Arbitration Yearbook Belgium

By: Koen De Winter1 and Michaël De Vroey2

A. Legislation, Trends and Tendencies

International arbitration for arbitration proceedings commenced in Belgium after 1 September 2013 continues to be governed by the Belgian Arbitration Act of 24 June 2013 (implemented into the Judicial Code and substantially amending the section on arbitration in Articles 1676 and following), to which no legislative amendment was made in 2015.

International and domestic arbitration with the Belgian Centre for Arbitration and Mediation (CEPANI), which is the main center for dispute resolution in Belgium, continues to be governed by the 2013 CEPANI Arbitration Rules,3 which have been in force since 1 January 2013.

B. Cases

B.1 Scope for Setting Aside Unreasoned Arbitral Award

Pursuant to Article 1717, §2 of the Judicial Code, an arbitral award may only be contested before the Court of First Instance, and it may be set aside solely for a limited number of causes, for instance, if the Court of First Instance finds that the award is in conflict with public policy (cf. Article 1717, § 3, b), ii) of the Judicial Code), or if the party contesting the arbitral award furnishes proof that the award is not reasoned (cf. Article 1717, § 3, a), iv) of the Judicial Code).

In its judgment of 28 November 2014,4 the Belgian Supreme Court (Hof van Cassatie/Cour de Cassation) held that Article 1717, § 3, b), ii) of the Judicial Code does not imply that the Court must re-examine the underlying dispute in the light of the statutory “public policy” provisions applying to the facts of the case, but only requires the Court to verify that the arbitral award itself is not in conflict with public policy.

The arbitrators’ duty to state the reasons for their arbitral decision is an essential feature of arbitration in Belgium. This duty implies that the arbitral tribunal should state the facts and briefly explain why the decision was rendered on the basis of these facts. In its judgment of 28 November 2014, the Supreme Court held that the oversight exercised by the Court of First Instance in the context of annulment proceedings as to whether an arbitral award is sufficiently reasoned cannot amount to a review of the intrinsic merits of the reasons supporting the arbitral decision. According to the Supreme Court, the circumstance that the reasoning is incorrect does not constitute a breach of Article 1717, § 3, a), iv) of the Judicial Code.

In a following judgment of 28 January 2015, the Court of First Instance in Brussels confirmed that the requirement for an arbitral award to state the reasons on which its decision was based is a formal rather than a substantive requirement, and that when deciding in annulment proceedings, it is not within the Court’s competence to evaluate the reasoning of the arbitral award.5

C. Costs in International Arbitration

C.1 Allocation of Costs

Article 1713, § 6 of the Judicial Code stipulates that the final award will fix the costs of the arbitration and decide which of the parties will bear them or in what proportion they will be borne by the parties. Unless otherwise agreed by the parties, these costs will include the fees and expenses of the arbitrators, the fees and expenses of the parties’ counsel and representatives, the costs of services rendered by the institution in charge of the administration of the arbitration, and all other expenses arising from the arbitral proceedings.

The CEPANI Arbitration Rules contain a separate chapter on arbitration costs (Articles 34 to 36). Article 34 of the CEPANI Arbitration Rules distinguishes between the arbitration costs and the parties’ costs. The arbitration costs include the fees and expenses of the arbitrators, as well as the administrative expenses of CEPANI. The parties’ costs include the expenses of the parties, such as the expenses incurred for their defense and the expenses relating to the presentation of evidence by experts or witnesses.

Article 36 of the CEPANI Arbitration Rules provides that the final award will decide which of the parties will finally bear the arbitration costs, as definitively determined by the Secretariat, or in what proportion they will be borne by the parties. In addition, the final award may decide which of the parties will finally bear the parties’ costs or in what proportion they will be borne by the parties. A decision on the arbitration costs is mandatory, whereas a decision on the parties’ costs is optional. Parties can also reach an agreement on the allocation of the arbitration costs and parties’ costs, in which case the award will record such agreement.

It follows from Article 36 of the CEPANI Arbitration Rules that the arbitral tribunal can exercise discretion when allocating costs. In practice, however, costs will usually follow the event, i.e., be allocated to the losing party, who must then reimburse the costs of the prevailing party.

Arbitration costs will be fixed by the Secretariat on the basis of the amount of the principal claim and of any counterclaim, according to the Scale of Costs for Arbitration in effect on the date of the commencement of the arbitration. For instance, for a proceeding introduced from 1 January 2013 onwards with a sum in dispute of EUR10 million to EUR50 million, the minimum fees and costs of the arbitrators are EUR70,000 plus 0.025 percent of the amount exceeding EUR10 million, and the maximum fees and costs of the arbitrators are EUR80,000 plus 0.025 percent of the amount exceeding EUR10 million.

If the amount in dispute is wholly or partially unspecified, the Secretariat may determine, taking into account all available information, the amount in dispute on the basis of which the arbitration costs will be calculated. The Secretariat may also fix the arbitration costs at a higher or lower figure than that which would result from the application of the Scale of Costs for Arbitration, should this be deemed necessary due to exceptional circumstances. The Secretariat may adjust the amount of the arbitration costs at any time during the proceedings if the circumstances of the case or if new claims reveal that the scope of the dispute is greater than originally considered.

The administrative expenses of CEPANI are fixed at 10 percent of the arbitrators’ fees and costs and are subject to VAT. For the parties’ costs, there is no binding scale but only recommendations (see point C.3).

The arbitration costs must be advanced and paid to CEPANI prior to the transmittal of the file by the Secretariat to the arbitral tribunal. The advance on arbitration costs, as well as any additional advance on arbitration costs, will be payable by both parties in equal shares. However, any party will be free to pay the whole of the advance on arbitration costs should the other party fail to pay its share. This is because the Secretariat will transmit the file to the arbitral tribunal only if the advance on arbitration costs has been fully paid.

When the advance on arbitration costs exceeds EUR50,000, an irrevocable first-demand bank guarantee may be posted to cover the payment.

C.2 Security for Costs

Pursuant to Article 1693 of the Judicial Code, the arbitral tribunal may require a party requesting an interim or conservatory order to provide appropriate security. A similar provision can be found in Article 27 of the CEPANI Arbitration Rules, which stipulates that each party may ask the arbitral tribunal, as soon as it has been appointed, to order interim and conservatory measures, including the provision of guarantees or security for costs.

In addition, where recognition or enforcement of an interim or protective measure issued by an arbitral tribunal is sought, Article 1696, §1 of the Judicial Code allows the Court of First Instance to order the requesting party, if it considers it proper, to provide appropriate security, provided:

• the arbitral tribunal has not already made a determination with respect to security; or

• such a decision is necessary to protect the rights of the respondent and of third parties.

C.3 Recovery of Costs

Arbitral tribunals and state courts consider outside counsel’s time charges to be recoverable. However, unlike arbitral tribunals, state courts are bound by Article 1022 of the Judicial Code and the implementing Royal Decree of 26 October 2007, according to which the recovery of representation costs is limited by statutory fee tables. These statutory fees are relatively low.

For nonmonetary claims, the basic amount is fixed at EUR1,320. In limited circumstances (for instance, because of the complexity of the case or the manifestly unreasonable character of the situation), the court may increase this amount up to a maximum of EUR11,000 or reduce it down to a minimum of EUR82.50.

For monetary claims, the basic amounts that can be recovered will depend on the amount of the principal claim and may vary between EUR165 for a principal claim of less than EUR250 and up to EUR16,500 for a principal claim of over EUR1 million. The maximum amount that can be recovered for a principal claim of over EUR1 million is EUR33,000.

This system of varying flat rates in respect of costs for the assistance of a lawyer is currently the subject of a request for a preliminary ruling from the Antwerp Court of Appeal (Belgium) to the Court of Justice of the European Union in case C-57/15 United Video Properties Inc. v. Telenet NV regarding compliance with Article 14 of Directive 2004/48/EC of the European Parliament and of the Council of 29 April 2004 on the enforcement of intellectual property rights.

Other legal costs that may be recovered from the losing party before the state courts are:

• stamp duties, registration fees, registration rights and enrolment rights;

• costs and fees related to legal documents (for example, a bailiff’s fee for the service of a writ of summons);

• the cost of authenticated copies of the judgment;

• costs of investigative measures such as witness testimonies and court-appointed experts; and

• travel costs of magistrates, registrars and parties if these journeys are ordered by the court.

In contrast, arbitral tribunals operating under the CEPANI Arbitration Rules are explicitly exempt from the application of Article 1022 of the Belgian Judicial Code, unless otherwise agreed by the parties.

The parties’ costs that can be recovered include all the reasonable costs borne by a party for the defense of its interests, such as the costs of legal assistance and representation, costs related to the production of evidence by experts or by witness testimony, and internal costs. These costs also include the travelling and hotel costs of counsel, experts and witnesses. Consequently, costs of a party’s in-house counsel and other members of a party’s staff (contract managers, engineers, etc.) are considered recoverable.

In its award relating to parties’ costs, the arbitral tribunal may take account of the circumstances of the case, the financial importance and the degree of difficulty of the case, the manner in which the parties have cooperated in handling the case, the relevance of the arguments presented the degree to which the claim has been successful.

Parties are also free to agree on the extent to which the parties’ costs are reimbursed as well as the modalities of the reimbursement of these costs by the arbitral tribunal. Parties are free to determine an upper maximum limit for the reimbursement of these costs.

Parties’ costs must be duly supported with evidence, taking into account professional rules as well as professional secrecy. The arbitral tribunal may not decide on a party’s request for the reimbursement of costs without offering the other party or parties the possibility of contesting these costs. This means that simply providing a schedule of costs for recovery purposes will, in most cases, not suffice (as this is relatively easy to contest). Some backup may be required (invoices, etc.), with the possibility, however, of redacting sensitive business information or confidential information.

Parties need not state that they have actually paid the costs. They can simply state that counsel has incurred them. This means that a third party funder or contingency arrangements need not be disclosed.

  1. Koen De Winter is a partner in Baker & McKenzie’s Antwerp office and co-heads the Belgian office’s Dispute Resolution Practice Group.
  2. Michaël De Vroey is a senior associate in Baker & McKenzie’s Antwerp office and a member of the Firm’s Global Dispute Resolution Practice Group and Global Intellectual Property Practice Group.
  3. Available at http://www.cepani.be/sites/default/files/files/hayez_reglement_arbitrage_cepani_en_2013.pdf
  4. Cass. 28 November 2014 (G. V. L., Lifestyle Press nv, Juke Box nv, K.V.L. / Epifin nv, De Persgroep Publishing nv), http://www.cass.be, concl. C. VANDEWAL.
  5. Brussels Court of First Instance, 28 January 2015, AR/2014/7806/A.