A company commits an unlawful act
May 2022 – The parliamentary committee for the reform of liability law has recently proposed a draft bill to reform extra-contractual liability in the Civil Code. What does this draft law provide for in relation to legal persons who commit wrongful acts?
Extra-contractual liability
What is meant by extra-contractual liability? Broadly speaking, it is the liability incurred by natural or legal persons as a result of their actions. It is sometimes also referred to as fault liability. If you cause damage to another person through a wrongful act, you are liable. Legal persons (companies and associations) may also be liable for fault. Although the law currently in force refers to "any act of man", the case law does not distinguish between private individuals and legal persons.
The problem is that the legal concepts of company or association imply the impossibility of doing physical acts... Ultimately, it is always a flesh and blood person who has performed an act or taken a decision. What about the fact that a fault committed by a company can ultimately be imputed to the company's organs?
Under the existing legislation, extra-contractual liability can always be imputed to the company. The organs, especially the director, are rarely liable, except in the case of directors' liability and pre-contractual liability.
New features
The preliminary draft is a continuation of the reform of the Civil Code: a bill concerning the insertion of a Book 5 "Obligations" in the (new) Civil Code is currently before Parliament. A new Article 5.144 (as provided for in the preliminary draft) is intended to remove any remaining doubts about the conceptual applicability of the rules on fault-based liability to legal persons: the rules on extra-contractual liability apply in principle to both natural and legal persons, whether private or public.
Article 5.146 is the central provision on fault-based liability. It simply states that any person who, through his fault, causes damage to another person is obliged to repair that damage. In this article, no distinction is consciously made between natural and legal persons.
Consequently, liability for fault attributed to legal persons must, by definition, not result from faults committed by the company's organs (directors). It is therefore possible to conceive of the legal person's fault liability more broadly than through the imputation of faults committed by organs.
Conversely, misconduct by organs in the exercise of their functions always gives rise to liability of the legal person.
Article 5.147 defines a fault as a failure to comply with a rule of conduct which results from the law or from the general duty of care which must be observed in company relations.
Article 5.148 specifies in this respect that the judge may assess the general rule of prudence in the light of, inter alia, the principles of good administration and good organisation. In other words, a company is not only liable for the faults committed by its directors, but also for the damage resulting from a deficient organisation!
Finally, the preliminary draft provides for a new Article 5.158 which introduces a separate basis of strict liability for legal persons for damage caused by non-subordinate persons entrusted with their management. This new provision is based on Article 1384 of the former Civil Code, which is currently in force, which makes masters liable for the acts of their servants. It should be remembered that most of these provisions date from the 19th century...
Future legislation
It should be noted that at the time of writing this article, this legislation has not yet been adopted and no final decision has even been taken at government level. As this is a technical matter, however, there is a good chance that it will evolve in this direction. But one would have to be a guesser to know when this legislation will come into force...
