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News

Litigation- France

In a decision dated November 8 2006 the Paris Court of Appeal held that a French citizen who has brought a claim against a foreign company may not refer to the jurisdiction of the French courts under Article 14 of the Civil Code where the parties have agreed to submit any dispute to arbitration.

 

Facts

A French citizen made a claim for payment of services provided to a Lebanese company before the juge des référés (ie, judge for emergencies) in Paris on the grounds of his urgent and difficult financial situation. The plaintiff requested that the judge order the Lebanese company to pay the amounts due under two contracts.

 

In October 2003 the parties had executed a sales contract in Morocco to the benefit of the supplier, a Lebanese company. The agreement provided that the French agent was entitled to compensation amounting to 8% of the sales. Although 35% of the amount was payable when the sales contracts were executed by the supplier, the remainder was to be paid when the clients paid the supplier. In July 2004 the parties signed a second agreement whereby the agent became a consultant and was entitled to a fixed monthly compensation of ˆ2,500. Both contracts were subject to Lebanese law and included an arbitration clause.

 

The defendant argued that, under the arbitration clauses, the French courts had no jurisdiction over the case. The defendant added that the inclusion of arbitration clauses in the agreements demonstrated the fact that the plaintiff had surrendered the 'jurisdiction privilege' under Article 14 of the code. Article 14 reads as follows:

 

"An alien, even if not residing in France, may be cited before French courts with regard to the performance of obligations contracted in France towards a French person, or may be called before the courts of France with regard to obligations contracted in a foreign country towards French persons."

 

The defendant alleged that, even in an urgent situation, the jurisdiction of the court should be determined by the general rules of civil procedure; accordingly, the plaintiff was not entitled to file an action against the defendant before a French court.

 

Decision

The judge found that he had jurisdiction over the case and ordered the defendant to pay its debts. However, the Paris Court of Appeal reversed the decision and held that the plaintiff had surrendered the rights afforded by Article 14 of the code when agreeing to the inclusion of arbitration clauses. As a result, in case of emergency, the place of jurisdiction must be determined by the general rules of procedure under Articles 42 and 46 of the new Code of Civil Procedure.

 

Consequently, the court of appeal denied jurisdiction on the grounds that the case should have been heard by the courts of the place of residence of the defendant (Lebanon) or of the place of performance of the contract (Morocco).

 

Comment

Under Article 14 of the Civil Code, French individuals and legal entities may file claims against foreign individuals and entities before French courts as a special privilege based on French citizenship. However, Article 14 is not mandatory and French plaintiffs are entitled to litigate before foreign courts. French parties are also entitled to include foreign jurisdiction clauses in agreements.

 

Under such circumstances, French parties shall be deemed to surrender the jurisdiction privilege where they include arbitration clauses in contracts. As a consequence, the courts will find that arbitrators have jurisdiction over the case. However, the juge des référés has jurisdiction to order interim measures in urgent situations or where arbitrators have not been appointed.

 

At issue in the case at hand was whether the plaintiff could file an action before the juge des référés under Article 14 of the code. The court of appeal decision illustrates that the French courts tend to limit the scope of Article 14. The French courts have jurisdiction on the basis of the plaintiff's nationality only where there is no other connecting factor. In addition, French plaintiffs surrender the rights afforded by Article 14 when agreeing to arbitration or jurisdiction clauses.

 

In the case at hand the court of appeal went further; it held that, in case of emergency, the jurisdiction of the French courts may no longer be based on Article 14. Therefore, the plaintiff should file a claim before the juge des référés in accordance with the general rules on territorial jurisdiction under Articles 42 and 46 of the new Code of Civil Procedure.

 

As a result, in contract disputes, the court with jurisdiction over the case is that of the defendant's place of residence under Article 42 (ie, Lebanon in the present case) or that of the place of performance of the contract under Article 46 (ie, Morocco). Accordingly, the court of appeal rejected the plaintiff's claim for payment.

 

International Law Office