Fanny Laune featured in Trends-Tendances regarding judicial restructuring procedure

Fanny Laune is featured in the Trends-Tendances article “Faut-il assouplir la réorganisation judiciaire?” by Gilles Quoistiaux.

This is the opportunity to share views on a draft bill aiming to simplify this rescue procedure for companies which will likely boom in the coming months…

The article is available here.

Should you have any question on this subject, bankruptcy or insolvency in general, do not hesitate to contact Fanny: fla@simontbraun.eu

 

 

Covid-19 – Temporary protective measures for enterprises in difficulty – Extended until 17 June

Update 13 May  |  The Federal Government has adopted new protective measures for enterprises affected by the COVID-19 crisis in the Royal Decree n°15 of 24 April 2020 (the “Royal Decree”).

Which enterprises are eligible to benefit from these measures?

  • Enterprises within the meaning of Book XX of the Belgian Code of Economic Law;
  • whose continuity is threatened by the COVID-19 pandemic and its consequences; and
  • which were not in a state of cessation of payments on 18 March 2020.

For how long may enterprises benefit from these measures?

The measures shall apply from 24 April 2020 to 17 June 2020 (the “Moratorium”). They have been extended beyond the first Moratorium running until 17 May, by a Royal Decree of 13 May 2020 extending the measures initially provided by the Royal Decree n° 15.

What are the measures to protect enterprises affected by the crisis?

No preventive or enforceable seizure may be granted, and no enforcement action may be pursued or carried out on an enterprise’s assets.

Seizures on real estate assets remain permitted.

An enterprise may not, at the request of its creditors, be declared bankrupt or dissolved (in the case of a legal person) except:

(i) on the initiative of the Public Prosecutor’s Department, or

(ii) on the initiative of the temporary director (voorlopig bewindvoerder/administrateur provisioire) appointed by the President of the Enterprise Court, or

(iii) with the agreement of the enterprise itself.

Eligible enterprises are relieved from the obligation to make an admission of bankruptcy throughout the Moratorium.

However, company’s directors should ring the warning bell (alarmbelprocedure/procedure de la sonnette d’alarme) and call the general meeting if the financial situation of the company justifies it (see our previous news here).

Payment terms provided in a judicial reorganisation plan approved before or during the Moratorium are extended for a period equal to the duration of the Moratorium provided that the execution of the plan does not exceed five years.

Contracts entered into before 24 April 2020 may not be terminated unilaterally or by a court decision due to a failure to pay a debt due under the contract during the Moratorium. Therefore, an express resolutory clause (uitdrukkelijke ontbindende beding/clause résolutoire expresse) cannot take effect during this period.

Similarly, other contractual mechanisms relating to non-payment may not take effect (such as penalty clauses for late payment).

However, the Royal Decree does not provide for a derogation  for:

(i) the debtor’s obligations to pay its debts due,  nor

(ii) the implementation of contractual sanctions under ordinary law such as, inter alia, the defence of non-performance, the set-off and the right of retention,

(iii) the application of the Law of 15 December 2004 on financial securities and various tax provisions relating to security agreements and loans relating to financial instruments,

(iv)  the obligations of employers.

What protection for creditors?

A creditor may proceed before the President of the competent Enterprise Court (“as in summary proceedings” (zoals in kort geding/comme en référé)) to lift the measures mentioned above (in whole or in part).

The President will lift these measures at his discretion, taking into account all relevant circumstances to assess the impact of the Corona crisis on the enterprise, such as:

  • whether, as a result of the Corona crisis, the debtor’s turnover or activity has fallen sharply;
  • whether there has been total or partial recourse to temporary or total unemployment;
  • whether the authorities have ordered the closure of the debtor’s enterprise;
  • whether the debtor and the creditor tried to reach an agreement,
  • whether there were attempts to obtain new credits;
  • the consequences of the suspension on the applicant’s interests (e.g. the creditor) (domino effect);
  • the overall burden of the debt and the debtor’s chances of recovery;
  • the fact that the debt arose from contracts concluded after the outbreak of the COVID-19 pandemic, insofar as the debtor could have foreseen the consequences;
  • whether the company is not affected by the pandemic or is perfectly capable of paying its debts (i.e. fraud).

Finally, and as set out above, creditors can still apply certain traditional contractual sanctions.

***

Axel MaeterlinckFanny Laune and Maxime Born

Should you have any question, do not hesitate to contact:
Axel Maeterlinck: axel.maeterlinck@simontbraun.eu
Fanny Laune: fanny.laune@simontbraun.eu

Covid-19: Duties and liabilities of directors in times of crisis

The health crisis we are experiencing and the restrictive measures adopted to limit its spread are and will be deeply affecting businesses. With all the economic and human consequences that this entails, this ordeal could be fatal for many of them. What are the decisive role and obligations that directors must now adopt to overcome this crisis? What liabilities do they incur?

Which actions should directors take?

Members of the board of directors, individually or collectively, must take all reasonable actions to ensure the continuity of the company.

Directors’ guidelines should remain the same: business decisions must be taken in the best interest of the company, i.e. the long term interest of shareholders taking into account the interests of all stakeholders – like employees, customers, creditors and suppliers.

Directors should carefully assess and proactively address the (possible) impacts of the current crisis as their passivity in a critical situation might be considered as a fault for which they might be held liable.

They should consider all measures approved by the federal and regional governments to help companies in difficulty following the spread of the coronavirus. These measures consist of:

If the company fulfils the required conditions to benefit from these relief measures, it should take timely action to benefit from them to the fullest extent possible.

Directors should make every effort to adapt the company’s business strategy to enable it to maintain a certain level of activity, taking into account the restrictions imposed by the Government. They should consider the need to put all or part of the employees on temporary unemployment for force majeure (on this topic, see our news here) and they should take all necessary precautions to protect the health and welfare of active employees, subcontractors and public at large.

Nevertheless, directors should be careful not to continue a loss-making activity that would appear unreasonable to normally diligent and prudent directors. They will certainly not pursue the activities of a company that would be in the conditions of bankruptcy (see below).

What must directors do when the financial situation of the company becomes critical?


1. The Warning Bell

Directors should not forget to ring the “warning bell” if financial difficulties increase.

Directors of SRL/BV and SC/CV will have to ring the bell (i) when the company’s net assets are negative or are likely to become negative, or (ii) when the company’s liquid assets are no longer sufficient to pay its debts due for the next twelve months.

Constantly and properly monitor the development of the company’s cash flow can prove very difficult. In case of doubt, directors should ring the bell to limit the risk of liability.

Directors of SA/NV will have to ring the bell when, as a result of a loss (i) the net assets are reduced to less than one-half of the share capital or (ii) the net assets are reduced to less than one-quarter of the share capital. Note that in the event of a reduction in the net assets below EUR 61,500, any interested party may request the winding-up of the company in court.

The activation of the warning bell requires the directors to convene the general shareholders meeting within two months of the statement that the abovementioned conditions are met. The directors must then draw up and submit to the general meeting a report in which they propose measures (i) to improve the situation in order to ensure continuity or, (ii) to wind-up the company. In such a case, directors can protect themselves against liability claims by convening a  general meeting to decide on the future of the company.

These measures involve the meeting of corporate bodies, which is problematic because of the containment measures. Fortunately, a Royal Decree has introduced exceptional temporary measures extending the possibilities of recourse to the unanimous written decision procedure and the use of telecommunication means for the management body. It also facilitates the use of remote voting and the use of proxies to vote at a general meeting, and allows the management body to postpone general meetings. On this subject, see our news here.


2. Possible measures of continuity: the reorganisation procedure

Directors may propose measures to pursue the company’s activities, notably by initiating a judicial reorganisation procedure.

As mentioned above, the directors should first propose all measures that are likely to reduce future losses, improve the company’s profitability, reduce its expenses or enhance the value of some of its assets.

At this stage, they may also assess the suitability of initiating a judicial reorganisation procedure.

Such a procedure aims at allowing enterprises in financial distress, but still having prospect for recovery, to continue all or part of their business as a going concern, by preventing – during maximum six months (the “Suspension period” – renewable once for six months):

  • any sale of the debtor’s movable/immovable assets resulting from creditors’ pending enforcement measures, except when the date of the auction has been scheduled within two months as from the date of the filing of the debtor’s application;
  • that the debtor is declared bankrupt or is judicially liquidated.

Because of the health crisis, several courts of enterprise (and notably the French Brussels court of enterprise) have decided to stay all of their hearings from 19 March up until 20 April 2020 (subject to re-evaluation at this date), except for urgent cases.

Nevertheless, if a company may benefit from a judicial reorganisation procedure, we recommend filing a petition via the electronic insolvency registry (REGSOL) even in the absence of hearing until 20 April (or later). Indeed, as long as the court has not ruled on the petition, the debtor is protected from almost all enforcement measures and from a declaration of bankruptcy (art. XX.44 of the Economic Code).


3. In case continuity of the enterprise is compromised: the dissolution of the company

If there is no prospect for recovery and if bankruptcy conditions are not met, the directors should in principle and under normal circumstances (see below) propose the winding-up of the company. To this end, the directors shall submit to the general meeting a special report justifying the winding-up of the company as well as a statement summarising the active and passive situation of the company, dated not more than three months ago. This statement must be subject to an audit report by the statutory auditor or, failing that, by an external auditor or chartered accountant. The winding-up must then be recorded in a notarial deed.

The Royal Federation of Belgian Notaries has instructed the Belgian notaries’ offices to receive only “urgent” deeds, but internal circulars confirm that transactions on corporate assets and warning bell procedures are of such an urgent nature. The notary should confirm this on a case-by-case basis.

Before considering this option, directors will be well advised to keep the company alive to the extent possible and at least until the end of the health crisis to make sure there is no prospect for recovery and, for example, envisage a judicial reorganisation procedure.


4. Final option: the admission of bankruptcy

In case the company cannot overcome its financial difficulties so that the conditions of bankruptcy are met at some point, directors must make an admission of bankruptcy via the electronic insolvency registry (REGSOL). The admission should be filed within the month of the fulfilment of these two conditions:

  • when it can no longer pay its debts as they fall due (permanent cessation of payment), and
  • when its creditors’ confidence is tainted (its credit is exhausted).

In case they fail to proceed with the admission of bankruptcy, directors might be held liable and might face criminal sanctions. Still, the Government is currently examining the possibility to put on hold the obligation for directors to make an admission of bankruptcy.

Also, governmental discussions are pending about the possibility to freeze bankruptcy proceedings initiated against companies that encounter financial difficulties because of the governmental health security measures. In other words, companies would be protected from being declared bankrupted upon request of a third party/ the Public prosecutor until the end of the crisis.

We are closely monitoring the Government’s decisions in this regard and we will keep you posted as soon as other measures enter into force.

In conclusion

It is not possible at this time to predict the outcome of this crisis. Nor is it possible to determine the extent to which courts and tribunals will show leniency to directors who have not fully complied with their obligations. Many parameters will no doubt be taken into consideration, but proactive directors who meet the basic requirements outlined above should be beyond reproach.

***

Axel Maeterlinck, Fanny Laune and Maxime Born

Should you have any question, do not hesitate to contact:
Axel Maeterlinck: axel.maeterlinck@simontbraun.eu
Fanny Laune: fanny.laune@simontbraun.eu

Simont Braun authors ICLG Belgian Chapter on the Enforcement of Foreign Judgments

Rafaël Jafferali and Fanny Laune authored the Belgian chapter on the Enforcement of Foreign Judgments in the International Comparative Legal Guide 2020, offering thought and pragmatic insight on the key questions that arise in this complex area.

The Belgian chapter is available here.

For any question in this area, do not hesitate to contact the authors.

 

 

Simont Braun promotes Fanny Laune and Thomas Derval to Counsel

Belgian independent law firm Simont Braun boosts its capabilities with two new counsels.

Fanny Laune has been assisting Belgian and international clients before the Belgian courts in commercial and corporate matters for more than ten years. Recently, she successfully completed a training in mediation, an increasingly popular method of dispute resolution.

Apart from her expert knowledge in procedural law, Fanny has also gained extensive experience in all types of insolvency proceedings.

Fanny’s nomination as counsel is a recognition for her sharp legal knowledge and expertise, as well as her excellent communication skills which are highly appreciated by clients,” says Béatrice Thieffry, co-Managing Partner.

Thomas Derval has been practising financial & insurance law for several years, advising and representing the interests of many companies and regulated institutions. Thomas assists his clients on both advisory and litigation aspects of this field of expertise. On the regulatory side, he has notably developed a strong track-record with Fintech & InsurTech companies, helping them to obtain their licences, and to develop and adapt their products and services to the legal requirements of the Belgian market.

Thomas always makes sure to understand clients’ business and to keep the global picture in mind. His multidisciplinary skills allow him to offer expert yet comprehensive guidance to our clients,” says Catherine Houssa, Partner in Banking & Digital Finance. “This is an essential quality as our clients highly appreciate Simont Braun’s multidisciplinary offer.”

We are delighted to count such appreciated and qualified lawyers amongst our counsels. Their respective skills are highly valuable to Simont Braun, and will boost the sustained growth of the firm,” adds Steven Callens, co-Managing Partner.

Contact details:
Fanny Laune – fanny.laune@simontbraun.eu
Thomas Derval – thomas.derval@simontbraun.eu

Has the ECJ just killed the Belgian judicial restructuring procedure by transfer under judicial supervision?

The Belgian judicial restructuring procedure by transfer under judicial supervision (“PRJ 3 / WCO 3”) regulates the transfer of all or part of the debtor’s undertaking under the supervision of a judicial trustee.

One of the main added-values of this Belgian procedure is the “right of option”, which allows the transferee to choose which transferor’s employees it wishes to keep on after the transfer, provided that this choice is dictated by economic, technical or organisational reasons entailing changes in the workforce (article XX.86 §3 of the Economic Code; former article 61 § 3 of the Business Continuity Act).

On 14 August 2017, the Antwerp Labour Court of Appeal referred a preliminary question to the ECJ on the compatibility of the Belgian provision with articles 3 and 4 of Directive 2001/23 relating to the safeguarding of employees’ rights in the event of transfer of (parts of) undertakings (also called “TUPE Regulation”). This question has been raised in proceedings launched by an employee (Mrs Christa Plessers), who has been dismissed further to the transfer of her employer’s company under judicial supervision and is asking for her reinstatement in the transferee’s company.

Condemnation of the Belgian procedure by the ECJ

In order to answer this question, the ECJ had to determine whether:

  • the “right of option” granted to the transferee falls under the exception laid down in article 5 §1 of Directive 2001/23, which requires that the transferor (1) is subject to a bankruptcy proceeding or any analogous insolvency proceeding that has been instituted in view of the liquidation of the transferor’s assets, and (2) is under the supervision of a competent public authority;

and if not,

  • whether articles 3 and 4 of Directive 2001/23 preclude the Belgian “right of option”.

The ECJ decided on 16 May 2019 that the choice granted to the transferee by the Belgian law does not meet the cumulative conditions laid down in Article 5(1) of Directive 2001/23 and that, consequently, transfers carried out in such circumstances must comply with articles 3 and 4 of Directive 2001/23.

The ECJ emphasised that “dismissals which occur in the context of the transfer of an undertaking must be justified by economic, technical or organisational reasons relating to employment which do not intrinsically relate to that transfer”.

Yet, article XX.86§3 of the Economic Code does not impose upon the transferee to justify its choice with regard to the transferor’s employees who are made redundant.

As a result, according to the Court, the application of current article XX.86§3 of the Economic Code could seriously threaten the principal objective of Directive 2001/23, i.e. to protect employees against unjustified dismissals in the event of a transfer of undertaking.

Therefore, the ECJ decided that Directive 2001/23 has to be interpreted as prohibiting the transferee to choose the employees it wishes to keep on after the transfer.

What is the impact of this decision under Belgian law?

Given the ruling of the ECJ, it becomes complicated for the Belgian courts to interpret article 86 §3 of the Economic Code consistently with Directive 2001/23.

However, and as the ECJ pointed out itself, in accordance with EU law, the Belgian courts will not have to discard their own national provisions. As a result, as long as article 86 §3 of the Belgian Economic Code is not amended, it seems that the sole possibility for employees who have been dismissed in the framework of a transfer under judicial supervision will be to sue the Belgian State to claim compensation because (i) it did not correctly implement Directive 2001/23, or (ii) the national courts did not correctly interpret article 86 §3. However, in that second case, the dismissed employees will also have to prove that they suffered damages due to this wrongful behaviour. In other words, they will have to prove that they were not dismissed for economic, technical or organisational reasons, which might be a difficult task.

Conclusion: is it the end of the PRJ3/WCO 3?

By considering that current article 86§3 of the Belgian economic Code does not comply with Directive 2001/23, the ECJ might have sounded the death knell of the PRJ3/WCO3.

As mentioned before, the main advantage of such a proceeding is precisely to allow the transferee not to keep all the transferor’s employees but only the chosen ones. In addition, under this proceeding, the transferee can also modify the working conditions of the transferred employees. Even if this second principle of the Belgian legislation was not referred to the ECJ, one can expect a similar ruling, which would make the PRJ3/WCO3 completely useless.

In any case, the Belgian legislator will have no choice but to modify the Title V of the Economic Code to make it consistent with Directive 2001/23. This modification might be included in the coming (and more significant) reform of the Belgian insolvency law to implement the Directive on preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures, whose final text has just been approved (15 May 2019) by the Parliament and the Council.

To be continued with our next government…

***

Fanny Laune & Pierre Van Achter

Le droit du procès civil – Colloque et parution du Volume 2

Le colloque « Le droit du procès civil – Etat actuel et analyse des réformes à venir » a attiré plus de 300 participants ce lundi 28 janvier à l’ULB.

Fanny Laune et Marc Baetens-Spetchinscky – Le droit du Procès civil

 

Les interventions de Fanny Laune et de Marc Baetens-Spetschinsky sont disponibles ici :

pdfLa déformalisation de l’acte juridictionnel et le régime des nullités par Fanny Laune
pdfIncertitude concernant les conditions de recevabilité de l’appel incident et actualités en matière de délai d’appel par Marc Baetens-Spetschinsky

Ce colloque s’est tenu à l’occasion de la parution du volume 2 du Précis « Droit du Procès civil » (Anthémis), un outil résolument orienté sur la pratique essentiel pour tout praticien de la procédure, auquel Fanny Laune et Marc Baetens-Spetschinsky ont contribué.

A step towards a harmonised EU insolvency framework

On 19 December 2018, the Council of the EU and the Parliament reached an agreement on the proposal for a directive on “preventive restructuring frameworks, second chance and measures to increase the efficiency of restructuring, insolvency and discharge procedures”. The main objective of the directive is to enhance the rescue culture across the EU. To do so, each Member State will be required to introduce into its substantive law effective preventive restructuring frameworks in order to help debtors experiencing financial difficulties to restructure at an early stage, with the objective to avoid insolvency and to improve the return for the creditors. 

Moratorium

Debtors who negotiate a restructuring plan with their creditors will benefit from a stay of individual enforcement actions. National laws may organise a full moratorium suspending all enforcement actions against the debtors by all its creditors or a moratorium limited to one or more individual creditors, for a period of up to four months, which can be extended to up to 12 months by a judicial or administrative court’s decision provided certain conditions are met. Judicial or administrative authorities will have the right to lift the stay if it becomes apparent that the majority creditors do not support the continuation of the negotiations or at the request of the debtor or the restructuring practitioner.

During the moratorium period, the debtor’s obligation to file for insolvency will be suspended, and the creditors shall equally be prevented to file for the opening of insolvency procedures against the debtor. In addition, the creditors will be prevented to refuse to perform, terminate, accelerate or amend in any other way the contractual agreement to the detriment of the debtor.

Restructuring plans and cram-down mechanisms

A majority of creditors in all creditor classes must vote in favour of the plan in order for the plan to be adopted and to bind dissenting creditors (cram-down). Member States may determine the majority voting requirements for the adoption of a restructuring plan, which may not be higher than 75 per cent in the amount of claims or interests in each class.

If the necessary majority is not reached in all classes of creditors, the plan may still be adopted by a judicial or administrative authority if certain conditions are met. The plan must be supported by at least one affected class of creditors, and the dissenting classes must not be unfairly prejudiced under the plan (cross-class cram-down). In particular, the plan must comply with the so-called “absolute priority rule”, i.e. the requirement that a dissenting class of creditors is paid in full before a more junior class to a subordinate class receiving anything under the plan.

Workers’ rights may not be affected by the preventive restructuring procedure.

Restructuring privilege and super senior financing

The directive offers strong protection to new and interim financing. These financings may not be declared null and void in a subsequent insolvency proceeding, except in case of fraud and their grantors will be immune from any civil, administrative and criminal liability in the context of subsequent insolvency. Also, the Member States may grant a priority right of payment to the grantors of new or interim financing that will rank at least senior to ordinary unsecured claims (super senior financing).

Court order and appointment of a restructuring practitioner

It will not be necessary to have a court order to open the restructuring process which may remain informal as long as the rights of third parties are not affected. The directive tends to limit the involvement of judicial or administrative authorities where it is necessary and proportionate. Also, the appointment of a restructuring practitioner will not be mandatory in all cases, but only in limited situations determined by national law such as situations where the debtor benefits from a general stay of individual enforcement actions and where the restructuring plan needs to be confirmed by a judicial or administrative authority by means of a cross-class cram down (see below).

As long as no restructuring practitioner is appointed, the debtor will remain in control of its assets, at least partially, and of the day-to-day operation of the business.

Duties of companies’ directors

Member States will be required to implement rules on duties of directors in insolvency proceedings that will be taken into account to assess their potential liability. It concerns the requirement to take immediate steps to minimise the loss for creditors, workers, shareholders and other stakeholders, to have due regards to the interests of creditors and stakeholders, to take reasonable steps to avoid insolvency and to avoid deliberate or grossly negligent conduct that threatens the viability of the business.

Second chance

The directive contains measures that promote a second chance for entrepreneurs acting in good faith, including the right to be fully discharged of their debts. In the Member States where full discharge is conditional upon a partial repayment of debt, such repayment obligation will need to be based on the individual situation of the entrepreneur and proportionate to his or her disposable income over the discharge period which shall not be longer than three years.

Entry into force and impact on current Belgian insolvency law

The directive will be formally adopted after the pending linguistic review and published in the Official Journal. It will enter into force on the 20th day following its publication on the Official Journal. The Member States will have two years to implement the directive from the date of its entry into force.

The directive will be of minimum harmonisation. The Member States will have extensive flexibility to adapt the new framework to their domestic insolvency regulation which may go further than the new EU rules.

It is interesting to note that in the draft bill of 20 July 2017 (which became the law of 11 August 2017 which added a new book XX in the Belgian Economic Code), the Belgian legislator had intended to implement a “pre-pack bankruptcy”, which was supposed to give the debtor the opportunity to “prepare” its bankruptcy out of court, with discretion and no publicity. The objective was to allow him to find better alternatives to the bankruptcy (notably via the transfer of his activities with the assistance of a “pre-trustee”). However, this part of the reform has eventually been abandoned.

One can notice that Belgian insolvency procedures are currently characterised by a high level of intervention of the courts, which usually appoint judicial representatives to assist the debtor in the different stages of the procedure. Yet, one of the objectives of the directive is precisely to promote out of court solutions and to limit the involvement of judicial and administrative authorities.

Therefore, and even if the directive gives the Member States large flexibility for its implementation, the Belgian legislator will likely need to noticeably amend not only its insolvency regulation but also its general philosophy. One can thus expect another significant reform of the subject matter in the next two years. We will, of course, monitor this closely.

Finally, the directive will let an important part of substantive law untouched, including the ranking of claims. It is, therefore, only a first step towards a harmonised EU insolvency framework.


*     *     *

Fanny Laune

For any question, please contact the author:
fanny.laune@simontbraun.eu – +32 2 533 17 62

Another novelty in the Belgian judicial landscape: the future Brussels International Business Court (“BIBC”)

On 15 May 2018, the Belgian Government filed a draft law concerning the implementation of a new specialised English-speaking court in Brussels: the Brussels International Business Court (“BIBC”).

The Belgian Parliament is currently reviewing the draft law. The Government intends to ensure the entry into force of the law on 1st January 2020 at the latest.

The Government’s objective and motivation

The recent economic and politic evolutions both at the national and international levels, combined with the Brexit, will lead to an increase of international commercial disputes.

For Brussels to maintain its central position on the European and international business scene, the Government has considered necessary to set up a new English-speaking State Court, which will give the opportunity to business actors to bring their cross-border disputes in the capital of Europe.

In other words, inspired by similar initiatives in the Netherlands and other European countries, the Belgian Government is hoping to make Brussels the new hub for international commercial disputes.

Overview of the BIBC based on the draft law

1) Jurisdiction

The BIBC will have jurisdiction over disputes meeting the following cumulative conditions:

(i) International disputes, i.e.:

  • When parties have their usual residence or establishment in different States;
  • When the location where a substantial part of the commercial obligations or the location with which the dispute has the closest links is established in another State than the state of the principal residence/establishment of the parties;
  • When parties expressly agree on the international character of their dispute; or
  • When the dispute must be solved using foreign law;

(ii) between enterprises (i.e. any person who pursues an economic goal, including public enterprises) and concerning an economic act (performed in pursuing this economic goal);

(iii) and over which another court does not have exclusive jurisdiction;

(iv) provided that all parties have agreed on the BIBC’s jurisdiction, e. when the BIBC jurisdiction has been provided for in (a clause of) the agreement or when the case is referred to the BIBC by another court that acknowledged the parties’ agreement on its jurisdiction.

2) Composition

The BIBC will be composed of:

(i) One professional judge: the “President”, who will be elected amongst Belgian judges and;

(ii) Two non-professional judges: the “Judges in the BIBC”, who will be chosen by the President amongst Belgian and foreign experts in international business law.

3) Main characteristics of the proceedings

Language: exclusively in English.

Procedural rules sensu stricto: application mutatis mutandis of the UNCITRAL Model Law on International Commercial Arbitration[1].

Rules on the merits: either the law chosen by the parties or, in the absence of choice, the law that is applicable pursuant to the relevant conflict of law rules.

Interim measures? The BIBC can take interim measures.

Costs: Self-financing via substantial registration fees (to be determined by Royal Decree). Hence, the BIBC’s procedural costs will be much higher than before other Belgian courts.

Appeal? No appeal against a BIBC’s decision. The judgments can only be challenged through extraordinary appeals (e.g. third-party proceedings, appeal on points of law before the Court of Cassation…).

Conclusion

The Council of State pointed out some drawbacks of the BIBC and of its procedural rules, notably in light of the constitutional principles of equality and non-discrimination.

In this regard, they noted, in particular:

  • the use of a unique language which is not one of the three Belgian national languages,
  • the absence of a right to appeal,
  • the very high costs of the proceedings.

However, the Government seems determined to have this new English-speaking State Court enter into action in a very near future.

Needless to say, we will keep you posted.

For any question or assistance, please contact Fanny Laune, Rafaël Jafferali or Steven Callens

fanny.laune@simontbraun.eu
rafael.jafferali@simontbraun.eu
steven.callens@simontbraun.eu
+32 (0)2 543 70 80

[1] The Belgian code of civil procedure will not be applicable except when expressly provided.