On 10 December 2013, a new act was published in the Belgian State Gazette concerning the trust accounts (kwaliteitsrekeningen/comptes de qualité) held by lawyers, notaries and bailiffs. By stipulating that lawyers' trust accounts are not part of their estate, the new act appropriately remedies and neutralises the effects of a highly criticised ruling of the Belgian Supreme Court (Hof van Cassatie/Cour de Cassation) of 27 January 2011.[1] The main effect of the act is that these trust accounts - and thus client and third-party funds - are now clearly protected against actions by a lawyer's creditors.
Concept of the trust account
A trust account is an account which the account holder holds openly on behalf of one or more other parties.
Until the Belgian Supreme Court's ruling of 27 January 2011, the literature assumed that lawyers' trust accounts - as is the case with the trust accounts of notaries and of lawyers in other EU Member States - could not form the object of attachment or garnishment orders by the lawyer's creditors. This conclusion followed from the fact that the trust account is not considered part of the lawyer's assets and, consequently, the lawyer does not have any claim to the amounts held in this account.
The Supreme Court's ruling of 27 January 2011
In a ruling of 27 January 2011, the Belgian Supreme Court surprisingly held that, in the absence of specific statutory provisions protecting lawyers' trust accounts, the amounts held in such an account should be considered part of the insolvent lawyer's assets and consequently could be garnished. This ruling was heavily criticised by the bar associations and legal scholars, which urged the legislature to take action in order to rectify the situation.
The Act of 22 November 2013
The legislature has heeded this call for action and inserted new Article 8(1) in the Mortgage Act of 1851.[2] Article 8 determines which of the debtor's assets can be considered collateral for creditors and how these assets should be distributed amongst creditors. New Article 8(1) expressly states that the amounts held in the trust account of a lawyer, bailiff or notary cannot be considered part of the debtor's assets and, therefore, cannot be garnished by the creditors of a lawyer or law firm in financial difficulty.
The new act will enter into force on 1st June 2014.
[1] Court of Cassation, 27 January 2011, Case F.07.0109.F, www.cass.be
[2] New Article 8(1) of the Mortgage Act refers to new Articles 446quater, 446quinquies, 522(1) and 522(2) of the Judicial Code. These articles do not yet exist, as the bills implementing these provisions must still be approved by the Senate.
