Litigation and enforcement in France: overview

A Q&A guide to dispute resolution law in France.

The country-specific Q&A gives a structured overview of the key practical issues concerning dispute resolution in this jurisdiction, including court procedures; fees and funding; interim remedies (including attachment orders); disclosure; expert evidence; appeals; class actions; enforcement; cross-border issues; the use of ADR; and any reform proposals.

To compare answers across multiple jurisdictions visit the Litigation and enforcement Country Q&A tool.

The Q&A is part of the global guide to dispute resolution. For a full list of jurisdictional Q&As visit www.practicallaw.com/dispute-guide.

Contents

Main dispute resolution methods

1. What are the main dispute resolution methods used in your jurisdiction to resolve large commercial disputes?

In France, large commercial disputes are usually resolved through litigation or arbitration. Mediation is also used, but to a lesser extent.

Litigation

Litigation procedure is governed by the French Code of Civil Procedure (CCP).

The commercial courts (tribunaux de commerce) (TCs) have jurisdiction where the:

  • Parties to the dispute are merchants or commercial or corporate entities.

  • Subject matter of the dispute is a commercial matter (for example, bills of exchange, promissory notes, security, and so on).

Before the TCs, disputes are decided by non-professional, elected judges who are often former business people and work part-time as judges.

Where a TC or another court does not have jurisdiction and the amount in dispute is above EUR10,000, the courts of first instance in major civil matters (tribunaux de grande instance) (TGI) have jurisdiction. Before the TGIs, disputes are decided by professional judges.

Courts of appeal hear appeals in civil and commercial cases.

The Court of Cassation (Cour de cassation), the highest court in civil and commercial matters, can overrule decisions from lower courts on legal points only.

The French litigation system cannot be described as purely inquisitorial or adversarial. It borrows aspects from both systems, depending on the stage of litigation and on the nature of the matter. For example, the supervising judge (juge de la mise en l'état) acts in a way similar to a manager, and the procedure before him or her is more inquisitorial. By contrast, at trial, the judge is more like a referee, and the procedure before him or her is more adversarial. The system is also more inquisitorial in criminal matters than it is in civil and commercial matters.

The claimant always has the burden of proof.

In commercial disputes, parties can adduce evidence of facts and contracts by any means. However, there are certain situations where written evidence is mandatory (for example, for partnership contracts). By contrast, in civil matters, there is a hierarchy of types of evidence (for example, the judge will give more weight to written evidence).

The French system involves a continuing series of hearings and written communications through which evidence is introduced and evaluated, testimony is taken, and motions are made and decided.

At the end of the process, the judge decides whether the party with the burden of proof has discharged its burden.

Arbitration

Large commercial disputes can also be resolved through arbitration. Arbitration is a widespread method of dispute resolution in France. Arbitration is addressed in Questions 31 to 33.

Mediation

Mediation is not compulsory in commercial disputes in France, but is a growing method of commercial dispute resolution.

 

Court litigation

Limitation periods

2. What limitation periods apply to bringing a claim and what triggers a limitation period?

The French law on limitation periods was reformed in 2008 (Law No. 2008-561 of 17 June 2008, which revised Articles 2219 et seq. of the French Civil Code).

Any action related to commercial disputes, contracts and/or torts becomes time-barred five years after the day on which the holder of the right knows or should have known that its right has been violated (Article 2224, Civil Code).

However, as the previous limitation period for commercial matters (both contract and tort) was ten years, if the action was commenced before 19 June 2008 (date of entry into force of the new regime), the limitation period will end at the earlier of five years after 19 June 2008 or ten years from the start of the (new) limitation period.

Any action related to land disputes becomes time-barred 30 years after the day on which the holder of the right knows or should have known that its right has been violated (Article 2227, Civil Code).

Any action related to insurance matters becomes time-barred two years after the occurrence of the loss (Article L114-1, Insurance Code).

Court structure

3. What is the structure of the court where large commercial disputes are usually brought? Are certain types of dispute allocated to particular divisions of this court?

General structure

The courts before which commercial disputes are brought (either the commercial courts or the courts of first instance in major civil matters) (see Question 1, Litigation) have specialised chambers depending on the subject matter at issue. For example, the Paris Commercial Court has 15 specialised chambers devoted to different types of commercial disputes.

Exclusive jurisdiction

Certain courts of first instance have exclusive jurisdiction over competition, IP and some real estate disputes (see, for example, Decree n°2009-1205 of 9 October 2009 for IP matters; Decree n°2009-1384 of 11 November 2009 for competition matters).

Rights of audience

4. Which types of lawyers have rights of audience to conduct cases in courts where large commercial disputes are usually brought? What requirements must they meet? Can foreign lawyers conduct cases in these courts?

Rights of audience/requirements

For proceedings before the court of first instance in major civil matters (tribunal de grande instance) (TGI) and before a court of appeal, parties must be represented by a French qualified lawyer (avocat) registered at the bar.

Under certain circumstances, parties can appear unrepresented before a TGI. This is the case, for example, for applications for interim measures before the juge des référés, which take place in chambers (see Question 12).

For proceedings before commercial courts, parties can appear unrepresented or can be assisted or represented by any person of their choice (including foreign lawyers, provided that the pleadings are in French).

Rights of audience before the Court of Cassation are restricted to specialised lawyers, who have a monopoly as a result of passing a specific examination. These lawyers are known as avocats au Conseil d'Etat et à la Cour de cassation.

European lawyers

Under Directive 98/5/EC on qualifications of lawyers, lawyers from an EU member state who have practised law in France on the basis of their EU qualification for more than three years can be deemed qualified lawyers in France.

Under Directive 2005/36/EC on the recognition of professional qualifications, lawyers from an EU member state, Norway, Iceland, Liechtenstein or Switzerland can be authorised to practise law in France on the basis of their original professional qualifications.

Non-European Lawyers

Non-European foreign lawyers have no rights of audience in France. However, where there is a reciprocal agreement between France and the foreign lawyer's country of origin, foreign lawyers may be allowed to take a special examination to qualify as lawyers in France (for example, see Article 100 of the Decree of 27 November 1991).

 

Fees and funding

5. What legal fee structures can be used? Are fees fixed by law?

Under French law and pursuant to the French National Bar Association Rules, lawyer's fees must be determined through a fee arrangement with the client.

The amount of fees can be freely negotiated and generally corresponds to a fixed fee or to a fee based on an hourly rate.

Full contingency fees are prohibited, but success fees are allowed where they do not account for the entirety of the fee.

 
6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation costs?

Funding

Parties are free to choose how to fund litigation. Generally, the parties fund commercial litigation themselves. However, recourse to third party funders is growing.

Insurance

Litigation costs are frequently covered by liability insurance policies.

 

Court proceedings

Confidentiality

7. Are court proceedings confidential or public? If public, are the proceedings or any information kept confidential in certain circumstances?

In principle, hearings before the French courts are public. However, there are some exceptions. For example, litigants can jointly request that hearings be confidential, or confidentiality can be ordered where a party's right to privacy is at stake. In any case, the court has discretion to order that hearings be confidential.

Judgments are rendered orally in a public hearing (at the court's discretion) or are made publicly available through the court registrar's office.

Pre-action conduct

8. Does the court impose any rules on the parties in relation to pre-action conduct? If yes, are there penalties for failing to comply?

In commercial matters, the parties' consent is generally required for mediation or conciliation. However, with respect to certain types of claims, the courts can order parties to attempt conciliation before commencing proceedings (see Question 29).

In addition, in all civil and commercial actions, parties must demonstrate that they have attempted to find an amicable solution to the dispute (Article 58, Code of Civil Procedure, modified by Decree No. 2015-282 of 11 March 2015).

French courts enforce contractual provisions that require the parties to settle a dispute or to mediate before going to court.

The practice of placing a "litigation hold" or "litigation freeze" on documents that are reasonably likely to be relevant to anticipated legal proceedings does not exist under French law.

Main stages

9. What are the main stages of typical court proceedings?

Starting proceedings

The first step is the service of a writ of summons (assignation) on the defendant. The claimant states the factual and legal arguments in support of its claim. A list of documents on which the claimant relies as supporting evidence is attached to the writ.

Once the writ has been served on the defendant, the claimant must file the writ with the court of first instance in major civil matters (tribunal de grande instance) (TGI) or the commercial court (tribunal de commerce) (TC).

Notice to the defendant and defence

The writ of summons is served on the defendant by a bailiff (huissier de justice). A company or other legal person must be served at its headquarters, while a natural person is served at his or her residence.

If the defendant resides abroad, the claimant must comply with the applicable rules for service outside of France (see, for example, Regulation (EC) 1393/2007 on the service in the member states of judicial and extrajudicial documents in civil or commercial matters).

Subsequent stages

General procedure. Once the writ is filed, the court sets a date for the first procedural hearing. Written pleadings before the TGI are mandatory. The procedure before the TC is oral. However, written pleadings are commonly used before the TC.

The parties can exchange several sets of written pleadings within time limits fixed by the supervising judge (juge rapporteur in the TC or juge de la mise en état in the TGI). In any case, a party must be given sufficient time to reply.

Subsequently, the supervising judge will schedule a date to hear the evidence and the oral argument.

Fast-track procedure. A claimant who wishes to obtain a ruling on the merits in an accelerated manner can submit a request to the presiding judge of the TGI or the TC. To succeed, the claimant must bring sufficient evidence to demonstrate that the case is urgent. A fast-track procedure before the TGI is called a "fixed date procedure", whereas before the TC it is called an "accelerated procedure". In practice, the fast-track procedures before the TGI and the TC are of similar length.

 

Interim remedies

10. What actions can a party bring for a case to be dismissed before a full trial? On what grounds must such a claim be brought? What is the applicable procedure?

In proceedings before a court of first instance in major civil matters (tribunal de grande instance), a party can raise procedural arguments before the supervising judge to have the case dismissed early on several grounds, such as lack of jurisdiction of the court or irregular service of summons. These procedural arguments must be presented in limine litis (that is, before the first defence on the merits is served).

In proceedings before a commercial court, the court can decide on the merits of the case and rule on the procedural arguments raised by a party simultaneously.

Unlike in many common law systems, there is no "summary judgment" mechanism in France. In other words, there is no way to have the case on the merits dismissed as a matter of law before the judgment.

However, when the claim is neither controversial nor questionable, a party can apply for an interim order (assignation en référé).

 
11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on what grounds?

In commercial matters, a defendant cannot apply for an order requiring the claimant to provide security for its costs, except in the context of an interim injunction (see Question 12).

 
12. What are the rules concerning interim injunctions granted before a full trial?

The juge des référés (whose powers are exercised by the presiding judge of the court of first instance in major civil matters or commercial court, or by his delegates) can issue interim injunctions. An interim injunction can be confirmed or revised by a subsequent decision on the merits.

Under French law, interim injunctions are enforceable on a provisional basis. Enforcement may be subject to security being provided by the applicant. The judge can, at any time, authorise the substitution of the original guarantee for one of equal value.

Where a juge des référés hearing an application for an interim injunction considers that the matter is urgent but raises issues that can be decided only on the merits of the case, then fast-track proceedings on the merits can be ordered at his discretion.

Availability and grounds

An application for an interim injunction can be made on the following grounds:

  • Application for urgent relief. This is available where the matter is urgent and where the respondent does not seriously challenge the issues raised.

  • Application for protective orders. This is available where it is demonstrated that such an order is necessary either to prevent an imminent loss or to put an end to a manifestly illegal situation.

  • Application for payment of a sum of money or specific performance. This is available where the obligation that the applicant seeks to enforce cannot be seriously challenged.

Prior notice/same-day

Interim injunctions can be obtained ex parte where this is necessary to obtain an effective remedy (ordonnance sur requête).

Mandatory injunctions

Mandatory interim injunctions are available, in addition to prohibitive interim injunctions. A judge can order the payment of a penalty for non-compliance with an injunction.

Rights to vary or discharge order and appeals

Where an interim remedy order is granted, the party against whom the order has been granted can challenge it in an inter partes hearing before the juge des référés.

 
13. What are the rules relating to interim attachment orders to preserve assets pending judgment or a final order (or equivalent)?

Availability and grounds

The enforcement judge (juge de l'exécution) (JEX) or the presiding judge of the commercial court can grant a preliminary freezing order (saisie conservatoire) with respect to property or assets, such as amounts owed by a third party to the debtor or securities (for example, a saisie conservatoire de créance).

Preliminary freezing orders can be granted in connection with assets located in France, regardless of whether the debtor lives in France or whether the action on the merits of the case will be brought in France.

The only requirements that the applicant must meet are that:

  • Its claim must have a legal basis.

  • The order is necessary to cover a risk of non-recovery of its debt.

This procedure is designed to surprise the debtor and to ensure the immediate unavailability of the seized assets.

Where the order relates to assets in a third party's possession, this party must disclose to the bailiff the debtor's assets in its possession.

The preliminary attachment of assets will lapse if any of the following events occurs:

  • The creditor does not effectively carry out the attachment within three months of the date of the order.

  • The creditor has neither commenced an action on the merits of the case within one month of obtaining the order nor taken steps to obtain a document entitling the applicant to enforce its rights without a further enforcement order (titre exécutoire).

  • The debtor has not been notified of the attachment of assets in the possession of third parties within eight days of the attachment.

Under French law, a preliminary freezing order is not intended to be a permanent measure and must be converted into an enforcement measure once the creditor is awarded an enforcement order.

Prior notice/same-day

Preliminary freezing orders can be obtained ex parte where this is necessary to obtain an effective remedy.

Main proceedings

Preliminary freezing orders can be obtained regardless of whether the proceedings on the merits will be brought in France.

Preferential right or lien

A freezing order does not create preferential rights over the relevant assets.

Damages as a result

If the judge decides that the application for the order constituted an abuse of process, he or she can order the applicant to compensate the respondent for any losses suffered as a result of the order.

Security

The applicant is not required to provide security.

 
14. Are any other interim remedies commonly available and obtained?

A preliminary security over assets (sûreté judiciaire) can also be obtained over personal property, partnership shares, and so on (for example, inscription provisoire d'hypothèque judiciaire, nantissement des parts sociales).

As for preliminary freezing orders (see Question 13), the applicant must file a request before the enforcement judge (juge de l'exécution) or the presiding judge of the commercial court, showing that:

  • Its claim has a legal basis.

  • The order is necessary to cover a risk of non-recovery of its debt.

This remedy will not prevent the disposal of the asset but creates a security interest in the asset, regardless of the person who holds it, provided that the security is duly registered.

 

Final remedies

15. What remedies are available at the full trial stage? Are damages just compensatory or can they also be punitive?

Damages (dommages et intérêts)

To obtain damages, the claimant must demonstrate a fault, a prejudice and a causal link between them.

Damages are the usual remedy for successful claims in contract and tort. Damages are compensatory and must relate to a loss suffered as a result of a breach of contract or a tortious act.

In principle, punitive damages cannot be awarded.

Under certain circumstances, French law allows for compensation arising from a penalty clause (liquidated damages clause). The court can revise the amount of the penalty to be paid under the clause where the amount is manifestly excessive or inadequate. Penalty clauses are strictly forbidden in consumer law cases.

Specific performance

Specific performance can be granted in connection with the breach of certain obligations, but will be denied in two circumstances (New Article 1221, Civil Code):

  • If the performance is impossible.

  • If it is out of proportion, considering the debtor's costs and the creditor's interest.

Specific performance can be ordered only at the discretion of the court.

 

Evidence

Disclosure

16. What documents must the parties disclose to the other parties and/or the court? Are there any detailed rules governing this procedure?

Under French law, there is no discovery or pre-trial disclosure procedure.

It is not compulsory for a party to produce documents that could be damaging for its case, unless a production order is obtained from the judge. To succeed, a request for the production of documents must be fairly specific (Article 145, Code of Civil Procedure).

Privileged documents

17. Are any documents privileged? If privilege is not recognised, are there any other rules allowing a party not to disclose a document?

Privileged documents

Communications (oral and written) between a client and his or her counsel are privileged and confidential. Communications between counsel of opposing parties are also confidential and cannot be disclosed to the lawyers' respective clients, unless the relevant communication has been marked "official", and its purpose is solely procedural.

In-house lawyers are not members of the bar in France. Communications between in-house lawyers and officers or employees of the company they work for are not privileged. However, there are currently debates on reforming the status of in-house lawyers in France.

Other non-disclosure situations

Professional relationships are protected by statutory professional secrecy provisions (Article 226-13, Criminal Code). Other professional relationships are protected by secrecy. For example, banking secrecy exists (Article L511-33, Code of Financial Markets), but its scope is limited as it does not protect information from disclosure to certain administrative authorities, such as the French Authority for Financial Markets. Additionally, the client is free to waive banking secrecy.

Third parties in litigation proceedings may be able to resist a production order by invoking the protection of their "trade secrets". The concept of trade secrets was created by French judicial decisions and remains undefined. Third parties can also rely on the protection of their privacy interests. Where third parties wish to rely either on trade secrets or privacy, they must demonstrate that they would suffer a loss as a result of disclosure.

Examination of witnesses

18. Do witnesses of fact give oral evidence or do they just submit written evidence? Is there a right to cross-examine witnesses of fact?

Oral evidence

In practice, litigants argue their cases on the basis of documentary evidence (which is given greater weight) and tend to resort to witness statements or oral evidence only where there is no available documentary evidence.

Evidence given by the parties can be presented:

  • Through a written statement (specific formalities are set out in Article 202 of the Code of Civil Procedure (CCP); submitting a statement containing false evidence is a criminal offence).

  • Orally, in the context of a procedure known as enquête, whereby parties and/or witnesses appear before the judge to give oral evidence (presenting false evidence is also a criminal offence).

Oral testimony is regulated by the CCP (Articles 199 and 223 to 230), although it is very rare in civil and commercial cases in France.

Right to cross-examine

There is no cross-examination of witnesses at any stage of French court proceedings.

Third party experts

19. What are the rules in relation to third party experts?

Appointment procedure

Under French law, experts can be appointed by a commercial court or court of first instance in major civil matters at the request of a party or on the judge's initiative. The expert will be a neutral third party with expertise in a given field, chosen from a list of experts approved by the court.

Role of experts

The role of experts is defined by the judge and detailed in each specific order appointing an expert. The expert is prohibited from giving legal opinions. The expert can summon the parties and conduct investigations.

The judge sets a time limit for the expert to file his report.

The expert will usually be given access to all documents in the court file and has the power to order the parties to produce documents or ask the judge to issue a disclosure order.

Right of reply (dire des parties)

Each party can present its position to the expert and can be assisted by its own expert.

Once completed, the expert submits his or her report to the judge. Litigants can challenge the report, including by filing a report of another expert of their choice or requesting the appointment of a new court expert. However, these attempts are usually unsuccessful.

Fees

The judge fixes an advance on costs in the order appointing the expert. This advance must be paid before the expert proceeds. The judge decides which party will bear the cost of the advance payment and the expert's final fees.

 

Appeals

20. What are the rules concerning appeals of first instance judgments in large commercial disputes?

Which courts

An appeal can be lodged against a first instance decision of a court of first instance in major civil matters or a commercial court before the court of appeal in the relevant district (see Question 1, Litigation).

Regardless of the court before which the large commercial dispute is brought in the first instance, any appeal must be lodged before the court of appeal of the district where the dispute was decided. This ensures that disputes initially decided by non-professional judges will be decided by professional judges in the case of an appeal. Generally, the commercial chamber of the court of appeal will hear the case.

The appeal will be struck if the appellant has not complied with any judgment that is enforceable on a provisional basis, unless the appellant demonstrates manifestly excessive consequences of the enforcement or that it has made a deposit with the court (Article 526, Code of civil Procedure (CCP)). The appeal will be reinstated if the appellant later proves compliance.

Proceedings before a court of appeal usually last about two years. A decision of a court of appeal can be challenged before the Court of Cassation, exclusively with respect to legal issues.

The appeal has suspensive effect unless the judgment against which the appeal is made is subject to provisional enforceability.

Grounds for appeal

Before a court of appeal, a judgment of a court of first instance in major civil matters can be challenged both in respect of findings of fact and law. The parties can even produce new evidence.

A decision of a court of appeal can be challenged before the Court of Cassation with respect to legal issues only.

Time limit

An appeal must be lodged with the court of appeal with territorial jurisdiction over the matter within one month of service of the judgment on the appellant. The respondent then has two months to submit its response (Article 909, CCP). When the judgment is served in the French overseas territories, the time limit to lodge an appeal is extended by one month. When the judgment is served abroad, the time limit is extended by two months (Article 643, CCP).

Certain decisions must be challenged before the court within 15 days:

  • Decisions rendered by the juge rapporteur (commercial courts).

  • Decisions rendered by the juge de référés.

  • Decisions rendered by the enforcement judge (juge de l'exécution).

The time limit for an application to the Court of Cassation to set aside a court of appeal decision is two months from the date of service, with a one-month extension for French overseas territories and a two-month extension where parties are outside of France (Article 643, CCP).

 

Class actions

21. Are there any mechanisms available for collective redress or class actions?

Law No. 2014-344 of 17 March 2014 on consumption sets out a mechanism for collective redress known as group actions (actions de groupe).

In summary, an authorised national association whose explicit purpose is the defence of consumers can bring an action before a court of first instance in major civil matters (tribunal de grande instance) (TGI) to obtain damages suffered by individual consumers in similar situations.

The association bringing the case is responsible for funding the group action.

The claim can seek compensation only for economic loss suffered by consumers. Any payments made by the defendant must be put in a specific escrow account with the Deposits and Consignment Fund (Caisse des Dépôts et Consignations) (a French public entity). Wire transfers from this account are permitted only to pay the victims.

Contrary to, for example, US class actions, French group actions follow an opt-in model, meaning that a consumer must explicitly join the group and make a claim before or after the liability of the defendant has been established by a judgment.

In addition, a simplified group action can be set up where the consumers' identities are known and the amount of their damages is similar. In this case, once the liability of the defendant has been established, consumers need only explicitly consent to the indemnification as established in the judgment.

The cross-border aspects of class actions, which are not addressed in French law, will undoubtedly raise complex issues, particularly if foreign consumers try to obtain group action compensation in France, or if a group action is conducted against companies domiciled abroad.

The scope of group actions has been extended to the areas of health and environmental law (Decree of 26 September 2016 and Law of 12 October 2016).

Since the adoption of this Law, nine group actions have been introduced in France, concerning financial, economic, electronic communications and banking issues (www.conso.net/content/laction-de-groupe-consommation-8-actions-introduites-en-pres-de-deux-ans).

To date, a TGI judgment has been rendered in only one of these nine group actions (on 27 January 2016).

 

Costs

22. Does the unsuccessful party have to pay the successful party's costs and how does the court usually calculate any costs award? What factors does the court consider when awarding costs?

Generally, the losing party must pay all of the legal costs incurred by the court (known as dépens) (Article 696, Code of Civil Procedure (CCP)).

In all proceedings, the judge will order the party that must pay for legal costs, or the losing party, to pay to the other party the amount that it will fix on the basis of the expenses actually incurred but not included in the legal costs (for example, lawyers' fees) (Article 700, CCP).

In awarding costs, the judge will apply principles of equity and will take into consideration the financial situation of the losing party. For reasons based on the same considerations, the judge may decide that there is no need for a costs order.

In matters where their representation was mandatory and where they have not received any interim payment, lawyers can request that the costs order give them the right to obtain payment from the party responsible for paying legal costs. However, the party against whom the recovery is sought can deduct, by legal set-offs, the amount of its claim from legal costs.

 
23. Is interest awarded on costs? If yes, how is it calculated?

A successful party to court proceedings in France is entitled to post-judgment interest at the applicable legal rate calculated on both:

  • The principal amount awarded in the judgment.

  • An award of court costs and other costs that have been assessed in the judgment, such as legal fees.

Since 1 January 2015, the rate is fixed every six months, and two different rates are applicable depending on the creditor's status (that is, whether he is acting in his individual capacity or as a professional).

Additionally, Article L313-3 of the French Code of Financial Markets sets out a specific rule on the payment of default interest. Where there has been a pecuniary penalty fine, the legal rate is increased by five points, two months after the day when the decision became enforceable (even if only provisionally enforceable).

However, on request of the debtor or the creditor, and taking into account the debtor's financial situation, the enforcement judge (juge de l'exécution) can exempt the debtor from this increase or reduce the amount payable.

 

Enforcement of a local judgment

24. What are the procedures to enforce a local judgment in the local courts?

A French judgment is enforceable in France when the following conditions are met:

  • The winning party's counsel has notified the losing party's counsel of the judgment (where representation by a lawyer is mandatory).

  • The parties have been notified of the judgment, unless it is enforceable on the mere production of the original copy to the losing party.

  • The judgment has become res judicata or the court has ordered its provisional enforceability (exécution provisoire).

 

Cross-border litigation

25. Do local courts respect the choice of governing law in a contract? If yes, are there any areas of law in your jurisdiction that apply to the contract despite the choice of law?

To determine the law applicable to commercial contractual obligations, French courts apply the following legal instruments:

  • For contracts concluded up to 17 December 2009: the Rome Convention on the law applicable to contractual obligations (1980/934/EEC) (Rome Convention).

  • For contracts concluded after 17 December 2009: Regulation (EC) 593/2008 on the law applicable to contractual obligations (Rome I).

The fundamental principle in both instruments is that parties are free to choose the law that governs their contract.

The choice must be express, or it must be demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. The parties can select the law applicable to the whole or a part of the contract.

In the absence of a choice, the contract will be governed by the law of the country with which the contract is most closely connected. If no choice has been made, the Rome Convention and Rome I contain default rules to determine the law applicable.

The main limitations on the parties' choice of governing law are as follows:

  • Where all other elements relevant to the situation at the time of the choice are located in a country other than the country whose law has been chosen, a court can apply the provisions of that other law which cannot be derogated from by contract (Article 3(3), Rome Convention; Article 3(3), Rome I).

  • Mandatory rules of law (lois de police) of a country can apply despite the choice of law made by the parties, as follows:

    • effect can be given to mandatory rules of law of another country with which the situation has a close connection if, under the law of that country, those rules must be applied regardless of the law applicable to the contract (Article 7(1), Rome Convention);

    • effect can be given to the "overriding mandatory provisions" of a country where the relevant contractual obligations will be performed, to the extent that those provisions make performance of the obligations unlawful (Article 9, Rome I).

  • Application of the chosen law can also be refused if it is "manifestly incompatible" with the public policy of the forum (Article 16, Rome Convention; Article 21, Rome I).

Rome I does not apply to matters of evidence and procedure, which are governed exclusively by the law of the court hearing the claim, regardless of the law that applies to the substantive issues.

 
26. Do local courts respect the choice of jurisdiction in a contract? Do local courts claim jurisdiction over a dispute in some circumstances, despite the choice of jurisdiction?

French courts will generally respect a choice of jurisdiction clause in a contract.

Where the parties have chosen the courts of an EU country, the applicable regulation is Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation).

Under the Brussels Regulation:

  • If the parties, one or more of whom is domiciled in a member state, have agreed that a court or the courts of a member state will have jurisdiction to settle any disputes that have arisen or that may arise, that court must have exclusive jurisdiction (Article 23(1)).

  • If none of the parties to an agreement on the choice of jurisdiction is domiciled in an EU member state, the courts of any other member state will have no jurisdiction over their disputes unless the court chosen has declined jurisdiction (Article 23(3)).

Article 23 does not apply where the parties have chosen the courts of a country outside the EU. The Brussels Regulation contains provisions on exclusive jurisdiction in disputes concerning certain types of subject matter, which override a choice of jurisdiction clause (Article 22). There are also special rules regarding disputes arising out of insurance, consumer and employment contracts (Articles 8 to 21).

Since 10 January 2015, Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation) applies. It replaces the current version of the Brussels Regulation and applies to legal proceedings instituted, authentic instruments drawn up, and court settlements concluded on or after that date. The Brussels Regulation continues to apply to proceedings instituted, settlements concluded, or instruments drawn up before that date.

The Recast Brussels Regulation introduces several changes. Article 25 of the recast Brussels Regulation gives jurisdiction to the courts of the member state chosen by the parties, regardless of their domicile. There is a new rule regarding the governing law to be applied when considering the validity of a jurisdiction clause. The question of whether a jurisdiction agreement is null and void as to its substantive validity will be determined under the law of the member state identified in the jurisdiction agreement (Article 25, Recast Brussels Regulation).

 
27. If a foreign party obtains permission from its local courts to serve proceedings on a party in your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction party to any international agreements affecting this process?

The applicable procedure depends on the jurisdiction where the foreign court sits:

  • Foreign court located in an EU member state. Regulation (EC) 1393/2007 on the service in the member states of judicial and extrajudicial documents in civil or commercial matters provides for various methods of service in another EU member state, principally through transmitting and receiving agencies designated by member states. In France, bailiffs with territorial jurisdiction have been designated as the receiving agencies. French bailiffs carry out service of documents in France in accordance with French procedural rules.

  • Foreign court located in a state party to the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil and Commercial Matters 1965. Each contracting state must designate a central authority to accept incoming requests for service. In France, the central authority is the Bureau du droit de l'Union, du droit international privé et de l'entraide civile (BDIP).

  • Foreign court located in a non-EU state or state not party to a relevant treaty. Articles 688-1 and 688-8 of the Code of Civil Procedure (CCP) apply. Service will be effected through delivery or service by a bailiff. The execution of a request for notification or service (through a bailiff) can be refused by a French authority if the request is of a nature to adversely affect the sovereignty or the security of France. The request can also be refused if it does not comply with the provisions of the CCP.

 
28. What is the procedure to take evidence from a witness in your jurisdiction for use in proceedings in another jurisdiction? Is your jurisdiction party to an international convention on this issue?

As an EU member state, France is subject to the provisions of Regulation (EC) 1206/2001 on co-operation between the courts of the member states in the taking of evidence in civil or commercial matters. For relationships with third countries, the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention) applies between signatories. In any other case, the provisions of the Code of Civil Procedure (CCP) apply.

Therefore, the applicable rules depend on where the foreign court sits:

  • Proceedings taking place in an EU member state. Under Regulation (EC) 1206/2001, the court of a member state can:

    • request the court of another member state to obtain evidence; or

    • request permission to gather evidence itself in another member state.

    Each contracting state must designate a central authority responsible for:

    • supplying information;

    • seeking solutions to any difficulties regarding transmission;

    • forwarding, in exceptional cases, a request to the court with jurisdiction.

In France, the central authority is the Bureau du droit de l'Union, du droit international privé et de l'entraide civile (BDIP).

  • Proceedings taking place in a country that is a party to the Hague Evidence Convention. To obtain evidence, a contracting state can, in accordance with the provisions of the law of that state, make a request to the competent authority of another contracting state, through a letter of request. The central authority (the BECI in France) will undertake to receive letters of request coming from a judicial authority of another contracting state and to transmit them to the authority competent to execute them. The judicial authority executing a letter of request must apply its own law regarding the methods and procedures to be followed. Evidence can also be taken by diplomatic officers, consular agents and commissioners of a contracting state in the territory of another contracting state and within the area where they exercise their functions. A contracting state must send a request to the BECI.

  • Proceeding taking place in a non-EU state or state that is not party to a relevant treaty. Articles 736 to 748 of the CCP apply. A letter of request must be sent to the Ministry of Foreign Affairs or through diplomatic channels. The Minister of Justice will transmit the request to the public prosecutor of the jurisdiction where the request must be implemented. Requests are implemented in accordance with French law, unless the foreign court has requested that it be implemented in a particular manner (Article 739, CCP). A judge can refuse to comply with a letter of request only on the grounds that it would trigger a risk of harm to French sovereignty or national security.

Legislation passed in 1968 and modified in 1980 (Law No. 80-538 of 16 July 1980) (Blocking Statute), prohibits, subject to the provisions of international treaties, both the request and the communication (in writing or orally) of documents or information of an economic, commercial, industrial, financial or technical nature in the following cases:

  • With a view to establishing evidence for future judicial or administrative proceedings outside of France.

  • In the context of such proceedings.

Although controversial, the Blocking Statute was intended to:

  • Provide French entities and residents with a legal excuse to refuse requests for documents in the context of discovery procedures associated with proceedings in jurisdictions such as the US.

  • Ensure compliance with the procedures set out in international treaties such as the Hague Evidence Convention (in other words, evidence can be obtained in France provided that the procedures established in this Convention are followed).

Failure to comply with the Blocking Statute can lead to prosecution and criminal penalties (for individuals, a prison sentence of up to six months and a fine of up to EUR18,000 and, for companies, a fine of up to EUR90,000). However, to date, there has been only one prosecution under the Blocking Statute (C. Cass., Criminal Chamber, 12 Dec. 2007, No. 07-83.228).

Enforcement of a foreign judgment

29. What are the procedures to enforce a foreign judgment in the local courts?

In the absence of a specific treaty applying to the case (lex specialis), the following regulations apply:

  • Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation).

  • Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 2007 (New Lugano Convention).

Recast Brussels Regulation

The Recast Brussels Regulation amended Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation). It applies to judgments rendered in EU member states, including the UK, and abolishes exequatur requirements for judgments rendered by courts of other EU member states.

A judgment given in a member state must be recognised in the other member states without any special procedural requirement (Article 36.1, Brussels Regulation). However, any interested party can apply for a refusal of recognition and enforcement if certain requirements are fulfilled (Articles 45 and 46, Recast Brussels Regulation). These include where the judgment is manifestly contrary to public policy (ordre public) in the EU member state in which recognition or enforcement is sought. Therefore, the foreign judgment must not be inconsistent with French principles of international public policy, and must not conflict with a French judgment that has become enforceable in France. In addition:

  • The subject matter of the dispute must be substantially connected with the jurisdiction of the court that rendered the judgment.

  • The French courts must not have had exclusive jurisdiction to hear the matter.

  • There must not be fraud.

To enforce a foreign judgment, a person must submit an application for a certificate stating that the decision is a judgment in civil and commercial matters that is enforceable in the country where it has been rendered without any further conditions, as well as a short description of the subject matter of the judgment (Articles 37 and 53, Recast Brussels Regulation).

New Lugano Convention

The objective of the New Lugano Convention is to unify the rules on jurisdiction in civil and commercial matters and expand the applicability of the Brussels Regulation to the relations between EU member states and Norway, Iceland and Switzerland.

For judgments rendered in these countries, a recognition and enforcement decision (exequatur) must be obtained through the relevant court of first instance in major civil matters in order to enforce a foreign judgment in France. There will be a review of the decision on limited grounds.

 

Alternative dispute resolution

30. What are the main alternative dispute resolution (ADR) methods used in your jurisdiction to settle large commercial disputes? Is ADR used more in certain industries? What proportion of large commercial disputes is settled through ADR?

The main ADR methods used in France are arbitration, conciliation, and mediation.

Directive 2008/52/EC on mediation in civil and commercial matters (Mediation Directive) was implemented in France by an Ordinance of 16 November 2011 (No. 2011-1540) and a Decree of 20 January 2012 (No. 2012-66) (Mediation Decree).

Mediation is defined as any structured process whereby two or more parties attempt to reach an agreement to settle their dispute amicably with the assistance of a third party, the mediator. The parties can choose the mediator (médiation conventionnelle), or the mediator can be appointed by the judge with the parties' consent (médiation judiciaire) within the framework of an existing dispute.

Conciliation is very similar to mediation. Under French Law, parties can use conciliation on their own initiative or on that of the judge during the proceeding.

Before commercial courts, there is a requirement to attempt conciliation before commencing proceedings. This conciliation can be conducted by the judge or by a conciliator appointed to that end.

 
31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR?

Mediation

Under French Law, two types of mediation can be relevant in commercial disputes:

  • Court-ordered mediation (médiation judiciaire).

  • Mediation on the basis of a contract, either under a dispute resolution clause providing for mediation or a subsequent agreement (médiation conventionnelle).

Court-ordered mediation. This is regulated by Articles 131-1 to 131-15 of the Code of Civil Procedure (CCP).

A judge can refer parties to mediation, but only with their consent. Mediation is conducted by a neutral third party, the mediator, who is appointed by a judge through an order (ordonnance). The judge also fixes a time period for the mediation when making the mediation order. A maximum time period of three months is granted, which can be renewed once for the same period of time, at the request of the mediator.

The mediator must fulfil his or her role in a manner that is impartial, competent and diligent and has an obligation to use his or her best endeavours to bring the mediation to a successful conclusion.

In addition, the order provides that, where appointed by a judge, the mediator must inform the judge or court as to whether or not the parties have reached an agreement.

A party or the mediator can ask the judge to terminate the mediation at any time.

The judge can also terminate mediation on his or her own initiative if the mediation appears to be compromised. If the judge terminates the mediation, the court proceedings will resume.

Contractual mediation. Pursuant to Decree of 20 January 2012 (No. 2012-66) (Mediation Decree), a new section relating to the amicable resolution of disputes, and to contractual mediation in particular, has been introduced in the CCP (Articles 1528 to 1567).

With regard to contractual mediation, the role of the courts is often limited to enforcement of a settlement agreement reached in the context of the mediation. However, given that a dispute resolution clause providing for mediation is contractual in nature, a party can apply to a court to enforce the clause.

Conciliation before commercial courts

Where the judge intends to appoint a conciliator, he or she will inform the parties. Once the parties have accepted, the judge will appoint a conciliator and fix a time limit for the conciliator to undertake his or her mission (Articles 831 to 835, CCP).

Since the adoption of the Decree of 11 March 2015 (No. 2015-282), the claimant must specify, in the writ of summons, when and how it tried to resolve the dispute through alternative means before going to court (Article 56, CCP). However, special circumstances or urgency can justify non-compliance with this requirement.

Commercial arbitration

Arbitration is a contractual dispute resolution mechanism based on consent. The parties must have agreed to arbitrate their disputes, either by inserting an arbitration agreement in their contract or in a separate document. They can also decide to use arbitration after a dispute has arisen.

When the parties have agreed that their disputes should be resolved exclusively through arbitration, they cannot go to the courts. In principle, French courts must decline jurisdiction when a party invokes the existence of an arbitration agreement, except when the arbitration agreement is manifestly void or manifestly inapplicable (Article 144, CCP). However, the existence of an arbitration agreement does not prevent the parties from seeking provisional measures from French courts before, and sometimes after, the constitution of the arbitral tribunal (Article 1448, CCP). In addition, the parties can request the assistance of French courts in support of the arbitration proceedings, in certain limited circumstances.

 
32. How is evidence given in ADR? Can documents produced or admissions made during (or for the purposes of) the ADR later be protected from disclosure by privilege? Is ADR confidential?

In court-ordered mediation, the mediator has no power of inquiry. He can only hear evidence from willing third parties and with the consent of the parties.

Confidentiality is considered to be one of the most important features of mediation. The mediator's findings and the statements that the mediator receives cannot be produced or referred to in any subsequent proceedings related to the dispute without the parties' agreement or in any circumstances in connection with other proceedings (Code of Civil of Procedure (CCP)). However, there are exceptions where disclosure is necessary for overriding considerations of public policy.

In commercial arbitration, the parties can define the procedural rules applicable to the production of evidence. In addition, the arbitral tribunal can take all necessary steps concerning evidentiary and procedural matters, such as ordering the parties to produce evidence and calling on any person to appear as a witness before the arbitral tribunal (Article 1467, CCP).

In domestic arbitration, proceedings are confidential (Article 1464, CCP). There is no express obligation of confidentiality in international arbitration, and parties are therefore advised to enter into a confidentiality agreement.

 
33. How are costs dealt with in ADR?

Court-ordered mediation

In the order (ordonnance) establishing mediation, the judge sets a provision for costs and a deadline for the parties to advance the funds. If the provision for costs is not paid, the mediation will be cancelled and the court proceedings will resume.

At the end of the mediation, the judge fixes the mediator's final compensation.

Contractual mediation

The allocation of costs is a matter to be decided by the parties.

Commercial arbitration

Absent an agreement of the parties, the arbitrators have wide discretion to determine the allocation of costs between or among the parties. They often take into account the conduct of the parties during the proceedings and the relative success of the claims presented by the parties.

 
34. What are the main bodies that offer ADR services in your jurisdiction?

The leading institutions that offer ADR services in France include the:

The ICC is the most famous arbitral institution in France. Other arbitration institutions include the:

  • French Arbitration Association (Association française d'arbitrage) (www.afa-arbitrage.com).

  • International Arbitration Chamber of Paris (Chambre arbitrale internationale de Paris) (www.arbitrage.org).

 

Proposals for reform

35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into force?

Although not a dispute resolution reform per se, the newly adopted French contract law reform could have consequences for the French dispute resolution system. The reform's main proposals have been adopted, including incorporating the concept of hardship (imprévision) into contract law and modifying the circumstances in which one party can suspend performance if the other party fails to perform its obligations.

Other changes regarding civil liability that are currently being discussed include:

  • Increasing compensation for victims of physical harm.

  • Allowing civil judges to impose a civil fine on a person who has committed a serious misconduct (in addition to damages owed to the victim of the fault).

In addition, the Decree of 13 May 2016 (No. 2016-607) reinforces consumer protection regarding the terms of the offer and the execution of mortgages.

 

Online resources

Legifrance

W www.legifrance.gouv.fr

Description. Legifrance is the official website of the French Government for the publication of up-to-date French legislation and many French court decisions. The website also provides non-official translations of the Civil Code and Code of Civil Procedure in several languages.



Contributor profiles

Elizabeth Oger-Gross, Partner

White & Case LLP

T +33 1 5504 1515
F +33 1 5504 1516
E elizabeth.oger-gross@whitecase.com
W www.whitecase.com

Professional qualifications. New York bar, 2005; Paris bar, 2012

Areas of practice. International arbitration (commercial and investment); cross-border litigation.

Recent transactions

  • Representing the main contractor on one of the world's largest infrastructure projects located in Central America, in a series of related ICC arbitrations against the employer, worth in excess of US$2 billion. Leading a team claiming over US$300 million in connection with design and fabrication issues with one of the main components of this project.
  • Representing a European owner in relation to a high-profile, multi-billion dollar ICC arbitration in respect of the design and construction of a nuclear power plant. Work has focused on conceiving and co-ordinating the defences to the multitude of individual claims brought by the supplier.
  • Advising a leading European buyer of gas on a price revision under a long-term gas supply contract.

Languages. English, French

Anastasia Pitchouguina, Associate

White & Case LLP

T +33 1 5504 1515
F +33 1 5504 1516
E anastasia.pitchouguina@whitecase.com
W www.whitecase.com

Professional qualifications. Paris bar, 2007

Areas of practice. White collar.

Recent transactions

  • Assisting a top tier European bank in a criminal claim against traders.
  • Assisting a major French bank in disputes related to variable rate loans granted in a foreign currency to individuals.
  • Representing primarily issuers and financial institutions in investigations and sanction proceedings before administrative authorities (AMF and ACPR).
  • Representing former high-profile political figures in criminal and press matters.
  • Representing anti-terrorist associations before criminal courts in international litigation cases.
  • Represented a major real estate developer in a national, multi-jurisdictional and regulatory case.

Languages. French, English, Russian

Elodie Valette, Associate

White & Case LLP

T +33 1 5504 1515
F +33 1 5504 1516
E elodie.valette@whitecase.com
W www.whitecase.com

Professional qualifications. Paris bar, 2013

Areas of practice. Civil and commercial litigation (domestic and international litigation).

Recent transactions

  • Assisting a major French bank with the regulatory compliance, review and update of existing contracts in the light of the contract law reform.
  • Assisting a major French bank in disputes and in a class action related to variable rate loans granted in a foreign currency to individuals.
  • Assisting an international industrial group resisting a demand made by a contractor under an on-demand bank guarantee issued by the Paris branch of a bank.
  • Assisting in multiple disputes relating to enforcement measures (national and international disputes).
  • Assisting and advising an international industrial group in a mediation following the wrongful termination of a contract.
  • Advising a Mexican bank on French law issues relating to representation and succession rights, in the context of a major dispute in Mexico against members of a famous deceased artist's family.

Languages. French, English

Anaïs Harlé, Associate

White & Case LLP

T +33 1 5504 1515
F +33 1 5504 1516
E anais.harle@whitecase.com
W www.whitecase.com

Professional qualifications. Paris bar, 2016

Areas of practice. International arbitration (commercial and investment); post-arbitral litigation.

Recent transactions

  • Representing the claimants in an ICSID arbitration regarding the regulated gas sector.

  • Representing a construction company in ICC proceedings related to a major infrastructure project in Central America.

  • Representing a group of foreign companies resisting annulment of an international award before the French courts.

  • Represented a group of companies in an ICC arbitration regarding tax disputes arising out of an M&A transaction in Central Europe.

Languages. French, English


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