On 1 July 2024, the law introducing Book 6 of the New Civil Code was published in the Belgian Official Gazette. This book contains the new rules on extra-contractual liability (formerly Articles 1382 et seq. of the Civil Code).
It expands the liability of auxiliary persons (e.g., (sub)contractors, directors of companies and employees) towards third parties as a starting point. The legislator leaves it up to the parties to make contractually deviating agreements. The new rules will enter into force on 1 January 2025 and will also apply to existing contracts.
Under existing legislation, executing agents or auxiliary persons (e.g., employees, directors and (sub)contractors) enjoy far-reaching protection against possible claims by third parties (e.g., customers of their principal). Indeed, barring exceptional cases, such auxiliary persons cannot be held directly liable for their possible mistakes by an injured co-contractor of their principal, with whom they themselves do not have a contract.
The new Book 6 of the Civil Code changes this principle.
An example:
Client A enters into a contract with company B, whereby B undertakes to carry out certain works for A. In order to carry out all or part of these works, B engages an auxiliary person C. In carrying out the works, C commits an error, as a result of which A suffers damage.
Can injured party A approach C directly to obtain compensation for the damage?
Current regime
A contractual claim by A against C is clearly precluded in the absence of a contract between them. Except in exceptional cases (e.g., if the facts constitute a criminal offence), it is also not permissible for A to turn to auxiliary person C extra-contractually (this is the so-called “quasi-immunity of the executing agent”). In accordance with current case law, as a principle, it is also not permissible for contracting party A to turn extra-contractually against contracting party B (this is the so-called “prohibition of concurrent proceedings”).
As a general principle, A can only bring a contractual claim against B, taking into account the clauses concluded between them (e.g., an exoneration clause).
These legal principles are abolished by the new legislation.
Future legislation
The new legislation leaves the choice to the injured party A: he can recover the damage ((extra)contractually from B or non-contractually from C. Unlike before, the damaged party will therefore henceforth have the possibility to recover the damage from the auxiliary person C.
Among others, company directors, representatives, subcontractors and employees may be considered auxiliary persons and therefore risk being directly sued by a party suffering damages under this new framework.
When the auxiliary persons are directly held liable by the injured party, the legislation does provide that they can invoke a number of defences:
- First, they can invoke the same defences as their principal. Thus, the contractual clauses between A and B continue to apply even if the claim is brought against C. This means that the injured party will not be able to circumvent contractual clauses (e.g., exoneration clauses) by bringing the claim against the auxiliary person.
- The auxiliary persons can also rely on the provisions in their own relationship with the principal. Defences under other legislation can also be invoked by the auxiliary persons. This means, among other things, that:
- workers retain their limitation of liability under Article 18 of the Employment Contracts Act. This means that the employee who causes damage to third parties in the performance of his contract is only liable for habitual light fault, fraud and serious misconduct;
- directors must rely on the legal regime regarding directors’ liability (as provided for in the Code of Companies and Associations).
Exception: parallel to what applies to the main contractor, the auxiliary who commits a fault that “causes an impairment of physical or psychological integrity” cannot invoke the contractual defences from the main and sub-contract. Nor can they do so if they committed a fault with the intention of causing damage. This limitation does not apply to other forms of damage that may or may not occur simultaneously.
The underlying idea is thus to let the risk allocation laid down in the main contract affect the relationship between the injured party and the auxiliary person. The auxiliary person will not be liable for more than his principal would be under the same circumstances.
An important nuance is that the legislator leaves the possibility for parties to agree contractually different arrangements. This means that the extra-contractual liability of auxiliary persons can be contractually limited, or even excluded.
Entry into force
The new rules will apply to facts occurring after the Act enters into force on 1 January 2025.
In the coming months it may be necessary to consider which clauses on extra-contractual liability are appropriate to include in both the main contract and in the contract with the auxiliary person.
Action point
The new rules on extra-contractual liability broaden the liability risk of auxiliary persons, such as directors or employees.
You may wish to assess whether and to what extent it is desirable to contractually limit or exclude the potential liability of your directors and employees.
