Major developments
Future issues

The Unilateral Termination of Exclusive Distribution Agreements of Indefinite Duration Act(1) will celebrate its 50th anniversary in a few months. The protection of distributors under the act has changed during this half century.


The act grants Belgian distributors significant protection against unwanted or early termination of distribution agreements. The act specifies a reasonable notice period (up to three years) or compensation in lieu of notice, plus additional compensation (in particular, for goodwill) (for further details, please see "Distribution agreements: termination and its pitfalls".)

Major developments

Since the act became law, the protection it offers to distributors has gradually been eroded. There have been several significant changes to the position of Belgian distributors.

On April 19 1979 the Supreme Court issued a judgment which allowed the parties to a distribution agreement to include a clause entitling the principal to terminate the agreement unilaterally in certain circumstances (the so-called clause résolutoire expresse) - for example, if the distributor fails to achieve its agreed minimum sales target or fails to perform its contractual obligations. The result was that some principals became 'creative' when citing reasons to terminate a distribution agreement without paying compensation to the distributor.

On April 6 2006 the Supreme Court ruled that the act applies only to distributorships covering all or part of Belgium. The act therefore cannot be invoked for distributorships covering other countries or parts thereof.

There have been a series of judgments in a trend towards a more realistic definition of a 'reasonable notice period'. Initially, the notice period had to be long enough for the distributor to find an alternative distributorship that offered the same commercial advantages. The courts now interpret this as meaning 'long enough to find an alternative source of income', which may involve the distributor undergoing a reorganisation.(2) Some courts (especially the Brussels Court of Appeal) now also tend to disregard the duration of the distributorship when determining the notice period, and instead focus on the investments made by the distributor and the percentage of the distributor's overall turnover represented by the distributorship.

Last but certainly not least, developments in European private international law have limited the scope of application of the act. Even though, in theory, the act should apply to all distribution agreements covering Belgium, irrespective of the law chosen by the parties, in practice, the combination of a choice-of-law clause and a forum clause allows the parties to exempt their distribution agreements from the application of the act (by virtue of Article 23 of the EU Brussels I Regulation and Article 3.1 of the Rome I Regulation).

Future issues

After 50 years, developments in this area have not come to a halt. Certain issues will certainly dominate the debate in the years to come.

There is currently no clear answer to the question of whether disputes regarding termination of distribution agreements can go to arbitration. Even though the Supreme Court still seems to take the position that arbitration is not an option in such disputes,(3) to the extent that this would result in the application of foreign law, a growing number of legal scholars think that this position has become obsolete due to developments in European private international law. They argue that, whereas it is (in practice) possible to avoid the act by opting for foreign courts and foreign law, it does not make sense to forbid arbitration merely because foreign law might apply.

The Hague Convention(4) on Choice of Court Agreements will further erode the scope of application of the act to the extent that it will allow parties to enforce forum clauses for US and Mexican courts, which obviously are not obliged to apply the act, further eroding the protection of distributors. Discussions in this area will probably focus on the following questions:

  • whether such choice of court clauses are now null and void;
  • whether the parties can agree on which court is competent to hear disputes; and
  • whether a Belgian court can overrule such a clause to hear a dispute (Article 6 of the convention).


(1) July 27 1961.

(2) See Supreme Court rulings of February 10 2005 and June 20 2008.

(3) See Supreme Court ruling of January 14 2010.

(4) June 30 2005.

For further information on this topic please contact Alexander Hansebout at ALTIUS by telephone (+32 2 426 1414), fax (+32 2 426 2030) or email ([email protected]).