DRAFTING AN NDA

DRAFTING AN NDA

In business, trust is key, but so is protection. When entering into new partnerships, negotiating deals, engaging external parties or welcoming new employees, companies often must share sensitive or confidential information. A well-drafted non-disclosure agreement (NDA) helps ensure that what is shared remains confidential and is used only for the agreed purpose. It is about setting clear boundaries and respecting the value of shared knowledge.

Different type of NDAs

• A unilateral NDA is appropriate when only one party will disclose confidential information
• A mutual NDA is suited when both parties share information

In each scenario, the NDA frames the relationship and supports the business in maintaining competitive advantage, preserving intellectual property or trade secrets, and avoiding unintended liability.

Legal framework in Belgium

Under Belgian law, NDAs are anchored primarily in the rules of the Belgian Civil Code and in specific regulatory regimes for trade secrets. Of particular importance are the Act of 30 July 2018 relating to the protection of trade secrets, the Belgian Code of Economic Law and in particular Books I, XI, and XVII of that Code as well as the Act of 3 July 1978 on Employment Agreements. While an NDA is not itself what makes information a trade secret, an NDA forms part of the reasonable steps to protect confidentiality and strengthens the enforceability of your rights.

Belgian courts will enforce confidentiality obligations provided they are reasonable in scope, duration and territory: overly broad or indefinite restrictions may be held unenforceable.

Key elements of an NDA

When drafting an NDA for use in Belgium, consider incorporating the following elements (and tailoring them to your particular transaction):

1. The use of definitions - Be precise, yet sufficiently broad

• "Confidential Information": Clarify what types of information are covered (e.g., business plans, technical data, prototypes, client lists, pricing information). Standard exclusions include information which is already public (other than by breach of the agreement), independently developed by the recipient, or rightfully received from a third party without obligation of confidentiality. 
• " Affiliate” / “Associated Company” and “Control":  Often certain obligations reach not only the recipient but also entails associated companies. It is important to define these terms or know what they refer to under Belgian law (cfr. art. 1:14 of the Belgian Code on Companies and Associations)

2. Obligations of the receiving party - Clearly state that the recipient must (i) protect the confidentiality of the Confidential Information; (ii) not use it for any unauthorised purpose; and (iii) not disclose it to third parties (except as permitted).

3. Permitted disclosures – Certain disclosures will be necessary and therefore explicitly permitted under certain conditions (on a need-to-know basis, to authorities, etc.)

4. Duration - The term of the confidentiality obligation should be clearly stated, often survival beyond the end of the business relationship/negotiations is foreseen. For example, obligations may continue in full force for five years from the effective date.

5. Return or deletion of materials - the receiving party, upon request or upon termination/expiration, will have to return or destroy (or certify destruction of) all materials containing Confidential Information. However, in practice, it is increasingly acknowledged that certain residual copies may remain in automated IT back-ups or cloud-based systems that are not easily erasable without compromising general data integrity. In such cases, the receiving party should ensure that these copies are not actively used, accessed, or restored except for legitimate IT, legal, or compliance reasons, and that the confidentiality obligations continue to apply for as long as the information remains stored.

6. Intellectual property rights – Typically no licence or assignment of intellectual property rights is conferred by disclosure of the Confidential Information.

7. No R&W – It is common for disclosed information to be provided without any representation or warranty as to its accuracy or completeness

8. Remedies – Parties may include indemnification provisions. For example, the breaching party may indemnify the other for proven direct damages. It is common to exclude indirect or consequential damages (such as loss of production, income, reputation, or client base). Some NDAs allow for liquidated damages (“fixed sum”) though in practice it can be difficult to fix an appropriate amount in a one-size-fits-all contract. In addition, provisional measures (voorlopige maatregelen / mesures provisoires) in connection with an actual or threatened breach of confidentiality can be sought in Belgium, even if this is not explicitly foreseen in the NDA

9. Non-hire/ non-solicitation clause – such clause preventing one party from hiring or approaching the other party’s employees during or after the business relationship can be entailed in the NDA. While such clauses can help protect legitimate business interests, they should be carefully tailored depending on which side of the agreement you are on. Their scope and duration must remain reasonable, and they should not prevent standard recruitment processes.

10. Governing law and jurisdiction – Best to explicitly include that Belgian law governs the NDA and to provide for the competent jurisdiction (typically the courts of a Belgian region or an arbitration court in Belgium).

The work does not end once the NDA has been reviewed, negotiated, and signed. It continues with the ongoing duty to protect confidential information and to implement effective safeguards. So make sure the confidentiality it guarantees is upheld in practice through controlled access, secure systems, encryption, and by ensuring that anyone receiving the information indirectly is bound by the same duties of confidentiality. Our team at act legal Belgium is pleased to assist in reviewing, updating, or drafting NDAs that meet your specific business needs.

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