Belgium
Climate change litigation continues to be an area of rapid growth alongside greenwashing and the ecological impact of products and services. Insolvency litigation continues to be on the incline and recent trends indicate that heightened litigation risk will be more commonplace in the cybersecurity, data protection, diversity, equity, and inclusion space.
There are only a few funded cases in Belgium. The least uncommon issues are in fact disputes amongst funders in the framework of co-funding agreements subject to Belgian law. These issues are generally settled in arbitration and are subject to general contract law.
1. Is third party funding permissible for disputes?
Yes, third-party funding is accepted for disputes in Belgium.
Currently, there is no specific legal framework dedicated to regulating this practice.
Belgium relies primarily on contractual agreements between the parties involved (the funder and the funded party, either the claimant or defendant), and sometimes the lawyer representing the funded party. These agreements outline the rights, obligations, and terms of the funding arrangement, including matters such as the funder’s share of any award or settlement, confidentiality, termination clauses, and any potential conflicts of interest.
Belgian third-party funding relies on best practices and principles derived from case law and legal precedents in other jurisdictions as well as comments made by the local scholars. This includes ensuring transparency, fairness, and compliance with ethical standards.
2. Are lawyers able to work on a contingent basis in the jurisdiction and are there any restrictions?
Belgian law does not allow contingency agreements (“no win, no fee”, or “pactum de quota litis”) where lawyers’ fees are solely determined by the case outcome ( Article 446ter of the Belgian Judicial Code). However, lawyers can receive a success fee, which is a percentage of the amount recovered by clients in addition to fees that are not dependent on the outcome (fixed fees; hourly fees) are permitted.
Consequently, Belgian lawyers can engage in contingency fee agreements as long as the success fee is reasonable and the agreed fee arrangement ensures a minimum remuneration regardless of the case outcome. This is however not commonly practiced.
3. Can the court or tribunal order one party to pay the other’s legal costs?
Yes, in Belgium, the court or tribunal can order the non-successful party to pay the successful party’s legal costs.
The fees are calculated by reference to a fixed sum known as the procedural indemnity, and the level of the procedural indemnity is fixed by Royal Decree. The higher the value of the case, the higher the fee. However, the procedural indemnity rarely covers all of the costs charged by a lawyer to its client.
In arbitration proceedings, costs generally follow the event.
Under certain circumstances, the judge may adjust the procedural indemnity, whether to decrease or increase it, in consideration of various factors outlined in the Judicial Code (1018 and following), including the complexity of the case, the financial capacity of the unsuccessful party, and the evident unfairness of the situation. Such adjustments are contingent upon a request by one of the parties involved and must remain within the statutory maximum and minimum limits.
In settlement agreements or other alternative dispute resolutions, parties may sometimes agree to share or allocate legal costs. In terms of third party funding, the funder, not being party to the proceedings, is not ordered by the court to pay the legal costs, even if the funded party has been unsuccessful in the proceedings. Nevertheless, specific clauses in the agreement between the third party funding and the funded party may address this matter.
4. Is insurance available to protect against adverse outcomes for funded litigation?
Insurance against adverse judicial outcomes is not a product that it is readily available on the Belgian market.
Third party funders are not privy to the proceedings, and therefore not liable for any adverse outcome unless otherwise stipulated in the contract.
Contact
Gaetano Jannone Partner
Jozef Nijns Principal Associate
Mériem Bennari Associate
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