Koen De Winter, Michaël De Vroey and Margo Allaerts
A. LEGISLATION AND RULES
Domestic and international arbitration in Belgium continues to be governed by Part VI of the Judicial Code (articles 1676-1722), which is largely based on the UNCITRAL Model Law. This legislation entered into force on 1 September 2013 and was amended by the Act of 25 December 2016.
Belgian arbitration legislation is mostly of a supplemental nature, allowing parties to organize arbitral proceedings as they wish. However, a few mandatory provisions exist, such as the recognition and enforcement of arbitral awards and the right to seek annulment of an arbitral award (infra). These mandatory rules apply irrespective of the place of arbitration, and any agreement or clause to the contrary will be deemed null and void.
New arbitration procedure for European double taxation disputes
The Act of 2 May 2019 introduced a new arbitration procedure for the resolution of European tax disputes. The Act transposes EU Directive 2017/1852 of 10 October 2017 on tax dispute resolution mechanisms in the European Union and came into force on 1 July 2019.
The objective of this arbitration procedure is to facilitate dispute resolution in relation to double taxation in the European Union, by organizing a cooperation mechanism between the Belgian tax authority and the corresponding authority of the Member State involved.
To initiate arbitration proceedings, companies or individuals can file a formal complaint with the competent Belgian authority (which is yet to be appointed) and the tax authority of the conflicting Member State. Upon receipt of the complaint, the Belgian authority is obliged to notify the foreign authority of the complaint and to communicate its preferred language. If the complaint is accepted by both authorities, the authorities will try to resolve the question in dispute by mutual agreement. If the formal complaint is rejected by at least one authority or where no mutual agreement is reached, the complainant can immediately request the establishment of an Advisory Commission, which will then further decide whether to accept or reject the complaint. If both authorities reject the complaint, the complainant can only file an appeal with the court of first instance. If the court rejects the appeal, the proceedings are terminated.
If the court, however, accepts the appeal, the complainant can request the establishment of an Advisory Commission, which will examine the complaint. The Advisory Commission comprises at least one member from both national authorities and rules independently. However, the authorities of the Member States may opt to establish a Commission for Alternative Dispute Resolution instead, which is authorized to apply any kind of dispute resolution method and to deliver a binding decision with respect to the dispute.
Brussels International Business Court
In 2017, the Belgian Government announced its initiative of creating a Brussels International Business Court (BIBC). The purpose of the BIBC was to provide a centralized forum for international disputes between companies that occurred on Belgian territory, by means of cooperation between state judges and independent experts, in an English working language. As such, the BIBC would have been the first hybrid institution in Belgium to combine state and ADR components.
The implementation of the draft Bill establishing the BIBC was initially scheduled for 2020. However, the draft Bill was withdrawn in 2019 due to a lack of political support. As a result, the future and existence of the BIBC has become uncertain and will be largely dependent on the policy of the next Government, which is currently being formed.
A.2 Institutions, Rules and Infrastructure
The Belgian Centre for Arbitration and Mediation (CEPANI) is the largest and most well-known arbitration and mediation institution in Belgium. The CEPANI Arbitration Rules (“Arbitration Rules”), together with the ICC Rules, govern most institutional arbitrations in Belgium.
In 2019, CEPANI published an updated version of its Arbitration Rules, which entered into force on 1 January 2020. These modifications are mostly of a procedural nature, to modernize the Arbitration Rules and to adapt them to CEPANI’s existing practices.
The most significant changes introduced by the revision are the following:
- Specification of confidentiality obligations – Confidentiality was already considered a cornerstone of the previous version of the Arbitration Rules, which contained a confidentiality obligation in general terms. The revised Arbitration Rules clarify the scope of this obligation, specifying that it extends to, inter alia, all awards, materials in the arbitration created for the purpose of the arbitration and all other documents produced by another party in the proceedings.
- Additional awards for undecided claims – Where a final award, or any previous award, did not decide on a claim or counterclaim presented in the arbitral proceedings, any party may request the arbitral tribunal to render an additional award, with notice to the other parties.
- Emergency arbitration procedure – Parties are able to seek interim and conservatory measures from a single arbitrator in the same way as they could before. However, this procedure has now been rebranded as the “emergency arbitration procedure.”
- New expedited procedure – Under the previous Arbitration Rules, a simplified procedure automatically applied to disputes of which the value did not exceed approximately USD 28,000. The new Arbitration Rules replace this mechanism with a general framework of an “expedited” procedure, which applies automatically to disputes up to approximately USD 110,000 or when the parties agree to it.
- Cost allocation and fees – Aside from a slight increase in CEPANI’s administrative costs, the new Arbitration Rules now authorize the arbitration tribunal to take into account certain criteria (e.g., the circumstances of the case, the degree of which the parties’ claims have been awarded, etc.,) when allocating the costs of the proceedings.
In addition, CEPANI has also introduced a new set of internal rules, which, inter alia, clarify the conflict of interest provisions vis-à-vis the President and Secretary-General, as well as their associates or partners.
B.1 Additional awards and unsubstantiated rejections of claims in arbitral awards
In a judgment from 15 March 2019, the Belgian Supreme Court ruled that arbitral awards containing general rejection clauses, in which a party’s claim is rejected without further motivation, does not prevent the application of that party’s right to request an additional award for unanswered claims.
The previous version of article 1708 of the Belgian Judicial Code provided that arbitral tribunals could supplement their awards at the request of one of the parties, where it had failed to decide on one or more aspects of the dispute. If the counterparty disputed that the award was, in fact, incomplete, obtaining such an “additional award” was only possible after confirmation by a state court. This provision has now been replaced by article 1715, section 3 of the Belgian Judicial Code which provides a similar rule but eliminated the intervention of a state court. Instead, parties can now directly request an additional award with the tribunal within one month after the final award was filed.
The dispute was rooted in a collaboration agreement concluded by three parties for the exploitation of a diamond grindery in Botswana, Africa. The parties agreed to bring arbitration proceedings after the claimant accused the defendants of breach of contract, as they had taken invasive management decisions with respect to the diamond grindery without the claimant’s involvement.
After all, claims had been dismissed by the arbitration tribunal of first instance, the case was brought before the arbitration appeal body in December 2014. The latter convicted the defendants to pay compensation to the claimant. This award was corrected in January 2015, when the arbitration appeal body reduced the amount of the compensation granted to the claimant.
The claimant subsequently requested an additional award, as it held that the arbitration appeal body had not decided on its claim with respect to the period from 2011 to 2013. In addition, the defendants requested correction and explanation of the award. Both claims were rejected.
The case was then brought before the state court of first instance in January 2015, where the (initial) claimant requested a referral of the case to the arbitration appeal body, as he agreed that part of his claims had been left unanswered. Both the court of first instance and the court of appeal rejected the claim, at least partly. This refusal was motivated by the fact that the arbitration body of appeal had mentioned in the award that it “reject[ed] the principal claim and all other claims.”
The case was finally brought before the Belgian Supreme Court, who was asked to determine whether the use of general clauses which rejected the parties’ claims entirely (without further specification), excluded the right to request an “additional award” in the application of article 1708.
The Supreme Court followed the established case law of the French Supreme Court. They held that such generic clauses did not suffice to establish that a tribunal has ruled on all claims when the motives of the award do not indicate that it did, in fact, investigate a particular claim. The court explained that this would erode the obligation of judges (c.q., arbitrators) to pass judgment on every aspect of the claims brought by the parties. In such cases, parties should, therefore, retain the right to request an additional award on the aspects of its claim(s) they had not yet obtained a ruling on.
This judgment may be applied by analogy to the current article 1715 section 3 of the Belgian Judicial Code, although without the involvement of a state court. This decision’s value, however, extends far beyond the scope of arbitration procedures, as it condemns the use of generic “rejection” clauses in judgments and arbitral awards in general. Indirectly, this judgment sharpens the obligation of motivation on judges and arbitrators.
B.2 Prohibited exclusion of right to request annulment of arbitral sentences
Belgian law provides that parties have an absolute right to seek annulment of an arbitral award. Article 1718 of the Belgian Judicial Code prohibits the preclusion of this right when at least one of the parties has the Belgian nationality or is established in Belgium. This provision is of public order.
Additionally, under article 1716 of the Belgian Judicial Code, a right to appeal only exists in arbitration proceedings when the parties have stipulated this in their arbitration agreement. In case the parties did provide for such right to appeal, the abovementioned right to seek the annulment of an arbitral award can only be exercised after the award has been subject to an appeal.
In the case at hand, the parties to the arbitration proceedings had provided for the right of appeal with the European RUCIP Committee (RUCIP). The value of the dispute amounted to approximately USD 45,000. The filing of a request for such appeal was, however, subject to a filing fee of more than USD 16,000.
Whilst the factual background of the dispute is not disclosed entirely, the underlying context of this case concerned a defendant who wanted to file an appeal against the arbitral award that had been ruled in first instance. However, the defendant’s application for appeal with RUCIP was deemed to be withdrawn after it had not paid the filing fee in time. The defendant could therefore no longer seek the annulment of the arbitral award.
This case was referred to the Belgian Supreme Court, where they were asked to clarify the scope of the absolute prohibition to preclude the right to seek the annulment of an arbitral award, in particular in connection with the obligation to lodge an appeal first.
The Supreme Court held that the filing fee constituted a manifestly unreasonable financial condition to file an appeal, which de facto denied the right to appeal of the defendant. In other words, it held that the defendant was practically unable to lodge an appeal against the arbitral award. The court decided that the prohibition to preclude the right to seek annulment of an arbitral award did not only concern explicit exclusions (e.g., contractual clauses) but also situations where a party is, in fact, denied access to this right; in particular, due to an unreasonable financial threshold. In this case, the lack of an appeal could therefore not deprive the defendant of the right to request the annulment of the award.
B.3 Professional liability of arbitrations and intervention of technical advisors
In the framework of a longstanding dispute that ended in 2019, the Brussels Court of Appeal annulled an arbitral award in a case concerning the professional liability of an arbitrator with respect to the intervention of a technical expert. In particular, the court ruled that the arbitrator had relied on the technical expert too closely, thereby violating multiple principles of justice. This gave rise to the annulment of the award and reimbursement of the arbitrator’s professional fees.
The dispute stemmed from arbitration proceedings before CEPANI, where a technical advisor had been appointed for the limited task of assisting the arbitrator with the technical aspects of the dispute. This appointment did not authorize any involvement in the decision-making process. From the technical expert’s invoices, it appeared that (i) he had drafted a report examining the usefulness of a technical inquiry – which is a procedural and therefore legal assessment, (ii) he was present at the judge’s deliberation after the court pleadings and (iii) he had received an unpublished, draft version of the award and delivered comments to the arbitrator.
One of the parties brought the case before the Brussels Court of Appeal (after the Court of First Instance had rejected its claim) on the basis of gross misconduct of the arbitrator, submitting that the arbitral award should be declared null.
The court held that the arbitrator had violated the secrecy of the deliberation – a principle considered to be fundamental to ensure judges’ (c.q. arbitrators) independency under Belgian law and had unlawfully transferred part of its jurisdiction to the technical expert. The court annulled the arbitral award and condemned the arbitrator to reimburse his professional fees (i.e., the full amount it had received from CEPANI). Interestingly, the appellant did not receive compensation for its legal costs incurred for the defense of its claims because it was not proven that the appellant would have obtained a more advantageous award if the arbitrator had not made a professional error, especially considering the fact that the parties had entered into a settlement agreement after the arbitral award was handed down.
 EUR 25,000.
 EUR 100,000.
 EUR 40,000.
 EUR 15,000.