On 1 February 2024, the Belgian Parliament adopted the new law on extra-contractual liability (Book 6 of the New Civil Code). It is expected that the provisions of Book 6 will apply to new and pre-existing agreements as from 1 January 2025.

One of the most controversial implications of this new liability regime is the abolition of the quasi-immunity from liability of the auxiliary, i.e. a person or entity involved in the performance of an agreement, such as directors, daily managers, proxyholders, employees and subcontractors. Let’s consider an agreement between a third party and a company for the installation of solar panels, where the decision to conclude the agreement has been taken by a director of the company and the installation itself is carried out by employees or independent subcontractors of the company.

Under the current liability regime, the third party has a contractual claim against the company in the event of defective performance of the agreement. However, an extra-contractual claim against the director is virtually impossible with a few exceptions, including in case of criminal liability (hence the denomination “quasi-immunity” of the auxiliary).

Under the new liability regime, the third party will be able to bring not only a contractual claim against the company, but also an extra-contractual claim against the director (as an auxiliary) in case he committed a fault in the context of the agreement between the company and the third party.

Fortunately, the legislator has provided the auxiliary with some protective measures. In order to provide the auxiliary with some protection against claims from the third party, (s)he can rely on any contractual exemptions from liability contained in (i) the ‘main’ agreement between the third party and the company, and (ii) the agreement between the company and the auxiliary (the latter may have the effect that the third party will request a copy of the agreement between the company and the auxiliary in order to check the exemptions, as these exemptions can be invoked by the auxiliary against the third party). Furthermore, the auxiliary can also derive limitations of liability from the law. Please note that the auxiliary will not be able to invoke such exemptions in the event of physical/psychological damage or intentional acts.

It is important to note that the protective measures depend on the capacity of the auxiliary. For subcontractors and proxyholders it is possible to use the entire suite of protective measures.

However, for directors and daily managers there are some limitations to these protective measures from a corporate law perspective. In such case an upfront exoneration by the company is not possible. Other measures of protection must be explored.

To counterbalance the prohibition of an upfront exoneration the law provides for a limitation of liability for directors and daily managers – the so called ‘CAP’. Depending on the size of the company (based on the total assets and the turnover) the liability of its directors will be limited to a certain amount ranging from EUR 125,000 for the smallest companies to EUR 12,000,000 for the largest. However, please note that the limitation of liability is only applicable in case of an accidental slight misconduct, meaning the vast majority of liabilities will not be covered by it.

Notwithstanding the above and with regard to employees, article 18 of the Employment Contracts Act provides for additional protection by limiting the employees’ liability. According to this article, employees can only be held liable in case of fraud, gross negligence, or a habitual minor negligence during the execution of the employment contract that causes damage to a third party.

An example of a protective measure for the auxiliaries includes a specific provision in a contract whereby the other party agrees not to introduce claims against the auxiliaries (but differ per type of auxiliary).

In conclusion, the upcoming new liability regime – which will be applicable to new and pre-existing agreements – should trigger an immediate call to action. It is to be expected that third parties will (threaten to) introduce claims against auxiliaries in order to increase pressure on all parties concerned. In light of these substantial changes, companies should work closely with their legal advisors to develop the best strategy to mitigate future risks. Do not hesitate to reach out to your regular EY Law contacts to discuss this topic in further detail and to develop solutions to mitigate the increased risk for your organization.