When can you invoke the exception of an arbitration agreement?

In a decision of 24 September 2020, the Belgian Supreme Court confirmed that the exception of the existence of an arbitration clause can be invoked for the first time in appeals against a judgment by default, when such a plea has been raised in the first written submissions of the party invoking the plea.

In this case, a lease contract (relative to the principal residence in the Walloon Region) concluded on 15 January 2018 for three years provided that all disputes regarding the contract, its interpretation and performance were subject to arbitration. A judgment by default in the first instance was rendered against the tenant. On appeals the tenant raised in their first written submissions the exception for the existence of arbitration agreement, which was declared inadmissible by the appellate jurisdiction, seeing as the exception is not one of public order and had not been raised by the tenant before the first judge. According to the appellate jurisdiction the exception could be not raised for the first time in appeals. Thus, the appellate jurisdiction deemed that it could decide the case, despite the existence of the arbitration clause in the lease contract.

However, the Belgian Supreme Court saw things differently and overturned the decision. It considered that pursuant to article 1682, §1 of the Belgian Judicial Code, the court before which a dispute is brought shall declare itself without jurisdiction when a party invokes an arbitration exception, unless the arbitration agreement is invalid or has ceased to exist. The exception must be raised in limine litis, i.e., before any other plea or defence. This condition is met when the exception is raised for the first time by a party it in its first written submission, even when in appeals.

Furthermore, this case reminds us that in recent legislative reforms, the Walloon legislation as well as in the Brussels Region legislation on residential leases, both legislators introduced provisions (entered into force on 1st March 2019 and on 1st January 2018) by virtue of which the parties to this type of contract can only agree to arbitration after the dispute has arisen. Any arbitration clause agreed before the dispute has arisen shall be unenforceable.

Focus Points

With a view to have an open eye on the future, we follow up on specific (legal) topics at the heart of modern businesses in transition.