Belgium’s Tort Liability Changes: A Guide for Directors
Belgium recently introduced significant changes to the tort liability rules for directors with the publication of a new Book 6 of the Civil Code. These changes will come into effect on January 1, 2025. The new rules abolish the principle of quasi-immunity that directors currently benefit from, allowing contracting parties to now have a direct, extracontractual claim against directors in addition to the contractual claim against the company.
Under the current law, directors in Belgium enjoy quasi-immunity, meaning they cannot be held liable by a third contracting party unless under exceptional circumstances such as criminal offenses, breaches of the general duty of care, pre-contractual faults, or manifest gross misconduct leading to the company’s bankruptcy. However, this quasi-immunity will be abolished with the implementation of Book 6 of the Civil Code.
With the new rules, contracting parties will have the right to pursue a direct claim against directors for breaches that occur after January 1, 2025. Directors will no longer have the same level of protection they once had under the previous quasi-immunity principle. It is important for directors to be aware of these changes and take necessary precautions to avoid potential liabilities.
Moreover, directors may still have certain defenses available to them when facing claims from third parties, based on their contract with the company and the main contract between the contracting party and the company. However, if the misconduct is limited to a contractual shortcoming by the company, directors may not be personally liable to the contracting party unless it involves an extracontractual fault.
It is worth noting that Belgian law provides for a liability cap for directors, depending on the size of the company and subject to exceptions. Additionally, article 6.15 of the Civil Code holds a company liable for misconduct by its directors, without any priority of claims, which could lead to claims against both the company and its directors.
As these changes will apply to all new claims arising from breaches after January 1, 2025, it is crucial for contracting parties to be mindful of tort liability when entering into new contracts and to assess the potential impact of these new rules on existing contracts.
In conclusion, directors in Belgium need to be prepared for the upcoming changes in tort liability rules and ensure they are well-informed about their new responsibilities and potential liabilities under the revised legislation. It is advisable for directors to seek legal advice to navigate these changes effectively and protect themselves from any unforeseen legal consequences.