The "Projet de loi modifiant la sixième partie du Code judiciaire relative à l'arbitrage"/"Wetsontwerp tot wijziging van het zesde deel van het Gerechtelijk Wetboek betreffende arbitrage" (the Draft Law), based on a draft prepared within CEPANI (the Belgian Centre for Mediation and Arbitration), is being fast tracked through Parliament. Presented to the House of Representatives on 11 April 2013, it was approved – unamended – by the House one month later, on 16 May, and sent up to the Senate. The Senate has until 3 June 2013 to decide whether it will debate (and possibly amend) the Draft Law.
The Draft Law is yet another sign of Belgium's long-standing interest in the subject of international arbitration. In 1972, Belgium was the first country to implement the Uniform Law on Arbitration (the Uniform Law) annexed to the European Convention providing a Uniform Law on Arbitration and concluded within the framework of the Council of Europe in 1966. The Belgian provisions on arbitration, based on the Uniform law, were incorporated into the Belgian Judicial Code and currently form the sixth part of that Code. Belgium was the first country to ratify and implement the Uniform Law - but also the only one! The international arbitration community had to wait until 1985, when the United Nations Commission on International Trade law (UNCITRAL) created its Model Law on International Commercial Arbitration (the Model Law), to see a significant number of countries implement uniform rules on arbitration. Legislation based on the Model Law, which was revised in 2006, has now been enacted in more than 80 jurisdictions.
The Belgian provisions on arbitration were further amended in 1985 and in 1988, partly to reflect the Model Law. As more and more states bring their legislation into line with the Model Law (ie Australia, Ireland, Spain, Florida, and soon, the Netherlands), the Belgian government has decided to make a similar move, but with some differences.
The Draft Law aims to modernise Belgium's legislation on arbitration by closely aligning it to the Model Law, while at the same time, (i) retaining specific Belgian provisions that have proved useful over time and (ii) creating new rules to meet those aspects that are not covered by the current legislation or by the Model Law.
A few highlights of the new regime
The Draft Law comprises 60 articles, and mostly follows the structure of the Model Law. Below we touch on some of the highlights that illustrate the choices that guided the Belgian legislator through its reform.
Scope of the new Draft Law
Compared to the Model Law which applies to international commercial arbitration, the Draft Law will apply to all types of arbitration whether, national or international, commercial or non-commercial. Of course, Belgium nevertheless remains bound by the international treaties on arbitration to which it is a party, such as the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 1958 and the Geneva Convention on International Commercial Arbitration of 1961. These international treaties will supersede the Draft Law in the case of a conflict.
Arbitrability of a matter
Up until now, Belgian law has not defined the type of matters that may be subject to arbitration proceedings. Neither does the Model Law. The Belgian legislator turned to Swiss and German law for inspiration. According to the Draft Law, all "asset related matters" (de nature patrimoniale – van vermogensrechtelijke aard) may be arbitrated. According to the Swiss Federal Court, this involves all claims that have a monetary value to the parties, as assets or as liabilities, in other words, claims that present, at least for one party, an interest that can be assessed in monetary terms. "Non-asset related matters" may be subject to arbitration proceedings if it is legally permitted to settle the matter by arbitration.
Nationality of an arbitrator
The Draft Law follows the Model Law in that in principle, no one may be precluded by reason of their nationality from acting as an arbitrator. However, it also states that the parties may decide otherwise. It may make sense, for instance, that the parties would wish to avoid appointing an arbitrator that has the same nationality as one of the parties. However, the possibility of the parties using nationality as a criterion to select an arbitrator is not exempt from criticism as it can lead to unlawful discrimination. Given that discrimination is prohibited under EU law (no discrimination between EU nationals) and that racism and xenophobia are prohibited under Belgian law, the Council of State raised this issue in its opinion on the Draft Law. The question is neither innocuous nor purely theoretical. In 2010, in the Jivraj case, the English Court of Appeal held that an arbitration clause in a joint venture agreement governed by English law, which required the arbitrators appointed by the parties to be members of the Ismaili community, was void because it violated UK anti-discrimination legislation in relation to religion and belief (the Employment Equality (Religion or Belief) Regulations 2003). The Court of Appeal held that arbitrators were "in employment" for the purposes of those Regulations and were therefore protected by the relevant anti-discrimination provisions. This highly controversial decision has since been overturned by the English Supreme Court. Find out more on this case in our previous eAlert.
Provisional, including protective, measures
The Belgian legislator has distanced itself from the Model Law as unlike the Model Law, the Draft Law does not (i) provide a generic definition of interim measures or (ii) set out the conditions for granting interim measures in detail. The Belgian legislator has decided that the approach adopted in the Model Law is not flexible enough and would create unnecessary rigidity in our system. Therefore, the Draft Law simply states that an arbitral tribunal may take all provisional, including protective, measures that it deems necessary, except for attachments and seizures. In this aspect, the legislation governing arbitration in Belgium gives more freedom to the arbitral tribunal than the Model Law to decide which interim measures can be ordered, when they can be ordered and how they can be ordered. The Draft Law also differs from the Model Law in that it does not give the arbitrator the power to order a provisional measure at the request of a party without involving the other party in the debate (a unilateral or ex parte provisional measure). The Belgian legislator has chosen not to grant this power to an arbitrator out of concerns that (i) it is more efficient to request this measure from the relevant state court and (ii) it might compromise the consensual nature of arbitration, the independence of the arbitrator and the rights of defence. On the other hand, the Draft Law also follows the Model Law in that, inspired by the Model Law, it incorporates an array of provisions detailing the rules governing provisional measures. Most of these rules already exist under Belgian law and are not specific to arbitration. The Belgian government suggests that the inclusion of these rules in the Draft Law has mainly an educational/informational purpose. This would also explain why the Draft Law contains provisions on the recognition and enforcement of interim measures. Unlike other countries, it has always been accepted that provisional measures are enforceable in Belgium under Belgian law, like any other arbitral awards. However, this is not necessarily obvious to a person who is not familiar with Belgian law and Belgian court cases and who is surprised not to find extensive debate on this issue. Therefore the new Draft Law will certainly shed a welcome light on the issue of the recognition and enforcement of interim measures.
Conclusion
It goes without saying that getting the seat right is crucial to ensuring an effective arbitration and an enforceable award.
By ensuring conformity with the Model Law, by carefully opting for a flexible and practicable regime and by making its rules as user- and reader-friendly as possible, Belgium is clearly positioning itself within the circle of the "favourable seats for arbitration".
Find out more on the legal framework for arbitration in the jurisdictions where Allen & Overy is present here.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
