bound by Belgium’s strict language laws. The parties can freely agree on the language(s) of the proceedings and evidence submitted in another language is not automatically considered inadmissible. However, the tribunal may require the parties to provide a translation with each piece of evidence that is not in the language(s) of the proceedings.
There is no express provision in the BAA on the confidentiality of arbitration proceedings. Parties, however, often include confidentiality obligations in the underlying agreement or in the terms of reference. Some institutional arbitration rules (such as Art. 25 of the CEPANI Rules) also provide for confidentiality obligations in the absence of an agreement between the parties.
Parties are free to determine the number of arbitrators, provided that the tribunal is composed of an odd number of arbitrators. In the absence of an agreement between the parties, a tribunal will be composed of three arbitrators.
Parties are also free to agree upon the procedure for the appointment of arbitrators, provided that the independence and impartiality of the arbitrators is guaranteed. Absent agreement, the parties can each appoint one arbitrator, and both party-appointed arbitrators elect the president of the tribunal.
If the parties cannot agree on a sole arbitrator, a party fails to appoint an arbitrator, or the party-appointed arbitrators cannot agree on a presiding arbitrator, the court may appoint such arbitrator(s) at the request of one the parties.
Once an arbitrator is nominated, he or she must communicate all circumstances which give rise to justifiable doubts as to his or her independence and impartiality. An arbitrator can only be challenged if such justifiable doubts exist, or when he or she does not fulfil the contractual requirements the parties have agreed upon (e.g., nationality, profession, experience, etc.). A party cannot challenge the appointment of the arbitrator it nominated on grounds which that party was aware of at the time of appointment.
The BAA does not provide guidance on what constitutes justifiable doubts that could give rise to an arbitrator challenge. In practice, most parties resort to the IBA Guidelines on conflicts of interest.
The parties are free to agree upon a procedure for arbitrator challenges, but usually opt for the mechanism provided by the applicable institutional arbitration rules. Absent such agreement or applicable rules, the BAA provides that the party wishing to bring a challenge must do so within 15 calendar days from the arbitrator’s appointment, or from the moment that party became aware of the circumstances giving rise to justifiable doubt concerning the arbitrator’s independence and/or impartiality. The arbitrator in question is then given the opportunity to step down within 10 days. If he or she refuses to step down, the challenging party has 10 days to submit its challenge to the court, which will decide in summary proceedings. The court’s decision is not open to appeal.
Arbitrator challenges cannot be used as a dilatory tactic, because the BAA explicitly provides that the arbitral proceedings continue (and an award can be rendered) pending a decision by the court on the challenge.
Termination of the arbitrator’s mandate
The arbitrator’s mandate comes to an end upon termination of the arbitral proceedings, i.e. signature and notification of the final award either exhausting the tribunal’s jurisdiction or ordering the closing of the proceedings, in case of claimant’s withdrawal of the claim or the parties’ agreement to close the proceedings. However, the tribunal may be requested to resume its mandate in order to correct or interpret the award or to remedy an annulment ground in the award.
The arbitrator’s mandate will also automatically terminate upon expiry of the deadline (agreed between the parties, set by the arbitration institution or imposed by the court) to render the arbitral award.
Arbitrators may be held liable under Belgian law. They cannot, however, be held liable for errors in law. In addition, most institutional rules provide for some form of immunity.
The BAA does not contain any particular provisions in relation to tribunal secretaries. When a secretary to the tribunal is appointed, typically either the guidelines provided by the chosen arbitration institution or the internationally established best practices are applied.
Absent contrary agreement between the parties, interim relief can be obtained both before the state courts and before the tribunal (i.e. either the tribunal deciding on the merits or an emergency arbitrator if no tribunal has yet been constituted and the institutional rules provide for emergency arbitration). Seeking interim relief before the state courts does not amount to a violation, nor a waiver of the arbitration agreement.
An arbitral tribunal may order any interim or conservatory measure it considers appropriate. There are, however, three limitations; a tribunal may not order: (i) ex parte interim relief; (ii) attachment or freezing orders; and (iii) measures binding upon third parties. Aside from those three exceptions, there are no limitations on the type of interim relief a tribunal may order or the timing thereof. The tribunal may also amend, suspend or terminate an interim or conservatory measure, even if such measure was initially ordered by the state courts.
Interim measures may include (but are not limited to) security for costs, the payment of a preliminary sum of money, the continued performance of a contract pending the proceedings, the preservation of property or evidence, injunctions, etc. A tribunal also has the power to reinforce its interim decisions by ordering accessory penalty payments in case of non-compliance.
Awards granting interim relief are declared immediately enforceable upon application to the courts by the enforcing party. The courts do not have the power to review the merits of the interim relief which has been granted by the tribunal.
Arbitral awards must be made in writing and must be signed by the members of the tribunal. The BAA has made explicit provisions to accommodate truncated tribunals where necessary. In principle, awards must be signed by all arbitrators, but a signature from the majority of the arbitrators suffices if the reason for the omitted signature is stated.
At least the following elements must be mentioned: names and domiciles of all parties and arbitrators; the place of arbitration; the date the award is rendered; and the subject matter of the dispute.
Substantively, all awards must be reasoned. The parties cannot discharge the tribunal from its obligation to state the reasons on which its decision is based.
Awards must be notified to the parties as soon as they have been rendered. The deadline for initiating annulment proceedings starts running as of the date of notification of the award. The requirement that an award must be deposited with the competent court of first instance of the place of arbitration has been abolished.
In principle, costs can be recovered by the prevailing party, in full or in part, as the tribunal considers appropriate. The tribunal has the widest possible discretion. Usually, a costs-follow-the-event approach is taken, also taking into account the conduct of the parties. The parties may agree in advance on the allocation and/or distribution of arbitration costs.
No costs are a priori non-recoverable. Unless agreed otherwise, the costs typically include arbitrator fees and expenses, counsel and representative fees and expenses, costs relating to evidence, institution fees and costs, etc.
Correction, interpretation and additional award
The BAA provides for a possibility to rectify calculation, typographical or other material mistakes in an award.
In addition, if the parties agree to make such a request, a tribunal which has rendered a final award may be requested to reconvene in order to clarify or interpret certain aspects of the award which the parties consider ambiguous.
Finally, the rendering of an additional award may be requested if the tribunal omitted certain claims from its award.
All three of these requests must be made within one month after the notification of the award.
The annulment grounds in the BAA are subdivided into grounds which the court can raise ex officio and grounds that must be invoked by the party wishing to obtain annulment.
Annulment can be obtained if, and only if:
(i) the party making the application demonstrates that:
• the arbitration agreement is invalid;
• the rights of defence were violated;
• the award deals with a dispute not provided for in, or not falling within, the terms of the arbitration agreement;
• the award is not reasoned;
• irregularities occurred in the composition of the arbitral tribunal;
• the arbitral tribunal has exceeded its powers; or
(ii) the Court of First Instance finds that:
• the subject-matter of the dispute is not capable of settlement by arbitration;
• the award violates public policy; or
• the award was obtained fraudulently.
Additional hurdles to annulment
An important limitation on annulment claims is that parties may not file for annulment if they were aware of the annulment ground during the arbitration yet did not raise it at that point in time.
Furthermore, where irregularities can still be remedied by reconvening the arbitral tribunal, the court may suspend the annulment proceedings to allow the arbitral tribunal to resume the arbitral proceedings or to take such other action as, in the latter’s opinion, will eliminate the annulment grounds.
The parties may file for annulment before the competent court of first instance of the place of arbitration, within three months after the notification of the award and provided that no other form of recourse before the tribunal (e.g., correction, interpretation, contractual appeal mechanism) is possible. There is no appeal against the decision of the court of first instance on the annulment application. Only a Supreme Court recourse may be possible.
To avoid delaying ongoing arbitration proceedings, tribunal decisions affirming jurisdiction can only be challenged together with the award on the merits.
The interplay between full annulment claims and opposition against an enforcement order has recently also been regulated. If a party challenges an enforcement order (rendered ex parte at the request of the enforcing party – see below), yet also wishes to have the award annulled, the annulment action must be brought together with the opposition against the enforcement order. This is to avoid the defendant having two chances to avoid an unfavourable award, potentially even before different judges. Annulment proceedings on the occasion of an enforcement order will only be possible if the three-month period for an annulment claim has not yet lapsed.
Exclusion of annulment possible for non-Belgian parties
Non-Belgian parties may exclude annulment proceedings by way of an express agreement.
Third party annulment
A recent decision by the Belgian Constitutional Court has granted third parties the right to also initiate third party annulment proceedings, provided that they have an interest in the outcome of the arbitration. Third parties have such a right in relation to Belgian court judgments and the Constitutional Court ruled that the absence of the same right in relation to arbitral awards constituted discrimination.
Ex parte proceedings to obtain an enforcement order
Enforcement of arbitral awards in Belgium is subject to exequatur proceedings before the Belgian courts. Such proceedings are conducted ex parte, at the request of the party wishing to enforce an award. The court must declare an award enforceable unless it determines that one of the three abovementioned ex officio grounds for annulment is applicable.
The competent court will be the court of first instance of the place of the arbitration if the award was rendered in Belgium. Only the courts of first instance where there is also a court of appeal are competent in arbitration matters, i.e. the courts of Ghent, Antwerp, Brussels, Mons and Liège. If the award was rendered abroad, the competent court will be determined by the domicile or place of business of the defendant. In the absence of such a domicile or place of business in Belgium, the courts of the effective place of enforcement will be competent.
Once the award is declared enforceable, the decision must be served upon the defendant. As from that moment onward, enforcement measures can be taken in accordance with Belgian procedural law, as if the award were a judgment rendered by a Belgian court. Merely conservatory measures, however, can be taken on the basis of an award which has not yet been declared enforceable.
Adversarial proceedings to challenge an enforcement order
Service of the enforcement decision upon the defendant starts the clock for opposition proceedings, which must be brought within one month. Those proceedings will, in contrast to the initial ex parte proceedings, be entirely adversarial. The decision of the court of first instance can only be challenged directly before the Belgian Supreme Court. The intermediary step of appeal before the courts of appeal has been abolished.
The grounds on which the defendant can oppose the enforceability decision are, broadly speaking, the same as the abovementioned annulment grounds. An additional ground for refusal exists when the arbitral award has, for some reason, not yet become binding upon the parties or has been annulled or suspended elsewhere.
The Belgian courts take a very pro-arbitration approach in enforcement matters. The grounds for annulment or enforceability are interpreted restrictively and annulments or refusals to enforce will usually only occur when serious procedural irregularities have taken place.
No distinction between domestic and foreign awards (subject to treaty application)
The enforcement regime is the same, whether the award was rendered abroad or in Belgium. However, where a (bilateral or multilateral) treaty applies between Belgium and the country in which the award was rendered, the treaty provisions will prevail over the general provisions of the BAA. Aside from the multilateral New York and Geneva Conventions, bilateral treaties exist with Germany, France, Switzerland, the Netherlands and Austria.
Belgium is a contracting state to the ICSID Convention and has signed over 60 BITs within the framework of the ‘Belgo-Luxembourg Economic Union’ (BLEU). Belgium is also a party to the Energy Charter Treaty. There is a specific regime applicable to the recognition and enforcement of ICSID awards, which deviates significantly from the general regime.
Only one investment arbitration has been initiated against Belgium so far. The claim for €871 million was brought in September 2012 by the Chinese insurance group Ping An, under the BLEU-China BITs of 1984 and 2005. Ping An had invested in the Belgian Fortis group and sought compensation over the Belgian government’s bailout, nationalisation and sale of the Fortis group to BNP Paribas. The ICSID tribunal decided in 2015 that it lacked jurisdiction.
It should be noted that as a result of recent anti-vulture fund legislation, sovereign assets located in Belgium are generally not eligible for attachment measures unless: (i) the foreign state expressly and specifically agrees that the property in question is eligible for attachment; (ii) the property was earmarked by the sovereign state specifically for the satisfaction of the claim for which attachment is being pursued; or (iii) it is established that the property is specifically in use or intended by the foreign power for commercial purposes and the property in question is located in Belgium, and provided that the property in question relates to the entity against whom the underlying claim is directed.
The anti-vulture fund legislation most notably affects enforcement efforts in Belgium relating to the Yukos bankruptcy. The former Yukos shareholders had attempted to enforce the 2014 Yukos award against Russian assets located in Belgium and had obtained a number of attachment orders in June 2015. However, after the annulment of the underlying arbitral award by the Dutch courts in April 2016, the Belgian attachment orders against those assets were lifted in June 2017 (despite pending appeal against the Dutch annulment decision). Whereas the 2015 attachment orders escaped the anti-vulture fund legislation’s temporal scope, any new attachment request will be subject to the new regime.
The constitutionality of the anti-vulture fund legislation was also challenged by the former Yukos shareholders, but the legislation was upheld by the Belgian Constitutional Court in its decision of 27 April 2017. In November 2017, the former Yukos shareholders announced that they would not seek further enforcement in Belgium.
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