Can the coronavirus crisis be relied on to avoid paying invoices?

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Fauve Bex

Associate

Although the coronavirus crisis can sometimes be relied on to invoke force majeure, debtors cannot rely on the crisis to avoid paying due invoices.

 

Principle: no force majeure

When two parties have concluded a contract for the delivery of goods or the provision of services and one party has correctly delivered those goods or services, then the other contracting party might decide to use the current crisis as a reason to try to contest the invoice, or state it is unable to pay the invoice, or simply choose not to pay the invoice.

However, for an event to qualify as force majeure, that event must make it impossible (or at least reasonably impossible) to perform the relevant obligation. The obligation here is the obligation to pay a sum of money, which is generally incorporated in the terms of the invoice.

The Belgian courts have usually considered that the obligation to pay cannot be subject to force majeure. Financial difficulties, even if due to any external circumstance that itself would qualify as a force majeure event for the debtor, do not release the debtor from its payment obligation. Accordingly, in principle, the current crisis cannot not be relied on as force majeure to avoid paying due invoices.  

Therefore, unless the creditor agrees, the debtor has to comply with its payment obligation, except if the creditor did not (correctly) perform its obligations, be it because of force majeure or not. In practice, however, actually enforcing payment obligations has become very difficult, due to the courts and bailiffs focusing on urgent matters only.

 

Government intervention

The Belgian government is taking measures to alleviate the (financial) situation for businesses.

One Royal Decree that is currently being discussed should confirm that the threat of the coronavirus and the measures taken by the government in that regard, qualify as force majeure. However, this Royal Decree is unlikely to apply force majeure to payment obligations.

A second upcoming Royal Decree will, for the duration of the crisis, suspend enforcement proceedings and rule out bankruptcy proceedings. Only in exceptional circumstances will the courts allow a creditor to take such action. This Decree will effectively protect debtors facing financial difficulties.

 

Some practical tips:

  • Check your agreements or invoice general conditions for any specific arrangement in the light of the present circumstances;
  • Consider renegotiating your agreement(s) or coming to a mutually acceptable settlement by, for instance:
    • extending the due date of any outstanding invoice; or
    • choosing not to apply late payment interest; or
    • agreeing on a payment plan with your partner.

 

Please do not hesitate to contact Fauve Bex, Charlotte Vermeersch or Alexander Hansebout for further information.

The above information is merely intended as comment on relevant issues of Belgian law and is not intended as legal advice. Before taking action or relying on the comments and the information given, please seek specific advice on the matters that are of concern to you.

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