Construction Law 2022 Comparisons

The principal laws applicable to Belgian construction projects differ, depending on the type of construction contract (private or public), the identity of the parties (consumer or business) and the region in which the project is located.

The legislative power in Belgium is divided according to subject matter between the federal level and the different regional authorities (the Flemish, Walloon and Brussels-Capital regions and the Flemish, French-speaking and German-speaking communities).

All federal legislation is available in Dutch and French (and partly also in German) on the governmental website.

Main Legislation

The main applicable laws and regulations can be found in the (former and new) Civil Code, as well as in specific legislation related to (amongst others) environmental law, labour law, insurance law, consumer law, evidence law, tort law and economic law.

However, important rules also derive from case law. Many of these rules are, or will be, merged into the different parts (‘books’) jointly constituting the new Civil Code. These books have been introduced separately over the past years or are still in process.

In the Civil Code, both the general rules for contractual obligations (Articles 1101–1314 of the former Civil Code, to be replaced in the near future by the fifth book of the new Civil Code) apply, as well as some specific Articles concerning construction contracts (Articles 1787–1799 of the former Civil Code).

Specific Legislation

Specific legislation applies to:

• public procurement contracts (amongst others, the Royal Decree of 14 January 2013); and
• the construction and sale of off-plan residential housing, governed by the Housing Construction Act of 9 July 1971, holding mandatory law on the subject.

Standard contracts are rarely used in the Belgian domestic construction market.

Most parties tend to use either contracts that have been negotiated for a certain project or the in-house standard template of one of the parties.

Such templates are most often provided by the party that employs the other party (eg, the employer vis-à-vis the main contractor, the main contractor vis-à-vis the subcontractor, etc).

Template Contracts

The content of in-house templates vary but, overall, their structure and content are rather similar.

Sometimes they draw inspiration from international standard contracts (eg, using the claim system from the International Federation of Consulting Engineers (FIDIC) contracts without using the other FIDIC clauses), from the standard specifications and requirements that are used for public procurement and/or from templates provided by professional stakeholder associations.

International standard contracts are, therefore, mostly used in projects with an international component, with FIDIC contracts being the most popular. It is noteworthy that the new engineering contract (NEC) 4 is being used for the construction of the Antwerp ring road, one of Europe’s biggest construction projects, which may lead to a breakthrough for this type of contract in the Belgian market.

Several contract clauses are mandatory in construction contracts, mostly related to labour and social law (see 8.1 Personnel).

For certain types of contracts and projects, more specific mandatory provisions apply (eg, following the Housing Construction Act).

Design contracts for architects are generally more standardised than construction contracts due to the compulsory nature of liability insurance for architects and the subsequent involvement of the architect’s liability insurer in contract negotiations.

Public Procurement Contracts

In most public construction projects, a specific set of contractual execution rules, as set out in the Royal Decree of 14 January 2013, applies by default and any deviation from these rules requires specific motivation and justification or is even, for certain clauses, excluded. These rules deal with all the issues that are normally dealt with in the general conditions of contract.

The COVID-19 pandemic and the measures taken to combat it were keenly felt in the construction industry.

At the start of the crisis, disputes mainly related to delay and time for completion as performance was impeded by the measures taken to combat the pandemic (eg, lockdowns, social distancing measures, etc).

This quickly expanded to include discussions concerning price changes, including those resulting from the sharply increased market prices for construction materials.

The discussions generally related to the applicability of the principles of force majeure or hardship to escape the contract provisions on both the time for completion and the price of the works.

Under current legislation, it frequently proved challenging to arrive at a satisfactory legal solution. The applicability of force majeure is often subject to debate and the concept of hardship is not accepted under general Belgian contract law. However, new legislation will soon be changing this (see 5.5 Force Majeure and 5.6 Unforeseen Circumstances).

Taking into account past experience, parties now more frequently incorporate contractual provisions regarding force majeure and/or hardship in their contracts, also governing the consequences of the COVID-19 pandemic.

In public procurement contracts, the concept of hardship has existed for a long time (see 5.5 Force Majeure and 5.6 Unforeseen Circumstances) and fully applies, better mitigating the impact of COVID-19 on the contractual conditions of this type of contract compared to private construction contracts.

A public or private entity or a natural person will typically act as the employer.

Key Obligations

The employer’s key contractual obligations are:

• allowing/enabling the contractor to execute the works;
• accepting the contractor’s properly executed works upon completion; and
• paying the contractor for such works.

Contractual Interaction Between the Project Partners

In private construction projects, all project partners will usually enter into separate contracts, as follows:

• a subcontract between the contractor and the subcontractor;
• a finance contract between the employer and the financier.

For any project requiring a construction permit, the employer must be assisted by an architect appointed by the employer (see 3.3 Design).

Direct agreements, multiparty agreements or accession agreements are uncommon in private construction projects. Furthermore, pursuant to mandatory law (see 3.3 Design), contractors and architects are not allowed to establish a direct contractual relationship with each other.

Contractors acting in a construction project are typically private entities or, in smaller projects, natural persons, acting as a general (main) contractor or as a specialised contractor.

In private construction projects, the contractor is usually freely appointed by the employer.

For larger construction projects, special purpose vehicles or joint ventures can be established amongst the contractors jointly engaging in such a project.

This is commonly structured through an incorporated partnership such as a temporary unlimited partnership (tijdelijke maatschap) or other joint venture structures, such as associations without legal personality.

Such joint venture structures are usually accompanied by agreements between the partners regarding, for example, the financing of the construction project and distribution of the profits or losses.

Key Obligations

The contractor’s key obligations are as follows:

• carrying out the works within the time for completion in accordance with the construction contract requirements, as well as the applicable norms and standards and best professional practices; and
• advising and informing the employer about the works to be carried out, including any risks involved, taking into account, amongst other issues, each party’s degree of specialisation.

Public Procurement

When choosing a private construction contractor, public contracting authorities are under obligation to comply with public procurement regulations and, therefore, cannot appoint a contractor freely, but need to take into account several selection and award criteria.

These rules are rooted in European legislation that applies throughout the EU.

Subcontractors appointed on a construction project are not necessarily assigned for having better know-how or more experience in one or more aspects of the contractor’s scope of works.

It is not uncommon that a main contractor subcontracts parts or the whole of its works to one or more general subcontractors who in the first place provide extra manpower and/or equipment, but do not necessarily bring added value in terms of know-how.

The contractor may freely subcontract the works to a subcontractor of their choice, unless agreed otherwise (see 8.2 Subcontracting).

Key Obligations

Traditionally, the contractor delegates to the subcontractor its duties in relation to the employer’s requirements and specifications of the main contract that are relevant to the subcontracted works.

In addition, the contractor usually includes relevant obligations that it has under the main contract in relation to, for example:

• milestones;
• the allocation of risks (such as subsoil and climate conditions, force majeure, obligations of result, etc); and
• liabilities, indemnities and insurances.

Back-to-back clauses are common in this regard, but often raise interpretation issues.

Interaction With Other Construction Partners

Subcontracts do not affect the responsibilities of the contractor vis-à-vis the employer. In addition, the subcontractor cannot be held liable vis-à-vis the employer for its works.

There is no direct contractual relationship between the employer and subcontractors, except in the event of a direct claim for payment pursuant to Article 1798 of the (former) Civil Code (see 8.2 Subcontracting).

Private construction works are financed either by own funds or by bank loans (mortgage loans).

Although public procurement contracts are usually financed by the (public) employer, public-private partnerships often call upon the financing abilities of the (private) contractor, especially in so-called Design-Build-Finance and Maintain (DBFM) contracts.

Direct agreements granting external financiers (eg, step-in rights or other rights vis-à-vis the contractors or subcontractors) are not common.

Banks will usually require a security in the form of a first ranking mortgage, a pledge or, but less common, parent company guarantees.

The scope of works is usually set out in detailed in one or more contractual documents attached to the construction contract.

This is due to the fact that the general design by an architect is in most cases mandatory (see 3.3 Design).

These contractual documents typically consist of the following.

• Design documents and specifications (drawings, descriptions, method statements, engineering studies, etc) as well as the employer’s instructions for the detailed design entrusted to the contractor (in case of a design and build contract) within the limits set by the law.
• Certain documents attached to the contractor’s tender, such as a bill of quantities, execution plans and technical documents, drawn up by the contractor.

In public construction contracts, the scope must be very precise so as to allow for bid comparability. Reference to standard documents and dedicated specifications (eg, for road construction) is quite common.

Parties are free, subject to mandatory limited law, to determine the provisions governing scope changes or variations.

In the absence of such a clause, the party who claims a variation or scope change bears the burden of proof.

Contractual Clauses

Parties will often include specific clauses on how to deal with scope changes and variations of the works during the project.

In employer-friendly contracts, such provisions usually require a prior written agreement between parties regarding both the scope and the associated price and the impact on the time for completion, failing which the contractor is not entitled to any compensation for works executed without complying with these requirements.

Moderating Case Law

Such clauses can, however, be moderated by a court or arbitrator, applying the principles of good faith and the general prohibition for a party to abuse any contractual rights they may have under a contract.

This applies in particular if a scope change or variation is due to or instructed by the employer.

Public Procurement

In public procurement contracts, the general set of execution rules (Royal Decree of 14 January 2013) determines how parties are to deal with changes to the scope of works. The latest version (2017) gives limited freedom to insert specific clauses with respect to contract modifications.

The contractor is not allowed to stop or suspend the performance of the works, even if there is no agreement on the price and time allocated for an instructed modification.

The architect has the main design responsibility for any works requiring a building permit, as laid down by the Act of 20 February 1939 regarding the protection of the title and profession of the architect.

This mandatory law holds that the architect has a monopoly on design services for works covered by this law, which is reflected in the architects being ultimately responsible for the design, of which they have to be the sole author.

This implies, for example, that the architect must coordinate all specialised studies (eg, concerning structural engineering, utilities, acoustics, energy, etc), and integrate them into their general architectural study and design.

This also applies if such studies are not carried out by the architect or a third party assigned by them, but by engineering offices contracting with the employer. In this case, the engineers remain (solely) responsible for the content of their studies.

The architect’s design monopoly has recently become a subject of debate as questions have been raised as to whether it is still compatible with more contemporary approaches to the construction process (early stage involvement, building team, etc). However, the architect’s monopoly still stands.

Within the aforementioned limits, specific parts of the design, or the design of a project not requiring a permit, can also be assigned to other construction partners, such as specialised consultants and/or engineers or the contractor.

Traditionally, contractors have no (primary) design obligations. They do, however, have an obligation to inform and warn the employer if the design would be inadequate or if they detect errors or inconsistencies in the design which it is able to identify from its general knowledge and experience as a contractor.

Some types of contracts assign greater design responsibilities to the contractor, such as design and build contracts, building team contracts (see 7.5 Risk Sharing) and the increasing use of building information modelling applications (see 8.3 Intellectual Property).

However, the use of such models and contracts is still restricted by the architect’s design monopoly as set out above.

The contractor is responsible for a proper and timely execution of the works in terms of quality and conformity with the construction contract. It is usually requested to provide execution documents for the architect’s and engineer’s review and is responsible for the site management.

The contractor may, in turn, subcontract a part or the whole of the works, depending on the contractual arrangements between the parties (see 8.2 Subcontracting).

A main contractor will usually also have a duty to coordinate all project works.

The employer’s primary obligation is limited to properly enabling the contractor to execute the works (see 2.1 The Employer). However, different degrees of employer involvement could be agreed upon (eg, assignment of a project manager who coordinates the works, approving certain choices or approving all subcontractors, etc).

If the appointment of an architect is mandatory (see 3.3 Design), the architect is responsible for the approval of the contractor’s execution documents and for regular supervision of the execution of the works. This supervision primarily includes conducting site visits to check if the contractors assigned by the employer are carrying out the works in accordance with the design documents and drawings.

The architect’s mandatory supervision is limited to the construction’s structural and shell elements. However, parties usually agree that the architect’s supervision also extends to the later stages of the project.

Allocation between the parties of the construction site status-related risks is usually the subject of specific clauses dealing with this. In general, the employer will bear the risks of any unforeseeable site conditions. This rule is explicit for public procurements.

However, the contractor has a material duty to gather reasonably accessible information on the works and the site, including underground conditions, prior to the execution of the works.

Furthermore, the contractor has a regulatory obligation to investigate for the presence of underground cables and pipes. The same obligation lies with the architect.

The required permits for a construction project are mostly related to environmental law. The applicable permits depend on the region in which the project is located (Flemish, Walloon, or Brussels-Capital Regions).

The employer is responsible for obtaining the necessary project permits, with the architect having an advisory role. This can, however, be contractually assigned to the contractor or the architect.

Maintenance of the works after delivery (see 3.10 Completion Takeover, Delivery) rests with the owner, which will often be the employer or the employer’s buyer(s).

Maintenance is usually not included in the scope of a construction contract, with some exceptions, such as for industrial projects or public DBFM contracts.

Parties can freely, within certain limits (see 3.3 Design), assign other functions in the construction process to the contractor or to third parties. In addition, the employer has to appoint a number of project partners required by law, depending on the nature of the project.

In large or multi-tiered construction works, the employer must appoint a safety coordinator for the design stage and subsequently for the construction stage. A safety coordinator can intervene if the works are, or will be, carried out in unsafe conditions.

In smaller projects, the architect can be assigned as safety coordinator.

In addition, for residential building projects in the Flemish Region, the employer must assign an accredited Energy Performance and Interior Climate (Energieprestaties en Binnenklimaat, (EPB)) advisor, to certify that a building complies with the applicable energy efficiency requirements. The same goes for the appointment of an accredited ventilation advisor, to certify that (newly constructed or renovated) residential buildings comply with mandatory ventilation requirements.

In public-private partnerships, the most advanced form of contract is a so-called Design Build Finance Maintain & Operate contract in which the private contractor is responsible for all stages of the construction project, including the operation of the works executed (eg, the infrastructure).

The completion of the works (see 3.10 Completion, Takeover, Delivery) will usually coincide with an inspection of the works by the employer, contractor, architect and any other relevant parties.

If specific tests are needed to ascertain whether the works comply with the contract requirements (eg, for industrial projects), such tests will have to be specified in the contract alongside each party’s duties and tasks regarding these tests.

In such cases, it is usually the contractor’s responsibility to set up and perform the contractually agreed tests.

Belgian construction law does not use the terms "completion", "takeover" and "delivery".

In brief, the completion of the works allows the contractor to request the (provisional, see below) acceptance (delivery). Takeover takes place when acceptance of the works is granted by the employer.

Generally, the employer has to accept the works upon their full and proper completion by the contractor.

The acceptance entails the employer ‘taking-over’ of the works, as it confirms that the contractor has duly fulfilled its obligations under the contract, save for its obligations regarding defects liability (see 3.11 Defects and Defects Liability Period).

Dual Acceptance Mechanism

Parties may, however, validly deviate from the above principle by contract and in the vast majority of construction projects, parties opt for a dual acceptance mechanism of the works. This includes:

• a provisional acceptance of the works upon completion, entailing the employer’s confirmation that the works have indeed been completed (but not yet accepted, see next bullet), save for (minor) outstanding items on the punch list; and
• a final acceptance of the works after a certain period of time after provisional acceptance (usually one year), entailing the employer’s actual acceptance of the works, which initiates the defects liability period (see 3.11 Defects and Defects Liability Period).

Contractor-friendly contracts and public procurement rules typically (validly) stipulate that provisional (instead of final) acceptance constitutes the employer’s acceptance of the works.

For residential construction projects governed by the Housing Construction Act, the aforementioned dual acceptance mechanism is mandatory.

Prior to acceptance, the contractor is liable for all damage and loss caused by their defaults or negligence when executing the contract, including any defects to the works due to such defaults or negligence.

Upon acceptance of the works (see 3.10 Completion, Takeover, Delivery), the contractor only remains liable for a period of ten years for the following:

• defects (hidden and visible) that endanger the solidity or stability of buildings and major construction works, or could have such effect within a more or less short time; and

• minor latent (hidden) defects, if the employer initiates a claim for such defects within a reasonable time upon their discovery.

Recent case law has confirmed that the contractor’s liability for stability-endangering defects already applies prior to acceptance of the works.

The same liabilities apply, with respect to the design, to the architect and engineers.

In public construction contracts, the contractor’s liability for minor latent defects expires at the date of final acceptance.

Nature of the Contractor’s Defects Liability

The contractor’s liability for defects endangering the solidity or stability of the project is a mandatory law of public policy and cannot be excluded or limited by a contract in any way. This gives reassurance to employers considering a construction project in Belgium or with Belgian law as the governing law.

The contractor’s liability for minor latent defects can be limited by contract, however, only within certain limits, taking into account, for example, consumer laws or recently-introduced law on unlawful clauses in B2B contracts.

Consequences of Defects Liability

If a defect is discovered by the employer prior to acceptance or within the applicable post-acceptance defects liability period, the employer can demand repairs from the contractor as well as compensation for any damages incurred.   

Upon expiry of both defects-liability periods, the contractor is released from all defects liability.

The most common contractual pricing arrangements are the following:

• absolute fixed price (lump sum, any changes to the works need to be agreed between the parties);
• relative fixed price (lump sum, changes to the works can be unilaterally made by the employer);
• price per unit; and
• cost plus fee, alternatively capped or combined with profit sharing.

In principle, payment is only due upon completion of the works (see 4.2 Payment).

However, milestone payments are commonly included in construction contracts, especially in larger construction projects.

Unless otherwise specified, milestone payments are provisional payments by nature, with the total paid amount subject to adjustment upon completion of the works.

Further, mandatory payment milestones are imposed by the Housing Construction Act (see 3.10 Completion, Takeover, Delivery).

Unless the parties agree otherwise, the price will only become due upon completion of the works.

However, as this puts a major burden on the contractor, advance payments and interim payments are typically included in construction contracts and usually linked with the actual progress of the works or with reaching particular milestones.

In some cases, mandatory milestone payments apply (see 4.1 Contract Place).

Late or non-payment entitles the contractor to claim late payment interest on the unpaid amounts.

Additionally, if such late or non-payment would be a material breach of contract, the contractor may suspend the execution of the works or terminate the contract for cause.

Construction contracts in larger projects, however, often include clauses to amend, limit or even exclude the contractor’s remedies in the case of late or non-payment. Such clauses are valid within certain limits.

For public procurements, the contractor’s right to slow down or suspend the work is strictly framed.

If the contractor is paid on the basis of the actual progress of the works or reaching particular milestones, invoicing will typically be based on the progress reports that the contractor draws up (usually monthly) for approval of the employer or of a project partner assisting the employer, such as a project manager or the architect. 

Recent legislation that applies to B2B contracts limits any contractual payment term to a maximum of 60 days. This includes any period of time needed to examine the invoiced goods, works or services.

If parties do not agree on a specific payment term, a statutory payment term of 30 days will apply.

In public procurement contracts, the employer benefits from a verification period of 30 days, followed by a payment period of 30 days after the verification.

Construction contracts will typically include contractual arrangements regarding the timing and planning of the works. This could be arranged in various ways, but often by defining a single end date for the works (as a fixed date or a period of time for completion).

In construction contracts where such an end date is included without a determined schedule, the employer usually includes contractual provisions related to the contractor’s duty to provide and follow a detailed schedule, for example:

• the contractor must provide a detailed schedule at the start of the works and keep it regularly updated;
• the parties will hold regular planning meetings;
• the main contractor must coordinate the whole of the project works in time and space; and
• the contractor must inform the employer of any events entailing changes to the schedule.

Further detail is often provided by including a timetable with defined intermediate milestones or by enclosing a (general or detailed) schedule as a contractual document.

Compliance with such milestones can be linked to payments or be subject to penalties (see 5.3 Remedies in the Event of Delays).

Role of the Parties

In general, the employer will set the overall timing goals, leaving the planning details to the main contractor, with input from the employer’s design team and, if appointed by the employer, the project manager, as long as the overall timing goals are achieved. 

However, in some projects (eg, if no main contractor is appointed for the project), it will be the employer or the architect who provides the schedule and coordination of the project works in time and space.

In the event of delays, construction contracts increasingly include particular obligations for each party, but especially for the contractor, on how to deal with such delays, even if they are not imputable to the contractor.

When the deadlines are not met, it is up to the contractor to prove that it is not liable for the delay (eg, external cause, beyond their control). The extent of the contractor’s burden of proof depends on the nature of the deadline (obligation of result, reasonable efforts).

Good faith requires each party to give notice as soon as they are aware of a delay and/or its cause, and to mitigate or even absorb the consequences of any delays that the party has caused.

Consequences of Delay

The consequences of a delay will be treated differently depending on which party is responsible for it.

If a delay is due to force majeure, all contractual obligations that cannot be executed (see 5.5 Force Majeure) are suspended. The same holds true for a suspension imposed by the employer for a cause unrelated to the contractor. The planning and milestones will generally be postponed accordingly (see 5.5 Force Majeure).

If a delay is due to the contractor, in most cases the schedule and milestones will remain unchanged, and the contractor will have to bear the consequences, such as to mitigate or remedy the delay by accelerating the works at their own expense or owing delay damages to the employer (see 5.3 Remedies in the Event of Delays).

If delays due to the contractor occur, the employer is entitled to compensation for the resulting loss and damage that was foreseeable for the parties at the time of concluding the contract.

Liquidated Damages

Construction contracts commonly specify a lump-sum damages amount for each day or week of delay as a remedy for delay. Such accrued liquidated damages are usually contractually capped to a specific amount (generally 5% to 10% of the contract price).

In public construction contracts, delays are compensated by liquidated damages capped at 5% (or sometimes 10%) of the contract price.

To be valid, the agreed liquidated damages must correspond to the potential loss. If not, a court or arbitrator can moderate or even nullify any claimed liquidated damages.

If liquidated damages are agreed upon, this would be the employer’s sole compensation for delay, unless the contract provides that the employer may claim (and then prove) its actual damage.

Other Remedies

Other possible remedies at the employer’s disposal include a termination of the contract at the contractor’s expense or replacement of the contractor by a third party at the contractor’s risk and expense.

In public procurement contracts, these remedies are clearly defined, as well as the procedure to be followed by the employer.

Parties are, subject to limited mandatory law, free to determine how the contractor has to apply for an extension of time under the contract.

If no particular contractual provisions are agreed by contract, the contractor may request an extension of time through all available channels, including by means of site reports.

For public construction contracts, stricter rules apply (eg, regarding time limits, material conditions, formal requirements).

However, in an increasing number of construction contracts, specific clauses are included dealing with how the contractor must request an extension of time (eg, in writing by means of a separate notice) and within which time after the events giving rise to a delay occurred, failing which the request is time-barred.

Moderating Case Law

In certain circumstances, for example, if the cause for the delay is directly imputable to the employer, a court or arbitrator may still grant an extension of time despite the contractor not having complied with the applicable contractual requirements.

The court or arbitrator's decision is usually based on the general prohibition of abuse of right (see 3.2 Variations). However, the courts remain reticent about doing so, as such a decision conflicts with the general principle of contractual freedom.

Force majeure requires (i) an event or circumstances that render the execution by a contract party of one or more of its contractual obligations impossible, and (ii) such event or circumstances being unforeseeable and not imputable to the party invoking force majeure. The courts traditionally uphold a strict interpretation of this ‘impossibility’ to perform.

Parties are free to contractually define force majeure or to limit or exclude particular events or circumstances from being qualified as force majeure, for example, by including a restricted list of events that can constitute force majeure.

Unless agreed otherwise, force majeure only entitles a party to suspend the contractual obligations that were affected by force majeure (ie, an extension of time), but does not allow for compensation of any costs incurred due to force majeure.

Under current legislation, unforeseen circumstances constituting hardship are treated differently in private contracts and public procurement contracts.

Private Construction Contracts

Current legal framework

According to the current law, hardship would only apply to private construction contracts if the parties agreed so. This is generally not the case in private construction contracts.

Unforeseen circumstances rendering the execution of the contract more onerous (but not impossible, see 5.5 Force Majeure) would not entitle a party to an amendment of the contract conditions or a termination of the contract, with the exception of limited case law, where this was accepted based on the principle of good faith.

Future law

A reform of the Civil Code has recently been promulgated that will change the legal landscape on this topic. This law reform ("book No 5") introduces, amongst other regulations, the right for a contract party to demand renegotiation of a contract or amendment or termination of the contract by the court on grounds of hardship.

However, this right is subject to fulfilment of some rather strict requirements. Parties will, nevertheless, be free, within certain limits, to exclude or amend this hardship article. The impact of this newly introduced legal hardship provision on private construction industry practice will largely depend on how courts and arbitrators deal with it.

The fifth book of the new Civil Code is expected to come into effect in late 2022.

Public Procurement Contracts

A hardship mechanism already exists for public procurement contracts, providing the contractor with the option of seeking compensation for incurred damages and/or extension of time, if certain admissibility and substantive conditions are met.

Liability can be excluded or limited by contract, with the exception of the following:

• for fraud or wilful misconduct; or
• resulting from a rule of mandatory law or of public policy (eg, the decennial liability for stability-endangering defects, see 3.11 Defects and Defects Liability Period).

Furthermore, a contractual exclusion of liability for gross negligence must be explicitly provided for in the agreement but is presumed to be unlawful (although this presumption is rebuttable).

As a general rule, any contractual limitations of liability or exclusions are not allowed to “erode” or “hollow out” the essential obligations of a party. The courts will assess this on a case-by-case basis.

Additional restrictions on limitation of liability clauses may apply in a B2C context. 

Public Procurement Contracts

In public contracts, the contractor’s liability regime may not be modified.

The concepts of "wilful misconduct" and "gross negligence" are both recognised by the law.

In the absence of a statutory definition, these concepts are defined and interpreted by case law and law practice as:

• gross negligence – to be understood as a kind of negligence that is more severe than “regular” negligence, coming close to intent; and
• wilful misconduct – requiring intent not only with respect to the act or omission, but also to the resulting damage.

Parties are, however, allowed to define these concepts in the contracts, to avoid legal uncertainty.

Subject to the exceptions set out in 3.11 Defects and Defects Liability Period and 6.1 Exclusion of Liability, parties to a construction contract are free to limit or even exclude their liability.

The following limitations or exclusions are customarily found in (construction) contracts.

• Liquidated damage clauses, excluding damages for the actually suffered loss or damage (see 5.3 Remedies in the Event of Delays and 9.3 Sole Remedy Clauses).
• Exclusion of certain types of damage, such as indirect and consequential damages. These concepts are not statutorily defined under Belgian law and are mostly contractually defined. Loss of profit is the prime example (see also 9.4 Excluded Damages).
• Limitation of the aggregate amount of liability (“cap” ), eg, of 100% of the contract price.
• Limitation of the duration of the warranty for minor latent defects (see 3.11 Defects and Defects Liability Period).

A common example of the contractor’s obligation to indemnify and hold harmless the employer for third-party claims is injury or loss/damage to adjacent property caused by the contractor (see 7.1 Indemnities). Such limitations are not opposable to the third party, but the contractor can exercise a right of recourse vis-à-vis the employer.

Indemnity clauses are not typically included in construction contracts.

However, inspired by UK and US law (where indemnities are sought for specifically identified issues such as IP infringements or physical or property loss), indemnity clauses in construction contracts pertain to particular recurring subjects, mainly IP rights infringement, health, safety and environmental liabilities and third-party claims for excessive nuisance (see below).

Third-Party Nuisance

Indemnity clauses related to third-party excessive nuisance are clauses imposing an obligation on the contractor to indemnify the employer against third-party claims arising out of loss or damage to third-party adjacent property due to excessive nuisance caused by the contractor when executing the works.

The nuisance would not be the result of a contractor’s default or negligence, but of the execution of the works as such.

According to (supplementary) law, such liability only falls to the owner (usually the employer), but can be contractually transferred to the contractor, ie, with an indemnity clause to the employer’s benefit.

Contracting parties are free to determine which specific guarantees or securities each party must provide.

In major projects, advance payment bonds, performance bonds, including defects liability bonds, to the employer’s benefit, are very common. Parent company guarantees, however, are not.

Usually, a performance or defects liability bond is:

• a bank guarantee payable on first demand, meaning that the guarantor cannot refuse payment if the employer’s call-off of the bond complies with the provisions governing the bond (“pay first, challenge later” principle); and
• released in two stages – one half at provisional acceptance of the works, the other at final acceptance (see 3.10 Completion, Takeover, Delivery).

Housing Construction Act

The Housing Construction Act (see 3.10 Completion, Takeover, Delivery) provides for a contractor obligation to put a specific security in place to the employer’s benefit that includes:

• a guarantee of 5% of the contract price for certified contractors; and
• that non-certified contractors must provide a guarantee of full completion, meaning a guarantee of 100% of the contract price.

In order to obtain such a certification:

• the contractor must meet a number of requirements in terms of good repute, financial standing and professional competence; and
• the contractor’s application for the certification needs to be approved by the competent government.

Public Procurement

In public procurement contracts, the general set of execution rules (Royal Decree of 14 January 2013) provides for an obligation of the contractor to issue a performance bond of 5% of the initial contract amount and determines the public employer’s entitlement to call upon the performance bond.

A wide variety of insurance is commonly or mandatorily taken out by each of the project partners.

Mandatory Insurance for Stability-Threatening Defects

Following the Peeters I Act of 31 May 2017, all service providers in the construction industry (in particular, architects, contractors and civil engineers) must mandatorily obtain insurance coverage of their decennial liability for stability-threatening defects (see 3.11 Defects and Defects Liability Period) upon fulfilment of the following conditions:

• the service provider acts in a professional capacity;
• the works or services are executed in Belgium; and
• the works or services are related to the shell construction of residential buildings located in Belgium and for which the appointment of an architect is mandatory (see 3.3 Design).

Mandatory Civil Professional Liability Insurance for Intellectual Service Suppliers

The Peeters II Act of 9 May 2019 introduced a further mandatory insurance for construction service providers providing intellectual services in a professional capacity (architects, engineering offices, etc). These service providers must take out insurance covering their civil professional liability, save for the decennial liability covered by the Peeters I Act (see above bullet).

This insurance coverage is not limited to specific projects, but applies to any immovable works and needs to remain in place for the course of the insured party's professional activities.

Construction All Risk Insurance

"Construction All Risk" insurance (CAR) is often taken out by the employer or the contractor for mid-sized and large construction projects; however, taking out CAR insurance is not mandatory. 

CAR insurance primarily covers damages to the construction work in progress. If included in the policy, CAR insurance coverage could be extended to damage to any temporary construction and/or to the employer’s goods that are on site.

Depending on the coverage options taken out, CAR insurance can also cover extra-contractual liability, meaning any damage to third parties, as well as any damage due to excessive nuisance to neighbours (see 7.1 Indemnities).

Third-Party Liability Insurance

"Third-Party Liability" insurance provides contractors with coverage of extra-contractual liability for damage caused to the employer, other contractors or third parties, which occurred when executing the works. This is not a mandatory insurance. Any repair of defects in the contractor's works is usually not covered.

Post-Works Civil Liability Insurance

"Post-Works Liability" insurance covers both the contractor’s contractual and extra-contractual liability for damage to the employer, other contractors or third parties. It covers such damage occurring (only) after completion of the works for which the contractor is liable. This is not a mandatory insurance.

Any repair of defects in the contractor's works is usually not covered.

Bankruptcy of a party does not automatically entail a termination of ongoing contracts. It is up to the receiver of the bankrupt entity to decide whether or not they will pursue the contracts. Each contract party of a bankrupt entity can require the receiver to take a position on this.

Contractual Deviations

Construction contracts often validly deviate from this principle by including a (typically reciprocal) clause that any insolvency - usually broadly defined - of a party is a cause for termination of the contract by the other party or by operation of law.

However, by mandatory law, this clause cannot be invoked when a contracting party is the subject of a judicial reorganisation procedure. As such a procedure’s aim is to safeguard the continuity of an entity, being entitled to invoke an insolvency termination clause would undermine the law’s aim. 

There is very little tradition of sharing risks in construction projects.

A traditional construction project is usually divided into two largely separate stages:

• a design phase in which (only) the design partners are involved; and
• an execution phase in which the contractor is involved.

Each construction partner will typically be (mostly) responsible for the risks and responsibilities only associated with its scope. Interaction between the two stages is limited to a review of each other's work (see 3.3 Design and 3.4 Construction).This could lead to the contractor and architect bearing joint liability for the entire damage caused to the employer if the contractor’s poor performance could have been prevented by more adequate supervision by the architect.

Building Team

However, in more and more major building projects, the employer relies on a "building team" (bouwteam), in which the contractor is already involved in the early design stages of the project and is asked to bring material input for the design. Many contractors, however, are reluctant to assume additional risks for the design drawn up in such building teams.

A major limit for risk sharing is the mandatory law that applies to projects for which an architect must be appointed (see 3.3 Design). The mandatory architect monopoly affects the possibility of the parties to share the construction project risks between them.

Belgian labour and tax law requires the inclusion in a construction contract of specific clauses that relate to personnel, under penalty of criminal sanctions and fines. 

These mandatory clauses pertain to the proper registration of all the persons employed by the contractor on the construction site, the health and safety of the contractor’s personnel, unlawful employment and procedures to comply with in case of major labour accidents.

Furthermore, including specific contractual clauses is needed in order to avoid the employer’s possible joint liability with the contractor for the latter’s failure to comply with the mandatory minimum wage requirements.

The employer is also strictly forbidden to issue direct orders to the contractor’s personnel. This can only be circumvented by including a specific clause with a detailed description of the instructions that can be given directly by the employer.

Recurring Clauses

Aside from the mandatory and regulatory law provisions, parties will often include other contractual provisions regarding the contractor’s and subcontractor’s personnel, mostly related to health and safety, administrative requirements, practical site-related matters, quality assurance and collection of personal data.

The contractor is free to subcontract the works, unless the parties have agreed otherwise by contract.

In the latter case, the contract usually requires the employer’s prior consent to a particular subcontractor proposed by the contractor, or a prior notice by the contractor to inform the employer of the subcontractor that they will call upon to execute the works.

In some cases, the contractor is denied the right to call upon a subcontractor to execute the works.

All such limitations are valid within certain limits.

Direct Claim

A subcontractor is legally entitled to address a direct claim against the employer for any amounts that the contractor should fail to pay to the subcontractor.

Upon receipt of such a direct claim from the subcontractor, the employer would then be obligated to pay the subcontractor, if and to the extent that the employer owes outstanding amounts to the contractor.

The subcontractor’s right to initiate a direct claim cannot validly be excluded or limited by contract.

Contractual provisions are mostly included in design agreements concluded with architects or other design-related parties.

For major projects, parties will generally allocate either the intellectual property of the design, or at least the right of usage of the designs by the employer if the intellectual property remains with other parties.

The rise of certain recent construction practices has increased the importance of intellectual property clauses, as these often make it more difficult to allocate the intellectual property rights over the end design or parts of it.

Examples are the use of design and  build contracts (where the contractor also has certain design obligations), the use of “building team” contracts (see 7.5 Risk Sharing) and the increasing use of building information modelling applications.

The following remedies are generally available in the case of a breach of contract.

• Performance of the contract “in kind”, ordering the breaching party to remedy the breach by performing its contractual obligations. This is the preferred remedy and recognised as a general principle law by the Supreme Court.
• Performance of the contract “by equivalent”, meaning that the breach is remedied by way of a monetary compensation or by way of replacement by a third party at the breaching party’s expense.
• Suspension of performance of its own obligations, which for an employer will most often entail withholding payment until the breach is remedied and, for a contractor, suspending the works.
• Termination of the contract for a cause accompanied with a claim for damages, if the breach of the defaulting party is a material breach of contract.

Prior notice of default is generally required before exercising these remedies.

Parties are, however, free, within certain limits, to do as follows:

• deviate from such required prior notice by contract;
• agree on particular conditions for the application of remedies; or
• agree on specific consequences of such remedies.

Public Procurement

In public procurement contracts, (public) employers additionally benefit from similar remedies, subject to strict formal obligations (prior notice of default, possibility for contractors to refute the allegations, etc).

Restricting remedies for breach in a construction agreement is possible.

The following examples are often found in construction agreements.

• Limiting the contractor’s right to suspend their performance. It is often stipulated that in the case of payment discussions, the contractor is obligated to continue their works.
• Limiting the damages that can be claimed. Generally, a compensation for damages should cover all foreseeable damage caused by the breach. This can include indirect and consequential damage. In construction contracts, however, the items of possible damage are often capped or even excluded (see also 6.3 Limitation of Liability).
• Limiting the possibility to terminate the contract for cause. Construction contracts usually limit the causes for termination either by listing them exhaustively in the contract or by providing for liquidated damages or performance “in kind” as the sole and exclusive remedy (see also 9.3 Sole Remedy Clauses).

As the so-called decennial liability is a rule of public policy (see 3.11 Defects and Defects Liability Period), any contractual restrictions of remedies to this liability are considered to be null and void.   

Sole and exclusive remedy clauses are not uncommon for construction agreements, but two common examples are:

• liquidated damages as the sole and exclusive remedy for breach of specific obligations, such as time for completion (ie, delay damages); and
• remediation “in kind” as the sole and exclusive remedy for defects.

Such clauses can be set aside if application would be an abuse of right (see 3.2 Variations), for instance, if a repair in kind as a remedy for a minor defect would cause unreasonably high costs for the contractor or would demand completely disproportionate efforts on the part of the contractor.

In principle, any kind of damage can be limited or excluded by contract, subject to the exceptions explained in 6.1 Exclusion of Liability. This includes damages to goods, economic damages and damages for personal injury. The latter is contested, however, and certainly not allowed in a B2C context.

Typically, all indirect and consequential damages such as loss of profit, use, production, business, contracts, revenues, etc, are excluded in construction contracts.

Construction contracts often exclude the right for the contractor to suspend its works in case of payment discussions with the employer (see 9.1 Remedies, first bullet point).

Retention of Title

A retention of title clause in favour of the contractor is becoming increasingly common in construction contracts.

Before the Pledge Act of 1 January 2018, such clauses were rather uncommon because the retention of title ceased to exist upon the incorporation of, for example, materials in the immovable goods. As incorporation is interpreted quite liberally under Belgian law, retention of title clauses had only little use in the construction industry.

However, under the new Pledge Act, a contractual retention of title does not cease to exist after incorporation, provided that the retention of title was duly registered. As a result, retention of title clauses are gaining relevance in the construction industry, as a security for the contractor.

There are no proceedings or courts that specifically deal with construction disputes.

Construction disputes are most often brought before the domestic courts, despite the lengthy nature of such proceedings. The competent courts are either the civil courts of first instance or the commercial courts, the latter being competent if the parties are enterprises. 

Arbitration of construction disputes is not very common as the multi-party and multi-contract nature of construction disputes often being seen as an obstacle for effective arbitration clauses. Arbitration is used more frequently in large projects with an international aspect, with the International Chamber of Commerce and the Belgian Centre for Arbitration and Mediation (CEPANI) being the most popular arbitration institutions. 

In urgent cases, interim and conservatory measures can be applied for in summary proceedings before the domestic courts, even if the parties have opted for arbitration. 

Arbitration is available to the parties as a means of dispute resolution outside of the domestic courts, but is not commonly used in construction disputes (see 10.1 Regular Dispute Resolution).

The Belgian Arbitration Act is based on the United Nations Commission on International Trade Law Model Law. 

Mediation of construction disputes is only attempted in a small minority of the cases.

However, mediation is actively being promoted within the construction industry and is slowly starting to gain traction. We expect that this trend will continue, all the more so since the Belgian legislature is also committed to mediation and has given judges the power to impose mediation, unless all parties oppose it.

A chapter of the Belgian Judicial Code is devoted to mediation. 

Third-Party Decisions or Advice

Parties sometimes submit certain specific points that are in dispute to a third party or a board of third parties (mostly technical or financial experts) for non-binding advice or a binding decision.

A binding decision has the legal value of an agreement and can, in principle, only be challenged if it is manifestly unreasonable.

Furthermore, parties are increasingly including mechanisms in their contracts aimed towards avoiding disputes or nipping them in the bud at an early stage, such as early warning duties and building team concepts.

Dispute boards (ad hoc or standing) are uncommon in the Belgian market.