Introduction

Given that an important portion of real estate investments in Belgium concerns the sale and purchase of new buildings, considerable time is spent during property negotiations ensuring the full transfer to the new owner of the contractual rights towards the architect and/or the contractor involved in the building's construction process. If the building is transferred through the sale of shares of a special purpose vehicle that owns the building, then the necessary contractual wording and guarantees are negotiated to ensure that the building owner's rights remain unaffected and in full force. If a building is delivered to or accepted by the principal, then the architects and contractors remain liable during a 10-year period for defects that affect the building's structure and as a result of which the building could entirely or partially collapse, even if it were due to the condition of the land on which the building was built. Safeguarding such recourse is thus important for the owner of a new building.

Ten-year liability principle

The principal, the architects and the contractors are all protected by the 10-year liability principle, as contained in Articles 1792 and 2270 of the Civil Code. Even after a new building's delivery or acceptance, if problems or defects occur that affect the building's strength, then the principal can act against the contractor and/or architect during a 10-year period after the provisional or final delivery. This right arises regardless of the act of delivery or the principal's acceptance of the new building. As the sturdiness of buildings is held to be in the public interest, the 10-year liability period is considered to be a public order matter. The parties cannot contractually limit the 10-year liability period. On the other hand, architects and contractors know that after the 10-year period they no longer have any liability towards or owe a guarantee to the principal.

However, Articles 1792 and 2270 of the Civil Code do not deal with the reciprocal inter-relation between the architect and the contractor (eg, if the damages to the new building are caused by the fault or mistake of both the architect through a lack of control for example and the contractor through faulty execution for example).

In solidum liability

To manage the interaction of both the architect and contractor, Belgian legal doctrine and jurisprudence have also embraced and developed the concept of 'in solidum liability'. As a result, the principal could claim the payment of the entire amount of damages from either the architect or the contractor if they both committed a contractual or extra-contractual fault that resulted in the same damages. The principal would no longer have to pursue both of them for their respective share of the damages. This right is beneficial for the principal who can obtain the full amount of the damages from either party, which in turn must exercise recourse against the other party. The principal would not have to bear the risk of insolvency concerning one of the counterparties.

Contractual limitations

In most agreements with architects and contractors, a clause can be found in favour of the architect or the contractor which stipulates that in case of the architect's and contractor's concurrent faults, the contractual party is liable towards the principal only for its share of the damages. Such a clause excludes the principal's right to claim the entire damages from one party on the basis of the in solidum principle. As a result of such a clause, the principal must act against both the architect and contractor. If, for example, it is determined that the architect is liable for only 30% of the damages and the contractor for the remaining 70%, then such a contractual clause limits the principal's recourse towards the architect to 30% and the principal must seek the remaining 70% from the contractor.

Supreme Court judgment

In its September 5 2014 judgment, the Supreme Court decided whether the contractual clause in an architect's agreement was legally valid if it denied the principal the right to invoke in solidum liability against the architect. The opinions in earlier doctrine and decisions of the lower courts had been, until then, divided.

The Supreme Court held that a contractual clause which contained a limitation on the architect's 10-year liability (ie, in a matter in which the architect and the contractor had concurrent faults, the architect could be liable only for his or her share in the resulting damages) had violated public order to that extent. The advocate general in the case had already taken this position based on the view that the principle of the principal's entire indemnification was included in the 10-year liability. The court held that the principal must thus be in a position to exercise a claim for 100% of the damages towards the architect; otherwise, the architect would be in a position to indirectly limit its liability and that would leave the principal, who had committed no fault, with the risk of only a partial indemnification (eg, if the contractor went bankrupt in the meantime).

The Supreme Court decided only on the 10-year liability period (Articles 1792 and 2270 of the Civil Code) and did not issue a judgment regarding any other potential joint liabilities between the architect and contractor (eg, in the case of problems at the time of the building's delivery or acceptance or in the case of small defects that do not affect the building's structure). In such cases contractual limitation could still be invoked.

Comment

Agreements with architects and contractors should be reviewed henceforth to take into account the Supreme Court's judgment in relation to the in solidum liability between the architect and the contractor.

For further information on this topic please contact Lieven Peeters at ALTIUS by telephone (+32 2 426 1414) or email (lieven.peeters@altius.com). The ALTIUS website can be accessed at www.altius.com

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