In addition to the general rules on compensation and termination, Book X Code of Economic Law (CEL) contains a number of specific provisions that may be relevant to certain types of intermediaries or in specific procedural situations.
Three themes deserve special attention: the use of sub-agents, the different rules for the banking and insurance sectors, and the very short limitation periods for bringing legal action.
1. Sub-agency: the agent becomes the principal
Can a commercial agent delegate his assignment to someone else? And who is then responsible?
The right to appoint a subagent
Art. X.5 CEL is clear: a commercial agent is in principle entitled to engage sub-agents to perform his duties. He does not need the principal's consent to do so, unless the contract expressly prohibits this.
In practice, this right is often excluded in contracts (e.g., due to the confidential nature of the assignment), but without such a clause, it is permitted.
The legal structure: a “cascade”
In the case of sub-agency, two separate contracts are created:
- The main contract between the Principal and the Primary Agent.
- The subcontract between the Primary Agent and the Subagent.
This has three important consequences:
- The primary agent is liable: The primary agent is himself the principal of the subagent. He must compensate the subagent. If the subagent makes a mistake, the primary agent is liable for this to the original principal.
- No relationship between principal and subagent: There is no contractual relationship between the original principal and the subagent. The subagent cannot therefore claim his commissions directly from the ‘big boss’.
- Autonomy of the contract: The subcontract is autonomous. This poses a significant risk for the primary agent: if the principal agency is terminated, the sub-agency does not automatically cease to exist. The primary agent must therefore terminate the sub-agency in a timely and correct manner in order to avoid having to pay compensation to his sub-agent while he himself no longer has any income.
2. The banking and insurance sector: a separate status
Commercial agents in the banking and insurance sector are in principle subject to general agency legislation (Book X, Title 1 CEL), but their status is complicated by specific sector legislation and exceptions..
The important exception: no pre-contractual information obligation
As discussed on our theme page about the pre-contractual information obligation, this strict obligation applies to most commercial collaborations.
However, the legislator has made an explicit exception (Art. X.26 CEL): banking agency agreements and insurance agency agreements are excluded from this specific information obligation and the associated severe penalties. This does not mean that there is no obligation to provide information, but that this is regulated by specific sectoral legislation (e.g. Bank Mediation Act).
Protection of elected representatives in the joint body
A unique feature in this sector is the extensive protection against dismissal. A bank or insurance agent who stands as a candidate or is elected to the sector's joint consultative body enjoys special protection.
The principal cannot unilaterally terminate the agreement with these protected agents, unless there is an urgent reason or—specifically for this sector—on the basis of objective economic criteria (e.g., structural failure to achieve the business plan).
3. The statute of limitations: be aware of the short time frame!
In commercial law, speed is often of the essence, but when it comes to commercial agency, the legislator is particularly strict. An agent or principal who waits too long to enforce their rights will be left out in the cold.
The limitation period of 1 year
Article X.24 of the CEL stipulates that all legal claims arising from the commercial agency agreement are subject to a limitation period:
- 1 year after the termination of the agreement;
- OR: 5 years after the event giving rise to the claim, but this period may never exceed 1 year after the end of the contract.
Specifically: if your contract ends on January 1, you must have issued the summons by January 1 of the following year at the latest. A regular registered letter is not sufficient to interrupt the limitation period (except for the recovery fee, see below).
Which claims expire so quickly?
This short term applies to almost all claims based on the contract, such as:
- Overdue commissions;
- The termination fee;
- Compensation for breach of contract;
- Claims for breach of the non-competition clause.
Please note: The Court of Cassation (May 9, 2016) ruled that the recovery of unduly paid commissions (e.g., paid in error by the principal) is not based on the contract, but on the “non-contractual” doctrine of undue payment. This is subject to the longer, common law limitation period.
The exception: suspension in the case of the goodwill fee
A specific rule applies to the goodwill fee. The agent must notify the principal within one year that he is claiming this fee. This notification (which may be sent by registered letter) suspends the limitation period for this specific claim, after which a new period of one year begins to run.
Conclusion
The rules governing commercial agency in Belgium are fraught with pitfalls. Whether you are a principal agent looking to engage a subagent, a bank agent enjoying protection against dismissal, or a party with outstanding claims after the end of a contract, the details make all the difference. Many parties are particularly surprised by the extremely short limitation period of one year.
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