The law of April 28, 2022, enacting Book 5 “Obligations” of the Civil Code, entered into force on January 1, 2023, along with Book 1 “General Provisions.” This law forms the foundation of the new contract law in Belgium.

In the coming months, we will regularly publish newsletters on specific topics of these new textes, highlighting the changes brought by the new code and their practical significance for your contracts.

Feel free to contact us so that we can conduct a comprehensive analysis of your contractual documents.

Episode 1: unforeseen circumstances

The new Civil Code introduces an Article 5.74 entitled “Change of Circumstances.” This article recognizes the theory of unforeseen circumstances, which was not accepted until now under Belgian law, unless the contract contained a specific clause (“hardship clause”). The concept of unforeseen circumstances allows a party, in certain specific circumstances, to request a contract revision.

Unforeseen circumstances have been regularly put forward before the courts, especially in recent years, to (attempt to) justify the revision of contracts affected by measures taken to fight the Covid-19 pandemic. The argument was generally not accepted due to its inconsistency with the sacrosanct principle of the binding force of contracts.

In the new Civil Code, the principle of the binding force of contracts remains (Art. 5.74, paragraph 1), but a party may compel its creditor to renegotiate the contract in case of a change of circumstances if the following five (5) conditions are met:

1) The change makes the performance of the contract excessively burdensome to an extent that it cannot be reasonably expected; (Examples: significant price fluctuations of raw materials, changes in market conditions such as a real estate crisis, legal or regulatory changes making the execution of a contract much more costly or difficult, a key supplier going bankrupt or being unable to provide the agreed-upon products due to an unforeseen internal issue,…)

2) This change was unforeseeable when the contract was concluded;

3) It is not attributable to the debtor;

4) The debtor did not assume this risk; and

5) The law or the contract does not exclude this possibility.

If the parties do not reach an agreement within a reasonable period of time, the judge may either adapt or terminate all or part of the contract, if necessary, with retroactive effect.

Article 5.74 is suppletive, which means that the parties can eliminate or modify the right to renegotiate the contract, for example, through a contractual clause or an amendment. The interest of contractual accommodation of unforeseen circumstances is to create a clear and predictable framework by providing pre-established mechanisms to readjust contractual obligations. This helps to avoid resorting to random arbitration through the courts.

For more information on this matter, please feel free to contact Antoine DECLEVE.