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, which is largely based on the UNCITRAL Model Law.
A.1.1 Brussels International Business Court
In 2018, the Belgian Government introduced a draft law concerning the establishment of a Brussels International Business Court (BIBC). The purpose of the BIBC was to provide a specialized, English-speaking forum to treat cross-border trade cases with an effective, one instance procedure. It would be composed of a president and vice-president specialized in commercial matters and of a group of both professional and lay judges specialized in international trade law.
However, as the initial draft law was received critically and lacked political support, it was quietly put on hold. Although some still argue in favor of the BIBC, stating the need for a strong international competitive stance and its strong potential in view of Brexit, the new Belgian Government has not yet indicated that it will proceed with the legislative process of this initiative.
A.2 Institutions, rules and infrastructure
In Belgium, Belgian Centre for Arbitration and Mediation (CEPANI) is the largest and most well-known arbitration and mediation institution. As flagged in last year’s edition of the Baker McKenzie International Arbitration Yearbook, an updated set of rules governing the arbitral proceedings before CEPANI was introduced in 2019 and entered into force as from 1 January 2020.
The 2020 CEPANI rules apply to all arbitral proceedings with CEPANI commencing as from 1 January 2020, unless the parties have agreed otherwise. These new rules include mostly minor adjustments and only encompass a few novelties, such as the introduction of an expedited procedure and further clarifications to the confidentiality in arbitration proceedings. In addition, digital communication and electronic exchange of documents have become the default rule, which has been especially useful since the COVID-19 outbreak.
Furthermore, CEPANI revealed a “user-friendly costs calculator” in March 2020, allowing users to calculate the costs of the arbitration proceedings in an accessible manner.
In September 2020, UNCITRAL issued its most recent draft provisions on expedited arbitration for the settlement of commercial disputes, which are meant to complement the UNCITRAL Arbitration Rules. The aim is to offer expedited arbitration procedures to resolve simple disputes with a low value using a “fast-track procedure” to improve efficiency and reduce costs. It remains to be seen if CEPANI will adapt its arbitration rules to these provisions.
A.2.1 The effects of COVID-19
Following the COVID-19 outbreak, the CEPANI Secretariat has remained fully operational and its services are being managed remotely. Although the new CEPANI rules of 2020 already digitized the arbitration proceedings to a certain extent, additional changes were made as from 1 July 2020 with respect to virtual hearings.
Before the latest amendment, approval of all parties was necessary to organize a meeting virtually. With this change, an arbitral tribunal may decide to hold a hearing physically, by videoconference, teleconference, or any other appropriate means of communication at the request of one of the parties or upon its own motion. Moreover, it may decide to assess the case based on a written procedure only, unless one of the parties requests a hearing.
B.1 Exception of arbitration may be invoked for the first time in appeal Proceedings
On 27 October 2020, the Court of Cassation annulled a judgment from the Court of First Instance of Namur which held that the plea of arbitration cannot be invoked for the first time in appeal. Article 1682, section 1 of the Belgian Judicial Code requires that the plea of arbitration, i.e., the argument that parties have agreed to subject a dispute to arbitration instead of judicial proceedings, is raised before the court prior to any other argument or substantive discussion (in limine litis).
The factual circumstances leading up to this decision involved two parties that had entered into a leasing agreement that contained an arbitration clause. After a dispute arose between the parties, one of them nevertheless initiated proceedings before the Justice of the Peace, who passed a default judgement as the defendant had not appeared before the court nor submitted written briefs.
The defendant lodged an opposition against the judgment before the Court of First Instance of Namur, which acted as an appellate court. Although the defendant raised the plea of arbitration as its very first argument, the court refused to refer the dispute to arbitration and held that the plea had not been invoked in a timely manner because the Justice of the Peace had already ruled on the merits of the case. The court held that a plea of arbitration cannot be invoked for the first time in appeal, even if the decision in the first instance was rendered in absentia of the party invoking the plea.
The defendant brought this matter before the Court of Cassation, arguing that the judgment of the Court of First Instance that set aside the plea of arbitration, was not legally justified because it had been established that (i) the judgment in the first instance was handed down in the absence of the defendant, and (ii) the defendant raised the plea of arbitration as its first argument in the proceedings to which it was involved (i.e., the appeal proceedings) and before entering into a debate on the merits. The defendant argued that the plea of arbitration could not be rejected merely because it was raised for the first time in appeal.
The Court of Cassation agreed with the defendant and held that the legal requirement of invoking the plea of arbitration before any other arguments or pleas is satisfied if the plea is raised in the first written briefs of the party that relies on it. Therefore, the defendant should have been able to successfully invoke the plea of arbitration in the appeal proceedings against the judgment in absentia.
B.2 Territorial jurisdiction of Belgian courts over foreign arbitral awards
On 9 March 2020, the Dutch-speaking Court of First Instance in Brussels declined jurisdiction to rule upon the validity of an arbitral award because the seat of arbitration was located in the Netherlands.
The two parties involved in the case submitted their dispute to arbitration based on an agreement, which provided that any disputes would be subject to the jurisdiction of the ICC and its respective arbitral rules. However, the agreement did not specify the forum of these proceedings. While the claimant argued that the location of the proceedings should be Belgium, the defendant argued in favor of Luxembourg. Ultimately, this matter was decided by the arbitrator, who appointed Amsterdam as the seat of the arbitration. After the arbitral award was rendered, the claimant sought its invalidation before the Court of First Instance in Brussels.
The judgment of the court is limited to an assessment of the question of jurisdiction, notably if it was territorially competent to rule on the possible invalidation of the award.
The court first referred to article 1676, section 7 of the Belgian Judicial Code which provides that, once a seat of arbitration has been determined, Belgian courts may only be competent to rule on arbitration disputes if (i) the parties have agreed so, or (ii) if the seat of arbitration lies in Belgium. The ourt then examined the application of this jurisdiction rule as follows:
- First, as the parties had not agreed on a location for the seat of arbitration, let alone that this location would be Belgium, the court found that the first jurisdiction rule did not apply;
- Second, the court held that the seat of arbitration was located in Amsterdam because the proceedings had taken place there in reality, as decided by the arbitrator, and therefore it lacked any jurisdiction to rule on the dispute between the parties.
The court then added a few interesting considerations with respect to the second assessment.
The court first held that it had no jurisdiction to assess or verify the location of the seat of arbitration determined in the award, even if a party claims that the appointment of that seat is false, debatable, or contestable. In other words, the jurisdiction rule provided in article 1676, section 7 of the Belgian Judicial Code must be applied based on the seat of arbitration as determined in the arbitral award. Any evaluation or modification of that decision would presume a substantive assessment for which the court had no jurisdiction. In any adverse event, a state judge could indirectly take the arbitrator’s position by changing an element of the arbitral award, thereby introducing a new legal remedy that is not provided by law.
The claimant’s argument that the arbitration proceedings had breached its right of defense and rules of public order did not alter this analysis. The jurisdiction rule in article 1676, section 7 of the Belgian Judicial Code can thus not be bypassed by relying on fundamental rights or rules of public order. Moreover, the court also rejected the argument that article 1717 of the Belgian Judicial Code (which authorizes state courts to annul arbitral awards in certain circumstances) is of public order and could therefore supersede the jurisdiction rule in article 1676 of the Belgian Judicial Code.
For the sake of completeness, the court further confirmed that the choice of applicable law has no bearing on the forum of the proceedings. The fact that, in this case, Belgian law applied to the substance of the dispute was not indicative of any agreement between the parties with respect to a location for the arbitration proceedings.
In conclusion, the court held that it had no jurisdiction to rule on an arbitral award with a foreign seat of arbitration on the basis of a strict interpretation of the jurisdiction rule in article 1676, section 7 of the Belgian Judicial Code. The contested nature of that seat of arbitration nor the (possible) application of rules of public order led the court to reconsider its jurisdiction.
B.3 Jurisdiction of Belgian courts to order provisional measures in arbitration disputes
In a decision of 17 January 2020, the Court of Appeal in Brussels clarified the jurisdiction of state courts to grant interim measures in the context of arbitration disputes. It confirmed that summary judges may grant interim measures with respect to such disputes, even if the inability of the arbitral tribunal to grant such measures in a timely manner has not been demonstrated or if the parties have the possibility of resorting to emergency arbitration.
The dispute involved two financial institutions that were subsidiaries of Iranian companies (“Claimants“). They both had an agreement with a Belgian company (“Defendant“) for the provision of a secured financial messaging system. In 2018, the Defendant suspended the agreements as a reaction to the inclusion of the sanctions imposed on Iran by the United States in the EU Regulation No 2271/96 of 22 November 1996, thereby ceasing the provision of its services to the Claimants.
After the Defendant did not respond to the claimants’ request to reconnect its services to the Claimants’ system, the latter filed summary proceedings before the enterprise court in Brabant Wallon to request reconnection by way of an interim measure. The president of that court, residing in summary proceedings, however, declined jurisdiction based on an arbitration clause in the agreements of the Claimants with the Defendant.
The Claimants lodged an appeal against this decision, and they simultaneously filed a request for arbitration with the ICC claiming the reconnection of the Defendant’s services as an interim measure.
The Court of Appeal in Brussels examined the jurisdiction of the summary judge. It held that the latter had in fact jurisdiction to grant interim measures in the dispute between the parties, notwithstanding the presence of a valid arbitration clause, taking into account the following provisions of the Belgian Judicial Code:
- Article 1683 provides that a claim for interim measures before a state court does not constitute a breach or a waiver of an arbitration agreement.
- Article 1691 authorizes the arbitral tribunal to grant interim measures as well, however without detracting from the competence of state courts to do the same.
- Article 1698 finally provides that the jurisdiction rules for state courts to grant interim measures are the same in arbitration disputes as in the context of judicial proceedings.
The Court of Appeal clarified the scope of these provisions and confirmed that parties may indeed request interim measures before a state court, even though the dispute is substantively subject to arbitration. Importantly, the Court of Appeal ruled that the right to request interim measures before a state court also applies in situations where (i) the inability of the arbitrator to order interim measures in a timely manner is demonstrated in a concrete and detailed way, or (ii) the parties have the possibility to resort to emergency arbitration.