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Litigation and enforcement in France: overview
Practical Law Country Q&A 9-502-0121 (Approx. 26 pages)
Litigation and enforcement in France: overview
by Alexandre Bailly and Xavier Haranger, Morgan, Lewis & Bockius
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.
Main dispute resolution methods
1. What are the main dispute resolution methods used in your jurisdiction to resolve large commercial disputes?
In France, three main methods are used to resolve large commercial disputes: litigation, arbitration and alternative dispute resolution methods (such as amicable settlement and mediation).
Litigation
The French legal system follows the civil law tradition. French law is traditionally divided into two major branches: public law and private law.
Public law governs questions involving administrative bodies and their relationships with private individuals. By contrast, private law covers purely commercial and civil matters and concerns all matters that are not governed by public law.
Regarding private and commercial law disputes, the French court system has a three-tier structure.
The civil courts (tribunaux d'instance and tribunaux de grande instance) and the commercial courts (tribunaux de commerce) are the first instance courts. The tribunaux de grande instance (main first instance civil courts) have general jurisdiction over private disputes when the disputed amount exceeds EUR10,000 and when the law has not expressly conferred jurisdiction on another court. The commercial courts have jurisdiction to hear disputes between traders, credit institutions and commercial companies, as well as disputes over commercial deeds (such as promissory notes, bills of exchange, and so on).
Law No. 2019-222 of 23 March 2019 has created a new court (tribunaux judiciaires) that merges the tribunaux d’instance and tribunaux de grande instance.
Judges of the commercial courts are not career judges, but are elected from members of the commercial community. The commercial courts only have special jurisdiction.
At the second instance level, the courts of appeal (Cours d'appel) hear appeals filed against all decisions rendered by the civil and commercial courts.
The highest court in civil and commercial matters is the Court of Cassation (Cour de cassation). The role of the Court of Cassation is to review lower court rulings on the grounds of legal and procedural errors, but not factual aspects.
Unlike for criminal matters, the French judicial system is mainly adversarial in commercial matters. The claimant always bears the burden of proof. At trial, the judge will act like a referee and assess the evidence submitted during the proceedings. There is no duty of disclosure or discovery before the French courts.
However, a judge can order or facilitate the submission of evidence. For example, in a counterfeiting case, before the filing of a lawsuit, a party may be authorised under a judicial order to seek evidence from the future defendant's premises.
Commercial acts can be proven by any means, unless the law provides otherwise. Therefore, all types of evidence are admissible in commercial matters (including presumptions and witness evidence).
Arbitration
The International Chamber of Commerce is based in Paris, which contributes to developing an arbitration-friendly regime in France.
France is a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958.
Most provisions of French arbitration law are contained in the Code of Civil Procedure (Code de procédure civile) (CCP). See Question Question 30 to Question 34 for further information.
Mediation
Under French law, parties can refer a matter to mediation in any area of law. This method is not state-regulated and parties can contact non-governmental organisations. See Question 30 to Question 34 for further information.
As a general trend, mediation decisions tend to be legally binding. See Question 30 to Question 34 for further information.
Recent trends in dispute resolution
Law No. 2019-222 of 23 March 2019 created a new legal framework for online mediation, conciliation and arbitration, and for online services of help to referral, applicable from 25 March 2019. It also created an obligation of online referral for demands for payment (applicable at the latest from 1 January 2021). This Law implemented a general reform of civil procedure (see Question 35).
Court litigation
The limitation periods were amended by Law No. 2208-561 of 17 June 2008. The general statute of limitations for making a claim or invoking a right has been reduced to five years (against 30 years previously).
The statute of limitations that applies to business disputes has also been reduced to five years, instead of ten years. Therefore, obligations arising from trade between traders or between traders and non-traders are time-barred after five years.
Legal actions regarding real estate issues become time-barred after 30 years from the day the holder of a right knew, or should have known, of the event(s) allowing him or her to exercise his or her right.
3. In which court are large commercial disputes usually brought? Are certain types of disputes allocated to particular divisions of this court?
The French Commercial Code allocates commercial disputes to the commercial courts (tribunaux de commerce) (Article L. 721-3).
Large commercial disputes are usually brought before the commercial courts or main first instance civil courts (tribunaux de grande instance) depending on the nature of the dispute, and regardless of the amount of the claims (see Question 1).
For competition and maritime disputes, as soon as the conditions of Article L. 721-3 of the French Commercial Code are fulfilled (that is, involvement of commercial acts or persons), commercial courts are competent. Otherwise, civil courts are competent.
For IP disputes, the tribunaux de grande instance are exclusively competent. As from 1 January 2020, they will be merged into the tribunaux judiciaires.
For employment disputes, a specific court is exclusively competent, that is the Conseil de prud’hommes (Articles L. 1411-1 to L. 1411-6, Labour Code).
These courts have specialised chambers. For example, the Commercial Court of Paris has specialised chambers dedicated to various matters such as banking, town planning, international disputes, and so on.
Additionally, two procedural court protocols of 7 February 2018 record the creation of international chambers within the Paris Commercial Court and the Paris Court of Appeal. This means that these two courts will now hear pleadings in English and accept exhibits in English. Other languages can also be chosen by the parties, in particular those most widely used in international trade, such as Spanish, German, Chinese, and Arabic.
From 1 March 2018, the international chambers have jurisdiction to hear disputes relating to international trade contracts in the following areas:
- Commercial contracts.
- Termination of business relationships.
- Transport.
- Unfair competition.
- Actions for damages for anti-competitive practices.
- Transactions in financial instruments.
- Market framework agreements on financial contracts, instruments and products.
The answers to the following questions relate to procedures that apply in the commercial courts and main first instance civil courts.
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
To represent a party in France, a lawyer must be registered on the official list of a bar association.
Representation by a French registered lawyer is mandatory before the main first instance civil courts and the courts of appeal.
Representation by a French registered lawyer is not mandatory before the commercial courts and local courts (tribunaux d'instance). A party can be represented by a person of its choice or can appear unrepresented, including for court hearings. When the party is represented by a French registered lawyer, it does not have to be present at the court hearing. When the party is represented by a person of its choice, with a written mandate, it can be absent at the court hearing. When the party is unrepresented, it must attend the court hearing. The tribunaux d’instance will be merged into the tribunaux judiciaires from 1 January 2020.
Foreign lawyers
Directive 98/5/EC on qualifications of lawyers allows nationals of EU member states who are fully qualified in their own countries to practise in France under their original titles and represent their clients in court. After three years of actual regular practise in France, they can apply for the title of French qualified lawyer (avocat) and be registered with a French bar association.
To have rights of audience, non-European lawyers must pass an examination assessing their knowledge of French law.
Fees and funding
A lawyer and his/her client must conclude a written fee agreement (Law No. 2015-990 of 6 August 2015). The written agreement must specify the:
- Amount of the fees or a method for determining the fees.
- Various costs envisaged.
The fee agreement can be freely negotiated and can refer to hourly rates or task-based billing.
"No-win no-fee" agreements are prohibited in France. However, it is possible to agree with a lawyer on a contingency or success fee combined with another method of remuneration (such as hourly rates or task-based fees).
6. How is litigation usually funded? Can third parties fund it? Is insurance available for litigation costs?
Funding
The use of third-party capital to fund litigation is neither expressly prohibited under French law nor customary.
A lawyer can only receive payment of his/her fees from his/her client, or a person who has been granted a power of attorney by the client (Article 11.3, French National Bar Regulation).
Third-party funding is not a major issue because litigation is not as costly in France as in other jurisdictions.
Court proceedings
7. Are court proceedings confidential or public? If public, are the proceedings or any information kept confidential in certain circumstances?
Court proceedings are public. However, a litigant can request confidentiality. In civil and commercials matters, confidentiality is mainly granted in insolvency proceedings and to protect individuals' right to privacy.
In principle, final judgments are rendered in the name of the French people and are made available through the court clerk.
From 25 March 2019, confidentiality may be granted by the judge to protect trade secrets (Article 33, Law No 2019-222 of 23 March 2019).
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 civil and commercial matters, the parties must specify the steps they have taken to reach an amicable resolution when referring a matter to a court.
If the parties fail to demonstrate that they have attempted to reach an amicable settlement to their dispute, the judge can propose to the parties to attempt conciliation or mediation. This ability was enhanced by Law No. 2019-222 of 23 March 2019. There is no sanction in this respect.
This Law also created a mandatory prior attempt of mediation, conciliation or participative procedure for specific demands of payment and neighbouring disputes, sanctioned by the inadmissibility of the claim. This provision is applicable from 1 January 2020.The parties can agree on contractual clauses requiring them to initiate a mediation or conciliation procedure before going to court. These clauses are binding on the court. A party seeking to refer a matter to a court in breach of such a clause will face a dismissal of the proceedings, provided that the other party raises the breach.
Starting proceedings
Proceedings start with the claimant instructing a bailiff to serve a writ of summons (assignation) on the defendant. The writ of summons sets out the grounds of the claimant's claim and summons the defendant to appear in court. A list of supporting documents must be attached to the writ. The claimant's counsel will then file an official copy of the served writ with the court.
In the commercial courts (tribunaux de commerce) and main first instance civil courts (tribunaux de grande instance), proceedings can be brought either by the service of a writ of summons, or by a joint application filed by both parties.
For specific demands of payment, the claim must be filed online from 1 January 2021 at the latest.
Notice to the defendant and defence
A legal entity must be served at its head office, while an individual must be served at his or her place of domicile.
For disputes before the commercial courts, the writ of summons must be served at least 15 days before the hearing. It must also be filed at the registry of the relevant commercial court no later than eight days before the hearing.
In the main first instance civil courts, a claimant can obtain a ruling in an expedited manner through a fixed date procedure. The claimant must file a request demonstrating that the case is urgent. In the commercial courts, an accelerated procedure can be initiated through a writ of summons at short notice.
Subsequent stages
Once the writ of summons is filed, a supervising judge is designated to guarantee the fairness of the proceedings, specifically regarding the timely exchange of pleadings and the production of documents, when applicable. The supervising judge is called a juge de la mise en état before the main first instance civil courts, a conseiller de la mise en état before the courts of appeal or a juge rapporteur before the commercial courts.
The electronic filing of documents is mandatory before the tribunaux de grande instance for contentious matters and before the court of appeal (Articles 796-1 and 930-1, CCP).
The procedure is oral before the commercial courts. However, when the parties are represented by their counsel, they file written pleadings as they do before the main first instance civil courts, and the supervising judge schedules a date for the filing of the briefs.
Once the supervising judge decides that the parties have exchanged all relevant arguments in their pleadings, he or she schedules a closing date after which no additional filings are authorised. After the closing of the proceedings, the supervising judge sets the date of the trial hearing.
Interim remedies
10. What steps can a party take for a case to be dismissed before a full trial? On what grounds can such applications be brought? What is the applicable procedure?
In France, there is no procedural mechanism to promptly and expeditiously dispose of a case on the merits without a trial.
Before the main first instance civil courts (tribunaux de grande instance) and the courts of appeal (cours d'appel), a party can raise procedural arguments such as lack of jurisdiction or invalidity of procedural documents. These arguments must be raised simultaneously and before any defence on the merits (in limite litis).
11. Can a defendant apply for an order for the claimant to provide security for its costs? If yes, on what grounds?
Availability and grounds
A preliminary injunction is a court order aimed at implementing temporary measures at an early stage, to prevent further damage being caused.
Under French law, interim injunctions are enforceable on a provisional basis. An interim injunction is not a final decision. To obtain a final decision, the claimant must initiate substantive court proceedings on the merits.
The competent judge is the provisional relief judge (juge des référés). This judge can order the payment of a penalty for non-compliance with an injunction. An interim injunction can be granted on different grounds, including:
- Where the matter is urgent, in the absence of serious dispute.
- To issue a protective order.
- To avoid an imminent damage or to abate a manifestly illegal nuisance.
- To order the payment of a sum of money or specific performance of an obligation, where the existence of the obligation is not seriously challenged.
The usual standard of proof applies for interim injunction (see Question 1).
The claimant is responsible for taking execution measures to implement the interim injunction. If it subsequently appears that the claimant was not entitled to such relief, he or she will need to compensate the defendant. (Article L 111-10, Code of Procedural Execution).
Prior notice/same-day
It is possible to obtain interim relief without prior notice to the defendant (ordonnance sur requête).
In the case of an emergency, it is also possible to deliver an emergency writ of summons within a few days (référé d'heure à heure).
Mandatory injunctions
Mandatory interim injunctions are available, in addition to prohibitory interim injunctions.
Right to vary or discharge order and appeals
Where the injunction order was issued without notice to the defendant, the defendant can lodge an appeal to dismiss it at a full hearing before the court of appeal (cour d'appel). The defendant can also appeal an interim injunction order issued with notice, within 15 days.
13. What are the rules relating to interim attachment orders to preserve assets pending judgment or a final order (or equivalent)?
Availability and grounds
Any person whose claim appears to be justified in principle can apply to the judge for an attachment order (saisie conservatoire) covering the property of its debtor.
An attachment order may be justified, for example, if the creditor fears that the debtor may seek to sell his or her assets to avoid reimbursement. The defendant's assets must be located in France.
The claimant must prove the principle of the claim and that the circumstances threaten its recovery.
An application for an attachment order must be made before the enforcement judge (juge de l'exécution), in civil matters, or before the presiding judge of the commercial court (tribunal de commerce), in commercial matters.
The creditor must comply with the following procedural rules:
- It must carry out the attachment within three months following the court order.
- It must start an action on the merits within one month following the attachment order.
An attachment order is not a permanent measure, and must be converted into a final and enforceable decision after the creditor is awarded an enforceable ruling on the merits.
Prior notice/same-day
An attachment order can be obtained without prior notice to the defendant in urgent cases or if there are circumstances likely to threaten recovery. In urgent cases, the judge can also issue a same-day attachment order.
Main proceedings
An attachment order can be granted in support of proceedings on the merits, already existing or filed within 30 days of the freezing order, that are taking place in a foreign court.
Preferential right or lien
An attachment order does not create preferential rights over the attached assets in favour of the claimant against other creditors. The attached assets will be distributed to creditors in proportion to their claims.
A preliminary security right over assets (sûreté judiciaire) can be obtained over personal property, partnership shares, and so on (for example, a mortgage, a pledge over a business or a pledge of shares). Preliminary security rights rank in order of registration.
The procedure is the same as for interim attachment orders (see Question 13).
Final remedies
15. What remedies are available at the full trial stage? Are damages only compensatory or can they also be punitive?
There are no punitive damages in France. Damages are intended to compensate an actual loss and must relate to a loss suffered as a result of a breach of contract or tortious act.
To obtain damages, the claimant must prove a fault, a prejudice and a causal link between them.
In case of breach of contracts, damages are limited to damages under the contract or predictable at the conclusion of the contract, and in case of very serious or wilful breach, to the immediate and direct consequences of the breach. For tortious acts, the principle is the integral compensation of the prejudice.
Damages can also result from a penalty clause (clause pénale). However, where the amount of a penalty clause is manifestly excessive or inadequate, the judge can revise the amount of the penalty.
Specific performance can also be granted. However, specific performance will be denied if actual performance is impossible or out of proportion.
Injunctions can also be granted, with penalties if necessary.
Evidence
16. What documents must the parties disclose to the other parties and/or the court? Are there any detailed rules governing this procedure?
Each party decides which documents will be disclosed to support its argument. All the documents mentioned by a party for its defence must be disclosed spontaneously (Articles 132 § 1 and § 2, CCP).
The documents can be provided in electronic form when the recipient has agreed (Articles 748-1 and 748-2, CCP).
However, these documents must be disclosed in due course, that is, the opposing party must have sufficient time to analyse and answer. Otherwise, the judge may discard them (Article 135, CCP).
In the absence of spontaneous disclosure, the opposing party may apply for a court order to disclose before the competent judge for the case at hand (Article 133, CCP).
The opposing party can also apply for a court order in the following cases:
- Disclosure of all documents not mentioned to the opposing party, possibly subject to penalties.
- Disclosure of all documents to a third-party, possibly subject to penalties (Articles 138 and 139, CCP).
However, before a trial, the judge can order a preparatory inquiry if there is a legitimate reason to preserve or to establish the evidence of the facts on which the resolution of the dispute depends (mesures d'instruction in futurum).
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. However, the counsel is the only party subject to a confidentiality obligation. Therefore, the client can disclose theses communications to third parties.
Communications between counsel of opposing parties are also confidential and cannot be disclosed, unless the relevant communication has been marked "official".
Communications between counsel and witnesses are not privileged, as privilege is limited to counsel/client communications.
In-house lawyers are not considered as members of a "bar" (mainly because they are deemed as not being independent from their employer). Accordingly, professional secrecy does not protect their communications with employees of their employer. Therefore, there is no privilege for communications between in-house legal advisors and a party or a third party.
When parties are attempting to settle a dispute, statements made in the course of negotiations cannot be disclosed before a court if the negotiations were handled by the parties' attorneys, since such exchanges are confidential per se.
A settlement agreement has been amicably signed cannot be disclosed, except when necessary to protect a party's rights in the case of a separate and subsequent dispute or for evidential purposes.
Other non-disclosure situations
There are other types of information that may be protected, such as:
- Information related to intellectual property and copyright infringement.
- Information protected by medical secrecy.
- Information protected by banking secrecy.
- Information related to personal privacy and access to databases.
Directive 2016/943/EU on the protection of undisclosed know-how and business information against their unlawful acquisition, use and disclosure was adopted in May 2016 to harmonise diverging national laws in the EY on the protection against the misappropriation of trade secrets.
France has implemented Law No 2018-670 of 30 July 2018 on trade secrets to comply with EU regulations, so that companies can exploit and share their trade secrets with privileged business partners.
Judges in civil and commercial disputes can adapt the court’s motivation and the disclosure when a document harms trade secrets (Article 33, Law No 2019-222 of 23 March 2019). Court hearings can also be private in relation to the judgment. These provisions entered into force on 25 March 2019.
18. Do witnesses of fact give oral evidence or do they only submit written evidence? Is there a right to cross-examine witnesses of fact?
Oral evidence
The parties argue their cases on the basis of written documentary evidence. They rarely resort to witness statements or oral evidence.
When a witness statement is needed, it must be provided in the form of written evidence (affidavit). The judge may, however, require to hear a witness.
As the courts rarely rely on oral evidence, more value is attached to written evidence in civil or commercial litigation.
However, the court will examine the value of both oral and written evidence in any case.
Appointment procedure
Under French law, experts are appointed by the court at the request of a party or on the judge's initiative.
An expert may be chosen from a list of experts approved by the court; otherwise, the judge can appoint a person of its choice.
The court will define the mission of the expert and the duration of expertise (Article 265, CCP). At the end of this period, the expert will provide a written report or give his/her opinion during the court hearing (Article 282, CCP). Within the decision appointing the expert and defining its mission, judges increasingly require the issuance of a draft expert report to collect the opinion of the parties on this report within a fixed time.
However, an extra-judicial appraisal may be initiated by both or one of the parties.
An extra-judicial appraisal initiated by one party can take place in two circumstances:
- Outside of any court litigation, to obtain a report which will be filed as evidence.
- During court proceedings, a party may require the assistance of an expert to participate in the expertise of the judicial expert and ask him/her questions (Article 161 § 1, CCP).
An extra-judicial appraisal initiated by both parties is often the result of a contractual provision. It is common in insurance disputes.
In both cases, the parties will appoint the expert.
An extra-judicial appraisal is not subject to the specific legal requirements of the French Procedural Code that apply to court-ordered experts. These experts are considered as service providers. However, the appraisal can be challenged before the court by the opposing party if the appraisal was not carried out contradictorily. Unlike judicial experts, extra-judicial experts do not have to file their report to the court administration services. Their report is subject to the same standard of proof as the other evidence disclosed by the party.
Role of experts
An expert does not represent the interests of one party, but is appointed to provide independent advice to the court. The mission of experts is defined and detailed by the judge on a case-by-case basis.
The expert must give his or her opinion on the points he or she has been appointed to examine. He or she must never express an opinion on a point of law. The expert must comply with the agreed time limits.
The expert can request the parties or third parties to submit any documents. Where there is difficulty in obtaining such documents, the expert can request that the judge issue an order for the submission of documents.
The mission of extra-judicial experts is defined by the party who appointed them.
Right of reply
After receipt of the parties' written statements, documented evidence and oral observations, the expert must submit his or her completed report to the judge and to the parties.
Under certain conditions, the parties can challenge the expert's report, including by:
- Providing a report from another expert of their choice.
- Requesting the appointment of a new court expert.
Fees
The judge fixes the amount of an advance on costs in the order appointing the expert. The fees are generally advanced by the claimant.
After the filing of the expert's report, the judge will determine the expert's fees taking into account the following factors:
- Steps taken.
- Compliance with the agreed time limit.
- Quality of the work completed.
The judicial expert must file an assessment of his remuneration with his report.
The judge decides which party will bear the expert's final fees in the ruling on the merits that follows the expertise proceedings. In practice, the losing party is sentenced to refund the advanced expert’s fees.
Appeals
Which courts
A decision of a main first instance civil court (tribunal de grande instance) or a commercial court (tribunal de commerce) can be challenged before a court of appeal (cour d'appel). An appeal must be lodged before the court of appeal located in the jurisdiction where the dispute was decided (ressort).
However, it is only possible to lodge an appeal if the claim is for an amount less than EUR4,000 (taux de ressort).
To lodge an appeal, no permission is requested. However, the appellant must:
- Have been a party to the first instance proceedings (Article 546, CCP).
- Have an interest, that is, be prejudiced by the first instance judgment.
- Absence of renunciation to its right of appeal, for example, by enforcing a non-enforceable judgment without reservations (Article 556 to 558, CCP).
The right to appeal decisions of the commercial courts ensures that professional judges decide on the dispute initially ruled on by non-professional judges.
An appeal has a suspensive effect, unless the appealed judgment is subject to provisional enforceability.
Court of appeal decisions can be challenged before the Court of Cassation on points of law only.
Grounds for appeal
Under French law, parties have the right to a second hearing. A first instance decision can be challenged before a court of appeal in respect of both factual and legal findings.
Time limit
In civil and commercial cases, the parties have one month from the notification of the judgment to lodge an appeal.
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 of the court of appeal decision.
These time limits are extended by one month when the notified party is domiciled outside mainland France (including Corsica), and by two months when the notified party is abroad.
Class actions
French law provides for several class actions mechanisms in limited areas, which are:
- Consumer protection.
- Discrimination.
- Health.
- Environment.
- Data protection.
This type of action is referred to as a group action (action de groupe).
Group actions were introduced in France by Law No. 2014-344 of 17 March 2014, which entered into force in October 2014. Class actions were initially only possible in consumer and competition-related matters.
Group actions were extended to health and product liability by Law No. 2016-41 of 26 January 2016, which entered into force on 1 July 2016.
Law No. 2016-1547 of 18 November 2016 defines group actions in broad terms and extended their scope to environmental liability, discrimination and personal data protection.
French group actions are based on an opt-in system. Both individuals and associations can apply to opt in.
A group action can be brought before the courts when several persons placed in a similar situation suffer damage caused by the same person, as a consequence of a breach of its legal or contractual obligations.
Group actions can only be exercised by associations that have been registered or duly declared for at least five years, and whose statutory purpose involves the defence of interests that have been infringed.
Group actions are funded by the association filing the claim. Subject to the means-tested requirements , legal aid from the State can apply to class actions. Legal rules do not provide specific provisions for third-party funding in class actions.
Class action proceedings consist of the three following stages:
- The competent judge assesses the liability of the defendant, based on the facts and on the testimonies of the persons presented by the association.
- After ruling that the action is admissible, the judge defines the group of persons affected and the publication methods to advertise the action. At this stage, individuals have the opportunity to opt in the class action.
- The judge sets the quantum and nature of damages payable by the defendant to each member of the class action.
A total of 18 group actions have been filed in France since their introduction into French law. To date, three actions have been rejected and two have led to a settlement. 11 actions are still pending.
The first French class action, brought in October 2014 against Foncia, a property management company, was rejected by a judgment issued on 14 May 2018. The claimants argued that Foncia had illegally charged its lessees for sending them monthly rent payments receipts. The main first instance civil court of Nanterre ruled that residential leases did not fall within the scope of the Consumer Code and therefore a class action could not be admissible in this case.
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?
In principle, the unsuccessful party will bear all the legal costs incurred by the court (dépens). However, the judge can decide that the successful party will pay the whole or any part of the legal costs (Article 696, CCP). Legal costs correspond to costs incurred during the proceedings and the enforcement of the decision (including court fees, translation fees and expert's fees) (Article 695, CCP).
The costs not included in the legal costs mentioned above (frais irrépétibles) must be allocated to the party that has to pay the legal costs, or the unsuccessful party (Article 700, CCP).
In all proceedings, the judge will determine this costs award on the basis of the expenses actually incurred, but not included in the legal costs (for example, lawyers' fees).
When awarding costs, the judge can take into consideration the rules of equity and the financial condition of the parties.
Statutory interest applies to any sum owed by a person as a result of a court decision. Interest runs from the date of the decision and is calculated on both the amount awarded in the judgment and the legal costs.
The calculation of interest varies according to the:
- Conditions set out in the judgment.
- Date of actual payment of the amount due.
- Applicable interest rate.
The applicable interest rate (called simple interest rate) applies if the payment is made within two months following the day the decision became enforceable. Otherwise, this rate is increased by five points on top of the simple interest rate. Different rates also apply depending on whether the party is an individual or a corporate entity.
Enforcement of a local judgment
24. What are the procedures to enforce a judgment given by the courts in your jurisdiction in the local courts?
To become enforceable in France, a judgment must be notified both to the unsuccessful party and its lawyers (for rulings issued by the main first instance civil courts (tribunaux de grande instance) and the courts of appeal (cours d'appel)). In practice, the court's decision is served by a bailiff on the unsuccessful party.
A judgment will be enforced from the moment it acquires the force of res judicata (that is, it is final and no longer subject to appeal), except where the debtor is granted a grace period or the creditor is granted provisional enforcement (exécution provisoire) (Article 501, CCP). Therefore, generally, a local court judgment will be enforceable at the expiry of the time limit for the appeal, when no appeal is filed.
The provisional enforcement is automatic for specific judgments or claims (for example, decisions in emergency interim proceedings) (Article 514, CCP). Otherwise, the local court, of its own motion or on application by the parties, can decide whether or not to grant it (Article 515, CCP).
However, a judgment may be enforceable in France on the mere provision of the original copy to the unsuccessful party, when such requirement is specified in the ruling (exécutoire sur minute).
Cross-border litigation
25. Do local courts respect the choice of governing law in a contract? If yes, are there any national laws or rules that may modify or restrict the application of the law chosen by the parties in their contract? What are the rules for determining what law will apply to non-contractual claims?
Contractual choice of law
There are two main legal instruments regulating the law applicable to a contract:
- The Rome Convention on the law applicable to contractual obligations (1980/934/EEC) (Rome Convention), which applies to contracts entered into before 17 December 2009.
- Regulation (EC) 593/2008 on the law applicable to contractual obligations (Rome I), which applies to contracts entered into on or after 17 December 2009.
The Rome Convention and Rome I harmonised the rules for establishing the law applicable to contracts in the EU.
The principle set out in those instruments is that the parties are free to choose the law applicable to their contract. In the absence of a parties' choice, the contract will be governed by the law of the country with which it is most closely connected.
However, there are limitations on the parties' choice of law:
- Where all other elements relevant to the situation at the time of the parties' choice are located in a country other than the country whose law has been chosen, the parties' choice will not prejudice the application of the mandatory provisions of the law of that other country (Article 3(3), Rome Convention; Article 3(3), Rome I).
- Specific rules apply to individual employment contracts, consumer contracts and insurance contracts (Rome I).
- Overriding mandatory provisions (lois de police) of the forum where the dispute is being heard may apply irrespective of the law that would otherwise be applicable. Overriding mandatory provisions are provisions "the respect for which is regarded as crucial by a country for safeguarding its public interest, such as its political, social and economic organisation, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable" (Article 9(1), Rome I).
- The application of the law chosen by the parties can be refused if it is manifestly incompatible with the public policy provisions (ordre public) of the forum (Article 16, Rome Convention; Article 21, Rome I).
In France, case law gives a few examples of overriding mandatory provisions, including:
- The prohibition of clauses allowing unilateral modification of a contract.
- The prohibition of corruption to obtain a contract.
- The principle of equality between creditors during an insolvency procedure.
The French courts will refuse to apply contractual terms that violate these rules as they are deemed contrary to the French international public order.
No choice of law and non-contractual claims
Choice of law for non-contractual claims within the EU is regulated by the Regulation (EC) 864/2007 on the law applicable to non-contractual obligations (Rome II), as follows:
- The general rule appoints the law of the country where the damage occurs (Article 4 § 1, Rome II).
- However, where the person claimed to be liable and the injured party have their habitual residence in the same country at the time of the occurrence of the damage, the law of that country will apply (Article 4 § 2, Rome II).
- If it appears from all the circumstances that the harmful event has manifestly closer links (for example, contract) with a country other than the former two, the law of that other country will apply (Article 4 § 3, Rome II).
- The choice of law is also taken into account (Article 14, Rome II).
- Specific rules apply to product liability, environment, competition, IP and strikes/lock-out disputes.
The law appointed may also be inapplicable because of overriding mandatory provisions or public policy provisions.
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?
International disputes
Choice of jurisdiction clauses are in principle lawful, provided that they do not detract from the mandatory territorial jurisdiction of a French court.
However, derogation from the jurisdiction of the French courts is excluded in the following matters:
- Personal status.
- Implementing measures in France.
- Real estate.
- Labour law.
EU disputes
The applicable instrument with respect to EU disputes is Regulation (EC) 44/2001 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels Regulation).
Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation) has replaced the Brussels Regulation from 10 January 2015. The Recast Brussels Regulation applies to legal proceedings instituted, authentic instruments formally drawn up or registered, and court settlements approved or concluded, on or after 10 January 2015.
Under the Brussels Regulation, if the parties, one or more of whom is domiciled in the EU, have agreed that a court of a member state has jurisdiction to settle any disputes which have arisen, or which may arise, in connection with a particular legal relationship, that court or those courts will have exclusive jurisdiction.
The Recast Brussels Regulation introduced an important change. It gives jurisdiction to the chosen court of a member state regardless of the parties' place of domicile, which may be located outside the EU.
Both instruments contain provisions limiting the parties' choice of jurisdiction, which include:
- Rules of exclusive jurisdiction in disputes relating to immovable property or tenancies, the validity of the constitution, the nullity or the dissolution of companies and the registration or validity of IP rights.
- Specific provisions regarding insurance, consumer and employment contracts.
Additionally, if a jurisdiction agreement designates the courts of an EU member state, this jurisdiction is exclusive unless the agreement is null and void as to its substantive validity under the law of that member state (Article 25, Recast Brussels Regulation).
27. If a party wishes to serve foreign proceedings on a party in your jurisdiction, what is the procedure to effect service in your jurisdiction? Is your jurisdiction a party to any international agreements affecting this process?
The applicable provisions depend on the location of the foreign court, as follows:
- The foreign court is located in the EU. Service of the proceedings will be governed by Regulation (EC) 1393/2007 on the service in the member states of judicial and extrajudicial documents in civil and commercial matters. This Regulation provides for a simplified route through the establishment of transmitting and receiving agencies in each of the member states. In France, the National Association of Bailiffs (Chambre Nationale des Huissiers de Justice) has been designated as the centralised receiving agency. The receiving agency can refuse to service the documents if they not translated either in a language understood by him/her or an official language of the receiving member state.
- The foreign court is located outside the EU and in a state party to the HCCH Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters 1965 (Hague Service Convention). The Hague Service Convention provides for the channels of transmission to be used when a judicial or extrajudicial document is to be transmitted from one state party to another state party for service in the latter. In France, the central authority is the Office of the Law of the Union, of Private International Law and Mutual Assistance (Bureau du droit de l'union du droit international privé et de l'entraide civile) of the Ministry of Justice. When documents are serviced through central authorities, these may require the documents to be written in, or translated into, the official language or one of the official languages of the state addressed.
- The foreign court is located outside the EU and in a state not party to the Hague Service Convention. The French CCP sets out the applicable rules. Foreign proceedings will be notified by means of a simple notification or service through a bailiff. The notification or service must be made in the language of the originating state. The execution of a request for notification or service may be refused by the French authorities if it is likely to adversely affect the sovereignty or the security of the French state. To prove service when the location of the addressee cannot be ascertained, the bailiff can draw up minutes recording the impossibility to reach the addressee.
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?
The applicable provisions depend on the location of the foreign court, as follows:
- The foreign court is located in the EU. Regulation (EC) 1206/2001 on co-operation between the courts of the member states in the taking of evidence in civil or commercial matters will apply where the court of a member state:
- requests the competent court of another member state to obtain evidence; or
- requests permission to gather evidence itself in another member state.
The request must be made to obtain evidence that is intended for use in judicial proceedings, whether commenced or contemplated. Each member state must designate a central authority responsible for:- supplying information to the courts;
- seeking solutions to any difficulties regarding transmission; and
- forwarding, in exceptional cases, a request to the competent court.
In France, the central authority is the Office of the Law of the Union, of Private International Law and Mutual Assistance (Bureau du droit de l'union du droit international privé et de l'entraide civile) of the Ministry of Justice. - The foreign court is located outside the EU and in a state party to the HCCH Convention on the Taking of Evidence Abroad in Civil and Commercial Matters 1970 (Hague Evidence Convention). Each contracting state must designate a central authority responsible for accepting and processing letters of request from other contracting states. Where the evidence requested consists of a deposition testimony, a letter of request can lead to the testimony being taken in a proceeding under the normal evidentiary rules of the country where the witness is located. Alternatively, the Hague Evidence Convention also provides for procedures for the taking of testimonies before a diplomatic or consular officer of the country where the action is pending, or by a commissioner especially appointed by the court in which the action is pending. In France, the central authority is the Office of the Law of the Union, of Private International Law and Mutual Assistance of the Ministry of Justice.
- The foreign court is located outside the EU and in a state not party to the Hague Evidence Convention. The French CCP will apply. The Ministry of Justice will transmit the request to the public prosecutor of the jurisdiction where the request is to be implemented. The request will be implemented in accordance with French law, unless the foreign court has requested that it should be implemented in a particular manner. The parties and their representatives, even where they are foreign nationals, can ask questions to a witness on leave of the judge. Questions must be asked in, or translated into, French. A judge can refuse to comply with a request.
In 1968, the French Parliament adopted Law No. 68-678 of 26 July 1968 (modified in 1980) that prohibits, subject to international agreements and other statutes, the request, research or communication, in writing, orally or otherwise, of documents or information of economic, industrial, financial or technical nature which are aimed at the constitution of evidence for current or future administrative or judicial proceedings outside France. This statute protects French residents from discovery procedures conducted by foreign courts. The statute is criminal in nature. In the case of a breach, the defendant may be sentenced to up to six months' imprisonment and a fine of up to EUR18,000 (EUR90,000 for legal entities).
Enforcement of a foreign judgment
Recast Brussels Regulation
Court decisions rendered in the EU may be enforced under Regulation (EU) 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Recast Brussels Regulation). A judgment rendered in a member state must be recognised in any member states without any special procedural requirement. The Recast Brussels Regulation abolishes the exequatur requirements for judgments rendered by the courts of EU member states.
However, the Recast Brussels Regulation sets out several grounds for refusal of recognition and enforcement if certain conditions are met (for example, if the judgment is manifestly contrary to the public policy provisions of the relevant member state).
New Lugano Convention
The main objective of the Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 2007 (New Lugano Convention) is to extend the applicability of the Brussels Regulation to relations between EU member states and Iceland, Norway and Switzerland.
HCCH Convention on Choice of Court Agreements 2005 (Hague Choice of Court Convention)
The Hague Choice of Court Convention, which applies to Mexico and all EU member states apart from Denmark, aims to ensure the effectiveness of choice of court agreements between parties to international commercial contracts. In addition to securing the jurisdiction of a designated court, the Convention provides that judgments rendered by a designated court are recognised and enforced by the contracting states.
The procedure applicable to the recognition, declaration of enforceability or registration for enforcement, and enforcement of the judgment are governed by the law of the requested state. Consequently, the enforcement of a judgment in France will be governed by French law.
French rules
In the absence of a bilateral enforcement treaty, a claim of exequatur must be filed. The court must assess whether:
- The foreign court had jurisdiction over the case under the French rules on jurisdiction.
- The judgment was obtained by fraud.
- The requested enforcement would breach French international public policy provisions.
Exequatur claims are admissible when the foreign judgment is enforceable in France and has not been enforced yet.
The main first instance civil court (tribunal de grande instance), as single judge, is competent for the exequatur of foreign judicial decisions and public documents (Article R. 212-8, Judicial Organisation Code).
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 alternative dispute resolution methods used is France are arbitration, mediation and conciliation. The courts generally encourage the parties to opt for alternative dispute resolution, when appropriate.
Arbitration
As a party to the UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards 1958, France has developed an arbitration-friendly legal regime. French arbitration law is mainly contained in the CCP.
Third-party funding is available in arbitration proceedings. Arbitration is binding when the parties have entered into an arbitration agreement.
According to the International Chamber of Commerce, 842 new cases were filed for arbitration in 2018, involving 2,282 parties from 135 countries and territories.
According to the Paris Centre for Mediation and Arbitration (CMAP), arbitration is mostly used in the following industries:
- Services to companies.
- Trade.
- Real estate/construction.
- Finance/insurance.
Mediation
Directive 2008/52/EC on mediation in civil and commercial matters (Mediation Directive) aims to facilitate access to alternative dispute resolution and to promote the amicable settlement of disputes through the promotion of mediation.
The Mediation Directive was implemented in France by a Decree No. 2012-66 of 20 January 2012. This Decree provides that the parties to a dispute can, at their initiative and under certain conditions, attempt to resolve the issue in a friendly manner with the assistance of a mediator, a conciliator of justice, or their lawyers.
The parties can freely choose the mediator, or he or she can be appointed by the judge with the parties' consent (in the case of a trial).
According to the CMAP, mediation results in an agreement in 70% of cases, and mostly concerns small disputes (mainly under EUR150,000). The main industries concerned are the following:
- Trade and distribution.
- Industry and energy.
- Employment.
- Real estate.
- Construction.
- IT.
Conciliation
Conventional mediation and conciliation are very similar.
Throughout the proceedings, the parties can use conciliation on their own initiative or on the request of the judge (CCP).
Judicial conciliation is conducted by the judge or by a conciliator of justice to whom the judge has delegated his/her mission.
In 2015, 72,200 disputes were resolved through conciliation out of the 125,800 direct referrals of conciliators by the parties, and 8,000 disputes resolved through conciliation out of the 16,300 referrals to a conciliator by the judge.
31. Does ADR form part of court procedures or does it only apply if the parties agree? Can courts compel the use of ADR?
ADR methods are based on consent. Therefore, a court cannot compel the parties to resort to ADR.
However, from 1 January 2020, the admissibility of specific payment or neighbouring disputes claims will be subject to a prior attempt of mediation, conciliation or participatory procedure (Article 3, II, Law No 2019-222 of 23 March 2019). This obligation is subject to numerous exceptions.
Arbitration
In France, arbitration is based on the parties' consent. However, formal requirements may apply depending on whether the arbitration is domestic or international.
To be valid, domestic arbitration agreements must be made in writing (Article 1443, CCP). An arbitration agreement can consist of an exchange of documents or a reference in a principal contractual instrument to another document containing the arbitration clause.
By contrast, in international arbitration, arbitration agreements are not subject to any formal requirements (Article 1507, CCP). Under French law, arbitration is considered to be international where it involves the interests of international trade.
Mediation
A litigation judge can, after obtaining the agreement of the parties, refer the parties to a third party (the mediator) who will hear them and confront their points of view to enable them to find a solution to their dispute.
Тhis power is not limited anymore to specific cases envisaged by law, but is now available at any stage of proceedings, including emergency interim proceedings (Article 3, I, Law No 2019-222 of 23 March 2019).
The judge can terminate the mediation on his/her own initiative if it appears to be compromised. In that case, the judicial proceedings will resume.
The claimant must mention in his or her writ of summons which action he or she has taken to try to amicably settle the dispute before any court proceedings, unless there is a legitimate reason based on urgency or the matter under consideration (Article 56, CCP).
Although not mandatory in commercial and civil matters, French Decree No. 2018-101 of 16 February 2018 provides, for a four-year experimentation period, a procedure of compulsory mediation prior to litigation concerning social matters, namely administrative decisions on the personal situation of civil servants and state benefits.
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 commercial arbitration, the parties can define the procedural rules applicable to the submission of evidence.
Subject to legal requirements, and unless otherwise agreed by the parties, domestic arbitration proceedings are confidential (Article 1464, CCP).
Mediation and conciliation are also confidential. The mediator's or conciliator's findings and statements gathered during the mediation or conciliation cannot be disclosed to third parties, or invoked or submitted in judicial or arbitral proceedings, without the parties' agreement.
The distribution of costs can be directly dealt with in the arbitration agreement. However, the arbitrator has discretion in allocating the costs between the parties.
In contractual mediation, the costs are directly determined by the parties.
In court-ordered mediation, the decision ordering mediation sets the amount of the provision to be paid regarding the mediator's fees. If the provision for costs is not paid, the decision ordering mediation is null and the court proceedings will resume.
Conciliation conducted by a judge or a judicial conciliator is free.
In France, the main bodies offering alternative dispute resolution services are the:
- International Chamber of Commerce (www.iccwbo.org). The ICC provides a framework for arbitration and mediation.
- Paris Centre for Mediation and Arbitration (www.cmap.fr). It provides mediation for disputes between companies, employment disputes, and consumer disputes. It also provides arbitrators.
- International Arbitration Chamber of Paris (www.arbitrage.org). It resolves disputes arising from domestic and international business transactions in all branches of commerce and industry through the means of arbitration and more recently mediation.
- French Arbitration Association (www.afa-arbitrage.com). It is an independent arbitration and mediation institution which offers the possibility of resolving commercial or professional, national or international disputes.
- European Institution for Mediation and Arbitration (www.ac-eima.org). It is competent both for arbitration and mediation.
Proposals for reform
35. Are there any proposals for dispute resolution reform? If yes, when are they likely to come into force?
There are currently no proposals for reform regarding dispute resolution.
Law No. 2016-1547 of 18 November 2016 on the modernisation of justice for the 21st century encourages the use of alternative dispute resolution methods such as mediation and conciliation. This Law also slightly amended Article 2061 of the French Civil Code with regard to arbitration clauses. While arbitration clauses were only valid in contracts concluded in the context of the parties' professional activity, the new text now allows for the use of arbitration clauses irrespective of the parties' capacity.
The most recent reform was the adoption of Law No 2019-222 of 23 March 2019. This Law has significantly changed French procedural law, including the civil procedural framework and the French court system. In civil matters, the Law aims to:
- Further develop ADR by generalising compulsory mediation before litigation concerning issues with a low financial impact, from 1 January 2020.
- Extend mandatory lawyer representation before courts dealing with technical issues (including litigation relating to enforcement issues), from 1 January 2020.
- Allow litigation to take place without hearings, subject to the prior agreement of the parties, from 1 January 2022 at the latest.
- Create a unique writ of summons to start civil proceedings, filed exclusively through digital means when the claimant is represented by a lawyer, from 1 January 2021 at the latest.
- Merge main first instance civil courts (tribunaux de grande instance) and local courts (tribunaux d'instance) in to the tribunaux judiciaires, from 1 January 2020.
- Provide a legal framework for online mediation, conciliation, arbitration, and judicial claim filing, from 25 March 2019.
Contributor profiles
Alexandre Bailly, Partner
Morgan, Lewis & Bockius, Paris Office
T +33 1 53 30 43 00
F +33 1 53 30 43 01
E alexandre.bailly@morganlewis.com
W www.morganlewis.com
Professional qualifications. Admitted to the Paris Bar
Areas of practice. Litigation and arbitration.
Languages. French, English, Spanish
Publications. Numerous publications in French and international legal reviews. The latest publications are:
- "The input of the Paris Court of appeal's decision of January 14, 2016 regarding sudden termination of established business relationships", Gazette du Palais no 31, 13 September 2016.
- "Starting point of the limitation and knowledge of the facts enabling the action", Gazette du Palais no 333-334, 30 November 2013.
Xavier Haranger, Partner
Morgan, Lewis & Bockius, Paris Office
T +33 1 53 30 43 00
F +33 1 53 30 43 01
E xavier.haranger@morganlewis.com
W www.morganlewis.com
Professional qualifications. Admitted to the Paris Bar
Areas of practice. Litigation and arbitration.
Languages. French, English, German
Publications. Numerous publications in French and international legal reviews. The latest publications are:
- "The input of the Paris Court of appeal's decision of January 14, 2016 regarding sudden termination of established business relationships", Gazette du Palais no 31, 13 September 2016.
- "Starting point of the limitation and knowledge of the facts enabling the action", Gazette du Palais no 333-334, 30 November 2013.
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