BELGIUM: Supreme Court Decision on Arbitrability of Exclusive Distributorship Agreement.

Silvia BORTOLOTTI | BELGIUM | 2006-02-15


View CV

In addition, pursuant to Article 31.2 the supplier reserved to itself the right to start the proceedings before the ordinary courts of the distributor’s place of business as well as to choose the law of such a place, as the applicable law.

In 1997 the Swiss supplier terminated the distributorship agreement observing a period of notice of 15 months.

The distributor claimed the application of the Belgian Distribution law (Law of July 27, 1961 as amended in 1971), which granted him a minimum period of notice as well as a compensation for termination of the agreement.

The supplier, at first, agreed with such a claim and admitted that the 15 months’ period of notice it granted to the distributor was in application of such a law.
Subsequently the supplier, changing its position, denied the application of the 1961 Belgian law. Therefore in 1997 it sent to the distributor a new letter of termination which provided a three months’ period of notice, in compliance with the provisions of the contract.

On March 26th 1998, the Belgian distributor sued the Swiss supplier before the Commercial Court of Antwerp claiming compensation for termination, by virtue of the 1961 Belgian Law.

The Commercial Court of Antwerp declared itself competent stating that the supplier with its letter of 1997 had waived the application of the arbitration clause and had chosen the application of article 31.2 of the contract as well as the application of the 1961 Belgian law.

On the appeal taken by the Swiss supplier against this decision, the Court of Appeal stated that the court of first instance was wrong in declaring itself competent in deciding the dispute at issue. The Court of Appeal examined whether it had jurisdiction and, in particular, whether the dispute was arbitrable and under which law the arbitrability issue had to be decided. It examined the provision of Article 2(3) of the New York Convention of 10th June 1958 on the Recognition and Enforcement of Foreign Arbitral Awards. It decided that the 1958 New York Convention clearly referred to the lex contractus in order to determine whether a case could be submitted to arbitration. In the present case, being Swiss law the lex contractus, the Court decided that the arbitration clause was valid under Swiss law.
As regards the Belgian Distribution Law, the Court of Appeal considered that its provisions were mandatory but that they did not pertain to public policy. Accordingly, the Court of Appeal held that the arbitration clause did not violate Belgian public policy. It concluded that the international provision of article 2(3) of the New York convention had priority over the mandatory provisions of the Belgian Distribution Law.

The Belgian distributor thereupon took an appeal before the Belgian Supreme Court against the decision of the Court of Appeal of Antwerp which had declined its jurisdiction in favour of the arbitration clause.
In its decision of October 15, 2004 the Belgian Supreme Court stated that Article 2(3) does not expressly indicate the law pursuant to which arbitrability must be decided but it added that this provision does not prevent the state court seized with the question, to answer this question according to its own law. The Supreme Court thus stressed that where the parties have agreed upon an arbitration with the application of a foreign law, the court seized with a plea of lack of jurisdiction may exclude arbitrability if the public policy of its legal system would otherwise be violated.
The Supreme Court annulled the decision of the Antwerp Court of Appeal in that the Court of Appeal had a priori excluded that the judge may also take into consideration the lex fori in order to decide the question of arbitrability.


References to comments to this decisions are available in the bibliography section of this website.


Print this article