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Revision And a Look at The Future: Unlawful Terms

A contract is a legally enforceable agreement that creates, defines, and governs mutual rights and terms among its parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date.

We have already touched upon the fact that, since 1 December 2020, the B2B Act of 4 April 2019 has ensured that consideration is given to the imbalances which may exist between contracting companies and that, for this purpose, provisions have been introduced, among other things, regarding unlawful terms which are not possible, or sometimes only under strict conditions, in such contracts.

The new law on obligations now seeks to extend this to common law and thus to C2C contracts as well. We will first briefly recall the main principles of the B2B Act and then look at the Draft Law and its possible impact.

The B2B-Act

Scope

The provisions of the B2B-Act apply to enterprises as defined in Book VI of the Economic Code. Thus, the new concept of an enterprise is not used in this book and the condition of “the durable pursuit of an economic objective” is still required. A remarkable consequence of this is that the local non-profit association will more than likely not be entitled to the protection of the B2B-Act.

As far as contractual terms in relations between undertakings covered by this definition are concerned, the B2B Act which entered into force on 1 December 2020 will be applicable as far as agreements concluded, renewed or amended after 1 December 2020 are concerned.

Unlawful terms

Very similar to consumer law, B2B-Act has attempted to deal with terms that create an apparent imbalance between the rights and obligations of parties. Specifically, this was done by introducing a general testing standard on the one hand and by working with the so-called specific “grey” and “black” list of unlawful terms on the other hand.

General testing standard

Article VI.91/3, §1 WER incorporates this general testing standard as follows: “For the purposes of this Title, any contractual term concluded between enterprises which, alone or in conjunction with one or more other terms, creates an obvious imbalance between the rights and obligations of the parties is unlawful.”

The “imbalance” should be read in terms of a “legal imbalance”. The economic balance, i.e. what parties agree on at what price, still depends on the free market in which, among other things, commercial customs are an important parameter. Paragraph 2 of the aforementioned article clarifies that this apparent imbalance must always be assessed in concrete terms in the context of all the circumstances
surrounding the agreement. Finally, the last paragraph makes it clear that the core terms, insofar as they are clear and intelligible, are not subject to this testing standard.

Black list

Article VI.91/4 contains four terms which deviate so much from the basic principles of civil law and create a serious imbalance between the rights and obligations of the parties that they are considered to be absolutely prohibited terms, hence the need for a very strict interpretation.

  1. Purely discretionary clauses
  2. Terms giving the right to unilaterally interpret the contract.
  3. Clauses excluding any means of redress
  4. Clauses establishing in an irrefutable manner the knowledge or acceptance of the other party

Grey list

Article VI.91/5 contains the terms which are presumed to be unlawful unless proven otherwise, and reads as follows:

  1. granting the company the right to change unilaterally the price, characteristics or conditions of the contract without valid reason;
  2. tacitly extend or renew a fixed-term contract without giving a reasonable notice;
  3. without compensation, transferring the economic risk to one party when it would normally be transferred to the other company or another party to the contract;
  4. inappropriately exclude or limit the legal rights of a party in the event of total or partial non-performance or defective performance by the other undertaking of any of its contractual obligations;
  5. without prejudice to Article 1184 of the Civil Code, to bind the parties without giving reasonable notice;
  6. to release the company from its liability for its wilful misconduct, its gross negligence or that of its agents or, except in cases of force majeure, for non-performance of the essential obligations that are the subject of the agreement;
  7. to limit the means of proof that the other party can use; and
  8. in the event of non-performance or delay in performance of the other party’s obligations, to fix amounts of compensation that are manifestly disproportionate to the prejudice that may be suffered by the enterprise.

In practice, this article means a reversal of the burden of proof to the strong contracting party.

The principle of this list is fairly easy to explain by means of a very actual topic. The first type of unlawful clause in the grey list is the one that grants the right to unilaterally change the price, characteristics or conditions of the contract without good reason. This clause will therefore be unlawful and considered null and void, unless the enterprise can prove that there is a valid reason and that no manifest imbalance is created between the parties. If we apply this to price alteration clauses, which are very topical in view of, among other things, the COVID-19 pandemic and today’s very unfortunate situation in Ukraine, then valid/objective reasons must be at the basis of such a clause. In principle, a price alteration clause that makes this dependent on, for example, changes in the price of resources, suppliers, regional taxes or charges, etc., will contain a sufficient objective justification so that such a clause will not be unlawful, which is to be welcomed. When including such a clause, the enterprise is well advised to be as specific and clear as possible about the criteria for changes. If one wishes to include a term which normally falls under the grey list, the parties can let their freedom of contract prevail if they can demonstrate that they really wanted to make this arrangement for legitimate economic reasons.

Sanction

Article 91/6 reads as follows: “Any unlawful term is prohibited and null and void. The contract shall remain binding on the parties if it can continue to exist without the unlawful terms.”

In principle, therefore, only the unlawful clause itself is null and void and the contract can continue to exist without it. Only if the relevant term is so crucial that it affects the entire contract will the latter be null and void.

Draft of new law on obligations

Scope

The legislator is rightly so of the opinion that it is problematic that since the B2B-Act unlawful terms have been prohibited in both B2B and B2C relationships, yet they can still be used in C2C relationships. This is seen as a possible conflict with the constitutional principle of equality.

The Draft Law provides for the application of the unfair terms doctrine to B2B, B2C and C2C relations.

Furthermore, Article 5:52 of the Draft Law reads:

“Any non-negotiable clause which creates an obvious imbalance between the rights and obligations of the parties is unlawful and will be considered as not written.

When assessing the apparent imbalance, all circumstances surrounding the conclusion of the contract are taken into account.

Paragraph 1 shall not apply either to the determination of the main terms of the contract or to the determination of the equivalence of those terms.”

In the original version of this article in the Draft Law, its effect was limited to accession agreements. In the meantime, the legislator has abandoned this. It was clarified that the previous version was too restrictive of the effect of the prohibition, which, according to the legislator, should have a supplementary effect on the existing specific regulations that already exist in contracts between companies and consumers and between companies.

Article 5:13 of the Draft Law clarifies that it does not affect the application of specific legislation, as the Draft Law concerns so-called lex generalis. As far as B2B and B2C are concerned, the existing legislation will continue to apply without prejudice and the Draft Law can at most have a supplementary effect.

General testing standard without lists

It is clear that the proposed Law seeks to achieve the same as the B2B-Act, namely to prohibit terms which create an apparent imbalance between the rights and obligations of the parties to a contract. In the preparatory works of the Draft Law, we read that this is pursued without affecting the principle of contractual freedom or legal certainty. In other words, freely negotiated contract terms should not be affected by the doctrine of unfair terms. Partly for this reason, only ‘manifest’ imbalances are targeted, as a result of which the court can only apply a marginal review and must always look at the contract as a whole.10 In this respect, the Draft Law creates more clarity than the B2B-Act, since the latter does not exclude negotiated agreements from its application.

As in the B2B-Act, the court will not be able to touch “the main provisions of the contract, nor the equivalence of these main provisions”. Thus, for example, the agreed price will not be affected.

Sanction

Under the Draft Law, an unlawful term will have no effect by being deemed unwritten and will leave the remainder of the contract unaffected if it can continue to exist without the invalid term.

Conclusion

It is clear that the legislator wanted to resolve a possible disparity in the application of the doctrine of unfair terms by introducing it into the Civil Code in a general provision applicable to all relations, without prejudice to more specific regulations already in existence.

The result is that there are three possible sources of legislation on unfair terms, which is hardly beneficial to clarity. In addition, it appears that although the intention is the same, the situation is not entirely identical.

One can and does wonder whether, as regards the relationship with B2B legislation, after the entry into force of the provisions of the Draft Law in the New Civil Code, the interaction will not become unnecessarily complex and whether the provisions in the Civil Code may suffice. The main point of criticism is that the lists, and in particular the grey list, in the B2B-Act do not provide the intended guidance and legal certainty due to the rather vague wording, which is open to interpretation.

In any event, the legislator itself seems to be of the opinion that the Draft Law constitutes a more adequate implementation of the doctrine of unlawful terms than the B2B Act:

“In that context, the proposed text aims at introducing into Belgian contract law a general provision to prohibit abusive terms, while ensuring that their effects are limited in accordance with the principles of freedom of contract, proportionality and legal certainty. It will be up to the legislator to decide, in the light of the planned evaluation of the Act of 4 April 2019 and its assessment by the doctrine, whether this law should be maintained or whether the interests of companies are not already sufficiently protected by the general provision inserted in Book 5.”

With this, the legislator alludes to the four-yearly evaluation provided by the B2B Act in Article VI.91/7 WER.

As it now appears, the Draft Law returns to the essence, striking a balance between protecting against and combating unlawful terms without unduly restricting the contractual freedom of the parties to negotiate deviations from the “standard balance” of rights and obligations between the parties.

In that respect, the planned evaluation of the B2B-Act seems an ideal moment to take a closer look. Until then, everyone will have to find their way through the multitude of legislation on unlawful terms.

We will follow up on the developments after the above-mentioned provisions of the Draft Law come into effect.

We can assist you in reviewing the terms of your agreements and in drafting them so as to avoid, as far as possible and foreseeable, any revision.

For further questions and information, please contact us by phone at 03/216.70.70 and by e-mail at [email protected].

UberX: 2000 Drivers Without a Job after Court of Appeal Decision?

The courts of appeal are the main appellate courts in the judicial system of Belgium, which hear appeals against judgements of the tribunals of first instance, the enterprise tribunals and the presidents of those tribunals in their judicial area.

Since 26 November 2021, around 2000 drivers and many more passengers will no longer be able to use the app UberX. This was decided by the Brussels Court of Appeal. In the meantime, a temporary emergency ordinance has been approved in view of a later definitive Brussels taxi reform so that the Uber drivers, under strict conditions, can once again operate in the capital.

In its order to cease, the Commercial Court of Brussels imposes a ban on the application UberPop because Uber would work with private individuals who transport people for a fee. In doing so, Uber would be unfairly competing with taxi companies, as Uber drivers would not have to hold a taxi license. Per illegal ride via UberPop, the company would have to pay a fine of €10000. As a reaction, Uber launched UberX, an application whereby Uber only cooperates with drivers who possess a so-called VVB permit, a permit to rent out a vehicle with driver, like limousine drivers.

Also in Europe, the qualification of the platform Uber as a transport company was subject to discussion. As already described in our previous article: UBER – Transport company, the Court of Justice decided in 2017 that Uber’s service should be qualified as a transport service and not as an information society service.

This was prompted by a preliminary question in a dispute between Uber drivers and a professional association of taxi drivers in the city of Barcelona, on the grounds that Uber drivers were driving without a license, which would violate Spanish competition law. Uber drivers were therefore required to comply with Spanish taxi regulations to avoid committing an act of unfair competition.

Back at home, on January 16, 2019, the French-speaking Commercial Court of Brussels ruled that the ‘taxi company’ Uber complied with Brussels legislation on paid passenger transport. Uber would act as an intermediary without offering taxi services. Based on the ruling, Uber was allowed to continue offering its services in Brussels, much to the frustration of Febet, “Fédération Belge des Taxis”. The latter therefore filed an appeal against the judgment, since Uber drivers were said to be abusing their VVB licence.

It is against this appeal that the Court of Appeal has now decided to reverse the decision and extend the 2015 order to cease to the UberX application. As of November 26, 2021 around 6pm, Uber is no longer allowed to offer its services through UberX under penalty of fines. Only drivers with a taxi license would still be allowed to work via UberX.

In the meantime, on December 10, the Government of Brussels reached an agreement on a temporary solution with a view to a later, definitive Brussels taxi reform. The temporary arrangement will run until the ordinance on the reform of the taxi sector comes into force, which should establish a fully-fledged unique status for the profession. In this way, the Uber drivers will be able to get back on the road under strict conditions.

For example, they will only be allowed to drive on the basis of an exploitation license applied for by January 15, 2021 at the latest, and drivers will have to prove, among other things, that they offer their services for more than 20 hours a week on average. Also, the rides will have to be ordered in advance via a platform, physical soliciting of customers is prohibited. Finally, they will not be allowed to station themselves on public roads or at the reserved taxi stands.

“My government has worked very hard and we are pleased that today we can propose a temporary solution, which should make it possible for drivers affected by the Uber’s decision to return to work quickly. This proposal respects the court rulings of recent years on this electronic platform and at the same time paves the way for the future ordinance that will establish a fully-fledged unique status for the profession. I am very pleased about that,” said Minister President Rudi Vervoort.

But less than three weeks later, the Brussels government has opted for a different interpretation of the temporary emergency ordinance. Thus, drivers with a Walloon or Flemish Uber licence would no longer be allowed to work in the capital.

Minister-President Rudi Vervoort even threatens to withdraw the licence of Uber if it turns out that Uber deliberately allows Flemish and Walloon drivers to drive in Brussels. The Uber saga thus does not seem to have come to an end yet.

To be continued…

If you still have questions after reading this article, please do not hesitate to contact us by sending a mail to [email protected] or by calling: +32 (0) 3 216 70 70.

You Are Not Allowed to Speak Badly About Your Competitors

Businesses may want to know certain things about their competitors, such as their USP, price, quality, convenience, location, product range and customer service.

In a previous article you could already read that it is forbidden to advertise in a way that misleads or may mislead the consumer, unless it concerns exaggerated advertising that should not be taken literally. In this article, we look at another spectrum of prohibited advertising, namely denigrating comparative advertising and badgering.

The Court of Appeal of Antwerp recently had to decide whether an e-mail to the press from a company in which it links its competitor to ‘sjoemelsoftware’ (software used to influence test results) should be considered as advertising in accordance with Article I.8,13° of the Economic Code (hereafter: WER). Moreover, the Court also had to examine whether the company was thereby guilty of badgering (Article VI.104 WER) and denigrating comparative advertising (VI. 17, 5° WER).

Article I.8.13° WER

Article I.8.13° WER defines “advertising” as: “Any communication aimed directly or indirectly at promoting the sale of products, regardless of the place or means of communication used”. In other words, the concept of advertising is broadly defined.

The Court of Appeal ruled that the e-mail falls under the definition of advertising, as it has at least the indirect objective of promoting the sale of products. After all, by besmirching the reputation of a competitor, one’s own image is strengthened, which can promote the sale of products. This view is fully in line with the case law of the Court of Cassation in a case where the Court ruled that: “the placing of an identification plate on one tank which – from the nature of the case – can only be installed in one place can constitute advertising.”

Article VI. 104 WER

Article VI.104 WER prohibits any act contrary to fair market practices by which a company harms or is likely to harm the professional interests of one or more other companies.

According to the Court of Appeal, badgering consists of: “making an announcement containing a fact or an allegation, launching an attack or expressing a criticism which, in the mind of third parties, is likely to undermine the credibility or the reputation of an economic operator, of its products, its services or its activity.”

Dyson argued before the first judge that BSH had allegedly manipulated test results. The Court of Appeal confirmed the decision of the first court insofar Dyson wrongly linked BSH’s products to fraud scandals as she was not convicted for these allegations. The Court of Appeal accused Dyson of badgering. After all, it is not for Dyson to insinuate that BSH has infringed a statutory provision. With this decision, the Court of Appeal follows the established case law that such accusations, in the absence of a final conviction, must be qualified as badgering.

Article VI.17 WER

Article VI.17 of the WER stipulates that comparative advertising is permitted on condition that it:

  • “1° is not misleading;
  • 2° compares goods or services that meet the same needs or are intended for the same purpose;
  • 3° objectively compares one or more essential, relevant, verifiable and representative features of those goods and services, which may include price;
  • 4° does not cause the goods or services of the advertiser to be confused with those of a competitor;
  • 5° it does not damage the good name of or denigrate the brands, trade names, other distinguishing marks, goods, services, activities or circumstances of a competitor;
  • 6° for goods with an appellation of origin, relates in any case to goods with the same appellation;
  • 6 Zie arrest Hof van Beroep te Antwerpen 20 januari 2021, NjW 2021, afl. 450, 778.
  • 7 Zie arrest Hof van Beroep te Antwerpen 20 januari 2021, NjW 2021, afl. 450, 778.
  • 8 Voorz. Kh. Antwerpen 1 februari 2011, Jb. Markt. 2011, 527; Voorz. Kh. Antwerpen 4 oktober 2011, Jb.Markt. 2011, 559.
  • 7° does not take unfair advantage of the reputation of a trade mark, trade name or other distinguishing marks of a competitor or of the designation of origin of competing goods;
  • 8° does not present goods or services as imitations or replicas of goods or services with a protected trade mark or protected trade name.”

Any comparative advertising that does not comply with the abovementioned conditions is prohibited. Since Dyson identifies BSH’s products in the e-mail to the press, it can be considered as comparative advertising in accordance with Article I.8,14° WER.

As set out above, the Court of Appeal ruled that Dyson is guilty of badgering pursuant to Article VI.104 WER, thereby damaging the good name of its competitor (BSH) and committing an infringement of Article VI.17,5° WER.

Some examples of derogatory comparative advertising messages and/or badgering:

  • According to a Utrecht judge, the slogan “Now really without antics” of supermarket Steengoed as a variant of the slogan “No antics. That saves” of C1000 was unnecessarily disparaging.9
  • When Ryanair was introduced in Belgium in 2001, the low-cost airline immediately nauseated Sabena with the slogan: “Pissed off with
  • Sabena’s high fares?” above a picture of Manneken Pis, who made Sabena disappear for good with a jet.
  • Not much later, Sabena successor ‘SNBA’ was welcomed by Ryanair with a smiling Mona Lisa saying: “SN says it has the lowest fares in Europe? Don’t make me laugh”.

Conclusion

The concept of advertising has a broad meaning in Belgian law. Any communication that can directly or indirectly promote the sale of products will be considered as advertising. If you mention the products of a competitor, you will fall under ‘comparative advertising’ and, as a company, you must comply with the conditions of Article VI.17 WER.

For example, it is prohibited to damage the good name of a competitor and to belittle the goods and services of a competitor. You should therefore always ensure that when you engage in comparative advertising, you comply with the conditions of Article VI.17 of the WER.

If you still have questions after reading this article, please do not hesitate to contact Joost Peeters.

Joint and Several Liability for Wage Claims in the Construction Sector

The system of joint and several liability for wage debts in the construction industry has been in place for almost ten years. Since 20121, employees have been able to claim back wages from their employer’s direct co-contractor in the event of the latter’s default.

This regime only applies to “activities in the construction sector”. Furthermore, the new regime applies both to contractors with seconded employees who come to work in Belgium and to contractors established in Belgium who hire Belgian employees.

The joint and several liability is limited to the “direct contractor”. This includes the principal, the contractor and the intermediate contractor. The principal is the party who orders the contractor to carry out, or have carried out, activities in the construction sector for a price.

The contractor is the party who binds himself to the principal.

The intermediate contractor is a subcontractor who himself engages a subcontractor to carry out the work entrusted to him. This joint and several liability is only aimed at the direct contractual relationship that these parties have with their counterparty.

Construction Workers on Work Site

Construction Workers on Work Site

The principal is jointly and severally liable for the wages due to the contractor from the employee. It is of no importance whether the contractor is established in Belgium or not. The principal who has work carried out exclusively for private purposes does not fall under this regime.

The contractor is jointly and severally liable for the wages owed to the employee by the subcontractor – with whom he has contracted directly. The law specifies that this liability applies “in the absence of a chain of subcontractors”.

The subcontractor is jointly and severally liable for the wages due to the employee by the subcontractor with whom he has directly contracted. This subcontractor is an “intermediate contractor” vis-à-vis the subcontractor with whom it has directly contracted.

Please note: in case of a chain of subcontractors, the contractor can never be held jointly and severally liable. After all, he does not have the capacity of “intermediate contractor”.

The liability regime applies immediately in the event of non-payment of the salary due. This means that the principal, contractor or intermediary contractor never has to be notified in advance by the inspection authority. The employee can jointly and severally sue his employer’s counterparty who fails to pay, without having to wait for a payment from any fund.

Usually in the building contract, the principal, the subcontractor or the intermediate contractor can exclude his joint and several liability by means of a written statement. This declaration must contain the coordinates of the FOD WASO website (http://www.werk.belgie.be) and a confirmation from the other party that it does not and will not pay the wages owed to its employee. Furthermore, this declaration must be signed by the jointly and severally liable person and the employer.

The exemption from liability is reinstated when the principal, contractor or intermediary contractor is informed that the employer is not paying the wages due to its employee. This knowledge can be proved by all means of law or when the inspectorate has sent a letter.

The renewed joint and several liability applies from the 14th day after the notification and thus only to the future wage debts. During this grace period of 14 days, the principal, contractor or intermediary contractor has time to take the necessary measures to avoid liability. He can, for example, have the breach of law stopped or terminate the contract with the direct contractor.

The employer must post a copy of the notice at the employees’ workplace. If he does not do so, the jointly and severally liable party must post the copy. Any person who believes he has been wronged may lodge an appeal with the president of the labour court.

Joint and several liability is further governed by Articles 1200 to 1216 of the Civil Code.11 Articles 3 to 6, 10, 13 to 16, 18 and 23 of the Wage Protection Act apply by equating the joint and several liability with the employer. They deal with the method of payment, the wages in nature, the interest due by law and the permitted deductions.

The jointly and severally liable person who does not pay the wages or fails to attach a copy of the notification by the inspection will be punished with a criminal or administrative fine.

Decision:

It is important to draft your contracts with contractors in a watertight manner and to include appropriate clauses to limit or exclude your potentially very large joint and several liability.

Authors:

Roxanne Sleeckx

Roxanne Sleeckx

Update UBO: Deadline UBO Register 31 August 2021 Has Passed

In our previous article ‘Update UBO register’ 1, you could already read that companies and non-profit organisations have until 31 August 2021 to comply with the provisions concerning the UBO register. Meanwhile, almost two months have passed and the FOD Financiën is serious. Those who do not comply with the registration can expect an administrative fine.

The UBO register is a register in which all the ‘Ultimate Beneficial Owners’ of a company or other legal entity are registered. The register is part of the fight against money laundering and seeks to put an end to the practices of money launderers who launder money through the creation of companies as intermediaries.

Such a UBO register should make it possible to find out who is behind certain legal arrangements and entities. The intention is therefore to register details of the most influential actors.

The new UBO register will require companies, non-profit organisations and foundations, as well as trusts and other legal entities similar to trusts, among others, to obtain and maintain adequate, accurate and up-to-date information on their Ultimate Beneficial Owners.

In addition, the Act provides for the obligation of directors to electronically transmit information on the beneficial owners to the UBO register within one month, under penalty of financial fines.

1. Companies

Ultimate beneficiaries in the case of companies include natural persons who hold a sufficient percentage of the voting rights or of the ownership interest in the company. A percentage of 25% is considered as sufficient. Individuals who have a degree of control by other means or who are members of the senior management are also ultimate beneficiaries.

2. Non-profit organisations and foundations

Ultimate beneficiaries in the context of non-profit organisations and foundations include:

  1. the members of the board of directors;
  2. the persons authorised to represent the association;
  3. the persons in charge of the daily management of the association or foundation;
  4. the founders of a foundation;
  5. the natural persons or, if these persons have not yet been designated, the category of natural persons in whose main interest the not-for-profit association or foundation was established or operates;
  6. any other natural person who ultimately controls the association or foundation through other means.

3. Trusts and other legal entities similar to trusts

Are considered as beneficial owners in case of trusts, fiduciaries and other legal arrangements similar to trusts:

  1. the settlor;
  2. the fiduciary or trustee;
  3. the protector, if any;
  4. the beneficiaries, or if the persons who are the beneficiaries of the fiduciary or trust have not yet been designated, the category of persons in whose main interest the fiduciary or trust was established or operates;
  5. any other natural person who, by virtue of being a direct or indirect owner or by other means, ultimately controls the trust.

It’s a nice initiative, but the practical implementation of it is proving to be quite challenging. The deadline for registering the beneficial owners in the UBO register has been extended several times.

As of 11 October 2020, every obliged entity is obliged to include in the UBO register every document that supports and proves the adequacy, accuracy and timeliness of the data. It is no longer sufficient to simply present these documents for verification purposes. This includes the identity card of the UBO, the deed of incorporation and the articles of association of the company, etc.

One would have the time until 30 April 2021 to submit these documents, but again the deadline for uploading supporting documents and annual confirmation of the information in the UBO Register was extended to 31 August 2021. This according to Minister of Finance, Vincent Van Peteghem, in order to be able to support authorities to comply with the new rules imposed by the Royal Decree of 23 September 2020.2

In the meantime, we are at the end of October ’21 and the FOD Financiën has become serious. Companies that have not followed up on the tax authorities’ reminder letters to bring their registration in order will be faced with an administrative fine of €500.00 per director. This would concern approximately 80,000 companies that have not yet put their registration in order.

If you still have questions after reading this article, do not hesitate to contact us via [email protected] or 03 216 70 70.

What Is Collaborative Negotiation?

Collaborative negotiation is a special form of conflict negotiation. Article 1738 Ger. W. defines it as “a voluntary and confidential procedure of dispute resolution by negotiation involving conflicting parties and their respective attorneys and the latter acting under an exclusive and limited mandate of assistance and advice to achieve an amicable agreement.”

The disputes listed in article 1724 Ger. W. can be the subject of collaborative negotiation. In general, all private law conflicts of a patrimonial nature and non-pecuniary conflicts that are amenable to settlement can be the subject of a collaborative negotiation.

The extrajudicial collaborative negotiation originates in the agreement between the parties. Judicial collaborative negotiation arises from the agreement of the will between the parties during a lawsuit.

A collaborative negotiation protocol is drawn up (“contract”). This protocol is signed by the participants and the collaborative lawyers. This protocol identifies the parties, defines the conflict, includes the confidentiality principle, voluntariness, and so on.

Please note that signing this protocol suspends the statutes of limitations regarding the conflict, but not the expiration periods. The expiry can only be avoided by issuing a summons. Also the taking of protective and provisional measures is temporarily not allowed anymore.

Although the legislator speaks of a “procedure”, it is essential that the participants negotiate with each other themselves. The parties undertake not to initiate or continue litigation.

Furthermore, article 1739 Ger. W. that “only collaborative lawyers may conduct the collaborative negotiations”. This exclusivity is also confirmed by the Constitutional Court since there are other forms of negotiation and mediation that can be carried out by other lawyers and experts.

A collaborative lawyer is a lawyer who has followed special training, acquired the required knowledge, subscribes to the regulations for collaborative lawyers and is registered on the list of collaborative lawyers. Their role is limited to providing assistance to the client (negotiation coach). The collaborative lawyer ensures that his client’s agreement to the collaborative negotiation agreement is pure will.

Should one of the parties withdraw from the collaborative negotiation, the collaborative lawyers may no longer intervene in a lawsuit between the same parties in the context of a dispute that was the subject of the collaborative negotiations (withdrawal obligation).

According to the Constitutional Court , this obligation to withdraw does not prevent the right to a free choice of lawyer. This right continues to exist in full in other cases and, moreover, the participants freely choose to take part in the collaborative negotiation.

The documents prepared and communications made in the course of the collaborative negotiation are confidential. On the other hand, the information and documents that existed before the start of the collaborative negotiation are not covered by this confidentiality principle.

However, an essential feature of collaborative negotiation is the spontaneous provision of full disclosure of information. In order to prevent transferred information and documents from being used in the lawsuit that follows an unsuccessful collaborative negotiation, the parties may agree in writing that this information is subject to the confidentiality of article 1745, §3 in conjunction with article 1728 Ger. W.

The collaborative negotiation process shall proceed as follows:

  1. Initial consultation between the collaborative attorney and his client;
  2. Collaborative lawyers contact each other;
  3. Preparation of the collaborative negotiations by the collaborative lawyer and the client;
  4. Preliminary consultation between the collaborative lawyers;
  5. First collaborative consultation session (first meeting);
  6. Debriefing between the collaborative lawyer and the client and between the collaborative lawyers themselves;
  7. Further preparation meetings with the client and consultation sessions between the participants and the collaborative lawyers;
  8. Draft text of the agreement.

After the clients agree to the draft text of the agreement, the lawyers organise a signing session. As a last resort, the participants and collaborative lawyers will then formally confirm and sign the agreement.

A collaborative negotiated agreement is in principle legally enforceable (settlement agreement). The facts and rights of the parties are laid down in a binding way. If the parties have made mutual concessions, this is referred to as a settlement agreement.

This agreement is binding on the parties and is therefore, in principle, non-confidential.

Note: this agreement can be enforced in court. If necessary, the collaborative negotiating agreement can be converted into an enforceable title by including it in a notarial deed or in a court order.

Authors:

Roxanne Sleeckx

Roxanne Sleeckx