New Book 6 of the Civil Code - Extra-contractual liability

 On 1 July 2024, the Act of 7 February 2024 containing Book 6 "Extra-contractual Liability" of the Civil Code was published in the Belgian Official Gazette. In this newsletter, we give an overview of the most important changes.

Thrusts of the reform

With the introduction of Book 6, extra-contractual liability law is being thoroughly reformed. The reform follows several main lines of force. First, it gives extra-contractual liability law a clearer and more readable structure by building it around its essential components, in particular the relationship to other liability rules, the facts giving rise to liability, causation, damages and compensation. Second, it seeks to confirm some developments in case law, with improvements and recasts where appropriate. Third, it introduces a number of genuine innovations.

The reform took into account the fact that the provisions of the Civil Code are common law in nature and thus needed to be structured as clear and precise general rules. As before, extra-contractual liability law remains on the whole victim-friendly, which is facilitated by pondering, inter alia, the easing of the injured party's burden of proof.

Structure of Book 6

Book 6 is divided into seven chapters, as follows:

• Chapter 1 - Introductory provisions contains the general rules on the supplementary nature of the provisions, the concurrence of liability rules and legal persons;
• Chapter 2 - Facts giving rise to liability defines the basis of extra-contractual liability and the various facts giving rise to liability;
• Chapter 3 - Causality defines the rules on causality;
• Chapter 4 – Damages defines damages, their prevention and the pre-determination of the injured party;
• Chapter 5 - Consequences of liability outlines the general principles on compensation;
• Chapter 6 - Injunction or prohibition concerns the court's power to prevent imminent damage;
• Chapter 7 - Special liability regimes, currently only regulates liability for defective products.

Most notable changes

Liability of legal persons confirmed

The principle of treating private and public legal equally to natural persons is confirmed. Book 6, Chapter 1 also includes faultless liability of legal persons for damage caused by (members of) its governing bodies to third parties during and as a result of the performance of their duties, as a result of their fault or any other act giving rise to liability.

Extended liability for another's act

The liability for another’s act is extended. A person who, by virtue of a statutory or regulatory provision, a judicial or administrative decision, or a contract, is charged with organising and controlling another person's way of life in a global and permanent manner, is liable for any damage caused by the latter's fault or other act giving rise to liability to third parties while under his control. This is a rebuttable presumption of liability: the supervising person is not liable if he/she proves that the damage is not due to an error in supervision on his/her part. The requirement of global and sustainable organisation and control means that, for example, sports clubs, youth clubs, babysitters, etc., who only supervise for a limited period of time, are not covered by this provision.

Abolition of  the concurrence prohibition

In case of a breach of contract which is also a tort, the injured party will now have the choice between a contractual and an extra-contractual liability claim. Under the old Civil Code, the concurrence of contractual and extra-contractual liability claims between contracting parties was excluded. Book 6 does allow this but additionally stipulates that the liable party can also invoke defenses from the contractual relationship (e.g. limitation of liability, special statutory limitation rules or contractual exclusion of concurrence) against the extra-contractual claim, except in case of damage resulting from an impairment of physical or psychological integrity or in case of willful misconduct.

Abolition of the quasi-immunity of the auxiliary

For the performance of their contracts parties often rely on auxiliaries, such as directors, independent service providers or employees. Under the old Civil Code such auxiliaries were protected against claims by their principal's co-contractor (“quasi-immunity”). They could not be held liable, neither on a contractual basis – as there was no contract between the auxiliary and the co-contractor – nor on an extra-contractual basis. Only in exceptional cases, such as a criminal offence they could be held liable. This quasi-immunity of the auxiliary was often unreasonably detrimental to the co-contractor, in particular if a claim against the principal did not yield a useful result because the latter was insolvent or could rely on an exoneration clause or any other personal ground of exemption from liability.

In the future, the co-contractor will be entitled to bring an extra-contractual liability claim against the auxiliary for damages resulting from a failure to (properly) perform the contract. This means that, in principle, directors, independent service providers or employees are at risk of being held liable by their principal's co-contractor.

Protection against such liability claims exists, but it is not as broad as the auxiliary’s quasi-immunity. Book 6 foresees that the auxiliary can invoke defenses (such as exoneration clauses) from his own contract with the principal and from the contract between the principal and his co-contractor. The auxiliary is not allowed to invoke such defences in case of damage resulting from an impairment of physical or psychological integrity or in case of willful misconduct. Furthermore, employees of private legal entities and personnel of public legal entities can only be held liable in cases of fraud, serious fault or repeated minor errors. Directors can invoke the limitation of liability under article 2:57 of the Code on companies and associations, which limits their liability to a certain amount ranging from EUR 120,000 to EUR 12 million as a function of the company's average turnover and balance sheet total. There are many exceptions to this limitation of liability, including in the case of fraud, serious fault or repeated minor errors. In their relationship with the company, directors can also regulate their liability by contract. In that case, however, they should take into account the legal prohibition for a company to exempt or indemnify its directors from liability in advance. This could possibly be overcome by having shareholders co-sign the agreement. Directors’ and officers’ liability insurance can also help avoid this risk.

How to prepare for this reform

The Act of 7 February 2024 will enter into force on 1 January 2025, giving some time to prepare. As the above legal rules are of supplementary law, it is possible to make other contractual arrangements. A contracting party could exclude its extra-contractual liability and that of its auxiliaries and parties could opt to settle liability exclusively by contract.

We recommend to check the provisions in your contracts regarding liability to see if it may be useful to amend them. Our legal team is happy to assist you.