Belgium - International Encyclopaedia of Laws

BelgiumProfessor at the Faculty of Law, K.U. Leuvenwith the assistance, for the original manuscript and the first update, ofChantal Goemans, Legal Counsel KBC bank, and Elke Ballon,European parliament, andfor the second updateTom Van Dyck, assistant Faculty of Law, K.U. Leuven andadvocaat in Brussels.This text is up to date as of 27 October 20052006Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 1

2 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

The AuthorProf. Dr. Jules Stuyck (born 31 July 1948) studied lawat the K.U. Leuven in Belgium (1965–1970). In 1975he obtained his Ph.D. with a thesis on ‘aggressive salesmethods’, a comparative study of the law of the originalsix Member States of the European Communities.In 1984 he was appointed associate professor andin 1987 professor at the Faculty of Law, K.U. Leuvenwhere he presently teaches European law in the lawfaculty and economic law in the Faculty of Economicsand Applied Economic Sciences of the K.U. Leuven.In 1987 Jules Stuyck became professor extraordinariusin European Community Law at the Faculty of Lawof the Radboud Universiteit Nijmegen (the Netherlands)and from 1989 to 1993 he was professor at the College of Europe (Bruges, Belgium)where he taught European Community Law to students of economics. During thewinter session of 1990–1991 and of 1995–1996 he was holder of the Jean MonnetChair at the University of Bonn in Germany, where he taught European economiclaw.Since 2000 he is Visiting Professor at the Central European University, Budapest,where he teaches European Competition law.Professor Stuyck has been a member of the Brussels Bar since 1984. He ispresently partner with Liedekerke.Wolters.Waelbroeck.Kirkpatrick, Brussels.He has published many articles in Dutch, French, English and German ontrade practices, competition law, European Community law and consumer law. Heis co-editor and author of several volumes on Belgian commercial and economiclaw in the standard Dutch language series on Belgian private law, Beginselen vanBelgisch Privaatrecht (general editors: R. Dillemans and W. van Gerven).The Assistant Authors (of the first update in 1998)Chantal Goemans (born 7 March 1966) studied law (1984–1989) at the K.U. Leuvenand European and International Law (1990–1991) at the University of Brussels,Belgium.She was an assistant at the Economic Law Department of the K.U. Leuven andwas assistant to the Flemish Minister of Economic Affairs and Media and is presentlylegal counsel with KBC Bank.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 3

The AuthorElke Ballon (born 10 August 1971) studied law (1989–1994) at the K.U. Leuven,Belgium, and European and Comparative Law (M. Jur, 1995) at the University ofOxford, United Kingdom.She was an assistant of the Economic Law Department of the K.U. Leuven andmember of the Leuven Bar. She works as a lawyer with the European Parliament.(assistant author second update)Tom Van Dyck (born 16 December 1976) studied law (1994–1999) at the K.U.Leuven, Belgium, and obtained an LL.M. at New York University (2000). He isa member of the bar of Brussels and New York and is an assistant at theEconomic Law Department of the K.U. Leuven.4 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Table of ContentsThe Author 3Glossary 17List of Abbreviations 21General Introduction 23Chapter 1. The General Background 23§1. Geography 23§2. Population 24§3. Political System 26§4. Population and Employment Statistics 29§5. Social and Cultural Values 34Chapter 2. The Economic System 36Chapter 3. The Legal System 37Selected Bibliography 39Part I. Commercial Law 41Chapter 1. Concepts and Sources of Commercial Law 41§1. The Distinction between Civil Law and Commercial Law 41§2. Commercial Acts and Merchants 42I. Natural Persons 42II. Companies 43III. Objective Commercial Acts 43IV. Legal Consequences of the Qualification of an Act asCommercial Act and of the Quality of Merchant 45A. Obligations of Merchants 45B. Other Legal Consequences of the Status of Merchant 45Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 5

Table of ContentsC. Rules Applying to Commercial Obligations only 451. Passive Solidarity 452. Agency is Remunerated 463. Establishment of a Pledge is Less Formalistic 464. Evidence of Commercial Obligations 46V. The Commercial Activities of Public Bodies 47§4. Importance of International and Supranational Law 47Chapter 2. The Economic Operators 49§1. Personal Status of Merchants 49I. In General 49II. Married People 49III. Foreigners 50§2. Companies (Partnerships and Corporations) 51I. Commercial and Civil Companies 51II. The Different Types of Companies 52A. General Introduction 52B. Partnerships 52C. Companies with a Reduced Legal Personality 52D. Cooperative Companies 53E. Public Limited Company 53F. Private Limited Company 53Chapter 3. The Economic Institutions 54§1. Professional Organizations 54I. Freedom of Trade 54II. Trade Associations 54III. Chambers of Commerce 54IV. Regional Development Companies 55§2. Advisory Bodies and Committees 55I. General Observations 55II. Some Important Consultative Committees 56A. The Central Economic Council and the RegionalSocial-Economic Councils 56B. Others 56§3. Commercial Courts and Commercial Arbitration 56Chapter 4. General Obligations of the Economic Operators 59§1. Merchants 59I. Survey 59II. Trade Register: General Database for Undertakings 59A. Obligation to Register 59B. Legal Presumption 60C. Sanctions 606 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Table of ContentsIII. Invoice 60IV. Bank Account 61§2. Corporations and Partnerships: Company File 61§3. All Undertakings: Bookkeeping 61I. Preliminary Observation 61II. Scope of Application of the Act 62III. General Rules 62IV. Categories of Undertakings 63V. Obligations for Small Undertakings 63VI. Obligations for Medium-sized Undertakings 64VII. Obligations for Large Undertakings 64A. Bookkeeping 64B. Annual Accounts 64VIII. Companies Limited by Shares: the Annual Report 65IX. Auditing 65X. Deposit of the Annual Accounts 66XI. Consolidated Annual Accounts 66Chapter 5. Business Assets, Goodwill and CommercialProperty Rights 67§1. Business 67I. General Observations 67II. Transactions Relating to the Business 67A. Overview 67B. Sale 68C. Lease 68D. Management 68§2. Intellectual Property 68I. General Observations 68A. Overview of Intellectual Property Rights 68B. Common Characteristics of Intellectual Property Rights 69C. International Treaties 70II. Patents 71A. Legislation 71B. Nature and Duration of the Protection 71C. Substantive Requirements 71D. Formal Requirements 72E. Rights of the Patentee 721. The Right to Dispose of the Patent 722. The Right to Exploit the Patent or to have it Exploited 72F. Inventions by Employees 73G. Protection of Biotechnological Inventions 73III. Designs and Models 73A. Legislation 73B. Definition of a Design or Model 74Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 7

Table of ContentsC. Designs and Models Excluded from Protection by theDesigns and Models Law 74D. Substantive Requirements 74E. Formal Requirements 74F. Rights Conferred by a Design or Model 75G. Legal Actions by Third Parties 76IV. Plant Breeder’s Rights 76A. System of the Plant Breeder’s Act 76B. Content of the Right 76V. Trademarks 77A. Legislation 77B. Definition of a Trademark 77C. The Different Signs which can be Registered as aTrademark 78D. Substantive Requirements 791. Distinctive Character 792. Novelty 803. Exclusions 80E. Formal Requirements 80F. Decay 80G. Rights Conferred by a Trademark 81H. Legal Actions by the Trademark Owner 811. Any Other Use 82I. Legal Actions by Third Parties 83VI. Copyright 83VII. Chips 83VIII. Know-how 84§3. Trade Name 84§4. The Protection of Domain Names 85Chapter 6. Bankruptcy and Related Institutions 86§1. General Survey 86§2. Prevention of Bankruptcy 86I. Survey 86II. Judicial Composition 86A. Purpose of the New Legislation 86B. Conditions 87C. Procedure 87D. Plan for Recovery 88E. End of the Judicial Composition 88III. Winding up and Liquidation 88IV. Amicable Compostition 89§3. Bankruptcy 89I. Nature of Bankruptcy 89II. Conditions for Bankruptcy 89A. Substantive Conditions 898 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Table of Contents1. Merchant 892. Cessation of Payments 903. Wavering of Credit Rating 90B. Formal Conditions 901. A Judgment of the Commercial Court 902. Publication and Legal Remedies 91III. Organization of the Bankruptcy 92A. The Receiver 92B. The Supervising Judge 92C. The Commercial Court 92IV. The Assets of the Estate 92A. Incapacity of the Bankrupt 92B. The ‘Suspect Period’ 93C. The Actio Pauliana 94V. The Liabilities of the Estate 94A. Notification and Verification of Claims 94B. Compensation 94C. Retention of Title 95VI. The Liquidation 95VII. The Consequences of the Bankruptcy after its Closing 95Chapter 7. Negotiable Instruments 97§1. Notion and Basic Features 97§2. Different Kinds of Negotiable Instruments 97§3. Bills of Exchange and Promissory Notes 98I. Bills of Exchange 98A. Notion 98B. Legislation 98C. Functions and Advantages of Bills of Exchange 99D. Validity Requirements 99E. Fund 100F. Abuse of Bills 100G. Endorsement and Discount 100H. Acceptance 101I. Aval 101J. Payment, Protest and Recourse 101II. Promissory Notes 102§4. Cheques 102I. Notion 102II. Legislation 103III. Differences with Bills of Exchange 103IV. Form and Content of the Cheque 103V. Different Types of Cheques 103VI. Fund 104VII. Transfer 104VIII. Presentation, Payment and Protest 104Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 9

Table of ContentsIX. Revocation and Opposition 105X. Loss, Theft and Abuse 105XI. Eurocheque and Eurocheque Card 106XII. Circular Cheque 106§5. Credit and Payment Cards 106§6. Electronic Fund Transfer 107Chapter 8. Organization of Financial Markets 108§1. Introduction 108I. General Structure 108II. Banking, Finance and Insurance Commission 109§2. Financial Institutions 109I. General Survey 109II. Credit Institutions (‘Banks’) 110III. Companies Granting Mortgages, Companies GrantingConsumer Credit and Leasing Companies 110IV. Investment Companies 111V. Investment Advisors 111VI. Insurance Companies 112VII. Pension Funds 112VIII. National Delcredere Service 112IX. Currency Exchange 112X. Specialists in Derivatives 113XI. UCITS-III Management Companies 113XII. Other Financial Institutions 113§3. Securities and Financial Instruments 113I. Typology of Securities 113II. Definition of Financial Instruments 114III. Definition of Securities (and Offerings of Securities) 114IV. Units of Undertakings for Collective Investment 116V. Treasury Securities 117§4. Financial Markets 117I. General Overview 117II. List of Regulated Markets 117§5. Transparency and Takeover Bid Regulation 118§6. Insider Trading, Market Manipulation and MarketAbuse 119Chapter 9. Commercial Contracts 121§1. General Principles of Contract Law 121§2. Sale of Goods 122I. International Sales Contracts 122II. Consumer Sales 122III. Other Sales Contracts 12210 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Table of ContentsA. Formation of the Sales Contract 122B. Obligations of the Vendor 123C. Obligations of the Purchaser 124D. Transfer of Property and of Risk 124§3. Commercial Services 124I. Distribution 124A. Survey 124B. Exclusive and Non-exclusive Distribution Agreements 1251. Definitions 125a. Distribution Agreement 125b. Exclusive Distribution Agreement 1252. Formation and Validity of Distribution Agreements 125a. In General 125b. Exclusive Distribution 1263. Privity of Contract 1264. The Unilateral Termination of Distribution Contracts:the Act of 27 July 1961/13 April 1971 127a. Introduction 127b. General System of the Act 127c. Scope of Application of the Act 127d. Agreements for a Fixed Period 128e. Unilateral Termination of a Distribution Agreement foran Indefinite Period 129C. Exclusive Purchasing Agreements 1321. Exclusive Purchasing Agreements in Belgium 1322. Regulation of Exclusive Purchasing Agreements 132D. Selective Distribution 1331. General Observations 1332. Selection of Distributors 1343. Termination of the Relationship with a SelectedDistributor 134E. Franchising 1341. Definition 1342. Legal Protection of Franchisees 135a. No Specific Protection 135b. Application of the Distribution Agreements Act toDistribution Franchising 135c. Influence of EC Competition Law 135II. Middlemen or Intermediaries 135A. Survey: Definition and Categories 135B. Brokers 1361. Definition 1362. Status of Merchant 1363. Legal Qualification of the Broker’s Contract 1364. Reciprocal Rights and Obligations of the Parties 1375. Termination of the Broker’s Contract 1386. Special Categories of Brokers 138Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 11

Table of ContentsC. Commission Agents and Related Intermediaries 1381. Definition 1382. Legal Qualification of Commission Agency 1383. Reciprocal Rights and Obligations of the Parties 139a. Obligations of the Commission Agent 139b. Guarantees of the Principal 139c. Obligations of the Principal 140d. Guarantees of the Commission Agent 1404. Stockbrokers 140D. Sales Representatives 140E. Commercial Agents 141a. Definition of Commercial Agency – Scope ofApplication 141b. Rights and Obligations of the Parties 141c. Conclusion and End of the Agency Contract 142F. Intermediaries in the Transport Sector 143G. Intermediaries in the Insurance Sector 144III. Insurance 144IV. Financial Services 145A. General Observation 145B. Leasing 145C. Factoring 146a. Endorsement of Invoice 146b. Obligations of the Supplier 146c. Obligations of the Factor 147V. Carriage by Land, Sea and Air 147A. General Provisions 147B. Carriage by Sea and by Inland Waterways 147C. Road Transport 148D. Air Transport 148E. Carriage by Rail 149F. Travel Contract 149Chapter 10. Commercial Securities 151§1. Introductory Observations 151§2. Commercial Securities Provided for by Statute Law 152I. Real Securities 152A. Commercial Pledge 152B. Pledge on a Business 152C. Others: Warehouse Receipt and Endorsement of Invoice 152II. Personal Securities 153A. Surety 153B. Credit Insurance 153§3. Securities Developed by Practice 153I. The New Real Securities 153II. The New Personal Securities 15412 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Table of ContentsPart II. Economic Law 155Chapter 1. General Principles 155§1. State Intervention in Economic Activities 155§2. Basic Principles of Economic Law 156I. General Observations 156II. Freedom of Trade 157III. Free Movement 157IV. Free Competition 157V. Equality 158§3. Institutional Framework of State Intervention in theEconomy 158I. Political Decision-making 158II. Consultative Committees 159III. Regional Development Companies and Public InvestmentCompanies 159A. Regional Development Companies 159B. Public Investment Companies 160Chapter 2. The Law of Establishment and Supervision ofEconomic Activities 162§1. Introduction 162§2. The Establishment Act for Small and Medium-sizedUndertakings 163I. Survey 163II. Scope of Application 164III. Professional Knowledge 164IV. Exemptions 165§3. The Professions 165§4. The Establishment of Aliens 166§5. The Establishment of Large Sales Surfaces 166§6. Licensing Requirements in Various Sectors 167§7. Supervision of Financial Insurance 167Chapter 3. State Incentives for Economic Activities 168Chapter 4. Competition Law 169§1. Introduction 169§2. Antitrust Law 169I. Introduction 169II. Institutional Provisions 169III. Scope of Application 170IV. Substantive Provisions 171Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 13

Table of ContentsA. Restrictive Competition Practices 1711. Restrictive Agreements 1712. Abuse of a Dominant Position 1723. Restrictions of Minor Importance 172B. Concentrations 172V. Procedure 173A. Provisional Measures 175VI. Sanctions 175§3. The Law of Unfair Competition and Trade Practices 176I. Introduction 176II. The Trade Practices and Consumer Protection Act 1991 177A. Survey 177B. Scope of Application 1781. Seller 1782. Products and Services 1783. Public Sector 1794. Excluded Sectors 179C. Substantive Provisions 1791. Information 179a. Price Indication 180b. Indication of Quantity 181c. Denomination, Composition and Labeling of Productsand Services 1822. Designations of Origin 1823. Advertising 1834. General Provisions Concerning the Sale of Products andServices to the Consumer 185a. General Information Duty 185b. Unfair Terms 185c. Contractual Documents 1865. Regulated trade Practices 186a. Sales at a Loss 187b. Announcements of Price Comparisons andDiscounts 187c. Clearance Sales 187d. Seasonal Clearance Sales 188e. Premium Offers 188f. Gift Coupons 189g. Auction Sales 190h. Unsolicited Sales 190i. Distance Sales 190j. Pyramid Selling 191k. Sales Outside Business Premises 1916. Acts Contrary to Honest Business Practices 191D. The Action for a Cease and Desist Order 192E. The Warning Procedure 193F. Sanctions 19314 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Table of ContentsChapter 5. State Regulation of the Conditions ofCommercial Transactions 194§1. Price and Supply Regulation 194I. Legislative Framework 194II. Price Regulation 195A. Scope of Application 195B. Prohibition of Abnormal Prices 196C. Price Interventions of the Government 1961. The Commission for Price Regulation 1962. Maximum Prices 1963. Notification of Price Increases 1974. Programme Contracts 197§2. Consumer Law 198I. General Observations 198A. Institutional Aspects and Representation of the ConsumerInterest 1981. At the Government Level 1982. The Consumer Council 1983. No special administrative bodies or courts 1994. The Research and Information Centre of ConsumerOrganizations 1995. Consumer representation in consultative committees 200B. General Principles of Consumer Law 200II. Consumer Information 200III. The Safety of Goods and Services 201A. Product Liability 2011. Principle 2012. Product and Producer 2013. Defect 2024. Burden of Proof 2025. Producer’s Liability and Means of Defence 2026. Damage 2037. Limitation and Cut-off Period 2038. Other Rights Unaffected 203B. Safety Regulations 203IV. The Quality of Goods and Services 205V. Consumer Contracts 206A. Unfair Terms 206B. Consumer Credit 207C. Consumer Sales 207Index 209Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 15

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List of AbbreviationsCass. Cour de Cassation/Hof van Cassatie (Court of Cassation)CJEC Court of Justice of the European CommunitiesEC European CommunityEEC European Economic CommunityECR European Court Reportserr.erratumGNP Gross National ProductIng. Cons. L’Ingenieur-Conseil, Revue de Droit intellectuelJTJournal des TribunauxJur. Benelux Cour de Justice Benelux, Jurisprudence/Benelux Gerechtshof,JurisprudentieMB Moniteur belge/Belgisch Staatsblad (Belgian State Gazette)OJOfficial Journal of the European CommunitiesPas. Pasicrisie beigePBA Plant Breeder’s ActRCJB Revue critique de jurisprudence beigeRDC Revue de droit commercial belgerrijdschrift voor BelgischHandelsrechtRDRoyal DecreeRev.Not.B. Revue de Notariat belgeROAR Revue generale des assurances et des responsabilitesRW Rechtskundig WeekbladSEW Tijdschrift voor Europees en Economisch RechtTPC Trade Practices and Consumer Protection ActUBLDM Uniform Benelux Law on Designs and ModelsUBLTM Uniform Benelux Law on TrademarksVAT Value Added TaxCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 21

List of Abbreviations22 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

General Introduction1–1Chapter 1. The General Background§1. Geography1. Belgium is a small country lying along the north-western coast of Europe. Itcovers an area of 11,779 square miles – slightly larger than the State of Marylandin the USA – and has some 40 miles of coastline on the North Sea, and 860 milesof land frontiers (bordering the Netherlands, Germany, Luxembourg and France).The country has a population of about 10.23 million and some 865 inhabitants persquare mile.FPOCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 23

2–2 General Introduction, Ch. 1, The General Background§2. Population2. Belgium is composed of two main cultural-linguistic communities, speakingFlemish (Dutch) and French, and a small German-speaking community. TheFlemish, who outnumber the French-speaking Walloons, live mostly in the northand west, while the Walloons live in the south and east. Both Flemish and Frenchare official languages, and the capital, Brussels, is administratively bilingual. Some9 per cent are foreigners.On 1 January 2004, the population of Belgium was as follows:(2003–2004)1 January 2004 1 January 2003 Increase EvolutionBelgium 10,396,421 10,355,844 +40,577 +0.39%– men 5,087,176 5,066,885 +20,291 +0.40%– women 5,309,245 5,288,959 +20,286 +0.38%Brussels Region 999,899 992,041 +7,858 +0.79%– men 480,334 476,692 +3,642 +0.76%– women 519,565 515,349 +4,216 +0.82%Flanders 6,016,024 5,995,553 +20,471 +0.34%– men 2,966,640 2,956,558 +10,082 +0.34%– women 3,049,384 3,038,995 +10,389 +0.34%Walloon Region 3,380,498 3,368,250 +12,248 +0.36%– men 1,640,202 1,633,635 +6,567 +0.40%– women 1,740,296 1,734,613 +5,681 +0.33%Foreigners 2004Belgium Brussels Region Walloon Region860,287 263,451 288,37524 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

General Introduction, Ch. 1, The General Background 2–2Structure of the population of Belgium 1 January 2004Per group of age of 5 years and per 1.000 inhabitants90+80–84MenFemale70–7460–6450–5440–4430–3420–2410–140–470 60 50 40 30 20 10 0 10 20 30 40 50 60 70Structure of the population per region 1 January 2004FlandersWalloonRegionBrusselsRegionCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 25

3–5 General Introduction, Ch. 1, The General Background§3. Political System3. The Belgian Constitution, promulgated in 1831, set up a centralized state.For many years, however, there has been a growing movement in the two mainregions of the country – the Flemish-speaking area in the north, and the Frenchspeaking area in the south – in favour of increased autonomy in the state structures.After much preparation, a general agreement was concluded in 1971, which providedfor decentralization to the regional level not only in the cultural field, but alsoin the social and economic fields, and in the administrative field. This generalagreement was separately executed, after difficult and protracted negotiations, bythe Acts of 8 and 9 August 1980. A real breakthrough came in the summer of 1988,after prolonged negotiations between three Flemish parties (Christian Democrats,Socialists and the People’s Union) and two French parties (Socialist and ChristianDemocrats), which together constitute a two-thirds majority in Parliament, which isnecessary to change the Constitution. The Acts of 1980 were fundamentally amendedas Belgium became a federal state, with two states of the Union, a Flemish and aFrench-speaking one. It is estimated that some 40 per cent of the budget is decidedupon by the Regional Parliaments. Brussels Capital also won a special status, withproper powers and organs.4. The Constitution also sets out the principle of separation between the threepowers of the state. The legislative power is wielded collectively by the King andParliament; the executive power is vested in the King and his Ministers, and thejudicial power is in the hands of the Courts and Tribunals. The King reigns, butdoes not rule. This means that although he appoints and dismisses his Ministers,his person is inviolable and his Ministers are responsible. No Act of the King iseffective unless it is countersigned by a Minister. Parliament is composed of twohouses: the House of Representatives and the Senate. The members of the House ofRepresentatives number 150 Members. The Senate is composed of 71 members.Both are renewed every four years. Citizens who are fully 18 years old are entitledto vote. The House has full powers and is the main political parliamentary forum.The Senate has specific powers like those relating to the revision of the Constitutionand treaties, the relations between the linguistic communities and others.The Senate has also the power of evocation.5. The two Acts of 1980, as revised in 1988 and in 1993, laid down theorganization for Flanders and Wallonia.A Flemish Council, combining the Flemish Community Council and the FlemishRegional Council (read Parliament) was established, as well as a French CommunityCouncil and a Walloon Regional Council. The Councils are directly elected.Each Council has its own government: the Flemish Executive (maximum elevenmembers), the French Community Executive (maximum four members) and theWalloon Regional Executive (maximum seven members).The Regional and Community organs are competent for education (includingvocational training), cultural affairs, social welfare, health, economy and energy,employment, roads and transport, environment and housing, ecology, water and26 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

General Introduction, Ch. 1, The General Background 6–6land and nature, local and provincial governments, public functions and scientificresearch.The Councils can enact decrees, which have the same legal effect as an Act ofthe National Parliament. Conflicts about competence are settled by an ArbitrationCourt.Notwithstanding a large transfer of competence to the respective Communitiesand Regions, Belgium retains its status as a single economic and monetary union.Thus it is expressly foreseen that the following remain national competences: monetaryand financial policies, price and income policies, competition and commercialpractices, commercial law and corporate law, conditions of establishment, industrialand intellectual property, metrology and normalization, statistics, the NationalInvestment Board, and labour law and social security legislation.Needless to say, there will be numerous interpretation conflicts between thenational and regional institutions about their respective competences, and theArbitration Court will have a lot on its hands. This is even more so as the Court ofArbitration has received extended powers to evaluate the constitutionality of eachlaw and/or decree as far as the principle of equal treatment is concerned, as laiddown in Articles 10 and 11 of the Constitution. Laws and/or decrees will also betested on their constitutionality regarding Article 24 of the Constitution, whichguarantees equal treatment as far as the right to education is concerned.A major constitutional step has been set, providing the competence of theregional authorities to act as legal parties to international treaties.Regarding Brussels, the following agreement has been reached. Brussels shouldbe able to play both its roles as European, national and capital of the linguisticCommunities. There is an elected Council called the Regional Council of BrusselsCapital and a Brussels Government, called the Brussels Executive. Both are competentfor the areas for which the other regions are competent: economy andenergy, employment policies, environment and housing, water, nature . . . The Councilcan vote ordinances or regulations, which do not have the same status as theActs of the Belgian Parliament, nor the decrees of the Regional Councils. Culture,education and health fall under the competence of the Flemish, or the FrenchCommunity Council, which can however delegate authority to the linguistic groupsof the Capital and can exercise power by the way of ordinances, which have torespect national laws or regional decrees.These constitute only the main lines of the political and administrative structureof the Capital Region of Brussels. One of the key characteristics of the arrangementis that Brussels does not constitute a third region on an equal footing with Flandersand Wallonia and cannot consequently act as a third man, swinging the balance ofpower between the two major linguistic groups.6. Belgium is composed of 10 provinces: Antwerp, Brabant (2), Hainaut, Westand East Flanders, Liège, Limburg, Luxemburg and Namur. Each province isheaded by a Provincial Council elected by universal suffrage, and by a Governorwho represents the Government and is appointed by the King. From among itsmembers, the Council elects a Permanent Deputation which constitutes the localgovernment. The 589 ‘communes’ or boroughs are administered by a councilconsisting of the Burgomaster (or Mayor), Aldermen and Councillors. MembersCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 27

7–8 General Introduction, Ch. 1, The General Backgroundof the Council are elected every six years by the voters in their own commune. TheAldermen are elected by the Council and their number is specified by law. TheBurgomaster is appointed by the King on the basis of a proposal submitted bythe Council.7. The highest court in Belgium is the Cour de Cassation. This Court doesnot, however, have the power to rule on the constitutionality of Acts passed by theLegislature. There are 5 Courts of Appeal; 26 Tribunals of First Instance (civil –criminal – labour – commercial – youth); and 222 judicial cantons, each of whichhas its own Justice of the peace. The Council of State is the supreme administrativecourt, competent to rule on the legality of the actions of the government and theadministration.As indicated earlier the Arbitration Court will judge whether the National andRegional Legislators, when enacting laws or decrees, stay within the material and/or territorial competence which they enjoy under the Constitution. The Court hasthe power to annul laws of Parliament or Decrees of Regional Councils partly ortotally.8. Until the middle of the 1960s, politics were dominated almost entirely bythree ‘national’ parties which constituted respectively the political expression ofthe Christian, socialist and liberal ideologies. Since then the position has alteredsubstantially: disagreement between Walloons and Flemings has put an end tothe unitary party structure. This has meant the birth of a number of autonomousparties, which although they still largely support the same ideology, adopt a differentapproach, notably on relations between the Flemish and French-speakingcommunities:– the Social Christian Party CDH (Centre Démocrate Humaniste) in the Frenchlanguage area, and the CD&V (Christen-Democratisch en Vlaams) in the Dutchlanguage area;– the Socialist Party sp.a (SP Anders – Sociaal Progressief Alternatief) and thePS (Parti Socialiste);– the Conservative Party: VLD (Vlaamse Liberalen en Democraten – Partij vande burger) and the MR (Mouvement Réformateur).At the same time, regional parties have emerged, with activities mostly concentratedin a specific region: in Flanders there are the Nieuwe Vlaamse Alliantie(NVA) and Spirit and the Vlaams Blok (Flemish right wing); and the FrontDémocratique des Francophones (FDF), a party which is active in Brussels and inthe surrounding area. The Communist Party (PC) is no longer represented in Parliament.More recently other parties have emerged like the Ecologists.The latest elections of May 2003 brought a new coalition government, composedat national level of the Conservatives, the Socialists and Spirit. At regional level,there is some asymmetry: at Flemish level, Spirit is part of the government.28 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

General Introduction, Ch. 1, The General Background 9–9§4. Population and Employment Statistics9.Employment 2004 1999 2000 2001 2002 2003 2004Employment 4,018,118 4,095,349 4,147,932 4,142,938 4,137,800 4,154,300Difference on year basis 77,231 52,583 −4,994 −5,138 16,500Wages earners 3,352,889 3,435,705 3,493,919 3,492,401 3,490,800 3,510,700Difference on year basis 82,816 58,214 −1,518 −1,601 19,900Non wage earners 665,229 659,644 654,013 650,537 647,000 643,600Difference on year basis −5,585 −5,631 −3,476 −3,537 −3,400Frontier workers 46,434 47,469 47,231 46,804 47,000 47,200Workers 4,064,552 4,142,818 4,195,163 4,189,742 4,184,800 4,201,500Difference on year basis 78,266 52,345 −5,421 −4,942 16,700Unemployed) 374,991 308,450 286,869 332,071 362,600 373,100Difference on year basis −66,541 −21,581 45,202 30,529 10,500Employment population 4,439,543 4,451,268 4,482,032 4,521,813 4,547,400 4,574,600Difference on year basis 11,725 30,764 39,781 25,587 27,200Population 15–64 years 6,715,128 6,723,898 6,743,339 6,774,827 6,798,700 6,815,000Difference on year basis 8,770 19,441 31,488 23,874 16,300Employment degree (15–64 year) 60.5 61.6 62.2 61.8 61.6 61.7Unemployment degree (15–64 year) 8.4 6.9 6.4 7.3 8.0 8.2Activity degree (15–64 year) 66.1 66.2 66.5 66.7 66.9 67.1Unemployed – Non-workingemployment seekers 507,626 474,427 469,740 491,481 538,140 552,800−33,199 −4,687 21,741 46,659 14,660Unemployment degree 11.1 10.3 10.1 10.5 11.4 11.6Degree of activity + unemployed 68.1 68.7 69.2 69.1 69.5 69.8Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 29

9–9 General Introduction, Ch. 1, The General BackgroundEvolution of the number of employed employees according to age and genderAge 2002/1 2002/2 2002/3 2002/4 2003/1 2003/2 2003/3 2003/4 2004/1 2004/2 2004/3

General Introduction, Ch. 1, The General Background 10–1110. In the private sector there are fewer blue-collar workers than white-collarworkers. Here a dramatic shift has taken place: in 1947 the ratio was still five bluecollarworkers for every white-collar worker. The growth of the white-collar groupis continuing and taking into account the fact that the vast majority of publicemployees are white-collar workers (85 per cent) one can say that the actual ratio iscontinually changing in favour of white-collar workers. Consequently, the Belgianlabour force is better educated and more sophisticated than ever before, with higherexpectations of more interesting jobs and humane working conditions.In June 2002 there were 1,071,428 employees in the public sector and educationand 2,421,130 employees in the private sector. There were 1,172,610 blue collarsand 1,249,130 white collars in the private sector.In 2003, 795,210 employees (179,320 men (23%) and 615,890 women (77%)were part timers. This amounts to 25.6 per cent of total employment.This has to do with the tertiarization of the economy and not the fact that bluecollarworkers received white-collar status. Many white-collar jobs are to be foundin the commercial and the non-profit sector. One out of five workers works in thenon-profit sector: education, health care, welfare work and the socio-cultural sector. 11. G. Tegenbosch, ‘België heeft grote non-profitsector’, De Standaard, 1 November 2001.11. Belgium remains a country of ‘small businesses’. In 2002 there were in theprivate sector 237,833 employers versus 220,360 in 1993. The large majority ofthem are small enterprises with less than 50 employees, namely 96.70 per cent or48.95 per cent of the employees. This has important consequences, and in factintroduces a dual labour system in Belgium. Taking size into account is a longestablished practice in labour legislation and industrial relations. A works councilonly has to be set up in enterprises which employ, on average, at least 100 employees;a committee for prevention and protection at work if there are 50 employees;and a trade union committee, depending on the existing collective agreements,when for example 25 or 50 workers are employed. As a result there are no workscouncils, committees or trade union committees in the majority of enterprises, andso for an important number of employees there is no workers’ representation at thislevel. Quite evidently the unions have less influence in smaller enterprises, ascompared with bigger companies. One has however to bear in mind, as we shall seelater, that collective agreements covering wages and working conditions, whether atthe inter-industry-wide level or at branch level, can be extended and thus madebinding on all employers active in the private sector as a whole, or in the givenbranch of industry, so that all employees will have the benefit of the collectiveagreement.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 31

11–11 General Introduction, Ch. 1, The General BackgroundDistribution of employers and employees by size of the enterprise on 30 June 2002Size of enterprise Private sector Total %Employers Blue Collar White Collar NumberNumber % Male Female Total Male Female TotalEmployers with:less than 5 employees 157,856 66.37 91,728 49,150 140,878 46,216 92,921 139,137 280,015 11.565 to 9 employees 37,290 15.68 89,416 31,142 120,558 43,988 70,017 114,005 234,563 9.6910 to 19 employees 20,746 8.72 103,483 33,111 136,594 57,298 72,354 129,652 266,246 10.9920 to 49 employees 14,092 5.93 155,850 48,938 204,788 95,821 104,083 199,904 404,692 16.7150 to 99 employees 4,174 1.75 98,122 33,966 132,088 69,136 72,992 142,128 274,216 11.32100 to 199 employees 2,083 0.88 93,720 35,382 129,102 73,322 67,588 140,910 270,012 11.15200 to 499 employees 1,133 0.48 95,232 42,888 138,120 80,475 85,749 166,224 304,344 12.57500 to 999 employees 301 0.13 44,031 22,346 66,377 50,013 45,475 95,488 161,865 6.681,000 or more employees 158 0.07 85,781 18,324 104,105 67,723 53,959 121,682 225,787 9.32Total 237,833 100.00 857,363 315,247 1,172,610 583,992 665,138 1,249,130 2,421,740 100.0032 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

General Introduction, Ch. 1, The General Background 11–11Distribution of employers and employees by size of the enterprise on 30 June 2002Size of enterprise Total Total %NumberEmployers Blue collar White collarNumber % Male Female Total Male Female TotalEmployers with:Less than 5 employees 164,413 63.88 92,766 52,435 145,201 50,700 97,270 147,970 293,171 8.395 to 9 employees 40,094 15.58 91,031 35,803 126,834 50,190 76,169 126,359 253,193 7.2510 to 19 employees 23,528 9.14 106,838 40,834 147,672 70,899 86,266 157,165 304,837 8.7320 to 49 employees 17,440 6.78 163,440 62,259 225,699 134,160 150,025 284,185 509,884 14.6050 to 99 employees 5,987 2.33 106,580 45,217 151,797 111,971 138,068 250,039 401,836 11.50100 to 199 employees 3,221 1.25 103,562 45,536 149,098 130,939 146,503 277,442 426,540 12.21200 to 499 employees 1,846 0.72 106,733 53,192 159,925 168,140 177,072 345,212 505,137 14.46500 to 999 employees 520 0.20 51,187 29,484 80,671 123,384 104,426 227,810 308,481 8.831,000 or more employees 324 0.13 97,132 28,656 125,788 194,394 169,907 364,301 490,089 14.03Total 257,373 100.00 919,269 393,416 1,312,685 1,034,777 1,145,706 2,180,483 3,493,168 100.00Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 33

12–13 General Introduction, Ch. 1, The General Background§5. Social and Cultural Values12. The social and cultural values which co-determine the nature of labour lawand industrial relations in Belgium largely coincide with the legal foundations ofeconomic power in a free enterprise economy. Economic power in Western societyrests mainly on four fundamental options, which will supposedly remain sacrosanctfor our generation. The first three of these options enable individuals or groups ofindividuals to obtain decision-making power over goods; the fourth gives the sameindividuals or groups of individuals power over people (employees). The firstfundamental option concerns the right of property; this right enables the proprietorto dispose of, exploit and benefit from his property, and to make a profit from it.The second fundamental option relates to the freedom of commerce and industry,which was introduced in Belgium in 1791 when the medieval guilds and corporationswere being abolished during the French Revolution. This freedom meansthat any person can freely engage in commerce, industry or any other activity ofhis choosing. Thirdly comes the freedom of association, whereby it is possible forindividuals to associate with others in order to engage in industry or commerce; andto that end, to bring in their own capital in order to maximize any profit which mayensue for eventual division. Property, freedom of commerce and industry and freedomof association still constitute the legal basis for the free enterprise system inour society and will, unless there is a revolution, undoubtedly continue to do so.The fourth option involves the freedom of labour: thus the employee is free tochoose his job and his employer, and has the consequent freedom to conclude anindividual labour contract. By means of this contract the employee engages himselfto work in a position of subordination; that is, under the command, authority andthe control of the employer. So the employer gains power over his workers, andthey have to carry out – within given limits of course – his orders. It is unnecessaryto illustrate that in the name of individual freedom with the employee at the mercyof the labour market forces and the (often) economically stronger employer, muchsuffering has been caused: child labour, long hours of work, dangerous andunhealthy work places, and low wages were all characteristic of the 19th and partof the 20th century.13. Although protective labour laws and trade union action, resulting fromcollective bargaining as well as from the direct intervention of the State in a mixedeconomy, have had a dramatic impact upon the Belgian scene, these basic valuesare still the pillars of the social system, and fundamentally determine the developmentof the labour relations system. The Belgian economic system can adequatelybe described as a market economy with active government intervention in its cyclicaland structural evolution. The economy is very open to the rest of the world, andtwo-thirds of all exports are destined for EU Member States. While the ‘system’,and especially the profit motive, has been challenged less now than in the past, itsexistence has, at the same time, been repeatedly and explicitly recognized andlegitimized. In most of the nation-wide, inter-industry agreements concluded sincethe Second World War, the trade unions have ‘recognized the necessity of the legalauthority of the employers’ (1944); ‘not to change the status of the enterprise orchallenge the authority of the managers’ (1954); ‘respect the managerial respons-34 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

General Introduction, Ch. 1, The General Background 14–14ibilities and the decision-making power of the employer’ (1970). In 1971 and againin 1972 the trade unions recognized, as they had in 1947, ‘the necessity of the legalauthority of the employers, and they consider it to be a point of honour for theworkers to execute their work dutifully’. The last agreements are still valid. Thesocietal choice for a free market is exemplified and strengthened by the EuropeanMonetary Union of which Belgium is a fully fledged member.14. So, it can be said that Belgium is a pluralistic society in which individualsand groups are allowed the freedom to promote their own interests, and inwhich social conflict is consequently inevitable, and indeed an essential elementin the decision-making process. This is evidently the case in the Belgian industrialrelations system, where employers and employees, enjoying a large degree ofautonomy, settle their conflicts of interest by means of industrial warfare. Conflictand strife are looked upon as being essential to the autonomous decision-makingprocess which characterizes the Belgian labour relations system: free and effectivecollective bargaining is in fact impossible when the workers do not, for example,have the freedom to stop work collectively and by so doing try to force theemployer to accept their point of view. Or, to put it another way, labour relationsare, in Belgium, essentially power relations, whereby the decision-making power ofthe employer is challenged by the collective power which the workers may display.Since the growing globalisation of the economy, massive introduction of newtechnologies, human resources management, re-engineering, benchmarking anddelayering, the industrial worker, once the traditional base of trade union strengthhas been fading away. Shifts in employment have contributed to the weakening ofthe trade unions, which are, as in other European countries, on the defensive.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 35

15–16Chapter 2. The Economic System15. The economic system in Belgium can be best described as a social marketsystem. The guilds and corporations existing since the Middle Ages were abolishedduring the French Revolution in 1791 by the decret d’ Al/arde. This Decree alsoestablished the freedom of commerce and industry, which is still considered as aquasi-constitutional principle in this country. 1 Moreover the Napoleonic Civil Code(1804), still in force in Belgium (but extensively amended), recognizes the freedomof contract: basically parties are free to determine, by mutual agreement, the contentof their contractual relationship. Since the end of the nineteenth century thefreedom of contract between employer and employee has been restricted in orderto protect the latter. In the twentieth century, freedom of contract has also beenrestricted to protect other groups in society: tenants against their landlords andconsumers against professional suppliers of goods and services. Since the 1930seconomic operators have often been limited in their freedom of trade and contractby the objectives of economic policy (e.g. price policy) or the protection of smalland medium-sized undertakings (mimimum requirements for establishment, tradepractices regulation, quantitative restrictions in the establishment of large retailstores, etc.). Since the Second World War a comprehensive (and expensive) systemof social security has been established. In recent years the viability of the system(especially in the field of unemployment benefits and pensions) has become moreand more questionable (Belgium has rather a high degree of unemployment and anincreasingly ageing population). These circum-stances can partly explain Belgium’svery high public debt (in 1992, 130 per cent of GNP). The necessary public savingsare rendered particularly difficult by the differences in views on this subject notonly between the political families (Christian Democrats, Socialists, Liberals, etc.),but also between Walloons and Flemings.In a ‘mixed economy’ the state does not only regulate the conditions of privateenterpreneurship but also invests in itself, either by taking a (majority) equity stakein private companies or by creating public companies. 2The right of property, another prerequisite for a market economy, is recognizedby the Napoleonic Civil Code of 1804. In addition, the Belgian Constitution of1831 protects private property against expropriation by the public authorities: expropriationis only possible in the general interest and provided that the proprietorobtains a fair compensation prior to the expropriation.1. See infra Part II, Chapter I, §2.2. See infra Part II, Chapter I, §§1 and 3.16. By the consecutive reforms of the institutions in the 1970s and the 1980s,Belgium has evolved from a unitary state (with important powers in certain areasfor the provinces and especially the communes) to a complex federation composedof three Communities and three Regions. 1 This is also reflected in the division ofpowers in the economic area: economic policy (state investments, state aids, etc.) isnow largely a regional matter.1. See supra I, §3, II.36 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

17–18Chapter 3. The Legal System17. The Kingdom of Belgium is a parliamentary democracy. The King is thehead of State, but politically he is incapable of acting without his Ministers. TheBelgian Constitution of 1831 is based on the triaos politica of Montesquieu: threeindependent powers which must keep each other in balance: the legislature, theexecutive and the judiciary. Since the 1970s Belgium has gradually evolved fromrather a centralized state to a federal state. There are three Regions: the Flemish, theWalloon and the Brussels Region, and three Communities: the Flemish (the peopleliving in the Flemish Region as well as the Dutch-speaking people of Brussels), theFrench (the people of Wallonia and the French-speaking inhabitants of Brussels)and the German Community (the German population of a small territory within theWalloon Region). There are now five legislatures. At the national level: the King(in fact the government appointed by the King on the basis of a majority in Parliament)and the Parliament (consisting of two Chambers) acting jointly. There is aFlemish Parliament, which is the legislature of the Flemish Community and theFlemish Region, a Council of the Walloon Region, a Council of the French Community,a Council of the Brussels Region and a Council of the German Community.There is a federal government and a government corresponding to each of theother parliaments. The Regions have i.a. competences in economic matters, such asstate incentives for economic activities, state entrepreneurship, town planning, forestmanagement and environmental policy. The Communities have competences inthe field of the use of the languages, culture, education and welfare. The nationalauthorities remain, however, competent for most of the subjects discussed in thisEncyclopaedia: civil law (e.g. family law, contracts), commercial law in the propersense (the status of merchants, bankruptcy law, negotiable instruments, etc.), intellectualproperty, the law of establishment, price regulation, competition law and theprotection of the investor and the consumer. The competences of the Regions arefurther subject to the respect for the principles of freedom of trade, the free movementof goods, persons, services and capital and the general regulatory framework of theeconomic and monetary union as it is established by law or international treaties (inparticular the Belgian-Luxembourg Economic Union and the EC). The freedomsmentioned are also the foundations of the single European Market pursuant to theEC Treaty. As a result of the application of these freedoms by the European Courtof Justice, an increasing number of national laws and regulations which restricttrade (requirements relating to composition and labelling of products or to the exerciseof certain economic activities and professions, etc.) have become unenforceable.The combination of economic and (since 1999) the monetary integration at the EUlevel (Belgium is a member of the Economic and Monetary Union) and the devolutionof economic powers to the Regions has significantly reduced the impact of thenational (federal) state) on economic policy. However the role of the federal stateremains important since it still has important leverages like social security and taxation.1. [1992] OJ C 224/I.18. There are only national (federal) courts in Belgium. The judgements of theCourt of Cassation have authority, since judgements of lower courts (there are 26Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 37

19–20 General Introduction, Ch. 3, The Legal SystemCourts of First Instance and five Courts of Appeal) can be annulled by the Courtof Cassation if they are contrary to the law. Belgium does not have, as e.g. France,a comprehensive network of administrative courts, but the Council of State, createdin 1948, can annul all acts of the national government, of the Executives and oflocal authorities if they are contrary to the laws in the appropriate sense (the acts ofParliament and the decrees of the Councils of the Regions and Communities).Finally, in 1983 the Court of Arbitration was created. This Court can annul acts ofParliament and decrees of the Councils of the Regions and of the Communities ifthey are contrary to the division of powers between the national State, the Regionsand the Communities as provided for in the Constitution. Since 1989 the Court ofArbitration can also annul acts of Parliament and decrees if they are contrary to theprinciple of equality enshrined in Articles 6, 6bis and 17 of the Constitution.19. The origin of Belgian commercial law lies in the French Commercial Codeof 1807. This Code is still in force in Belgium, but most parts of it have beenamended by later Belgian acts. Belgium also still has the Code Napoleon, the CivilCode of 1804. This Code has been amended thoroughly, but the system of civil lawof the Code has remained and important parts of it affecting economic life (such asthe general principles of contract law) are still original.20. Belgian law is increasingly affected by the law of the EC. First, there areCommunity policies, such as the common agricultural policy, the application of theEC competition rules, the common commercial policy and the common transportpolicy, which directly affect the legal position of business and even individuals.Second, important parts of the law (especially commercial and economic law), havebeen or must be adapted to EC directives adopted by the European Parliament andthe Council of Ministers. This is the case for company law, insurance law, intellectualproperty law, consumer law, banking law, etc. Third, a number of nationalrules regulating the marketing of goods, the establishment of firms or the provisionof services are not enforceable (any longer) if the goods, the firms or the services inquestion originate in another EC Member State. The EC Court of Justice oftenstrikes down such rules as being contrary to the basic freedoms of the EC Treaty:free movement of goods, persons, services and capital.38 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Selected BibliographyL. and S. Frederique, Handboek van Belgisch handelsrecht, 4 volumes, 2nd ed.(Bruylant, Brussels 1976–1982).W. van Gerven, H. Cousy and J. Stuyck (ed.), Beginselen van Belgisch Privaatrecht,Vol XIII, Handels- en economisch recht, Part I, Ondernemingsrecht, 2 volumes,3rd ed. (Story-Scientia, Brussels 1989).J. van Ryn and J. Heenen, Principes de droit commercial belge, 4 volumes, 2nd ed.(Bruylant, Brussels 1976–1988).P. De Vroede and M. Flammee, Precis de droit economique belge (Story-Scientia,Ghent 1991).Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 39

Selected Bibliography40 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I. Commercial Law21–22Chapter 1. Concepts and Sources of Commercial Law§1. The Distinction between Civil Law and Commercial Law21. The French Civil Code of 1804 and Commercial Code of 1807 are still inforce in Belgium. Although many of their provisions have been amended over theyears and whole chapters have been replaced by modern legislation (this is particularlythe case for the Commercial Code), the basic distinction between civil lawand commercial law still exists. The Commercial Code contains a number of ruleswhich apply to merchants only. While Belgium still has a separate body of lawcalled commercial law (legal rules only applicable to ‘merchants’) the CommercialCode itself has been largely stripped by later laws. In the 1960 and 70ies importantparts of commercial law, like bookkeeping, annual accounts and commercial registershave been enacted in separate laws. Since the end of last century, the rules oninsolvency, companies and corporations, which had originally been integrated inthe Code, are now also to be found in separate laws.Moreover specialized courts, the commercial courts, have competence over legaldisputes between merchants.22. The purported necessity for a separate body of rules for merchants is basedon the following assessments and assumptions: i) commercial transactions are morefrequent and necessitate a higher speed than civil transactions, ii) credit and goodfaith play a more prominent role in commercial than in civil matters, and iii) profitmaking is the motive for commercial transactions, much more so than it is for civiltransactions.These contended differences are highly contestable and the distinction betweencivil and commercial law is often criticized. It is generally acknowledged that thereis a necessity for special rules applying to economic operators, i.e. self-employedpersons and companies (e.g. concerning registration in trade registers, accountancy,bankruptcy, methods of competition) and that the mutual relations between economicoperators should not always be subject to the same rules as those governingthe relations between private individuals or between economic operators andconsumers (e.g. in relation to means of evidence, professional liability, etc.). Thedistinction however, as it is still made between civil law and commercial law isobsolete. In particular it is difficult to grasp why important sectors of economic life,such as agriculture, the professions (lawyers, auditors, architects, doctors, etc.),mining and real estate are still considered to be ‘civil’ activities, as a result ofCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 41

23–26 Part I, Ch. 1, Concepts and Sources of Commercial Lawwhich the persons exercising these activities on a professional basis, are not subjectto the rules of the Commercial Code and other statutes concerning e.g. accountancy,bankruptcy, fair competition, etc.23. Within the Belgian legal system the hierarchy of the sources of law is thefollowing: statute law, customary law and case law, statute law being more importantthan the two other sources. Within the category of statute law, supranationallaw, such as the law of the European Community, the law of the Benelux and theEuropean Convention for Human Rights, has precedence over domestic law. Withindomestic law the Constitution has the highest authority; some of the fundamentalrights it contains are important for commercial and economic law. 1 At the nextstage in the hierarchy of statutes there are the acts of the national Parliament and ofthe Councils of the Communities and the Regions. 2 An even lower level of statutelaw are the royal and ministerial decrees and the decrees of the Executives of theRegions and the Communities. All these sources playa role in commercial andeconomic law. Many competences in the economic field are now regional insteadof national.1. See infra Part II, Chapter 1, §2.2. See supra in General Introduction, I, §3, II and 3.24. Customary law plays a much less important role in Belgian law. Howeverin commercial law it is still rather important: when two merchants (or commercialcompanies) have entered into a contract and have not stipulated to the contrary,they are deemed to have contracted according to the customs of the branch (termsof payment and delivery, complaints, liability, etc.). This is particularly true in theevent of transborder transactions. 11. See e.g. the INCOTERMS. discussed infra in Part I. Chapter 9, §2.25. Finally, both in civil law and in commercial law, case law is much moreimportant than the constitutional task of the courts may suggest. The courts arecharged with the interpretation and the application of the law in individual cases.Although there is no rule of precedence, the decisions of the higher courts have animportant influence on the decisions by the lower courts. Since the Court of Cassationcan annul a judgement of a lower court when it rules that the latter has incorrectlyapplied the law, lower courts will generally follow the case law of the Court ofCassation.§2. Commercial Acts and MerchantsI. Natural Persons26. The distinction between civil law and commercial law is based on thenotions of commercial act and merchant. Article 2, with the exception of the lastparagraph, and Article 3 of the Commercial Code list the so-called ‘objectivecommercial acts’. According to case law, these activitiesl are only commercial if42 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 1, Concepts and Sources of Commercial Law 27–28they are exercised with the intention of making a profit. Preventing losses or savingcosts however are also considered as the pursuit of a profit.By virtue of Article 1 of the Commercial Code, any person who has as hisprincipal or accessory profession the exercise of commercial acts (i.e. with a viewtomaking profit) is considered to be a merchant. Finally, Article 2, last paragraph,provides that every obligation of a merchant is a commercial act, unless it is provedthat this obligation is unfamiliar to his professional activity (the so-called ‘subjectivecommercial acts’). A classic example: if a merchant purchases a car, his obligationto pay the price is of a commercial nature, unless evidence is produced thatthe use of the car is strictly private. The qualification of an activity as an objectivecommercial act is significant, since the professional exercise of this activity leads tothe applicability of the special rules for merchants (registration in trade registry,obligations concerning accountancy, the possibility to be declared bankrupt, thecompetence of the commercial courts, etc.). The presumption that an act of amerchant is a (subjective) commercial act is important for the applicability ofcertain rules governing commercial obligations differently from civil obligations(e.g. rules of evidence, solidarity between merchants).1. See infra III.II. Companies27. According to Article 3, §2 of the Companies Code of 1999 (replacing BookI, Title IX of the Commercial Code), commercial companies are companies whichhave as their object the exercise of commercial acts. Not the form of the companyis decisive (a public limited company is a ‘civil’ company if its object is theexercise of a noncommercial activity, such as the joint exercise of a liberal profession),but its object as expressed in its Articles of Association. If this object iscommercial within the meaning of Articles 2 and 3 of the Commercial Code, thepursuit of profit is presumed. All acts of a commercial company are commercial.III. Objective Commercial Acts28. A natural person is only a merchant if he or she exercises on a professionalbasis (and a company if it has as its object the exercise of) one or more of thefollowing acts (activities):1. the purchase of movables (including obligations and intellectual property)with the aim to sell or to lease them after having processed them or not (e.g.wholesale and retail business, the renting or leasing of cars, etc.);2. the sale or lease which is the result of such a purchase; an exception is madefor the sale of medicines by pharmacists, doctors and veterinarians to theirpatients (see Article 2bis of the Commercial Code);3. the lease of movables with a view to rent them out (e.g. motion pictures);4. the provision of services of a material (i.e. neither intellectual nor artistic)nature by a self-employed person, as soon as it is accompanied, evenCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 43

28–28 Part I, Ch. 1, Concepts and Sources of Commercial Lawaccessorily, by the delivery of goods (e.g. the hairdresser who sells shampoo,the rest home where the clients can purchase meals, etc.); only when materialwork is not accompanied by the delivery of any goods (e.g. cleaning ofoffices, excavation activities, trimming) it is not considered as a commercialact, but as a handicraft, at least when it is exercised by a natural person(partnerships and corporations of craftsmen are commercial companies); craftsmenmust register in a handicraft registry held at the same place as the traderegistry, but they are not subject to most of the rules of commercial law;5. the purchase of a business with a view to exploit it oneself; this means that thepurchase of a business is a commercial act when it is done by a privateindividual who is not yet active as a merchant;6. the business of processing of goods, with the exclusion of activities whichnormally belong to agriculture; industrial activities (factories) are thus commercial;agriculture in the wider sense, including cattle-breeding, horticulture,fishery and primary processing of agricultural products (e.g. the preparationof butter or quark) is of a non-commercial nature; however, it has been decidedthat the breeding of chickens at an industrial level is a commercial act;7. the business of building-contracting;8. the business of transport (in whatever form: road transport, taxi, water or aircarriage, pipelines);9. the business of supplies (e.g. the supply of water, gas, electricity, petroleum toprivate subscribers or to ships, hospitals, etc.);10. the business of service agencies (e.g. collection offices, tax consultants,patent agents, travel agencies, advertising agencies); accountants and auditors(together with lawyers, bailiffs, notaries, architects, pharmacists and the selfemployedmedical and paramedical professions) are considered professionsthe activities of which are of a non-commercial nature;11. the organization of auctions and shows in the widest sense (e.g. theatre,cinema, concerts, sports events); artistic activities are of a non-commercialnature;12. every obligation by a commercial agent for negotiations or for the conclusionof transactions;13. the insurance business (with the exclusion of mutual insurance);14. the banking business (in the widest sense);15. all credit, exchange, brokerage and commission operations;16. the signing of a bill of exchange or any other negotiable instrument to bearer;the mere signing of such a negotiable instrument, even occasionally and withoutthe intention of making a profit, is a commercial act; consequently, as amatter of exception to the general rules on competence, 1 the commercial courtis always competent for disputes relating to bills of exchange;17. the business which has as its object the purchase of real estate with a view tore-sell; contrary to what is the case for movables, 2 the purchase with a view tolet is not sufficient;18. any business concerning overseas trade;1. See infra Part I, Chapter 3, §3.2. See supra 1.44 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 1, Concepts and Sources of Commercial Law 29–32IV. Legal Consequences of the Qualification of an Act as Commercial Actand of the Quality of MerchantA. Obligations of Merchants29. Only merchants have the following obligations: 1– to register in the trade registry (now part of the Crossroads Bank forundertakings);– to have a bank account;– to make public their marriage settlement;– to maintain accounts in conformity with the detailed accountancy rules providedfor in the Act on the accountancy of undertakings (this Act more generallyapplies to ‘undertakings’; for the application of this Act undertakings arenot only merchants and commercial companies, but also civil companies havingchosen the legal form of a commercial company as well as public undertakingsexercising a commercial, a financial or an industrial activity. 21. See for more details infra Part I, Chapter 4.2. Act of 17 July 1975, MB, 4 September 1975; see infra Part I, Chapter 4, §3.B. Other Legal Consequences of the Status of Merchant30. Only merchants and commercial companies can be declared bankrupt andonly they cannot decline the competence of the commercial court when an ordinaryaction is brought against them before that court.C. Rules Applying to Commercial Obligations only31. A number of rules apply to commercial obligations (all obligations of merchantsexcept those which are foreign to their commercial activity):1. Passive Solidarity32. As a matter of principle, when two or more persons are debtor of the samedebt, the latter is dividable. In some exceptional cases the Civil Code provideshowever that there is solidarity between debtors. In such a case the creditor canrecover his entire claim from one of the debtors at his own discretion. The debtorwho has paid the creditor can recover from the other debtors their share of the debt.Passive solidarity or solidarity between debtors is in other words a guarantee for thecreditor. Passive solidarity can also be stipulated between parties to a contract. Inpractice, solidarity is often imposed by financial institutions as a guarantee for therepayment of a credit (e.g. by husband and wife). Solidarity, however, is not presumed:in cases where it is not provided for by a statutory provision, it only existsCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 45

33–36 Part I, Ch. 1, Concepts and Sources of Commercial Lawwhen parties have expressly stipulated solidarity (Article 1202 of the Civil Code).But this rule does not apply to commercial obligations. Between merchants who arebound by the same contractual obligation, there is solidarity by law. 11. Cass., 3 April 1952, [1952] Pas., I, 498; Cass., 5 December 1975, [1976] Pas., I, 428.2. Agency is Remunerated33. According to Article 1986 of the Civil Code, the exercise of a mandate ispresumed to be free of charge. In commercial matters, this presumption does nothold. When an intermediary, such as a commission agent, a broker or a commercialagent, accepts to conclude transactions on behalf of the principal, he has a right toa commission, even if it has not expressly been provided for (in the latter case theusual commission of the branch will apply).3. Establishment of a Pledge is Less Formalistic34. A pledge as a security for a commercial obligation can be established withless formalities than an ordinary ‘civil pledge’ as described by the Civil Code. 11. See infra Part I, Chapter 10, §2.4. Evidence of Commercial Obligations35. The Civil Code contains rather formalistic rules concerning evidence. Asa general rule, contracts for a value of more than 375 EUR can only be proven bya written document signed by the parties and issued in as many copies as there areparties with a different interest (see Articles 1325 and 1341 of the Civil Code). Thecourts have somewhat tempered this formalism by accepting rather easily the othermeans of evidence which the Civil Code intended for exceptional circumstances:witnesses, presumptions and written documents which do not comply with the aforementionedrequirements.36. In commercial matters rules on evidence are much more liberal:– according to Article 25(1) of the Commercial Code, witnesses can be acceptedin all cases where the court judges it appropriate, except in those expresslyexcluded by law;– regularly maintained books can be admitted by the court as evidence of acommercial obligation between merchants (Article 20, Book I, Title III of theCommercial Code); 1 irregularly maintained books can only be used as evidenceagainst the merchant concerned or as a beginning of evidence of his claim (tobe supplemented by presumptions or other means of evidence); during proceedingsthe court can order the submission of the books or, in order to protectbusiness secrets, the mere disclosure of the whole or part of it;46 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 1, Concepts and Sources of Commercial Law 37–39– an invoice is always evidence of the underlying contract against the issuingmerchant; 2 it also supplies evidence against the customer provided the latter hasaccepted it expressly or tacitly; where the customer is a merchant his acceptancewill generally be presumed in the absence of any protest within a reasonableperiod.1. On the obligation to maintain books, see infra Part I, Chapter 4, §3.2. On the obligation to issue invoices, see infra Part I, Chapter 4, §1, III.V. The Commercial Activities of Public Bodies37. The State, the Regions, the Communities and the local authorities participatein many respects in economic life. In principle the public authorities and thebodies created by them in the economic sphere (e.g. telecommunications, postalservices, transport, energy, distribution of water) must act in the general interest,which excludes profit making in the proper sense. It is believed however that wherea public body exercises an activity which competes with those exercised by privatebusiness it should apply sound commercial methods in particular with regard toaccountancy and the way it deals with the public.38. Increasingly these principles are acknowledged by the legislature. Principally,the obligations of certain public bodies, such as the National Railway Company,the formerly completely publicly owned telecom operator Belgacom and thePostal Service are commercial, although these bodies are not necessarily consideredto act with the intention of making a profit. Furthermore, there are a number ofpublic bodies in the economic sphere which have the form of a private law corporation.This is e.g. the case with the Federal Investment Company and the RegionalInvestment Companies (with the task to hold equity shares in private companies orto create subsidiaries in certain areas). The rules on corporations of the CompaniesCode apply in principle to these public companies. Moreover, all public bodieswhich exercise a commercial, financial or industrial activity, whether they have theform of a commercial company or not, are made subject to the same accountancyrules as private companies. 1 Finally, the Trade Practices and Consumer ProtectionAct of 14 July 1991 2 (regulating fairness in commercial transactions and the informationand protection of the consumer with respect to contract terms, sales methodsand advertising) has brought all public companies within its scope of application.1. See Act of 1975, discussed infra in Part I, Chapter 4, §3.2. Act of 14 July 1991, MB, 29 August 1991, err., MB, 10 October 1991.§4. Importance of International and Supranational Law39. More than civil law, commercial law is a creation of international trade andinternational customs (e.g. in relation to maritime law and the international saleof goods). In certain areas there is uniform law created by international treaties towhich other European countries are a party. This is the case with bills of exchange,Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 47

39–39 Part I, Ch. 1, Concepts and Sources of Commercial Lawtrade marks and design protection. More recent is the vast policy of harmonizationof laws at the EC level. Significant portions of commercial and economic law arenow harmonized or are in the process of being harmonized with the laws of theother EU Member States. This is particularly the case with company law, which ispart of commercial law, but which is addressed in a separate Encyclopaedia. 1 Harmonizationhas also occurred in the field of consumer law 2 and industrial property. 31. See K. Geens (ed.), International Encyclopaedia of Laws, Corporations and Partnerships,Kluwer, Deventer, 1991.2. See infra Part II, Chapter 5, §2.3. See infra Part I, Chapter 5, §2.48 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

40–44Chapter 2. The Economic Operators§1. Personal Status of MerchantsI. In General40. Natural persons can only be a merchant if they have legal capacity. Areform of the Civil Code in 1976 has abolished the remainders of the legal incapacityof women. Minors though are still legally incapable to act on their ownbehalf (except for a number of personal legal acts). In 1990 the age of majority hasbeen lowered from 21 to 18 years A minor can therefore not be a merchant. Theacts mentioned in Articles 2 and 3 of the Commercial Code if exercised by a minorare considered as civil acts (Article 6 of the Commercial Code).41. Some persons cannot exercise a commercial activity because of the task ofgeneral interest they are entrusted with: judges, bailiffs, lawyers, notaries, servantsof the state, etc.42. By virtue of Royal Decree No. 22 of 24 October 1934 1 the exercise ofa particular commercial activity can be prohibited by court order in the case ofcertain criminal convictions (e.g. the activity of banker or securities-broker in caseof a conviction of at least three months imprisonment for criminal offences suchas theft, forgery or fraudulent bankruptcy). Since an amendment to Royal DecreeNo. 22 by an Act of 4 August 1978 2 the commercial court can even prohibit amerchant or a member of the board of a company whose obvious gross fault hascontributed to his personal bankruptcy or to the bankruptcy of his company fromexercising any commercial activity.1. MB, 27 October 1934.2. MB, 17 August 1978.II. Married People43. A married person can exercise a commercial activity without authorizationof his or her spouse. However, by virtue of Article 216(1) of the Civil Code, thelatter may oppose to this in court if he or she considers that the activity wouldseriously jeopardize his or her material or moral interests or those of his or herchildren.44. Creditors have an interest in knowing the terms of the marriage settlementof a merchant, if any. It may be observed that in the absence of a marriage settlementmade before a notary, the default regime of the Civil Code applies. Thesettlement can be modified before a notary. The modification must be approved bythe Court of First Instance and published in the Moniteur belge (the Belgian StateGazette). The default regime of the Civil Code is based on a separation of goodswhich the spouses possessed before marriage and goods inherited or acquired throughCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 49

45–45 Part I, Ch. 2, The Economic Operatorsa donation during marriage, whilst all earnings and savings are common. Commonpossessions can be attached by the creditors of both spouses. Therefore, the CommercialCode contains duties with respect to the publication of the marriage settlementof merchants. Articles 12 to 15 of the Commercial Code distinguish the fourfollowing situations:(i)(ii)(iii)(iv)a merchant marries: if there is a marriage settlement, the notary must send anextract of the settlement to the record office of each commercial court wherethe merchant is registered (the law specifies the elements which must bestated in the extract);a modification is made to the marriage settlement of a married merchant: thenotary must take care of the publication as mentioned under (i) within threemonths;during marriage one of the spouses becomes a merchant or starts a newcommercial activity: in this case he has the duty to inform the record officeof the commercial court where he registers;in case of divorce between spouses one of which is a merchant, the judgementmust be forwarded to the trade register.III. Foreigners45. A foreigner who is not an EU citizen (EU citizens benefit from the freedomof establishment) 1 and who desires to exercise a profit making activity on aself-employed basis must hold a so-called professional card (Act of 19 February1965). 2The King can grant exemptions from the obligation to obtain a professional card,either for certain activities or where such an exemption is imposed by internationalobligations or is recommendable in view of reciprocity (Article 2 of the Act).Exemptions have been granted for the following categories of foreigners, byRoyal Decree of 3 February 2003 (3):1. citizens of a Member State of the European Community and certain of theirrelatives provided they establish with them;2. the spouse of a Belgian citizen, provided he or she establishes with him orher;3. foreigners who are allowed to reside or to establish in Belgium for an indefinitetime;4. fugitives recognized in Belgium;5. foreigners assisting or replacing their spouse in the exercise of a selfemployed professional activity;6. foreigners doing business tours in Belgium, provided the duration of thepresence in Belgium does not exceed three consecutive months;7. foreigners who have no principal residence in Belgium and who give conferencesin Belgium, provided the duration of the presence in Belgium does notexceed three consecutive months;50 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 2, The Economic Operators 46–478. foreign journalists who have no principal residence in Belgium and whoperform activities here in the exercise of their job, provided the duration ofthe presence in Belgium does not exceed three consecutive months;9. foreign sportsmen and their foreign self employed assistants, who have noprincipal residence in Belgium and who perform activities here in the exerciseof their job, provided the duration of the presence in Belgium does not exceedthree consecutive months;10. foreign artists and their self employed assistants, who have no principalresidence in Belgium and who perform activities here in the exercise of theirjob, provided the duration of the presence in Belgium does not exceed threeconsecutive months;11. foreign students, who fulfill a traineeship in the framework of their studies,for the duration of the traineeship;12. foreigners who fulfill a traineeship in Belgium which has been approved bythe competent authority in the framework of development aid of reciprocalexchange programs, for the duration of the trainseeship;13. foreigners exercising an ambulant activity within the meaning of the Act of25 June 1993.1. See infra Part II, Chapter 2, §1.2. MB, 26 February 1965; the Act has been amended by Act of 2 February 2001.3. MB, 4 March 2003.4. MB, 24 September 1986; see infra Part II, Chapter 4, §3, II, C, 5, k.46. Exercising an economic activity without professional card, where such acard is required, is a criminal offence. The business of the foreigner can be closedor his professional card revoked where he fails to observe his tax obligations or hislegal obligations with respect to the economic activity in question. These measuresare taken by a special administrative court, the Council for Economic Investigationof Aliens.§2. Companies (Partnerships and Corporations)I. Commercial and Civil Companies47. The distinction between commercial acts and civil acts 1 is strongly reflectedin the Belgian law of corporations. The civil or commercial character of a corporationor partnership is determined by the nature of the object as expressed in theArticles of Association. If the object is of a civil nature (e.g. medicine, the exerciseof the legal profession, mining, agriculture) then the corporation or partnership willbe civil. In contrast, if the object is commercial (e.g. banking, trade in commodities,retail trade) the corporation or partnership will be commercial. Where the object ofa corporation or partnership is partly commercial and partly civil, the nature of thecorporation or partnership is commercial, unless the commercial object is onlysubsidiary.1. See supra Part I, Chapter 1, §1.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 51

48–51 Part I, Ch. 2, The Economic OperatorsII. The Different Types of CompaniesA. General introduction48. In 2001 a completely new Companies Code (the Companies Code 1999)entered into force. It replaced both the old Companies Act which was integrated inthe Commercial Code of 1807 and the provisions of the Civil Code of 1804 on civilpartnerships. The Companies Code contains rules on all forms of partnerships andcorporations.B. Partnerships49. Partnerships are regulated by Articles 46–55 Companies Code. They arepurely contractual. They have no organs. Like any other company a partnership iscivil or commercial depending on its objective. If the objective is the exercise ofcommercial acts the partnership is commercial and therefore subject to commerciallaw (rules on evidence, jurisdiction of commercial courts, applicability of bankruptcyrules and so on). A partnership whose object is e.g. the exercise of a liberalprofession (not commercial by nature) is civil. The rules of operation of partnershipsare the same for civil and commercial partnerships. An important difference,stemming from common commercial law, is the automatic solidarity which existsbetween the partners in a commercial partnership (see Article 52), whereas in thecivil company the debts of the partners are severable.50. The Companies Code distinguishes two specific forms of partnerships,without legal personality: the temporary association and the sleeping partnership.A temporary association is a partnership created for a single venture or a singlenumber of ventures (e.g. a joint venture between two constructors with a view toundertaking a specific work). The sleeping partnership is not disclosed to thirdparties who only know the working partner. The sleeping partner can limit hisliability for the debts contracted by the working partner, but the working partner isfully liable for all contracts concluded on behalf of the partnership.C. Companies with a Reduced Legal Personality51. Two further forms of companies which do have legal personality, albeit areduced legal personality, are distinguished in Article 201 et seq. Companies Code:the firm and the commandite partnership. The Code also recognizes the commanditepartnership with shares (Article 654 et seq.), a form that is hardly used anymore;the rules of the limited company apply to it. The firm or ‘general partnership’ haspartners who are personally (and where the firm is commercial, also solidarily)bound for the debts of the firm. The legal personality benefits the creditors of thefirm who are not in concourse with the personal creditors of the partners; unlessthe contribution to the firm was fraudulent, these creditors cannot seize the assets ofthe firm. In the commandite partnership there are two types of partners: working52 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 2, The Economic Operators 52–55partners on the one hand, and sleeping partners whose identity is not necessarilyknown to third parties, on the other hand. The latter have a limited liability; providedthey do not intervene in the management of the partnership their liability islimited to their contribution. The liability of the partner in a firm and of the workingpartner in a commandite partnership is unlimited.D. Cooperative Companies52. The cooperative company is a company in which new partners can beeasily admitted. Those who want to leave the company can do so and can berefunded for their share. Only if no explicit choice is made to the contrary, liabilityof the partners is unlimited. A cooperative company therefore has a variable capital.Three partners is the minimum. The cooperative company can opt for limitedliability. In that case it is subject to rules on capital very similar to those applyingto limited companies (see hereinafter).E. Public Limited Company53. The public limited company (Article 437 et seq. Companies Code) is acapital company, a real corporation, a full legal person. The shareholders are notliable for the debts of the company. Their liability is limited to their contribution.Therefore, the company must have a minimum capital (of 61.500 euro) which mustbe fully subscribed. The company has a General Meeting of Shareholders, a Boardof Management and a(n) (Board of) Auditor(s). The shares are easily transferable.The company can offer its shares or bonds on the stock exchange.F. Private Limited Company54. The private limited company is largely organized like the public limitedcompany. Its minimum capital is 18.550 euro of which at least 6.200 euro (12.400if its is a one shareholder company) has to be paid at the moment of its establishment.The major difference with the public limited company is that its shares areonly transferable to a limited group of persons (shareholders, relatives) andthat management of the company can be entrusted to one director, who can beappointed in the Articles of Association. His dismissal is only possible for seriousreasons by a majority of three fifths of the votes.55. Since 1987 a private limited company can be created by one person whowants to limit his liability for his business transactions to the capital brought intothe company.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 53

56–58Chapter 3. The Economic Institutions§1. Professional OrganizationsI. Freedom of Trade56. Apart from the professions (medical professions, lawyers, pharmacists,auditors, architects), the exercise of an economic activity is not subject to membershipof a professional organization. The guilds or professional corporations havebeen abolished by a French Revolutionary Decree of 2–17 March 1791 (décretd’Allarde), which is still in force in Belgium and which has introduced the freedomof trade and profession. 1 Contrary to the Netherlands or France (in the agriculturalfield) there are no private bodies to which the State has delegated the power toregulate a specific branch or market.1. See infra Part II, Chapter 1, §2.II. Trade Associations57. Nevertheless, in most of the branches of trade and industry there existassociations for the defense of the interests of the branch and their members.Among other things they act as an organization of employers in labour relations(for the conclusion of collective labour agreements), they bring actions againstacts of unfair competition which harm their members and they act as representativeof their branch in the relations to the public authorities. These associations arealso members of inter-professional associations such as the overall Federationof Belgian Enterprises or more specialized federations such as the AdvertisingCouncil. Small and medium-sized undertakings (often designated as classesmoyennes or middenstand, not to be translated as ‘middle class’) have their owninter-professional organizations at the local and national level. These organizationsand the organizations of farmers play an important role in this country.III. Chambers of Commerce58. The Chambers of Commerce exist in the major towns throughout the country.They are private associations of local business with a history dating back as faras the Middle Ages. These strongly decentralized interprofessional and apoliticalorganizations are mainly concerned with the small, medium-sized and big businessesof their region and therefore with the social-economic development andprosperity of this region. To this end the Chambers keep in close contact with themunicipal, provincial, but also with the national and EU authorities, informingthem of the needs of commerce and industry and bringing them to take measures infavour of this commerce and industry. Furthermore, the Chambers make it easierfor businesses to find their way to government agencies on which they depend andact as ‘ombudsservice’. They cooperate with the Employment Office and mediate54 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 3, The Economic Institutions 59–61between local businesses and the public authorities, etc. The Chambers also representthe point of view of commerce and industry in several bodies such as RegionalDevelopment Companies, Training Centres for the Self-Employed, Regional EconomicCouncils, advisory committees on physical planning, commercial and labourcourts, fiscal committees, etc.On a more practical level they supply various services. A few examples: anInformation Service distributes information about different types of topics:available business locations, local supply and demand, accounting and financingtechniques, the future of small and medium-sized businesses within the EU,computerization, export, etc.; the Chambers register local businesses in the traderegister; they organize courses and seminars i.a. on management and sales techniques,social legislation, distribution, VAT; they have programmes assisting youngself-employed and starting businesses; they issue certificates of origin, visa’s forexport, transportation documents; they lend assistance with regard to wagesadministration and the social status of the self-employed and organize the medicalexamination of employees and the inspection of the circumstances in which theywork.1. See infra Part II, Chapter 2, §2.IV. Regional Development Companies59. An Act of 1970 1 has created the so-called Regional Development Companies(RDCs). Presently there is one RDC for Wallonia, one for Brussels and onefor each of the five Flemish provinces. The RDCs are in charge of the study, theplanning and the promotion of the economic activity of the region. They also havethe power of expropriation for the construction of industry sites.1. Act of 15 July 1970, MB, 21 July 1970.§2. Advisory Bodies and CommitteesI. General Observations60. Numerous acts organize the consultation of professional and interprofessionalassociations (and sometimes trade unions and/or consumer or other public interestassociations) in the decision-making process in economic and social matters. Theopinion of one or more consultative committees must be asked by the competentauthority (Federal Government, Minister or Regional Government) before taking adecision relating to various matters, such as the establishing of maximum prices,the introduction of professional qualifications for establishment in a particular branch,the adoption by the Government of implementing provisions in relation to consumerand foodstuffs legislation, etc.61. The opinions are delivered by consultative committees in which the differentinterests (e.g. agriculture, industry, distribution, classes moyennes, labour, consumers)Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 55

62–65 Part I, Ch. 3, The Economic Institutionsare represented. Generally these committees also have other powers, such as issuingreports on questions within their jurisdiction and making recommendations tothe public authorities on their own initiative.II. Some Important Consultative CommitteesA. The Central Economic Council and the Regional Social-Economic Councils62. The most important consultative committees in the economic field at thefederal level are the Central Economic Council which is competent for economicmatters and the National Labour Council which is competent for social matters.Both councils were created in 1948. In the eighties, new consultative bodies werecreated at the regional level for social and economic questions: the Social-Economic Council for Flanders, the Social-Economic Council for Wallonia andthe Social-Economic Council for Brussels.B. Others63. Other important consultative committees are the High Council for Smalland Medium-sized Undertakings, the Commission for Price Regulation and theConsumer Council.§3. Commercial Courts and Commercial Arbitration64. The distinction between civil and commercial law corresponds to a distinctionbetween civil courts and commercial courts. The Commercial Courts havejurisdiction over legal disputes between merchants (or commercial companies) concerningcommercial acts (except for small claims where the Justice of the Peace iscompetent), as well as over legal disputes between shareholders in a commercialcompany or disputes with respect to bankruptcy or bills of exchange. The Presidentof the Commercial Court is solely competent for the application of the TradePractices and Consumer Protection Act. 1 A non-merchant can sue a merchant eitherbefore the Commercial Court or before the (civil) Court of First Instance. Appealagainst a judgement by the Commercial Court must be lodged before the CivilChamber of the Court of Appeal. There is no specialized commercial jurisdiction atthe level of the Courts of Appeal.1. See infra Part II, Chapter 4, §3.65. Commercial arbitration in Belgium is i.a. organized by the Belgian Centrefor the Study and Practice of National and International Arbitration, or CEPANI.This national, interprofessional and independent non-profit organization was establishedon 25 September 1969 at the initiative and under the auspices of the BelgianNational Committee of the International Chamber of Commerce (ICC) and of the56 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part I, Ch. 3, The Economic Institutions 66–66Federation of Belgian Enterprises, 1national and international levels.in order to deal with arbitration at both the1. See supra in this Chapter, §1, II.66. Any party wishing to have recourse to the CEPANI arbitration proceduremust send, by registered post, a request to the Secretariat of CEPANI and a copyof the application and of the documents attached thereto to the defendant (Article 1of the CEPANI Regulation). The defendant has one month after the date of thisnotification to send his reply – and, if so desired, his counter-claim to the CEPANISecretariat (Article 2). The defendant can request for an extension of this time limit(Article 3). In the absence of an obvious arbitration agreement, arbitration cannottake place if the defendant does not reply within this thirty-day period, or if hedeclines arbitration through intervention by CEPANI (Article 4). Where the partieshave agreed to apply to CEPANI for arbitration and, notwithstanding this agreement,one of the parties refuses to submit or refrains from submitting to arbitration,arbitration will nonetheless take place (Article 5).The parties can choose to present their case to a sole arbitrator or to a committeeof three arbitrators. If the parties have agreed to settle their dispute through a solearbitrator, they may appoint him by mutual consent, subject to the approval of theAppointment Committee or the President of CEPANI. Failing agreement betweenthe parties within the period of thirty days, the arbitrator will automatically beappointed by the said Committee or President. Where three arbitrators have beenagreed upon, each party designates an arbitrator in the arbitration application and inthe reply to it, which is subject to the approval of the Appointment Committee or ofthe President. The third arbitrator, appointed automatically by the Committee or thePresident, is by right the chairman of the arbitration tribunal. If the parties have notadopted the number of arbitrators, the dispute will normally be settled by a singlearbitrator (Article 9). Where several contracts containing the CEPANI arbitrationclause give rise to disputes which are closely related or indivisible, their consolidationcan be ordered. In this case, if necessary, the Appointment Committee or thePresident of CEPANI can increase the number of arbitrarors to a maximum of five(Article 12). The Centre operates in a very selective way as regards the arbitratorschosen. It always tries to nominate arbitrators who have the necessary legal andtechnical skills to settle disputes.Before taking the case, the arbitrator draws up an instrument defining his termsof reference. The instrument includes i.a. a brief statement of the parties’ claims, adescription of the circumstances of the case, the duties of the arbitrator and theissues on which he must give a ruling (Article 24).Within the shortest possible time, the arbitrator must ascertain by all appropiatemeans – he may i.a. gather testimonies and appoint one or more experts – the factsrelating to the case. The arbitrator may rule on the basis of documents, unless theparties, or one of them, request a hearing. At the request of the parties, or of one ofthem, or by virtue of his office, the arbitrator invites the parties to appear beforehim at the time and place specified (Article 17).The arbitrator renders his award within four months of the date of signature bythe arbitrator of the instrument referred to in Article 16 (Article 19). Where severalCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 57

67–69 Part I, Ch. 3, The Economic Institutionsarbitrators have been appointed, the award is made by majority decision. If nomajority can be reached, the chairman’s vote is decisive (Article 20).The arbitration award is final and not subject to appeal. By submitting theirdispute to CEPANI arbitration, the parties thereto undertake to execute the awardwithout delay (Article 32). An award which is not voluntarily executed can becomethe object of judicial proceedings before the President of the Court of First Instance.This may result in a compliance order on the basis of which the award canbe enforced.For all the questions not specifically provided for by the CEPANI Regulation,the latter refers to Articles 1676 to 1723 of the Belgian Judicial Code adopting andapplying – insofar as is provided for in the said Articles – the European Conventioncreating a uniform law in the matter of arbitration, done at Strasbourg on 20January 1966, unless otherwise agreed by the parties (Article 28).67. In comparison to judicial proceedings, the advantages of an arbitrationprocedure are manifold. Firstly, since there is no appeal and since the procedurerequirements are simplified and arbitrators are easily available, arbitration proceedingsare much speedier. A CEPANI arbitration on average takes between six monthsto two years. Furthermore, protection of confidentiality is guaranteed since theparties are heard behind closed doors and the award is not announced publicly.Also, the arbitration usually takes place in a climate of trust which does not jeopardizethe relations between the parties. Another advantage is that the arbitratorsare chosen because of their expertise in the field related to the case on hand.Finally, the language to be used in the arbitration procedure can freely be determinedby the parties and is not limited to the national languages.68. Arbitration is not CEPANI’s only activity. It also provides other means ofdispute settlement, such as conciliation, adaptation of contracts and expert valuation.69. Arbitration between business and consumers exists in the field of textilecleaning and package holiday tours. These arbitration schemes are organized jointlyby a professional organization and one or more consumer organizations.58 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

70–71Chapter 4. General Obligations of the Economic Operators§1. MerchantsI. Survey70. A number of specific obligations rest upon merchants within the meaningof Article 1 of the Commercial Code. One of these has already been mentionedhereinabove, 1 namely the obligation to publish their marriage settlement. Otherobligations are: the registration in the trade register, the delivery of invoices, themaintaining of books and the use of nominal money.1. See Part I, Chapter 2, §1, II.II. Trade Register: General Database for UndertakingsA. Obligation to Register71. Until recently any natural or legal person intending to exercise a commercialactivity had to register in the trade register kept by the record office of thecommercial court of each jurisdiction where he will exercise his activity in the formof a principal establishment, a place of business or a branch. The Act of 16 January2003 establishing a Crossroads Bank for undertakings has introduced, within theFederal Service for Economy, SME’s and Energy, a centralized system of registrationof all legal persons under Belgian law, certain foreign legal persons andall natural and legal persons and associations who either exercise a commercial orother professional activity in Belgium, or are subject in this country to VAT or tosocial security as an employer. The Act entered into force on 1 July 2003. Allidentification data of undertakings are now grouped into one database. The Actdetermines the data to be provided by undertakings (name, address, legal form,activities, capacities, begin and end of the book year, bank accounts, VAT numberetc.). and the conditions of access to the Crossroads Bank for the undertakingconcerned, public authorities and private persons. Each undertaking has now anational ‘undertaking number’.Commercial undertakings and undertakings exercising a craft shall, before takingup their activity, take a registration in the Crossroads Bank for undertakingsand provide the following information: the national number if they have alreadyobtained it, their name, and if applicable their legal form, their national registrationnumber (which every person has for i.a. social security purposes), the trade name ofthe undertaking, the identification of proxies if any, a description of the intendedactivities, the complete addresses of all establishments, the name and nationalregistration number of the persons who have provided evidence of the requiredentrepreneurial skills if they are not provided by the applicant himself, the startingdate of the activities, the bank account(s) on which the authorities can make refunds.For each commercial undertaking or undertaking exercising a craft a file is heldby the Crossroads Bank for undertakings. This file contains in essence the followingCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 59

72–74 Part I, Ch. 4, General Obligations of the Economic Operatorsdata: all applications for registration, change of registration or deletion of registrationmade by the undertaking, evidence that the undertaking complies will al specificlegal conditions for the exercise of the particular activity, including theestablishment certificate which is required for SME’s in a certain number of branchesof commerce and craft. Changes and cessation of activity have to be reported to theCrossroads Bank.Applications for registration, change or deletion of registration can be madethrough one of the recognized so called ‘ondernemingsloketten’/‘guichetsd’entreprise’ (undertaking ‘pigeon holes’) that have been established by privateorganizations, such as the chambers of commerce, the associations of small andmedium sized enterprises and so on. Every commercial undertaking and everyundertaking exercising a craft has to appose its national undertaking number on allinvoices, announcements, letters, orders and other documents emanating from them.B. Legal Presumption72. A registration as a merchant or craftsman in the Crossroads Bank createsa rebuttable presumption of the capacity of a merchant within the meaning of theCommercial Code.C. Sanctions73. The exercise of a commercial activity without proper registration is punishablewith penal sanctions. Moreover, if a merchant initiates proceedings in courtwithout being registered (for the relevant activity) or without stating his registrationnumber and/or the place of registration, he has to prove that he was registered atthe date of the introduction of his action. If he fails to prove this or if it appears thatthe undertaking is not registered the court has to declare the action inadmissible.(Article 14 of the Act).III. Invoice74. An invoice is a written document containing confirmation of a claim inmoney and which is delivered by the supplier of goods or services to his customer,pursuant to that claim. Commercial law imposes no general obligation on suppliersof goods or services to issue and deliver an invoice. However Article 53, 2° of theVAT (Value Added Tax) Code provides that a taxpayer within the meaning of thatCode must issue an invoice for each supply of goods or services. The obligationdoes not exist for supplies to consumers, with the exception of certain activities(such as construction, instalment sales and supply of cars and domestic fuel oil).Consumers are those who do not destine the goods or the services for the exerciseof a professional activity.As long as an invoice has not been issued in conformity with the fiscal legislation,an action in court for the recovery of the claim will be inadmissible. Some60 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II. Economic Law384–386Chapter 1. General Principles§1. State Intervention in Economic Activities384. Whilst commercial law, as described in the first part of this monograph isthe body of, mainly private law, rules concerning the status of economic operators(special obligations, bookkeeping, bankruptcy, etc.) and the instruments they haveat their disposal (commercial contracts, industrial property rights, negotiable instruments,etc.), economic law is generally understood to be the body of, mainly publiclaw, rules which regulate the operation of economic operators on the market as wellas state intervention in economic life.Both aspects of economic law refer to State action. Firstly, the State, in its capacityof regulator, establishes the rules of the game for market behaviour by privateundertakings (competition law in the broad sense). Sometimes access to the marketis made dependent on the possession of an authorization delivered by the State (e.g.establishment requirements relating to professional qualifications, solvency, etc.).In some cases the State establishes the conditions of economic transactions itself(e.g. by establishing maximum prices or policy conditions of insurance contracts).State regulation of economic activities serves various objectives, relating to publicorder, economic or social policy, the protection of fairness in commercial transactionsor the protection of small business, consumers or investors.Secondly, the State is also present on the market in a totally different capacity,namely as stimulator of private investments and sometimes as investor itself.385. From the beginning (in 1831) the State has always, directly or indirectly,given incentives for private investments (e.g. in the form of tax measures), butsince the 1950s, the State intervenes in a more systematic way, with a great varietyof incentives (specific tax reductions, subsidies, state guarantee, etc.) in order topromote economic welfare. These measures became also specifically aimed at thedevelopment of regions which were particularly distressed by unemployment. Theestablishment of the EEC in 1958 and the arrival of American companies in the1960ies, has undoubtedly speeded up the enactment of a number of statutes enablingthe government to grant all kinds of allowances in order to attract newinvestments, particularly in less developed regions.386. Traditionally the State was supposed to take care of a number of serviceswhich were considered as public services (such as postal services and telecommun-Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 155

387–389 Part II, Ch. 1, General Principlesications, energy, railway transport, broadcasting, a saving bank for the small saver,the giro service, etc.). These services were provided by the State itself or by publicundertakings wholly owned by the State. With the adoption of the Act of 2 April1962 on the National Investment Company (since 1994: Federal Investment Company),the first State holding, the legal instrument was created for State investmentin all kinds of industry, by buying shares in private companies in order to promotetheir creation, reorganization or expansion. By amendments to the NIC Act of 1962in 1976 and 1978, the powers of the NIC were extended to the taking of majorityholdings and the creation of public undertakings, in order to promote public economicinitiatives. After the creation of the regions as autonomus entities in the1980ies a number of tasks and holdings of the NIC have been transferred to theregional investment companies established since 1978. 11. See infra §3, III, B.387. Near the end of the twentieth century the postwar structures of the Belgian‘mixed economy’ weree gradually adjusted – one could even say: disintegrated – asa result of two major new factors: liberalization of national monopolies 1 at the EUlevel and the sale of State assets (and undertakings) to raise money in order toreduce the budget deficit. The breakdown of national monopolies is already palpablein the telecommunications sector as a result of directives of the EC Commissionpursuant to Article 86(3) EC. 2 The first major privatization to raise money for thegovernment was the sale of shares in the state bank/insurance company (establishedas public savings bank in 1865) CGER/ASLK (Caisse générale d’épargne et deretraite, Algemene Spaar – en Lijfrentekas) in 1993. Later the fomer nationalTelephony and Telegraphy Board was first transformed into an autonomous publiccompany, Belgacom. Later nearly half the shares in Belgacom were sold to aconsortium of private companies. Belgacom is now a listed company.1. In the broadcast sector the state monopoly for television has already been abolished at the endof the 1980s (the Flemish and the French Community now have one public broadcaster eachand one private commercial television station). The Belgian flag carrier for air transport (Sabena)is now a joint venture of the Belgian State and Air France, the French state owned airline.2. Directive 88/301/EEC on competition in the markets for telecommunication terminal equipment,[1988] OJ L 131/73 and Directive 90/388 concerning competition in the markets oftelecommunication services, [1990] OJ L 192/10.§2. Basic Principles of Economic LawI. General Observations388. As a small Member State of the European Union with an open economy,Belgium undergoes directly the basic principles of European economic law, i.e. freemovement of goods, persons, services and capital, aimed at the establishment andproper functioning of the internal market, and a regime of free competition.389. These principles have also been enshrined in Belgian legislation. Article6, paragraph 1, VI, third subparagraph of the Special Act 1 of 8 August 1980 on the156 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 1, General Principles 390–392reform of the institutions, 2 as amended by Special Act of 8 August 1988 whichprovide for the powers of the Regions and the Communities in a (quasi-) federalBelgium, 3 provides:‘In economic matters the regions exercise their powers with due observance ofthe principles of free movement of persons, goods, services and capital and ofthe freedom of commerce and industry, as well as with due observance of theregulatory framework of the economic and monetary unity, as establishedby or by virtue of (national) statute law and by or by virtue of internationaltreaties.’1. Act adopted with a qualified majority.2. MB, 15 August 1980.3. See supra General Introduction, 1, §3, II.II. Freedom of Trade390. The freedom of commerce and industry is the oldest of the principles ofBelgian economic law. It was established during the French Revolution in 1791, bythe so-called décret d’Allarde. This law abolished the guilds and corporations existingsince the Middle Ages and it established the basic principle that trade andindustry should be free from government intervention. This principle is still consideredas a quasi constitutional freedom (now enshrined in the Act of 1980/1988 onthe institutions). The exercise of this freedom can only be limited, without eliminatingit, in the general interest, by a provision adopted by the national or a regionalParliament.III. Free Movement391. Free movement within a country which has been one nation for more than150 years is self-evident. However, the legal expression of the principles of freemovement of goods, services and persons (freedom of establishment for undertakings)is not superfluous since the Regions have legislative powers in the economicfield. For example: a tax levied by the Walloon Region on the export of drinkingwater to Flanders has been declared contrary to the Special Act of 1980/1988 by theCourt of Arbitration.IV. Free Competition392. Whilst free competition in trade between Belgium and the other MemberStates of the EC was since 1962 effectively imposed by the competition rules of theEEC Treaty, it is only since 1 April 1993 that a real competition policy exists at theBelgian level. At this date the Competition Act of 5 August 1991 entered intoforce. 11. See infra Chapter 4, §§1 and 2.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 157

393–395 Part II, Ch. 1, General PrinciplesV. Equality393. Article 6 of the Constitution of 1831 contained the fundamental principleof equality between Belgian citizens. Article 6bis, inserted in 1970, provide that thefundamental rights and freedoms must be conferred on all Belgians without anydiscrimination and that to this end the acts of Parliament and the decrees (of theCouncils of the Regions and the Communities of Belgium) guarantee the rightsand freedoms of the philosophical and ideological minorities. All public bodies arebound by the principles of equality and non-discrimination as they are now enshrinedin Articles 10 and 11 of the coordinated text of the Constitution of 1994 (exArticles 6 and 6bis of the Constitution of 1831). By virtue of Article 12 of the ECTreaty discrimination against citizens of EC Member States on the basis of theirnationality is also prohibited.394. Acts of the national and regional governments and lower administrativebodies have repeatedly been annulled by the Council of State. 1 Since the Court ofArbitration 2 has been vested with the power to annul acts of the legislature if itinfringes on Articles 10 and 11 Coordinated Constitution, a great number of actionsfor annulment on the basis of these provisions have been brought before this Court(often by economic operators). In a number of cases these actions were successful.Recent legislation on consumer protection, in particular the prohibition of unfaircontract terms in the Trade Practices Act of 1991, 3 are the expression of the will ofthe legislature to bring more equality in the relationship between undertakings andconsumers.1. See supra General Introduction, 1, §3, IV.2. See supra General Introduction, 1, §3, IV.3. See infra Chapter 4, §3.§3. Institutional Framework of State Intervention in the EconomyI. Political Decision-making395. The legal system in Belgium has been described in the General Introductionof this Monograph. 1 Political decisions as to the organization of the economyare taken at the level of the federal government (monetary policy, price regulation,competition policy, the regulation of trade practices and consumer protection, priceregulation, supervision of banks, insurance companies, the law of establishment,etc.) or by the regional governments, i.e. the governments of the Flemish, theWalloon and the Brussels Region (state incentives for economic activities, stateholdings in undertakings, environmental policy, town planning, regional development,etc.) on the basis of powers conferred on them by acts adopted by therespective legislative bodies. These powers are largely affected, i.e. limited, by theEC Treaty and the acts adopted by the Council of the EU, the European Parliamentand the European Commission. Pursuant to that Treaty: price measures, importrestrictions for goods which are marketed according to the rules of the country oforigin where that country is a EU Member State, obstacles to the cross border pro-158 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 1, General Principles 396–398vision of services by companies legally established in other Member States en soon . . . may be found to be contrary to the principle of free movement within theCommunity; national competition policy must be in line with EC competition policy,prudential rules for banks and insurance companies are established by Councildirectives, monetary policy is now primarily a power of the European Central Bank(Economic and Monetary Union), etc.1. See supra General Introduction, 1, §3.II. Consultative Committees396. Before adopting general rules or making decisions concerning social andeconomic matters, the legislature and the executive power will generally consultone or more of the consultative committees which have been created at the level ofthe Federation or of the Regions. Consultation of committees prior to the adoptionof acts of the government (or of a regional Executive) is often provided for by therelevant Act of Parliament (or Decree of the regional Council).397. The major consultative committees are dealt with in Part I of thisMonograph. 11. See Part I, Chapter 3, §2.III. Regional Development Companies and Public Investment CompaniesA. Regional Development Companies398. At the time when the powers of promoting economic activities still belongedto the central State an Act was adopted concerning the organization ofplanning and economic decentralization: the Act of 15 July 1970. 1 This Act establisheda Plan Office charged with drawing up a five-year plans. Since the regionsare now responsible for taking initiatives to stimulate economic activities, the functionof the Plan Office can be best described as an economic think tank for thegovernment. With respect to economic decentralization the Act of 15 July 1970 hascreated two kinds of institutions which still exist, albeit in somewhat differentforms. On the one hand it instituted the Regional Economic Councils for Flanders,Wallonia and Brabant, now the Social-Economic Council for Flanders, the Social-Economic Council for Wallonia and the Social-Economic Council for Brussels. Onthe other hand the Act of 15 July 1970 contains the legal ground for the creation, atthe level of the provinces of the so-called Regional Development Companies, publicbodies with legal personality, with the task of developing economic activities intheir region, by making proposals, coordinating local initiatives, supporting proposalsfor the promotion of economic activities, regional planning, social equipment,etc. Most of the provinces have created a RDC. There is also one in Brussels.1. MB, 21 July 1970.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 159

399–401 Part II, Ch. 1, General PrinciplesB. Public Investment Companies399. The taking of holdings in private companies as well as the creation ofpublic undertakings is a task for the public investment companies: the FederalInvestment Company and the Regional Investment Companies (for Flanders, Brusselsand Wallonia). The majority of the equity of these companies must be held bypublic bodies. They have the form of a public limited company and are subject tothe rules applicable to that type of commercial company, except where otherwiseprovided for by the law of 1962.400. As mentioned hereinabove, 1 the National Investment Company (since 1994:Federal Investment Company) was founded in 1962. With the devolution of economicpowers to the Regions, regional investment companies were created with thesame task and powers, at the regional level, as the National Investment Company atthe national level. The Regional Investment Company for Flanders, the RegionalInvestment Company for Wallonia and the Regional Investment Company for Brusselswere established pursuant to Royal Decrees taken in the period 1978–1980.The Act of 1962 has been amended in 1976, 1978, 1983, 1985, 1986, 1987 and1994 and as far as the Regional Investment Companies are concerned by decrees ofthe Walloon and the Flemish Region. 21. See supra §1.2. For a coordinated text of the Act with its various amendments, see W. van Gerven andJ. Stuyck, Wetboek Economisch en Financieel Recht – Economisch Recht/1, Story-Scientia,Brussels, loose-leaf service, C.I.3.401. The mission of the federal and the regional public investment companiesis threefold: 11. to promote, in the interest of the Belgian economy or the economy of theRegion and with due observance of the industrial policy of the State (theRegion), the establishment, reorganization and expansion of private companiesin the form of a public limited company, a private limited company or a cooperativecompany.To that end the Investment Company can:(i)(ii)(iii)(iv)(v)participate in associations, groups or syndicates which are establishedwith a view to the setting up or reorganization of undertakings;subscribe to part of the capital of a company at the time of its foundationand participate in an increase in capital;obtain a holding in the capital of a company in any other way;subscribe to bonds which are convertible in shares to which subscriptionrights are attached;conclude all transactions which relate to the aforementioned tasks orwhich correspond to the protection of its patrimonial interest;2. to promote the public economic initiative directly, or indirectly through itsspecialized subsidiaries (e.g. in the field of energy, international investments or160 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 1, General Principles 401–401the restructuring of undertakings in difficulty). In this capacity the InvestmentCompany may not only take equity holdings in private companies, but it cancreate companies itself and participate in the management of any company;3. to contribute, together with its specialized subsidiaries, to the implementationof the industrial policy of the State (the Region). In this capacity the InvestmentCompany, acting on behalf of the State, is obliged to fulfil all missionswhich are assigned to it by law or by act of the Regional government.1. The first task is the oldest, it exists since the Act was adopted in 1962; the second task wasadded in 1976, the third in 1978.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 161

402–404Chapter 2. The Law of Establishment and Supervision ofEconomic Activities§1. Introduction402. Whilst freedom of commerce and industry, free competition and free movementof goods, services, persons and capital, are the basic principles of economiclaw, the exceptions to these freedoms are manifold. According to the basic principlesmentioned, restrictions on the exercise of certain activities can be justified inthe general interest, e.g. to protect consumers, investors, etc., against bad quality, orto serve general policy objectives of a social-economic nature, relating to safety,protection of the environment, town planning, etc. The existence of a number ofrestrictions on the establishment in a given sector should however be sought in thesuccessful lobbying of the undertakings which are already established and whichseek protection against new competitors. Finally, the general and special professionalrequirements imposed on small and medium-sized undertakings in a largenumber of sectors of commerce and trade have been introduced at the request of therepresentative organizations of the sector concerned. One could state that they servethe interests of small and medium-sized business much more than the interests ofconsumers.403. By virtue of Article 43 of the EC Treaty, restrictions on the freedom ofestablishment of nationals of other Member States are prohibited, unless they canbe justified on grounds of public policy, public security or public health (see Article56 of the EEC Treaty). Restrictions within the meaning of Article 43 EC are statemeasures which discriminate on the basis of nationality or which, without formallydiscriminating citizens of other Member States, do not take into account the professionalqualifications these citizens have acquired in their Member State of origin,when it is obvious that these qualifications are equivalent to those imposed by theguest Member State. 1 or restrict, without objective justification, in any other waythe freedom of establishment of citizens or companies from other member States. 2Moreover, as a result of directives adopted pursuant to Article 47(1) of the ECTreaty the conditions for the exercise of a number of economic activities have beenharmonized at the EC level. Finally, as a result of directives on the mutual recognitionof diplomas pursuant to Article 47(2), Belgium, like any other EC MemberState, is required, within certain limits, to recognize professional qualificationsobtained in other Member States.1. See Case C-340/89, Vlassopoulou, [1991] E.C.R. I-2357.2. Case C-55/94, Gebhard, [1995] ECR I-4165.404. Restrictions on establishment can take many forms. The following categoriesmay be distinguished: 1) a requirement of professional qualification, 2) arestriction on the number of undertakings in a particular sector, 3) an authorizationsystem linked to certain conditions relating to solvency, morality, public health,etc., 4) the obligation to adhere to a professional body which establishes ethical162 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 2, Law of Establishment and Supervision 405–407rules and supervises the activities of its members (e.g. for doctors, lawyers, auditors,pharmacists, etc.), 5) a comprehensive system of supervision by a specializedsupervisory authority (insurances, banking, investment services in the securitiesfield). Only the most important of the establishment rules will be discussed (inbrief) hereinafter.§2. The Establishment Act for Small and Medium-sized UndertakingsI. Survey405. An Act of 24 December 1958 1 introduced for the first time, the possibilityfor the King to impose, at the request of the representative association of small andmedium-sized undertakings of the sector concerned, establishment requirements relatingto a minimum knowledge of business management and specific professionaleducation for small and medium-sized undertakings wanting to exercise the activityconcerned. Pursuant to this act, establishment requirements were established byRoyal Decree for twenty different sectors (e.g. hairdressers, photographers, butchers,watchmakers, electricians and a number of activities relating to building).1. MB, 11 January 1958.406. The Act of 1958 was replaced by the Act of 15 December 1970 on theexercise of professional activities in the small and medium-sized commercial andcraft undertakings, 1 but the Royal Decrees taken pursuant to the Act of 1958 remainedin force. They were consecutively amended to bring them in line with theprovisions of the Act of 1970, which has basically maintained the system of 1958:the King can impose requirements as to professional qualifications at the requestof the sector concerned. The Act of 1970 has been amended several times, lastly in1987. 2 It has given rise to 19 new Royal Decrees concerning i.a. garage keepers,trade in second hand cars, plumbers, restaurants and catering and undertakers.1. MB, 20 March 1971.2. For a coordinated text see W. van Gerven and J. Stuyck, Wetboek Economisch en FinancieelRecht – Economisch Recht/1, Brussels, Story-Scientia, loose-leaf service, B.I.3.407. Before being allowed to exercise one or more of the 42 activities regulatedby virtue of the Acts of 1958/1970, a small and medium-sized undertakingmust possess the appropriate establishment certificate(s). 1 An establishment certificatefor a specific profession will only be delivered if the applicant can proveknowledge of business management and professional knowledge as imposed byRoyal Decree. The required knowledge of business management has been establishedin a uniform manner, for all regulated activities. In contrast, the differentRoyal Decrees regulating the different professional activities contain the requirementsconcerning the specific professional knowledge.1. ??????Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 163

408–411 Part II, Ch. 2, Law of Establishment and Supervision408. The Act of 10 August 1998 on independent entrepreneurship 1 hasabrogated the 1970 Act but has maintained the essence of the existing rules as wellas the implementing Royal Decrees. Now, every SME, (i.e. an undertaking with anaverage number of employees not exceeding 50, whose shares are not held for morethan 25 per cent by one or more undertakings which are not an SME, a yearlyturnover not exceeding 7 million euro or a balanc sheet total not exceeding 5million euro) whether natural person or legal person, wishing to exercise an activityfor which a registration in the commercial register is required, shall prove to possessa basic knowledge of business management (Article 4, §1). The evidence canbe brought by the manager of the enterprise, his spouse or steady partner or by theperson responsible for the daily management of the business. For more than 40professions which were already regulated under the former regime (see hereabove)there are specific requirements as to professional knowledge (plumbers, undertakers,bycicle merchants, opticians, restaurants, and so on). Certain persons, like thechildren or the spouse of of a person who was licensed for a specific activity, areexempted from proving the knowledge required (see No. 404 hereinafter).1. MB, 21 February 1998, which entered into force in successive stages.409. The exercise of a particular activity which is regulated without the requiredcertificate is an offence. Moreover, this will be considered as an act contraryto honest business practices against which any competitor (or trade associations)can bring an action for a cease and desist order pursuant to the Trade Practices andConsumer Protection Act 1991. 11. See infra Chapter 4, §3, II, D.II. Scope of Application410. An establishment regulation pursuant to the Establishment Act of 1970 orthe 1998 Act on independent entrepreneurship only applies to small and mediumsizedundertakings as defined hereabove. 11. In other words the notion of SEU for the application of the Establishment Act is different fromthe notion of SME for bookkeeping and annual accounts (Chapter 4, §2, IV, A, 3).III. Professional Knowledge411. The Royal Decrees for the different professions list the diplomas, certificatesand other verification of professional qualification. In addition to a diploma,professional experience of a maximum of two years may be required (this experiencemust be acquired during the vocational education and may not be imposed onindividuals over 35).Individuals who do not fulfil the formal qualification requirement may beadmitted to the professional activity provided they show evidence of sufficientpractical experience the nature and duration of which shall be established by the164 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 2, Law of Establishment and Supervision 412–415Royal Decree. The exercise of activities in a neighbouring professional field mayalso be accepted as evidence of professional qualification.IV. Exemptions412. The following persons are definitively exempted from the obligation toobtain an establishment certificate:– natural persons, where the deceased director complied with the establishmentrequirements and his or her spouse or steady partner has become director ororgan of the company;– the surviving husband or wife or steady partner who continues the business ofthe deceased, provided the latter complied with the establishment requirements.413. The following persons are provisionally exempted from obtaining the certificate:– during one year: the purchaser of an undertaking and the person succeeding anindependent branch manager;– during three years: the children of the deceased head of an undertaking whocomplied himself with the establishment requirements (for infants the threeyears begin to run when they reach the age of majority).Under certain conditions a provisional exemption from the requirement of businessmanagement can be granted to persons who undertake to follow courses in businessmanagement.§3. The Professions414. The exercise of the literal professions, like notaries public, lawyers, architects,doctors, dentists, pharmacists, veterinarians, and recently company controllers,is organized by separate statutes, some of which go back to the FrenchRevolution. Apart from the professional qualifications required for their establishment(a specific diploma of higher education, training under the supervision of anestablished member of the profession, etc.) the members of these professions mustadhere to a professional organization in which the law has vested the power toensure that its members comply with the rules of professional conduct, which itgenerally may prescribe too. These professions also benefit from a protection oftheir title.415. In 1976 these regimes served as an example to the legislature when itadopted an Act concerning the regulation and the protection of the professional titleand the exercise of intellectual professions in the services sector. 1 The idea wasto give the professional associations of surveyors, tax consultants, accountants, etc.,the possibility to request the King to issue a regulation protecting their title andCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 165

416–419 Part II, Ch. 2, Law of Establishment and Supervisionestablishing conditions for the exercise of the profession. The procedure for thecompletion of a regulation is similar to the one of the Establishment Act of 15December 1970 for Small and Medium-sized Undertakings. 2 The application mustprovide for the creation of a professional institute the main task of which is toprescribe ethical rules and make sure that they are observed. Until now only twoprofessions have been regulated by virtue of the Act, namely those of accountantswho are neither a member of the Institute of Auditors nor of the Institute ofAccountants and for real estate brokers.1. Act of 1 March 1976, MB, 27 March 1976, amended by Acts of 15 July 1985 and 30 December1992; for a coordinated text, see W. van Gerven and J. Stuyck, Wetboek Economisch enFinancieel Recht – Economisch Recht/1, Story-Scientia, Ghent, loose-leaf, Bd. II.1.2. See supra §2.§4. The Establishment of Aliens416. According to an Act of 19 February 1965, as amended by the Act of 2February 2001 2 an alien who wants to exercise, an independent activity of a lucrativenature in Belgium must possess a professional card delivered by the Ministredes Classes Moyennes. There are a lot of exceptions to this obligation, relating tothe person wanting to exercise the activity and to the nature of the activity. Themost significant category of aliens exempt from the obligation are citizens of ECMember States. For the other categories see supra Part I, Chapter 2, §1, III.1. MB, 26 February 1965; MB 8 March 2001.2. For a coordinated text, see W. van Gerven and J. Stuyck, Wetboek Economisch en FinancieelRecht – Economisch Recht/1, Story-Scientia, Ghent, loose-leaf, Bd. II.1.417. The professional card determines precisely the nature of the activity forwhich its is delivered. The card is personal, cannot be transferred and is valid forfive years. Renewal of the card is possible.418. The Minister can only refuse the card after having obtained the opinion ofthe Council for Economic Investigation of Aliens, an administrative court. Theapplicant must be heard by the Council. Decisions which deviate from the opinionof the Council must be taken by the Minister personally. The Council has the powerto withdraw the card in cases where it is used unlawfully.§5. The Establishment of Large Sales Surfaces419. By virtue of the Act of 13 August 2004 on the establishment of shops 1 alicence is required for the running of a retail shop with a large sales surface, i.e. anet built-up surface of more than 400 m 2 . A licence is also required for the expansionof an existing shop when these thresholds are exceeded. The licence is granted,on the basis of social-economic criteria (influence on employment, on existingshops, advantages for the consumers, town planning), by the College of Mayor and166 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 2, Law of Establishment and Supervision 420–422Aldermen, after consultation of the Social-Economic Committee for Distribution,composed of specialized civil servants of different departments.1. MB, 5 October 2004.§6. Licensing Requirements in Various Sectors420. The exercise of a number of economic activities is subject to an authorizationimposed by specific legislation: tourism (tour operators, travel agents, campsites, hotels), transport, the manufacture of and trade in medicines, mining activities,etc. The granting of the authorization is generally made dependent on thefulfilment of conditions relating to the quality of the services (e.g. accommodationstandards for hotels and camp sites), professional qualifications and financial guarantees(e.g. tour operators and travel agents), etc.§7. Supervision of Financial Institutions421. Certain financial institutions, such as credit institutions, investment companies,insurance companies, are subject to being duly licensed and being supervisedby a specialized government body (in most cases the Banking, Finance andInsurance Commission) (see Chapter 8). Most of the minimum requirements for thegranting of such licenses have been harmonized at the EC level by various ECdirectives.422. The aforementioned EC directives have in most financial sectors (includingthe banking, investment services and insurance sector as well as, more recentlyalbeit to some extent differently, the public offering of securities) introduced aprinciple of ‘home state control’ and ‘single license’ (‘European passport’). Essentially,this means that the granting of the license and subsequent supervision becomesthe (quasi-)sole responsibility of the Member State in which the companyhas its head office (the ‘home Member State’). Once that company has obtained alicense by the authorities of the home Member State it can exercise its activitiesthroughout the European Economic Area either by establishing branches oragencies or by providing cross-border services in other Member States (the ‘hostMember State’) trough a simple notification procedure.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 167

423–427Chapter 3. State Incentives for Economic Activities423. As mentioned hereinabove the powers to grant specific incentives 1 forprivate investments have been transferred to the Regions (Flanders, Brussels andWallonia) by the Acts of 1980 and 1988 on the reform of the institutions. 2Nevertheless, the measures taken at the regional level must comply with thefundamental principles of the Belgian economic and monetary union. Moreover,most of the Acts concerning state measures to favour economic expansion havebeen adopted before the regionalization. These Acts are still in force, but sometimesthey have been amended separately for one or more Regions, by the legislaturesof these Regions.1. Tax incentives remain a national matter.2. See supra Part II, Chapter 1, §2, I and §3.424. The principal institutions which are responsible to assist and help privateinvestors, namely the regional development companies and the public investmentcompanies, have been described hereinabove. 11. See supra Part II, Chapter 1, §2, I and §3.425. Several statutes at the federal and regional level provide for a wholevariety of state aid to undertakings. 1They provide for aids in the form of interest subsidies, State (now Region)guarantees, premiums for additional employment, tax relief, etc.1. MB, 17 August 1978.426. State aids can also take the form of capital investment in private undertakings.As mentioned before 1 this is the task of the public investment companies.1. See supra Part II, Chapter 1, §1 and §3, III.427. State aids which distort or threaten to distort competition by favouringcertain undertakings or the production of certain goods, shall, insofar as they affecttrade between Member States, be incompatible with the common market (Article87 EC Treaty). The EC Commission has issued regulations and developed a numberof guidelines on i.a. regional or sectorial aid schemes or rescue operations forundertakings in difficulty. Through the years a certain number of measures whichthe Belgian federal and regional authorities had taken or contemplated had to bemodified or abandoned after intervention of the European Commission.168 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

428–430Chapter 4. Competition Law§1. Introduction428. Competition law in the broad sense comprises two branches: antitrust law,i.e. the law relating to restrictive practices, monopolies and mergers, and the law ofunfair competition. Whilst the law of unfair competition is very well developed inBelgium (there are statutory provisions on unfair competition since 1935), antitrustlaw, or competition law in the strict sense, is a rather new area of the law. An Actof 27 May 1960 introduced a prohibition of abuse of economic dominance. This Actwas characterized by a long-winded procedure and the absence of effective sanctions.It was seldom applied. Since 1 April 1993, date of the entry into force of the newCompetition Act, Belgium has an effective antitrust law. This law will be discussedfirst in this Chapter. The following section will be devoted to the law of unfaircompetition. It will appear that there is a close link between the two parts ofcompetition law. Although they are the object of two different Acts with their ownsubstantive rules and procedures, restrictive practices can be qualified as acts ofunfair competition as well and therefore can be brought before the president of thecommercial court according to the action for a cease and desist order provided forby the Trade Practices Act. 11. See infra §3, II, D.§2. Antitrust LawI. Introduction429. Belgian competition law is basically structured like EC competition law.The Act of 5 August 1991 on the protection of economic competition (hereinafter:Competition Act 1991) is a transcription of Articles 81 et seq. of the EC Treaty andof the EC Merger Regulation. 1 The EC provisions are adapted to the Belgiansituation (e.g. with respect to the definition of the market on which the restrictivepractice must take place). In view of the similarity of the concepts and the wordingof the prohibitions in the Belgian Act and EC law, the case law of the Court ofJustice as well as the regulations, decisions and notices of the European Commissionin competition matters have a genuine interpretative value for the applicationof the provisions of the Belgian Act.1. Regulation 4064/89/EEC on the control of concentrations between undertakings, [1989] OJ L257/14, entered into force on 21 September 1990 and has been replaced as from 1 May 2004by Regulation 139/2004, [2004] OJ L 24/1.II. Institutional Provisions430. The Competition Act 1991, as amended in 1999, created the following newinstitutions: the Competition Service which is part of the Department of EconomicCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 169

431–433 Part II, Ch. 4, Competition LawAffairs (now Federal Service for Economy, SME and Energy), the College ofReporters, the Competition Council and the Competition Commission.431. The Competition Council is an administrative court composed of twentymembers. All members are nominated for six years, by a Royal Decree taken in theCouncil of Ministers. The president and the vice-president and two other Membersare full time. Eight members are judges are designated from magistrates of thejudicial order, lawyers who are at least 10 years member of the bar or law professor.At least four of them are judges. The then other members are experts in competition(Article 17). The Council takes all individual decisions pursuant to the CompetitionAct. Its decisions can be appealed before the Court of Appeal of Brussels. 1Cases are instructed by the College of Reporters (since 2004 there are six reporters)which is assisted by the staff of the Competition Service. The College ofReporters has a certain autonomy. It does not receive orders from the Ministerresponsible for the Competition Service. Every decision by the Competition Councilmust be based on a Report from the College of Reporters.1. See infra V.432. The Competition Commission is a consultative committee established withinthe Central Economic Council. 1 Tits members represent the ‘social partners’. TheCommission delivers opinions either on its own initiative or at the request of theKing on every draft decree taken pursuant to the Competition Act or of the Ministerof Economic Affairs or the Competition Council on all matters of general competitionpolicy (Article 21).1. See supra Part I, Chapter 3, §2, II.III. Scope of Application433. The Competition Act relates to the conduct of undertakings, defined as:all natural and legal persons who, on a permanent basis, pursue an economicobjective. This definition is much broader than the definition of merchant andcommercial company. It may be recalled that a merchant is the natural person whohas as his profession the exercise, with the intention of making a profit, of commercialacts, listed by the Commercial Code. A commercial company is a companywhich has as its object the exercise of commercial acts. 1 The concept of undertakingincludes the professions, the agricultural sector and all other economic activitieswhich are not listed as commercial acts in Articles 2 and 3 of the CommercialCode. Finally the Competition Act also applies to public undertakings.1. See supra Part I, Chapter 1, §3.170 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 4, Competition Law 434–437IV. Substantive ProvisionsA. Restrictive Competition Practices434. Restrictive competition practices are those stated in Articles 2 and 3 of theAct. Article 2 prohibits restrictive agreements. Article 3 prohibits abuses of adominant position.1. Restrictive Agreements435. Article 2(1) prohibits all agreements between undertakings, decisionsby associations of undertakings and concerted practices which have as their objector effect the prevention, restriction or distortion of competition on the Belgianrelevant market, and in particular those which:(a)(b)(c)(d)(e)directly or indirectly establish purchase or selling prices or any other tradingconditions;limit or control production, markets, technical development or investment;share markets or sources of supply;apply dissimilar conditions to equivalent transactions with other tradingparties, thereby placing them at a competitive disadvantage;make the conclusion of contracts subject to the acceptance by the other partiesof supplementary obligations which, by their nature or according to commercialusage, have no connection with the subject of such contracts.436. Any agreements or decisions prohibited pursuant to this Article shall beautomatically void (Article 2(2)).437. The provisions of paragraph 1 may, however, be declared inapplicable inthe case of:– any agreement or category of agreements between undertakings;– any decision or category of decisions by associations of undertakings;– any concerted practice or category of concerted practices;which contributes to improving the production or distribution of goods or to promotingtechnical or economic progress or which give small and medium-sized undertakingsthe opportunity to strengthen their competitive position on the relevantmarket or on international markets 1 (first condition), while allowing consumers afair share of the resulting benefit (second condition), and which does not:(a)(b)impose on the undertakings concerned restrictions which are not indispensableto the attainment of these objectives (third condition);afford such undertakings the possibility of eliminating competition in respectof a substantial part of the products in question (fourth condition).1. The words in italics do not appear in the text of Article 85(1) of the EEC Treaty.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 171

438–440 Part II, Ch. 4, Competition Law2. Abuse of a Dominant Position438. Any abuse by one or more undertakings of a dominant position on therelevant Belgian market or on a substantial part of it shall be prohibited. Such abusemay in particular consist in:(a)(b)(c)(d)directly or indirectly imposing unfair purchase or selling prices or other unfairtrading conditions;limiting production, markets or technical development to the prejudice ofconsumers;applying dissimilar conditions to equivalent transactions with other tradingparties, thereby placing them at a competitive disadvantage;making the conclusion of contracts subject to acceptance by the other partiesof supplementary obligations which, by their nature or according to commercialusage, have no connection with the subject of such contracts (Article 3 ofthe Competition Act 1991).3. Restrictions of Minor Importance439. Until proof to the contrary, restrictive competition practices as definedhereinabove are deemed not to be contrary to the provisions of the Act when theundertakings which are party to it are small or medium-sized within the meaning ofArticle 12, paragraph 2 of the Act of 17 July 1975 on the bookkeeping and annualaccounts of undertakings, 1 i.e. undertakings which do not exceed more than one ofthe three following criteria: a total balance of BF 100 million, an average staff of 50employees and an annual turnover of BF 200 million, exclusive VAT; if an undertakinghas an average yearly staff of over 100 employees it is not considered assmall or medium-sized. It should be noted that Article 12 of the Act of 17 July1975 has meanwhile been abrogated and that the Companies Code has introducedan new concept of small companies corresponding more or less to its notion ofSME in the bookkeeping Act (see No. 90 hereabove).1. See supra Part I, Chapter 4, §3, IV.B. Concentrations440. Concentrations are subject to prior approval by the Competition Council, 1provided the undertakings concerned achieve a combined aggregate turnover inBelgium of more than 100 million euro and at least two of them achieves a Belgianturnover of at least 40 million euro. 2 However, the concentrations which are submittedto the control of the European Commission are not submitted to the controlestablished by the Competition Act. 31. See infra V.2. Royal Decree, 1 July 2005.172 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 4, Competition Law 441–4423. See Article 1 EEC Regulation 4064/89: the EEC Concentration Control Regulation applies toconcentrations where the aggregate worldwide turnover of all the undertakings concerned ismore than ECU 5 billion and the aggregate Community-wide turnover of each of at least twoof the undertakings concerned is more than ECU 250 million, unless each of the undertakingsconcerned achieves more than two thirds of its aggregate Community-wide turnover within oneand the same Member State.441. A concentration within the meaning of the Competition Act arises wherea) two or more previously independent undertakings merge, or b) – one or morepersons already controlling at least one undertaking, or – one or more undertakingsacquire, whether by purchase of securities or assets, by contract or by any othermeans, direct or indirect control of the whole or parts of one or more other undertakings.An operation, including the creation of a joint venture, which has as its object oreffect the coordination of the competitive behaviour of undertakings which remainindependent shall not constitute a concentration. Where the creation of a jointventure performing on a lasting basis all the functions of an autonomous economicentity, which does not give rise to coordination of the competitive behaviour of theparties amongst themselves or between them and the joint venture, shall constitutea concentration shall be approved in the light of Article 2 (i.e. the prohibition ofrestrictive practices). (Article 9, paragraphs 1 and 2). This definition is identical tothe original definition of Articles 3(1) and (2) of the EEC Concentration ControlRegulation. 11. Regulation 4064/89/EEC on the control of concentration between undertakings, [1989] OJ L257/14, amended by Regulation 1310/97, [1998] OJ L180/1.V. Procedure442. In order to benefit from an exemption, i.e. a declaration of inapplicabilitywithin the meaning of Article 2(3), 1 a restrictive agreement shall be notified to theCompetition Office (Article 7). Such a notification is not required for agreementsbenefiting from an exemption under the EC competition rules (Article 8). Moreover,the undertakings concerned can apply for a negative clearance, i.e. a declarationby the Competition Council that the agreement or practice in question does notconstitute a restrictive agreement or abuse of a dominant position within the meaningof the Act. The system of notifications with a view to an individual exemptionand of applications for a negative clearance finds its origin the EC law which, in therecent ‘modernization’ move has abandoned that system. Under the new Regulation1/2003 EC, which as from 1 April 2004, has replaced the old system of Regulation17/62, Article 81 (the prohibition of restrictive agreements affecting trade betweenMember Sates) has become a ‘unitary’ norm. Where an agreement is restrictivewithin the meaning of Article 81(1) (to be compared to Article 2(1) of the BelgianCompetition Act) not only the European Commission, but also national courts andnational authorities can verify whether the conditions for a declaration of inapplicabilityunder Article 81(3) (now a ‘legal exception’) are satisfied and if so clear theagreement. The Belgian Act has not (yet) been aligned to this new EC regime.Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 173

443–444 Part II, Ch. 4, Competition LawRestrictive agreements still have to be notified to the Competition Council in orderto benefit from an exemption under Article 2(3) of the Act. As indicated hereabovea notification is superfluous when the agreement is exempted under EC law (whichin the future means ‘block’ exempted). Pursuant to Article 3 of Regulation 1/2003a positive decision by the Commission under Article 81 EC precludes the nationalcourts and authorities (including the Competition Council) to prohibit the sameagreement on the basis of national law.1. See supra IV, A, 1.443. The King can also adopt ‘block exemptions’, i.e. declare the prohibitionof Article 2, (1) inapplicable to categories of agreements which fulfil the conditionsof Article 2, (2) of the Act. 1 Agreements which are exempted under an individual orblock exemption granted by the EEC Commission are exempted from notificationunder the Competition Act (Article 8). No such block exemptions have been adoptedto date, but agreements having effect (only) on the Belgian market benefit from theblock exemptions existing at the EC level.1. See supra IV, A, 1.444. Concentrations are subject to a prior approval by the Competition Council.They must be notified to the Competition Council within one month from theconclusion of the agreement, or the announcement of the public bid, or the acquisitionof a controlling interest. Until the Competition Council has taken a decisionconcerning the admissibility of the concentration, the undertakings concerned canonly take measures which do not make the concentration irreversible or bring aboutlasting changes in the structure of the market (Article 12). Concentrations with aCommunity dimension within the meaning of the EC Merger Regulation (Regulation139/2004) shall not be notified to the Belgian authorities (Article 13).Within 45 days from the notification of a concentration the Competition Councilshall take one of the following decisions:(a)(b)(c)where it concludes that the concentration does not fall within the scope ofapplication of the Act, it shall record that finding by means of a decision;where it finds that the concentration, although falling within the scope of theAct, does not raise serious doubts as to its admissibility, it shall decide not tooppose it; where the undertakings concerned hold a market share of not morethan 25 per cent the Competition Council shall declare the concentrationadmissible.if, on the other hand, it finds that the concentration notified falls within thescope of application of the Act and raises serious doubts as to its admissibility,it shall decide to initiate proceedings.If the proceedings are initiated – in which case the Competition Service is chargedwith an additional inquiry – the Council shall take a decision on the admissibility ofthe concentration within 60 days. In the absence of a decision within that time limit174 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

Part II, Ch. 4, Competition Law 445–448the Council is deemed to have decided that the concentration is admissible(Article 33).445. Before taking a decision on a restrictive competition practice or a concentrationthe Competition Service may obtain all necessary information from undertakingsor associations of undertakings. If the undertaking or association ofundertakings does not provide the information requested within the time periodestablished by the Competition Service, the President of the Competition Councilmay order the supply of that information. The Competition Service CHECK mayalso carry out investigations in all business premises and even in the residences ofdirectors and managers (Article 23).446. All decisions of the Competition Council can be appealed before theCourt of Appeal of Brussels (Article 43). Judgements of the Court of Appeal can bereviewed by the Court of Cassation.A concentration which has been declared inadmissible can still be cleared by theCouncil of Ministers if reasons of general interest prevail over reasons of competitionpolicy (Article 34bis). This power has not been used so far.A. Provisional Measures447. The president of the Competition Council can order interim measureswhere it is urgent to avoid a situation that may lead to serious, imminent andirreparable damage to undertakings whose interests are affected by such practicesor harm the general interest.VI. Sanctions448. In case it establishes the existence of a restrictive competition practice theCompetition Council can impose fines on the undertakings concerned of a maximumof 10 per cent of their turnover. The Council may also establish a periodicpenalty payment of a maximum of euro 6.200, which shall be due if the undertakingsconcerned do not observe its decision (Article 36). A fine cannot be imposedfor a restrictive agreement which has been duly notified (Article 39). The samefines can be imposed in case an undertaking does not comply with the terms of anexemption or, in case of a concentration, where the undertakings concerned havetaken measures which make a notified concentration irreversible or bring aboutlasting changes in market structures (Article 38). The Council may impose onundertakings, persons and associations of undertakings, a fine from euro 25.000 toeuro 500 where they, intentionally or negligently, supply incorrect, misleading orincomplete information or do not supply the information within the required timelimit in case of a notification or a request for information. The same fines can beimposed in case a concentration which falls within the scope of application of theAct has been carried out without prior notification (Article 37).Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 175

IndexIndexThe numbers given refer to paragraphsAbnormal prices (prohibition of ) 519Abuse of dominant position see AntitrustlawActio Pauliana 168, 184Acts contrary to honest business practices505Advertising 478–481Advisory bodies and committees seeConsultative committeesAmicable composition see BankruptcyAnnual accounts 76–95Act 78–80Auditing 93Companies limited by shares 92Consolidate – 95Deposit of – 95General rules 81–83Large undertakings 84, 87–91Medium-sized undertakings 84, 87Small undertakings 84 –85Annual report 92Antitrust law 429–448Institutional provisions 430–432Introduction 428Procedure 442–446restrictive competitive practices434 –439abuse of dominant position 438restrictive agreements 435–437restrictions of minor importance439concentrations 440–441Sanctions 448Scope of application 433Substantive provisions 434–441Assets of the estate see BankruptcyAuction sales see SalesAval see Bill of ExchangeBank account 75–76Bankruptcy 154–201Assets of the estate 189–192Cessation of payments 175Claims (notification and verification)193Conditions for – :– formal 177–182– substantive 172–176Consequences of – after its closing198–201Incapacity of the bankrupt 189Judicial composition 157–167Liabilities of the estate 193–195Liquidation 168–169, 196–197Nature of – 171Organization of – 185–188Prevention of – 156–171Receiver 185–186Supervising judge 187, 193‘Suspect period’ 190–191Wavering of credit rating 176Winding up of a company 168–169Bill of exchange 208–223Abuse of – 215Acceptance 219Advantages of – 211Amicable composition 172Aval 220Discount 218Endorsement 216–218Functions of – 210Fund 214Legislation 209Notion 208Payment 221Protest 222Recourse 223Validity requirements 212–214Bookkeeping see Annual accountsCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 209

IndexBroker 329–335Definition 329Legal qualification of the broker’scontract 331Reciprocal rights and obligations of theparties 332–333Special categories of brokers 335Status 330Termination of the broker’s contract 334Business 96–101– assets 96Carriage 364, 370Lease of a – 97, 98, 100Management of a – 99, 101Pledge of a – 97, 98Sale of a – 95, 97By air 368By inland waterways 365–366By rail 369By road 367By sea 365Travel contract 370Central Economic Council 57, 531Cessation of payments see BankruptcyChambers of commerce see ProfessionalorganizationsChambers of crafts and industry seeProfessional organizationsCheques 225–243Abuse 238–239Circular cheque 242Content of – 228Differences with bills of exchange227Different types of – 229–230Eurocheque 240–241Eurocheque cards 240–241Form 228Fund 231Legislation 226Loss 238Notion 225Opposition 238Payment 233–236Postal cheque 243Presentation 233–236Protest 236Revocation 237Theft 238Transfer 232Chips 14Civil company see CompanyCivil partnership see PartnershipCircular cheque see ChequesClearance sales see SalesCommercial acts 26–38Commercial activities of public bodies37–38Legal consequences of the qualification29–36Objective commercial acts 28Commercial agency 33, 345–349Conclusion of the – contract 349–352Definition 346End of the – contract 349–352Legislation 345Rights and obligations of the parties347–348Scope of application 346Commercial agent see Commercial agencyCommercial arbitration 65–69Commercial company see CompanyCommercial contracts 273–370see also Commercial services and SalescontractsCommercial courts 64, 177–182, 188Commercial law 21–383Concept 21–39Distinction with civil law 21–22Importance of international andsupranational law 39Sources of – 23–28Commercial obligations 31–36Evidence of – 35–36Rules applying to – only 31–36Commercial partnership without legalpersonality see PartnershipsCommercial pledge see PledgeCommercial property rights see Intellectualproperty rightsCommerical securities 371–383Developed by practice 379–383new personal securities 380–383new real securities 379Provided for by statute law 374 –378personal securities 377–378real securities 374–376Commercial services 292–370see also Carriage, Distribution, Financialservices, Insurance andintermediaries210 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

IndexCommission agency 336–343Definition 336guarantees of the commission agent 342guarantees of the principal 340Legal qualification of – 337–338obligations of the commission agent 339obligations of the principal 341Reciprocal rights and obligation of theparties 339–342Commission agent see Commission agencyCommission for Banking and Finance255–257Commission for price regulation 63, 519Commission for unfair contract terms 532Commodity exchange 248–272Company 28, 47–55Civil – 27, 47Commercial – 27, 47– limited by sharessee Annual accountsDifferent types of – 48–55see also PartnershipsPrivate limited – 54Public limited – 53Company limited by shares see AnnualaccountsCompany File 76Compensation 194Competition law 428–513see also Antirust law and Trade practicesComposition of products and services435–474Concentrations see Antitrust lawConsultative committees 60–63, 396–397,525–527, 532Consumer contracts 560–563Consumer council 63, 525–527Consumer credit act 524–528, 563Consumer information 459–473, 536–537Consumer interest (Institutional aspects andrepresentation of) 524 –532Consumer law 524–563Consumer protection 449–489, 524 –563Consumer representation in consultativecommittees 525–527, 532Consumer sales 284, 482–489Contract law (General principles of)279–282Cooperative partnership see PartnershipCopyright 146–147Corporation see Company and partnershipCredit cards 243–244Credit insurance 378Credit institutions (supervision of) 421–422Currency exchange 259Denomination of products and services471–475Designations of origin 474–476Designs and models 118–127Definition 119– excluded from protection by thedesigns and models law 120Legal actions by thirds parties 127Legislation 118Requirements:– formal 122–123– substantive 121Rights conferred by a – 124–126Discounts (announcements of) 492Distance sales see SalesDistribution 292–325see also Exclusive purchasingagreements, Franchising andSelective –– Agreement Act 298–316general system 299introduction 298scope of application 300–316Exclusive and non-exclusive –agreements 293–296definition 293–294formation and validity 295–296Unilateral termination of – agreementsfor a fixed period 302–304of – agreements for an indefinite period305–316Distribution agreements act see DistributionEconomic institutions 56–69see also Commercial arbitration,Commercial courts, Consultativecommittees and ProfessionalorganizationsEconomic law 384–562Basic principles 388–394General principles 384 –401Economic operators 40–55, 70–95see also Annual accounts, Company,Company file, Partnership and MerchantElectronic fund transfer 245Equality 393–394Commercial and Economic Law – Suppl. 28 (August 2006) Belgium – 211

IndexEstablishment (law of) 402–422– Act for small and medium-sizedundertakings 405–413– of aliens 416–418– large surfaces 419– of the professions 414–415– regulation 412–413Eurocheque 240–241– cards 240–241Exclusive distribution agreements seeDistributionExclusive purchasing agreements 317–319Extension of payment see BankruptcyFactoring 361–363Endorsement of invoice 361Obligations of the factor 363Obligations of the supplier 362Financial markets 362–373see also Commodity exchange and StockexchangeFinancial services 358–363see also Factoring and LeasingFranchising 323–326Definition 323Legal protection of franchisees324–326Free competition 392Freedom of trade 56, 390Free movement 391General Partnership see PartnershipGift coupons 498Goodwill 96, 99Honest business practicessee Act contrary to –Incapacity of the bankrupt see BankruptcyIndication of quantity 470Information duty 482Insider trading 270–272see also Stock exchangeInsurance 357, 375Insurance companies (supervision of)424–425Intellectual property rights 102–150see also Chips, Copyright, Designs andmodels, Know-how, Patent, Plantbreeder’s right and TrademarkCommon characteristics 103–106International treaties 107–109Overview 102Intermediary 327–355see also Broker, Commercial agency,Sales representative– in the transport sector 353–354International sales contracts see SalescontractsInvestment companies (public) 399–401see Public investment companiesInvoice 74Endorsement of – 361, 376Joint offers 495–498Judicial composition see BankruptcyKnow-how 149–150Labeling of products and services471–473Leasing 359–360, 379Liabilities of the estate see BankruptcyLiability (product) 538–552see Product LiabilityLicensing requirements 420Limited partnership see PartnershipLiquidation of a company see BankruptcyMaximum prices 520Merchant 26–39, 40–55, 70–76, 155,173–174Company 27, 47–55Foreigner 45–46Legal consequences 29–36Married people 43–44Natural person 26, 40–46Obligations 29, 70–77Middleman see IntermediaryModels see DesignsNegotiable instruments 202–245see also Bills of exchange, cheques,Credit cards, Payment cards,Promissory notes and Electronicfund transferBasic features 202–205Different kinds 206–207Notion 202–205Partnership 48–52see also Company and Company fileCivil – 48212 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)

IndexCommercial – without legal personality50Cooperative – 52General – 51Limited – 48– limited by shares 51– with reduced legal personality 51Sleeping – 50Partnership limited by shares seePartnershipPartnership with reduced legal personalitysee PartnershipPassive solidarity 32Patent 111–117Biotechnical inventions (protection of)117Inventions by employees 116Legislation 110Protection 111, 117Requirements:– formal 113– substantive 112Rights of the patentee 114–115Payment cards 243–244Personal securitiessee Commercial securitiesPlant breeder’s right 128–129Content of the – 129System of Plant Breeders Act 128PledgeCivil – 34, 371Commercial – 34, 374– of a business 97–98, 375Postal cheque see ChequesPremium offers 495–498Price comparisons (announcements of) 492Price increases (notification of) 521–522Price indication 460–469Price interventions of the government519–523Price regulation 514 –523see also Commission for –Private limited companysee CompanyPrivity of contract 297Product liability 538–552Professional cardsee Establishment of aliensProfessional knowledge 411Professional organizations 56–59Chambers of commerce 58Regional development companies 59,395Professions 414–415Programme contracts 523Promissory notes 224Public bodies (commercial activities of)37–38Public investment companies 399–401Public limited company see CompanyPyramid Sales see SalesQuality of goods and services 556–559Real securitiessee Commercial securitiesReceiversee BankruptcyRegional Development companiessee Professional organizationRegional social-economic councils 62Research and information centre ofconsumer organizations 528–531Restrictions of minor importancesee Antitrust lawRestrictive agreements see Antitrust lawRestrictive competition practices seeAntitrust lawSafety of goods and services 538–563SalesAuction – 500–501Clearance – 493Distance – 503Pyramid – 504– at a loss 491– outside business premises 505Seasonal clearance – 494Unsolicited – 502Sales of goods 283–291, 482–489Sales contracts 283–291Formation of – 286International – 283Obligations of the purchaser 288Obligations of the vendor 287–289Transfer of property and of risk 291Sales outside business premisessee SalesSales representative 344Sesonal clearance sales 411see SalesCommercial and Economic Law – Suppl. 28 (August 2006) Belgium – 213

IndexSecuritiessee Stock exchangeSelective distribution 320–322Sleeping partnership see PartnershipSmall and medium-sized undertakings84–86see Annual accounts and establishment405–413State incentives for economic activities423–427State intervention in economic activities384–387, 393–401State regulation of the conditions ofcommercial Transactions 401–547Stockbroker 250see also Stock exchangeStock exchange 246–272Stock Exchange Commission 253–254Supervising Judge see BankruptcySupervision of credit institutions see CreditinstitutionsSupervision of economic activities401–425Supervision of insurance companies seeInsurance companiesSupply regulation 514–523Surety 377‘Suspect period’ see BankruptcyTakeover bid regulation 246, 260–263Temporary association 50Trade association 57Trade in securities 258Trademark 130–145Decay 138Definition 131Different signs which can be registeredas a – 132Legal actions: – by the – owner 140–144– by third parties 145Legislation 130Requirements:– formal 137– substantive 133–136Rights conferred by a – 139Trade name 151–152Trade practices 449–513see also Unfair competitionIntroduction 449–453Trade Practices and Consumer ProtectionAct 1991 454–513Action for a cease and desist order509–511Sanctions 513Scope of application 455–458Substantive provisions 459–508Warning procedure 512Trade Register 71–73Legal presumption 72Obligation to register 71Publicity 72Sanctions 73Transfer of propertysee Sales contractsTransfer of risksee Sales contractsTransparency regulation 246, 260–263see also Stock exchangeTransport see CarriageTravel contract see CarriageUndertakingsee Annual accounts and EstablishmentUnfair competition 449–513see also Trade PracticesUnfair consumer contract terms 484–487Unsolicited sales see SalesWinding up of a company see BankruptcyWarehouse receipt 376214 – Belgium Commercial and Economic Law – Suppl. 28 (August 2006)