The quasi-immunity of the performing agent
The quasi-immunity of the performing agent was an established principle in Belgian law for a very long time by which auxiliary persons charged with the performance of another person's contract enjoyed broad protection against liability claims by (principal) creditors within the same contract.
The new Book 6 in the Civil Code changes this principle. In this Wanted Fact, we would like to explain why this is an important change in our law.
Old regime
The doctrine of quasi-immunity of the performing agent was first established in a Court of Cassation judgment. This was followed by a number of judgments that refined this doctrine. This has ensured that a principal can only hold its performing agent non-contractually liable in exceptional cases.
When an executing agent (e.g. a subcontractor) causes damage in the performance of the contract vis-à-vis the principal (the client), the principal debtor (the main contractor) has to be responsible for the faults of this auxiliary agent, without having to prove fault on the part of the principal debtor.
Moreover, under Belgian law, there is a ‘relative overlap prohibition’ between a contractual and a non-contractual liability claim.
Such prohibition can occur when a contracting party not only breaches its contractual obligations but also the general duty of care.
Because of the overlap prohibition, another contracting party who has suffered damage cannot invoke the rules of extra-contractual liability. According to case-law, this can only be waived if the fault constitutes a breach of the general duty of care and the resulting damage is different from the one due to the poor performance of the contract. These conditions must be fulfilled cumulatively. A derogation is also possible when the contractual default can also be qualified as a crime.
In practice, the performing agent thus enjoyed a so-called ‘quasi-immunity’. An immunity from being sued by the principal, so to speak.
New regulation
The new Book 5 ‘Obligations’ and Book 6 ‘Extra-contractual Liability’ of the Civil Code introduced a number of new rules. The new rules end the quasi-immunity of the performing agent by allowing the injured party to sue the auxiliary person from now on, even if the damage follows purely from the defective performance of the contract.
The abolition of the overlap prohibition allows auxiliary persons to be sued directly by the creditor.
These auxiliary persons can be either directors, representatives, subcontractors.
This can be for all kinds of reasons such as violation of a general standard of care or of specific rules.
Contractual derogation possible
De wetgever heeft als tegenhanger hierop wel voorzien in de mogelijkheid om de immuniteit en het verbod op samenloop (zoals vroeger) contractueel te bedingen. Op die manier kunnen contracten de oude situatie handhaven.
Op dit contractueel verweermiddel bestaan wel wettelijk bepaalde uitzonderingen.
Wanneer de opdrachtgever fysieke of psychische schade heeft opgelopen, kan de uitvoeringagent dit contractueel verweermiddel – zijnde een clausule in de overeenkomst – niet opwerpen.
Thus, the possibility of introducing a contractual defence clause in the contract leaves the possibility for contracts to largely leave the old regime in place.
It will therefore become important to assess on a case-by-case basis whether you want to exclude these claims or not.
It will also have to be considered whether you want to take steps in the main contract between the principal and the main contractor, or whether you want to make certain adjustments only in the contracts between the main contractor and the auxiliary person in case they too wish to use certain auxiliary persons.
Legal deviations
Besides the possibility of contractual adjustments, mandatory regulations from other legislation must also be taken into account.
For instance, under the Employment Contracts Act, employees are largely protected from the employer or third parties for their mistakes, as they can only be held liable for gross misconduct or intentional or repeated minor mistakes. This mandatory legislation in favour of employees cannot be derogated from. This protection therefore remains.
But there is also a specific regulation for directors of companies in Article 2:56 of the Companies and Associations Code and a financial limit to liability in Article 2:57 of the Companies and Associations Code. The director's liability may not be limited to less than this limit and the company may not exempt or indemnify the director in advance for the director's liability against the company or third parties. If this does happen, the provision is held to be unwritten. This does not prevent some possibilities from remaining open here too provided that the main contract is carefully drafted.
Entry into force and transitional law
The new rules will enter into force in January 2025. This is six months after publication in the Belgian Official Gazette.
As with any new legislation, the legislator will also have to provide for a transitional regime. Under the provided regulation, the new rules should be applied to liabilities arising after the entry into force of the law.
This means that a contract concluded under the old legislation, but where the liability arises under the new regime, would have to be assessed under the new rules.
This does raise questions, since under the old legislation and before you could become aware of the consequences of the new legislation, you will not have included clauses to regulate the aforementioned derogation. On the other hand, the concurrence prohibition under the old legislation is no longer invocable. Therefore, it will be important to take these principles into account at least in contracts you conclude now.
Any questions about this new liability scheme?
Would you like to see how this regulation will impact your operations? And how you can adjust it, if necessary?
Then contact Wanted Law.