New Belgian Arbitration Act enters into force

1. Belgium adopts the Uncitral Model Law

On 1 September 2013, the new Belgian Arbitration Act (the "Arbitration Act") entered into force1. The Arbitration Act is based on the Uncitral Model Law on International Commercial Arbitration, with amendments adopted in 2006 (the "Model Law")2. Belgium is the 65th country and 16th European member state to have modelled its arbitration legislation on the Uncitral Model Law. With this, Belgium aims to affirm its pro-arbitration stance and to attract more international arbitration proceedings.

The scope of application of the Arbitration Act is all-encompassing and is therefore not restricted to international commercial arbitration. It applies to any arbitration proceedings seated in Belgium, whether domestic or international and whether commercial or not.

The Arbitration Act will apply to arbitration proceedings that have been initiated after 1 September 2013. On-going proceedings remain subject to the Act of 4 July 1972 as last amended on 19 May 1998.

2. Key changes to Belgian arbitration legislation

The new Arbitration Act amends several key aspects of Belgian arbitration legislation. The most significant changes are described below.

Firstly, the Arbitration Act broadens the category of disputes that can be submitted to arbitration. Previously, disputes were arbitrable if they could validly be the object of a settlement agreement. Now, disputes of a pecuniary nature are distinguished from other types of disputes. The old criterion still applies to the latter category, while the former category of disputes can be submitted to arbitration without any restriction.

The phrase "dispute of a pecuniary nature" must be construed broadly. As is the case in Switzerland, it must be understood as "any claim that has a pecuniary value for the parties, whether in terms of assets or liabilities or, in other words, rights that are valuable in cash for at least one of the parties"3.

The Arbitration Act also clarifies the limits of subjective arbitrability with respect to State entities. Under the previous legislation, State entities could conclude arbitration agreements for disputes relating to the conclusion and performance of contracts. The new Arbitration Act is more general and stipulates that State entities may submit any contractual dispute to arbitration.

Secondly, the efficiency and proficiency of arbitration-related judicial proceedings are greatly improved.

The new Act entrusts to five specific Courts jurisdiction to hear all matters relating to arbitration proceedings. The competent Courts are the five Tribunals of First Instance4 located at the seat of the Courts of Appeal. These five lower courts will therewith gain a useful expertise in arbitration matters.

Most judgments rendered by the lower courts can no longer be appealed. This is the case for judgments concerning the appointment5, challenge, and replacement of arbitrators as well as those concerning the taking of evidence. This is also true for decisions on the setting aside and enforcement of arbitral awards. Parties can however still challenge the lower court's decision on a point of law before the Court of Cassation.

Thirdly, the Arbitration Act introduces a comprehensive regime of interim and conservatory measures. This regime is less detailed than that of the Uncitral Model Law. The Belgian legislature opted for a more flexible approach, and therefore, many of the 2006 amendments to the Model Law were not included in the Arbitration Act.

Arbitral tribunals may, at the request of a party, grant interim or conservatory measures (other than protective attachments). Contrary to the Model Law, the Arbitration Act does not set forth the conditions under which interim and conservatory measures may be granted, nor does it enumerate what these measures might be. The Arbitration Act leaves these issues to the discretion of the arbitral tribunals.

With regard to enforceability, the Arbitration Act follows largely Articles 17H and 17I of the Model Law6. Interim or conservatory measures ordered by an arbitral tribunal are binding and enforceable. Grounds for refusing enforcement of such measures are set out in the Arbitration Act.

Fourthly, grounds for setting aside and refusing recognition or enforcement of arbitral awards have been aligned with those of the Model Law. The Arbitration Act adds two additional grounds to the list, namely the arbitral tribunal's failure to state the reasons for its decision7 and the fact that the arbitral tribunal has exceeded its powers8. With respect to certain grounds, the setting aside is subject to such grounds having been invoked during the arbitral proceedings or having had an impact on the arbitral tribunal's decision.

Under the new Arbitration Act, non-Belgian parties and entities may still exclude in their arbitration agreement the right to apply for the setting aside of arbitral awards. This is a peculiarity of Belgian law, which is only shared by Switzerland and Sweden.

3. Conclusion

The entry into force of the new Arbitration Act brings welcoming changes to Belgian arbitration legislation. It takes place after the adoption by the Belgian arbitration centre (CEPANI) of new arbitration rules earlier this year and confirms Belgium's favourable attitude towards arbitration. The new Arbitration Act, coupled with Belgium's central position in the heart of Europe, purports to make the country more attractive to foreign parties. It remains to be seen what Belgium will be able to offer when compared to other historical arbitration hubs.

written by Bart Volders and Sophie Bourgois.

1. Act of 24 June 2013 modifying the sixth chapter of the Judicial Code relating to arbitration. The Belgian Arbitration Act is available at http://www.ejustice.just.fgov.be/loi/loi.htm.

2. Available at http://www.uncitral.org/pdf/english/texts/arbitration/ml-arb/07-86998_Ebook.pdf.

3. Projet de loi modifiant la sixième partie du Code judiciaire relative à l'arbitrage, Doc. Parl. 53 2743/001, p. 9.

4. Or the President of the Tribunal of First Instance.

5. Unless the court declines to appoint an arbitrator.

6. Article 17H and 17I reads as follows:

"Article 17 H. Recognition and enforcement

(1) An interim measure issued by an arbitral tribunal shall be recognized as binding and, unless otherwise provided by the arbitral tribunal, enforced upon application to the competent court, irrespective of the country in which it was issued, subject to the provisions of article 17 I.

(2) The party who is seeking or has obtained recognition or enforcement of an interim measure shall promptly inform the court of any termination, suspension or modification of that interim measure.

(3) The court of the State where recognition or enforcement is sought may, if it considers it proper, order the requesting party to provide appropriate security if the arbitral tribunal has not already made a determination with respect to security or where such a decision is necessary to protect the rights of third parties.

Article 17 I. Grounds for refusing recognition or enforcement3

(1) Recognition or enforcement of an interim measure may be refused only:

(a) At the request of the party against whom it is invoked if the court is satisfied that:

(i) Such refusal is warranted on the grounds set forth in article 36(1)(a)(i), (ii), (iii) or (iv); or

(ii) The arbitral tribunal's decision with respect to the provision of security in connection with the interim measure issued by the arbitral tribunal has not been complied with; or

(iii) The interim measure has been terminated or suspended by the arbitral tribunal or, where so empowered, by the court of the State in which the arbitration takes place or under the law of which that interim measure was granted; or

(b) If the court finds that:

(i) The interim measure is incompatible with the powers conferred upon the court unless the court decides to reformulate the interim measure to the extent necessary to adapt it to its own powers and procedures for the purposes of enforcing that interim measure and without modifying its substance; or

(ii) Any of the grounds set forth in article 36(1)(b)(i) or (ii), apply to the recognition and enforcement of the interim measure.

(2) Any determination made by the court on any ground in paragraph (1) of this article shall be effective only for the purposes of the application to recognize and enforce the interim measure. The court where recognition or enforcement is sought shall not, in making that determination,"

7. The failure to state the reasons is a ground for setting aside or refusing enforcement only if the arbitration law of the seat imposes such a requirement on the arbitral tribunal.

8. The Act also adds that an award can be set aside on grounds of fraud. However, this anyway falls under the public policy exception.