Belgium

In summary

This article analyses the current status of the international arbitration field in Belgium, and identifies the most recent evolutions as well as the trends of Belgian courts in international arbitration-related matters.

Discussion points

• Review of CEPANI Rules
• The legitimate role of administrative secretaries
• Setting-aside proceedings in Belgium
• Recognition and enforcement of awards in Belgium
• Investor–state arbitration

Referenced in this article

• 2013 Arbitration Act
• CEPANI 2020 Rules
• 1958 NY Convention
• Court of Appeal of Brussels (9th ch), 17 January 2020
• Court of Appeal of Brussels (17th ch), 17 November 2020
• Brussels Tribunal of First Instance, Emek İnşaat Şti and WTE Wassertechnik v European Commission, 17 June 2021
• Brussels Tribunal of First Instance, M Dawood Rawat v The Republic of Mauritius, 30 June 2020
• DP World PLC v Kingdom of Belgium, ICSID Case No. ARB/17/21
• CJEU, Republic of Moldova v Komstroy, 2 September 2021

Introduction

International arbitration proceedings seated in Belgium are governed by the Arbitration Act of 24 June 2013 (the 2013 Arbitration Act or the Act)^[1] that entered into force on 1 September 2013. ^[2] The 2013 Arbitration Act is incorporated in Part VI of the Belgian Judicial Code (BJC) (articles 1676 to 1722 BJC).

The 2013 Arbitration Act has modernised the Belgian legislation on arbitration and is very much influenced by the 2006 UNCITRAL Model Law from which it transposed important improvements, including on issues of validity of the arbitration agreements and interim measures.

Improvements in the arbitration legislation have contributed to the promotion of Belgium as a place of arbitration. Indeed, as confirmed by the most recent ICC Statistics, in 2019 Belgian cities (mostly Brussels) were chosen as the place of arbitration in nine ICC arbitration proceedings (against six cases in 2018), thus placing Belgium in 14th position in the ranking of the preferred jurisdictions chosen as the place of arbitration in ICC cases.^[3] This positive trend is also confirmed by the arbitral practice in high-stakes investor–state cases: in both Permanent Court of Arbitration (PCA) cases Manchester Security Corporation vs Republic of Poland^[4] and Dawood Rawat v The Republic of Mauritius,^[5] the arbitral tribunals selected Belgium as the seat of the arbitration manifesting the increasing attractiveness of Belgium as a seat for international arbitration proceedings.

Although the Act includes provisions typical of modern legislations on international arbitration also inspired by the UNCITRAL Model Law (such as article 1682 recognising the principle of competence-competence), a few key distinctions are worth mentioning.

First, as regards its scope, the Act is not limited to commercial arbitration and is applicable to all types of arbitration, including investor–state arbitrations. Also, no distinction is made between domestic and international arbitration, unless the parties agree otherwise, and subject to mandatory provisions.^[6]

Second, when comparing it with legislations of other jurisdictions, the Act includes provisions that appear specific to the Belgian context. An example of this originality is found at article 1709(3) of the BJC, which provides that where a third party wishes to join proceedings, or is called to join, the arbitral tribunal’s decision to allow proceedings in respect of this third party requires unanimity of the arbitrators. Majority decisions are therefore not accepted in these circumstances.

Two other provisions of the Act are worth mentioning. First, concerning the award, beyond the traditional formal and substantive requirements,^[7] article 1713(3) BJC provides that if there is more than one arbitrator and one of them does not sign, the award may still be valid ‘provided that the reason for the omission [of the signature of the others] is mentioned’. Second, with regard to confidentiality, arbitration proceedings are not confidential by default under Belgian law, and confidentiality needs to be expressly agreed upon between the parties (directly or by reference to the rules of an arbitral institution).

Belgium is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards but has declared to apply the Convention subject to reciprocity. Belgium is also a signatory to the European Convention on International Commercial Arbitration of 21 April 1961, and the ICSID Convention of 18 March 1965. In principle, these treaties take precedence over Part VI of the BJC (Belgian arbitration law), except where the treaties provide otherwise (article 1721(3) BJC).

Recent institutional developments

In 2020, the main arbitral institution in Belgium, CEPANI, amended its Arbitration Rules twice (CEPANI Rules 2020). The first amendment came into force on 1 January 2020. The second amendment, which came into force on 1 July 2020, aimed at addressing the impact of the covid-19 pandemic on arbitration proceedings.^[8]

The most important features of the novel rules are the following. First, article 33 now specifically provides for a scrutiny of the draft award that the arbitral tribunal shall submit to CEPANI’s Secretariat. The scrutiny ‘may, without affecting the arbitral tribunal’s liberty of decision, suggest modifications as to the form of the award’. This amendment is indeed a welcomed change, and is likely to ensure a better quality of arbitral awards, as the practice of the ICC clearly shows. Second, article 36(7) of the CEPANI Rules 2020 provides that, where the arbitral tribunal did not rule on all parties’ claims in its final award, and after consultation with the parties, the arbitral tribunal may (on its own motion or at the request of one of the parties) render an additional award on those claims. Third, the wording of the CEPANI Rules 2020 has changed and refers to ‘emergency arbitrator’ to define proceedings for urgent interim and conservatory measures ‘which cannot await the constitution of the arbitral tribunal’ (article 27). This adaptation allows the parties to draw on the – already quite extensive – practice of ICC arbitral tribunals on the admissibility and jurisdiction over emergency arbitration proceedings. Fourth, to enhance the efficiency of the proceedings, especially in covid-19 times, the new Rules provide for the possibility to hold hearings physically, but also ‘by videoconference, teleconference, [or] any other appropriate means of communication or by a combination of the foregoing methods’ (article 25(3)). Fifth, subject to any agreement otherwise between the parties, all correspondence exchanged by the parties, the arbitrators and CEPANI can be done in electronic format. CEPANI also uses a secure online platform (BOX) for the exchange of correspondence, submissions, exhibits and procedural decisions, which helps centralise all the relevant documents of the case for the benefit of all stakeholders.

Temporal application of the 2013 Arbitration Act

The Brussels Court of Appeal has recently clarified the temporal application of the Act in a judgment of 17 November 2020 in the Republic of Kazakhstan v Stati et al. case. ^[9] The Brussels Court of Appeal dismissed Stati’s argument that the Act should apply differently to arbitrations seated in Belgium and arbitrations seated abroad, ^[10] and confirmed that the Act must apply in the same manner, irrespective of the nature of the arbitral proceedings.

In the same judgment, the Brussels Court also decided that the Act does not have a retroactive effect and only applies to arbitration proceedings initiated after 1 September 2013. As such, parties seeking to enforce an award in Belgium should be aware that arbitration proceedings started before the entry into force of the Act (1 September 2013) and related court proceedings remain governed by the former provisions of the BJC.

Plea in favour of arbitration

Following the competence-competence principle, article 1682(1) BJC provides that Belgian courts must declare themselves without jurisdiction unless the arbitration agreement is invalid or has terminated. According to article 1682(1), a party that wishes to raise an objection against the jurisdiction of state courts in favour of the arbitration agreement agreed upon by the party, must do so before raising any other argument or substantive discussion (in limine litis).

By an unreported judgment of 27 October 2020, the Belgian Court of Cassation (the Belgian Supreme Court) has clarified the conditions that a party should meet for its argument in favour of arbitration to be admissible. In the case at stake, the dispute arose out of a leasing agreement. While the agreement included an arbitration clause, one of parties nevertheless initiated judicial proceedings before a local court. The defendant did not participate in the proceedings and the judge therefore handed down a decision in absentia.

The defendant then challenged the judgment before the appellate court and raised a plea of arbitration on the basis of article 1682(1) BJC. The appellate court rejected the defendant’s argument and held that the plea had not been invoked in a timely manner since the first court had already ruled on the merits of the case. Notably, the appellate court found that the defendant could not challenge the jurisdiction of the state courts for the first time in appeal, even though the first court’s judgment had been rendered in absentia.

On 27 October 2020, however, the Court of Cassation reversed the Court of Appeal’s decision and held that a plea in favour of an arbitration clause may validly be invoked in the first written briefs filed by the party that relies on it. Therefore, in the case of judgments in abstentia, and provided that the defaulting party has not filed any kind of submissions, the legal requirement of article 1682(1) is satisfied if the plea is raised by the defaulting party in appeal proceedings. This liberal interpretation of the 2013 Arbitration Act confirms the favor arbitrandum of the Belgian highest court.

Interim measures: state courts or emergency arbitration?

A recent judgment of the Court of Appeal of Brussels of 17 January 2020^[11] clarified the difficult relations between state courts and emergency arbitrators in cases where a party requests interim and provisional measures pending the constitution of the arbitral tribunal.

The facts of the case at stake can be summarised as follows. In light of the sanctions imposed on Iran, the Belgian company Swift decided in 2018 to suspend a set of agreements for the provision of a secured financial messaging system concluded with financial institutions belonging to Iranian companies and stopped providing its services under the agreements. The financial institutions then applied for interim measures before the competent court in Belgium and requested the president of the court to order Swift in summary proceedings to reconnect them immediately to the messaging system.

In light of the existence of arbitration clauses in the agreement, the president of the court declined jurisdiction. The president’s decision was then overruled by the Court of Appeal in Brussels, which stated that the president had jurisdiction on the basis of ‘urgency’ as defined in the BJC, and not as retained by arbitral tribunals, that is, whether the measures requested ‘cannot await the constitution of the tribunal’ (as it is, for instance, the case in the ICC Rules). As such, there is no requirement on the party requesting urgent measures from Belgian courts in summary proceedings to show that the matter is so urgent that it cannot await the constitution of the arbitral tribunal.

In accordance with the Court of Appeal’s judgment, it is now clear that the Belgian courts and emergency arbitrators have concurrent jurisdiction for interim measure requests brought by parties before the constitution of the arbitral tribunal on the merits.

Setting aside of arbitral awards

The 2013 Arbitration Act provides for grounds for setting aside arbitral awards similar to the grounds for non-recognition of awards listed in the 1958 New York Convention. Among those grounds, three may be raised by a court on its own motion: non-arbitrability, violation of public policy and fraud.

The Act also provides that (1) a party cannot seek to set aside a decision or partial award on jurisdiction, and such an award can only be contested together with the award on the merits (article 1690(4)), and (2) only arbitral awards rendered in proceedings seated in Belgium may be set aside (or annulled) by the Belgian courts (article 1717 BJC). An interesting provision is incorporated in article 1718 BJC, which is one of the few provisions of the Act differentiating between domestic and international arbitration. Indeed, only where none of the parties are Belgian nationals, article 1718 BJC allows the parties to exclude the possibility for setting aside of the award. If the parties agree to such waiver, they will not have any possibility for a recourse against the award.

Finally, article 1716 BJC provides for the possibility that parties include, in their arbitration agreements, an appeal mechanism before another arbitral tribunal. This option is rare in international arbitration-related legislations, and has not attracted users’ interest so far.

Two interesting decisions of the Brussels First Instance Tribunal related to setting-aside proceedings are worth mentioning.

In a first case that opposed a Cypriot and a German company to the European Commission, the Brussels First Instance Tribunal rejected the companies’ application to set aside an ICC award in favour of the European Commission.^[12] In that case, the companies claimed, inter alia, that the role of the administrative secretary nominated by the arbitral tribunal and agreed upon by the parties exceeded its legitimate scope. In particular, the companies argued that the administrative secretary had written a list of questions to be asked to the parties during the hearing as well as sections of the award, including those incorporating the arbitral tribunal’s decisions and reasoning.

The Brussels Court rejected those arguments and proceeded with a very detailed analysis and interpretation of the provisions of the ICC Note to the Parties and the Arbitral Tribunals (the ICC Note)^[13] governing the issue of the role of administrative secretaries in ICC arbitration proceedings. It concluded that, pursuant to the Note, an administrative secretary in ICC proceedings can carry out a series of activities, including the drafting of factual sections of the arbitral tribunal’s decisions or awards provided that the decision reflects the reasoning of the arbitral tribunal, which remains the ultimate decision-making authority. This decision is of particular interest because it is one of only a few interpreting this ICC Note and deciding, in a quite liberal way, on the role of administrative secretaries, which has become a very topical issue in the international arbitration field.

The second interesting case relates to setting-aside proceedings opposing Mr Dawood Rawat to the Republic of Mauritius. Mr Rawal (French-Mauritian) brought a claim against the Republic of Mauritius before a PCA/UNCITRAL arbitral tribunal on the basis of the France–Mauritius bilateral investment treaty. In particular, Mr Rawal’s claim in the arbitration amounted to US$1 billion for several alleged breaches to the treaty’s investment protection standards committed by the Republic of Mauritius. The arbitral tribunal rendered an award on 6 April 2018 rejecting its jurisdiction on the matter, mainly because of Mr Rawal’s double nationality.^[14] In brief, the arbitral tribunal decided that the treaty in question did not protect those investors with the nationality of both state signatories.

Mr Rawal applied before the Brussels First Instance Tribunal on 3 July 2018 to annul the award. The Brussels court rendered its decision on 30 June 2021,^[15] rejecting the application to set aside the award and confirming the arbitral tribunal’s decision that dual nationals are excluded from the scope of the treaty. In particular, the court agreed with the arbitral tribunal’s reasoning that the provision of the treaty on ‘nationals’ should be interpreted having regard to the full context of the treaty. The court therefore concluded that the reference to the ICSID Convention in a provision of the treaty indeed confirmed that the signatories intended to exclude investors with dual nationality. Moreover, the Brussels court pointed out that this conclusion was also supported by successive initiatives of France and Mauritius that decided to exclude dual nationals from another bilateral treaty by including an ICSID arbitration clause. Finally, the Brussels court highlighted the fact that bilateral treaties aim at promoting and increasing economic cooperation between the signatories, and that such goal is doubtfully reached in cases involving dual nationals.

Enforcement of arbitral awards

As explained earlier, Belgium is a party to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards but has declared to apply the Convention subject to reciprocity. The grounds for the non-recognition of an award are similar to the grounds for setting aside of an award and are listed at article 1721 BJC.

In recent times, Belgian courts have been faced with very interesting and high-profile enforcement proceedings of arbitral awards in investor–state arbitrations, including the pending case in the dispute between Moldovan investors, the Stati, and the Republic of Kazakhstan in relation to the enforcement of a US$500 million Energy Charter Treaty arbitral award.^[16]

There are at least two other pending cases^[17] before the Belgian courts where foreign investors are seeking to enforce ICSID awards by attaching monies owed to the states by EUROCONTROL, the Brussels-based European Organisation for the Safety of Air Navigation.^[18]

Also, in another reported case, creditors of the Czech Republic have obtained the exequatur of their investment treaty award in 2020 before the Brussels Court of Appeal.^[19]

Finally, in unreported cases, several creditors of the State of Libya are seeking to enforce arbitral awards in their favour against Libyan frozen assets held by Belgian’s Euroclear (the Brussels-based Central Securities Depository) pursuant to the UN sanctions against Libya.^[20]

Investor–state disputes

Belgium is a signatory to the ICSID Convention, as well as to more than 60 bilateral investment treaties (BITs), which it negotiated and concluded together with the Grand Duchy of Luxembourg as the ‘Belgo-Luxembourg Economic Union’. Despite not having published an official model BIT, certain tendencies are followed in the treaty negotiations, such as the wish to include clauses protecting environment, social and human rights. Belgium is also a party to the Energy Charter Treaty (ECT).

Belgium has been involved in only two investor–state arbitrations so far. The first came to an end in 2015 with an award in which the arbitral tribunal ruled in favour of Belgium and declined its jurisdiction.^[21] The second case is currently pending before an ICSID arbitral tribunal and was initiated by the UAE-based port operator DP World.^[22] On 10 April 2021, the arbitral tribunal rendered a decision on jurisdiction and liability in favour of the claimant.^[23]

Important political initiatives taken by the Belgian government in the field of investor–state disputes should also be highlighted. Indeed, as the consequence of the well-known Achmea decision of the European Court of Justice,^[24] Belgium has decided (1) to terminate all the intra-EU BITs to which it is a signatory, and (2) to submit a request to the Court of Justice of the European Union (CJEU) for an opinion on the compatibility of the future modernised ECT’s arbitration provisions with EU law in the context of the application of the ECT to disputes within the EU.^[25] The application of the current arbitration system in the ECT to disputes involving intra-EU claims was also the subject of other proceedings before the CJEU. On 2 September 2021, the CJEU issued its ruling concluding that, pursuant to EU law, article 26 of the ECT is not applicable to intra-EU disputes.^[26]

Outlook and conclusions

As noted above, several positive factors are converging and play a pivotal role to allow Belgium to increase its already important role in the context of international arbitration. The modernity of the Arbitration Act, the recent review of the CEPANI Arbitration Rules, the familiarity of the judges with the international arbitration-related issues and the selection of Brussels as the place of arbitration by parties, institutions and arbitral tribunals in high-profile disputes show this positive trend. One must also not forget that, in light of the current discussions on investor–state arbitration and the increasingly important role of the EU institutions in these discussions and in shaping the new system, Brussels will most likely become an important hub for the settlement of international investment disputes, before arbitral tribunals seated in Brussels or before the new bodies that will be established in the near future.

Notes