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14 December 2017

Direct claim procedure by subcontractors changes as of 1 January 2018

rechtstreekse vordering onderaannemer consignatie direct claim subcontractor

As of 1 January 2018, if a subcontractor demands direct payment from a client of a construction project, the client can consign this payment and thus stay out of the discussion between subcontractor and main contractor. At the same time, the subcontractor can thus sooner attain certainty in the event of imminent bankruptcy of the main contractor.

1. Direct claim by the subcontractor: principles

A subcontractor who is not paid by the main contractor can directly request the client to pay the invoice (including interests and damages) (article 1798 of the Civil Code).  However, this only applies for the amount for which the client himself still has a debt (or will have one in the future) to the main contractor, with regard to the same construction site.  By paying the subcontractor, the client’s debt to the main contractor is of course settled too.  Sub-subcontractors can also lodge this “direct claim” against the main contractor, since the latter is in turn the subcontractor’s client.

Lodging a direct claim requires no formalities.  However, it is advisable to send a registered letter, which then serves as proof of the date.  Only for the benefit of the subcontractors who made their direct claim before the bankruptcy of the main contractor, the proceeds will remain outside the bankruptcy.

2. Legislative change as of 1 January 2018: possibility of consignment by the client

If the client still pays the main contractor anyway, he risks having to pay a second time to the subcontractor.  Conversely, the client may also be liable to the main contractor if he pays the (claimed) subcontractor without any check or without considering the dispute by the main contractor.  In that case, the client can – rightly or wrongly – delay any payment, as a result of which he may owe interests and damages, or as a result of which the main contractor can stop the works.

As of 1 January 2018, the amended article 1798 of the Civil Code offers a solution to this issue: in the event of a dispute between the subcontractor and the contractor, the client will have the possibility to deposit the (disputed) amount at the Deposit and Consignment Office or into a blocked bank account in the name of the contractor and subcontractor.  If the main contractor or subcontractor makes a written request thereto, the client is even obliged to do so.  It is then up to the main contractor and the subcontractor to decide who is entitled to the money.

The consignment can also be in the interest of the subcontractor.  As a result of the actual deposit at the Deposit and Consignment Office, this sum will be separated from the other assets of the main contractor, and the subcontractor will in principle no longer be in competition with other subcontractors, who could also still make a direct claim in good time (i.e. before the possible bankruptcy of the main contractor).

If you are a subcontractor, it may be advisable to immediately request in your model letter that the client either makes the payment within the (reasonable) term you have set, or consigns the sum without further delay if in the meantime he would have become aware of a dispute by the main contractor.  We recommend that you state that you will hold the client liable if, due to a lack hereof, you would have to share the proceeds with other subcontractors.

Bruno Thoen

 

Published in “Business Vlaanderen”,  number 05 2017, November – December 2017. Click here for the online (Dutch) version on the “Business Vlaanderen” website.

 

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