Impact of the new Belgian tort law (Book 6 of the Belgian Civil Code) on insurance risk

Concurrence

One significant change introduced by the new Book 6 is the shift in the regime governing concurrence. The current regime is based on a general prohibition of concurrence. This means that it is not possible to combine contractual and non-contractual liability claims, subject to some exceptions, which causes problems in practice.

While the distinction between contractual and extra-contractual liability will remain in the new Book 6, the principal prohibition of concurrence will be erased, and concurrence will become the basic rule. This will allow a contracting party to choose between contractual and non-contractual liability claims against co-contractors.

If an injured party seeks compensation from his co-contractor on a non-contractual basis for non-performance of a contractual obligation, the co-contractor may invoke certain contractual defences. However, this is not possible in the case of damage resulting from (i) impairment of physical or psychological integrity; or (ii) a fault committed with intent to cause damage.

These new concurrence rules may extend coverage obligations under liability insurance covering extra-contractual liability, necessitating careful consideration by insurers.

Abolition of the quasi-immunity of auxiliary agents

Current law applies the quasi-immunity of the auxiliary agent. If an employee, company director or subcontractor commits a fault in the course of his duties as an auxiliary, the customer (i.e. the principal) who has suffered damage as a result of that fault is legally prevented, except in exceptional circumstances, from making a claim directly against that employee, director or subcontractor. The customer or principal can only bring a claim against its own contractual counterparty (i.e. the contractor). In other words, auxiliary agents are quasi-immune to claims by the principal.

This regime is now to be abolished. Under the new rules, the principal will not only have a contractual claim against its contractual counterparty, it will also have a second tort claim directly against the auxiliary. Faced with such a claim, the auxiliary can base its defence on both contracts. It can rely on the terms and liability limitations in the contract concluded between itself and the contractor to which the principal is not a party. It can also rely on the terms and limitations of liability in the contract concluded between the contractor and the principal. This shift may complicate claims handling and require adjustments in insurance underwriting and premium assessment.

Moving away from classical organ theory in the context of liability of legal entities

Additionally, the new Book 6 departs from the classical organ theory regarding the liability of legal entities, where the actions of directors are directly imputed to the legal entities.

The new Book 6 abandons this principle and introduces objective liability. Legal entities will be liable without fault for the harmful consequences of errors committed by members of their organs (including de facto directors) during and as a result of the performance of their duties.

This change might require certain insurance policies (e.g. D&O policies) and definitions to be revised to comply with the new legislation. In addition, the shift from direct liability of legal persons to qualitative liability may also indirectly affect the coverage provided by certain insurance policies.

Liability for one’s own deed

Article 1382 of the old Belgian Civil Code will be replaced by Article 6.5 of the new Book 6. It will be important to change the terminology in insurance contracts to reflect this.

The new Article 6.6 lists two types of faults, namely the breach of a statutory rule and the breach of the general standard of care. The definition of the general standard of care has also been amended and the law includes a list of criteria that can be taken into account to meet this standard. The following list is a codification of case-law:

• The reasonably foreseeable consequences of the conduct;
• The proportionality of the risk of the harm occurring, its nature and extent in relation to the efforts and measures necessary to prevent it;
• The state of the art and scientific knowledge;
• The requirements of good workmanship and good professional practice; and
• The principles of good management and organisation.

Liability of minors

Furthermore, regarding the liability of minors, the bill introduces an interesting distinction between minors under the age of 12 years and minors between the ages of 12 and 18 years.

A minor under the age of 12 years cannot be held liable for his/her own fault or for any other act giving rise to liability.

A minor between the ages of 12 and 18 years is liable for damage caused by his/her own fault or any other event giving rise to liability, but this minor is subject to the discretion of the court, which may decide that no compensation is due or that the compensation is limited. The court must decide in accordance with the principles of equity, taking into account the circumstances and the situation of the parties, including their financial situation.

Importantly, if the minor's liability is covered by an insurance contract, the court cannot decide that no compensation is due or limit compensation to an amount lower than the amount covered by the insurance contract. This is in line with existing case-law of the Belgian Court of Cassation. 

Contrary to what was initially proposed, compulsory family insurance was not introduced because there was too much opposition from the insurance industry.

Causal link

Traditionally, causation in Belgian law has been determined by the doctrine of equivalence, which states that without fault, the damage would not have occurred as it did.

This rule is now codified in the new Book 6. However, recognising that this doctrine has sometimes led to absurd outcomes, the new Book 6 introduces several exceptions or mitigations.

One such exception is the concurrent cause exception, which acknowledges that the doctrine of equivalence fails when several events occur simultaneously, and each event is sufficient in itself to cause the damage. For instance, consider a scenario where two arsonists start fires on opposite sides of a building simultaneously, and both fires combine to burn down the building. Under the traditional doctrine of equivalence, neither arsonist may be held liable because each could argue that the damage would have occurred regardless of their actions. However, the new Book 6 remedies this by considering each event as a cause of the damage.

Another exception is provided in cases of manifest unreasonableness, where the link between the event giving rise to liability and the damage is so remote that it would be manifestly unreasonable to attribute the damage to the defendant. This exception aims to address situations where the causal link is uncertain or too distant to hold the defendant liable.

Additionally, the new Book 6 introduces the concept of causal uncertainty. In cases where there is uncertainty about a person's fault as the cause of the damage, some form of proportional liability will be imposed based on the likelihood that their fault caused the damage. This concept resembles the doctrine of loss of chance, applied at the level of causation rather than damage.

Furthermore, the new Book 6 includes an article on uncertainty regarding the identity of the liable person. This provision ensures, for example, that several companies that have sold a defective product contribute to compensation in proportion to their market share. This rule, based on the Dutch example, aims to ensure fair distribution of liability among multiple parties involved in causing the damage.

These changes in causation rules are aimed at addressing complexities and uncertainties in determining liability, ensuring a fair and just outcome in cases where multiple factors contribute to damage. Insurers will need to consider these nuances when assessing claims and settling disputes under the new legal framework.

Loss

Finally, under the new Book 6, anyone liable for damage is obliged to make full reparation, considering the concrete condition of the injured party. This principle reaffirms the fundamental obligation to compensate for harm caused. For insurers, this underscores the importance of considering the specific circumstances of the injured party when assessing claims and determining appropriate compensation.

A notable addition to the compensation rules is the concept of profit transfer to the benefit of the injured party when the liable party has infringed a right of the injured party or damaged their reputation with the intention of making a profit.

Regarding future damages, the new Book 6 introduces an innovation allowing the court to award interest if justified by overriding reasons relating to the protection of the injured party.

Given that the new Book 6 introduces articles defining different aspects of loss, including specific terms or types of damages, insurers will need to review these definitions and terminologies to ensure consistency with those used in their insurance policies. This alignment is crucial for clarity and transparency in claims processing and settlement.