Proxy Decrees adopted during COVID-19 crisis: practical points of attention for the in-house lawyer
The ongoing COVID-19 crisis has affected all aspects of our daily lives. For in-house lawyers, it is important to keep an overview during these turbulent times. In any case, the regulator does not make things any easier for in-house lawyers with the multitude of regulatory initiatives in response to this crisis. The various federal initiatives are discussed below.
On 30 March 2020, the two laws of 27 March 2020, empowering the federal executive power to take measures to combat the spread of the coronavirus (hereafter: “Special Proxy Law I” and “Special Proxy Law II”, collectively the “Special Proxy Laws”), were published in the Belgian Official Journal. These Special Proxy Laws gave the federal executive power the power to amend existing laws in certain matters and under certain conditions by royal decree until 30 June 2020, in order to respond adequately and in a timely manner to the various challenges brought by the COVID-19 pandemic.
This article reflects on the practical points of attention in this respect, and explains the impact of the proxy decrees on the daily practice of in-house lawyers.
Large scope Special Proxy Laws
The Special Proxy Laws gave the federal executive power extensive powers to take measures during the so-called ‘first wave’ to mitigate the pandemic’s consequences.
Thus, by virtue of Special Proxy Law I, the federal executive power was empowered to amend the functioning and justice of the Administrative Jurisdiction Division of the Council of State and the Administrative Courts. This made it possible to guarantee, in the midst of a crisis, the proper functioning of these bodies as well as the continuity of the administration of justice and their other missions.
Special Proxy Law II on the other hand, gave the executive branch the power to adopt a whole series of social, fiscal and economic measures to prevent the spread of the virus and its consequences. As a result, the federal executive power could take measures to:
- prevent the further spread of the coronavirus (article 5, § 1, 1°);
- safeguard the necessary logistical and storage capacity (article 5, § 1, 2°);
- provide support or take protective measures for the affected financial, economic, profit and non-profit sectors, enterprises and households (article 5, § 1, 3°);
- ensure the economy’s continuity, the country’s financial stability and the market’s functioning, as well as consumers’ protection (article 5, § 1, 4°);
- make adjustments in labour and social security law, (article 5, § 1, 5°);
- suspend or extend legal terms (article 5, § 1, 6°);
- ensure the proper functioning of the courts (article 5, § 1, 7°); or
- comply with decisions taken by European Union authorities in the context of the COVID-19 crisis (article 5, § 1, 8°).
These broad powers left much room for manoeuvre in the adoption of special proxy decrees. The federal executive power made extensive use of this and issued approximately fifty special proxy decrees.
The granting of special powers is always limited in time. In the framework of COVID-19 the special powers were granted for an initial period of 3 months that could be renewed if necessary. This period expired on 30 June and was not extended.
To enable the federal executive power’s effective combat against the crisis’ consequences, the measures enacted based on the Special Proxy Laws could be granted retroactive effect back to no earlier than 1 March 2020.
The Council of State rightly noted in its advice 67.142/AV/AG that the Special Proxy Laws do not specify the period during which these measures may have effect. This can be justified by the uncertainty surrounding the pandemic’s continuing evolution. As will be explained, in-house lawyers will therefore also have to take into account these special proxy decrees in the future.
Ex post ratification required
All special proxy decrees adopted on the basis of the Special Proxy Laws must be ratified by law within one year of their entry into force. The ratification can be done in one movement or by several separate laws. If such ratification does not take place (on time), the special proxy decrees are deemed never to have existed and their legal consequences retroactively disappear.
Should the decisions regarding special power of attorney not be ratified, the enormous (practical) impact on our society can hardly be overestimated.
At present, the special power of attorney decrees have yet to be ratified by law. A legislative initiative can therefore be expected shortly.
Practical impact for in-house lawyers
The measures taken by the federal executive power by special proxy decree have an impact on the daily practice of in-house lawyers.
As a first example, reference can be made to the Royal Decree No. 4 of 9 April 2020, containing various provisions on co-ownership, company and association law in the context of the fight against the COVID-19 pandemic. This decree provided for the possibility to postpone general meetings of legal entities, or allow them to take place through a more flexible regime.
On the other hand, the Royal Decree No 15 of 24 April 2020 on the temporary suspension of executory and other COVID-19 crisis measures to the benefit of enterprises, provided for a temporary moratorium on the debts of enterprises that were not on payment cessation as of 18 March 2020, but whose continuity was threatened by the pandemic. Enterprises could therefore temporarily invoke this moratorium, which lasted until 17 June 2020 and entailed that:
- enterprises could not be declared bankrupt through summons or dissolved by the courts;
- no conservatory, executory attachment or other means of enforcement could be applied to enterprises’ movable property;
- agreements concluded before 24 April 2020 could not be unilaterally or judicially dissolved on the grounds of non-payment of a pecuniary debt, due and payable under the agreement;
- the payment terms included in reorganization plans have been extended for the duration of the moratorium, if necessary, beyond the maximum length of five years provided for by law;
- the obligation to declare payment cessation was suspended for the duration of the moratorium; and
- any payment and securities provided in the context of new credits obtained by the company during the moratorium period could not be reversed in a subsequent bankruptcy, and the providers of these credits could not be held liable for this on the grounds of unlawful lending.
Royal Decree no. 7 of 19 April 2020 provided for various additional tax support measures that could be applied by enterprises. Through a temporary postponement for the submission of declarations, and an automatic postponement of
payment deadlines for personal income tax, corporate income tax, legal persons’ tax, non-residents tax and payroll tax, the federal regulator aimed at giving enterprises the necessary financial breathing space.
Equally relevant for numerous in-house lawyers, and created through a special proxy decree, was the possibility of taking a so-called ‘corona parental leave’, with the different modalities and conditions under which this was possible.
Moreover, in-house lawyers who follow up on pending litigation have noticed a temporary extension of time limits for initiating legal action in civil proceedings. In criminal proceedings on the other hand, the temporary suspension of prescription periods for criminal claims and penalties had to be taken into account.
In addition, many sector-specific measures have been taken and remain relevant today. An example is the deferred payment for certain amounts collected by the National Social Security Office until 15 December 2020.
In addition to these numerous federal regulatory initiatives in response to the COVID-19 crisis, there are also several regional and European initiatives (not covered in this article). It is the task of the in-house lawyer to maintain an overview. Consulting the Belgian Official Journal on a daily basis is one way of doing this. Through this link you can consult a list of all special proxy decrees that have been adopted on the basis of the Special Proxy Laws. Fortunately, there are alternative means, such as commercial databases that allow users to access legislative information more efficiently. Furthermore, the first steps are also being taken to use AI in the analysis of regulations, which will make the work of in-house lawyers easier in the future (Deloitte developed RegExplorer, an AI tool to promote the transparency and efficient accessibility of regulations).
If you have any questions concerning the items in this newsflash, please get in touch with your usual Deloitte Legal - Lawyers contact at our office in Belgium or:
- Kathleen De hornois, firstname.lastname@example.org, + 32 2 800 70 60
- Wim Naudts , email@example.com, +32 2 800 70 92
- Louis Swennen, firstname.lastname@example.org, + 32 2 600 71 47
For general inquiries, please contact:
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