I INTRODUCTION TO DISPUTE RESOLUTION FRAMEWORK
In 1958 the Fifth Republic was formed under a new Constitution replacing the Fourth Republic that had existed since 1946. Under the Fifth Republic, France is governed by a mixed system of presidential and parliamentary democracy.
In addition to mainland France and Corsica, the territory of France includes 10 overseas departments and territories. The administration of the state is organised centrally, although some administrative functions have been devolved to the regions, departments and communes.
Although the origins of French law are in customary law, by the end of the 18th century much of the law had become uniform and committed to writing by jurists. In 1804, the Civil Code was passed into law. This Code was prepared under the authority of Napoleon and forms the basis of most of the civil law of France today.
French law is structured around a division between public law and private law. The existence of the two systems of jurisdiction sometimes results in difficulties in determining their respective powers, and thus justifies the arbitration of the Conflicts Tribunal. However, the frontiers between the judicial and administrative branches are now quite stable and only about 40 to 50 cases are submitted to the Conflicts Tribunal each year.
Generally speaking, public law and the administrative courts are concerned with the relationship of the various organs of the civil administration with each other and with the individuals. There is a wide involvement of public authorities in French national life, from the government down to the commune, and public law includes its own distinct rules governing contracts entered into by and wrongdoings involving public officials and institutions. Most claims for damages for breach of contract or tort to which a public authority is a party must be brought in an administrative court. The system of administrative courts consists of local courts of first instance, administrative courts of appeal and the cassation jurisdiction of the Council of State.
Private law governs all matters not subject to public law and it encompasses civil, commercial and labour matters. Ordinary courts are also concerned with criminal law and some aspects of tax law. There are two levels of ordinary civil courts of first instance, the courts of common pleas and the superior courts, with separate business tribunals for commercial cases and labour courts for employment cases. The regional courts of appeal hear appeals from all these first instance courts. Jurisdiction in cassation is exercised over the whole of France by the Supreme Court for Civil and Commercial Matters, which is based in Paris.
Although it does not constitute a fourth jurisdictional level above Supreme Courts, the Constitutional Council ensures the conformity of all French laws with the provisions of the Constitution. Until a major reform that came into force in 2010, the Council could only control the constitutional conformity of bills prior to their final adoption and upon request of a few executive and legislative bodies. The reform has completed this constitutional verification system by allowing all litigants to question the constitutionality of provisions applied to them – such mechanism being referred to as the priority preliminary rulings on the issue of constitutionality (QPC). The QPC is forwarded either to the Council of State or the Supreme Court for Civil and Commercial Matters, and then by them to the Constitutional Council, if the constitutionality of the legal provision in question (1) has not been considered before, (2) is legitimate, and (3) is applicable to the case at hand. The decision of the Constitutional Council is binding on everyone. Having reached its fifth anniversary in March 2015, the QPC system has become a jurisdictional path in itself, playing an important role in French lawyers’ trial strategies: more than 10,000 QPCs have been raised, with 400 resulting in a decision from the Constitutional Council.
Lastly, alternative dispute resolution (ADR) procedures sit alongside the courts as consensual means of resolving disputes for most matters (for those matters for which ADR is not available, see Section VI, infra), and have been the subject of codification efforts that culminated in 2012. As such, although the Code of Civil Procedure (CPC) contains specific rules, for instance, for arbitration proceedings, there is no specific framework in which the procedures are to be carried out. For instance, they can be ad hoc or under the auspices of a private institution, and provided that principles of public policy are respected can result in binding solutions that are themselves enforceable by the courts.
II THE YEAR IN REVIEW
i Justice in the 21st century
The principal development in 2017 was the entry into force on 1 September 2017 of implementing decrees of the Law on the Modernisation of Justice in the 21st Century, which was promulgated on 17 November 2016. The reform aims to modernise the justice system and was seen by the government as being necessary, primarily because the system was considered to be too complex and slow. The main axes of the Law are intended to render access to justice easier, to promote alternative methods of dispute resolution, to improve the organisation and functioning of the justice system and to extend the scope of class actions.
The May 2017 implementing decrees lay the foundation stones of the reform by, inter alia, simplifying civil procedure, implementing procedural rules applicable to class actions which have been extended to claims of discrimination, environmental disputes and disputes regarding data protection, and making considerable procedural changes before the courts of appeal. The procedural changes include modifications to the time frame for the exchange of written submissions, the revocation of special rules for jurisdictional appeals, the introduction of an obligation to concentrate all claims and demands in the first written briefs exchanged, etc. These changes increase the burden on the parties and their legal counsel as the time periods have been reduced and sanctions have been increased.
In line with this, the government announced in October 2017 the launch of five areas of work and consultation (digital transformation, criminal and civil improvement and simplification, adaptation of the judicial system, and meaning and effectiveness of punishments) in view of a future reform in 2018.
ii International disputes
Some major developments also concern international disputes.
The Sapin 2 Law established new rules in relation to state immunity from execution by clarifying which assets cannot in principle be subject to seizure, and by introducing a judicial authorisation procedure prior to any seizure measure, thus protecting foreign states from enforcement of judicial decisions and arbitral awards on the French territory.
III COURT PROCEDURE
i Overview of court procedure
The civil court system is structured as a three-tier pyramid. The judicial reform that was completed in December 2010 reduced the number of courts and rearranged the courts’ territorial jurisdiction.
The first instance tier comprises four main courts:
- a The High Court has, subject to a €10,000 threshold, jurisdiction over any dispute involving private interests unless the law has expressly conferred jurisdiction on another court. The superior courts are organised by administrative departments. There are currently 164 superior courts.
- b Small-claims courts have jurisdiction over any civil matter involving monetary claims up to €10,000 and over certain specific matters such as landlord and tenant disputes. There are 307 small-claims courts in France today. As noted above, the Law on the Modernisation of the Justice System in the 21st Century requires that all disputes up to €4,000 must be submitted to a free conciliation service before they can be brought before the courts.
- c Commercial courts are manned by non-professional judges elected from the professional community. They have jurisdiction over commercial matters, including insolvency proceedings – for complex cases of which the Macron Law created 18 specific commercial tribunals. There are 134 commercial courts in France today.
- d Labour tribunals have equal numbers of employers and employees elected by their peers. They sit in panels of four and exercise exclusive jurisdiction over employment disputes. There are 210 labour tribunals sitting throughout France today.
A law promulgated on 13 December 2011 that entered into force on 1 July 2017 abolishes the lay judges. Cases formerly heard by these lay judges will then be heard by the small-claims courts.
The second tier comprises the courts of appeal, of which there are 36 organised on a regional basis. Appeal from any first instance decision is automatic except for judgments for less than €4,000, for which appeal lies only on points of law directly to the Supreme Court for Civil and Commercial Matters. The third, top tier of the civil court system is the Supreme Court for Civil and Commercial Matters. It is divided into four sections: a civil section (formally divided into three discrete civil sections); a commercial and financial section; an employment section; and a criminal section. Appeal to the Supreme Court for Civil and Commercial Matters lies only on points of law. If such an appeal is successful, the case is remanded to another court of appeal for a rehearing of both fact and law.
Under the CPC, the claimant commences proceedings by having a summons served by a bailiff directly on the defendant.
Two criteria must be considered when considering which particular court has jurisdiction over a given claim. First, to determine subject-matter jurisdiction one must consider whether the proceedings must, as a matter of law, be brought before a specialist court. Second, one must apply the rules of territoriality, the particulars of which were modified by the judicial reform.
Regarding subject-matter jurisdiction, the most important specialist jurisdictions are the commercial courts for business disputes and the labour tribunals for employment disputes. Parties should also bear in mind the existence of quasi-judicial bodies with authority over matters relating to, for instance, competition law (the Competition Council) and securities law (the Financial Markets Authority).
Within each court, cases are allocated by the president of the court at his or her discretion.
The prehearing phase is important given the focus on written pleadings. The hearing of witnesses is rare. Oral evidence is considered inferior to documentary evidence as proof.
The court manages the written phase, which begins with an organisational hearing fixed by the court. The purpose of this hearing is to fix a schedule of the case after discussion with counsel. The court has the option to decide that the case is already ripe for judgment in light of the documents and proof before it, in which case it will fix a date for the final hearing; schedule a new organisational hearing to give the parties time to exchange further written evidence and briefs; or send the matter to the specifically assigned judge to oversee the proceedings (the procedural judge) to oversee the preparation of the case. When satisfied that the case is properly prepared and ready for hearing, the court will declare the preparatory phase over. A hearing will be scheduled.
At the oral hearing on the merits before the full court, counsel present their oral arguments. Again, it is rare for witnesses to be heard. At the close of the hearing, each counsel submits a dossier on the merits containing all formal procedural papers, from the summons to the last written submissions, the documentary evidence relied on and often a written summary of the oral arguments. This dossier is not usually communicated to opposing counsel. At the end of the hearing (which often lasts little more than a matter of minutes), the court invites counsel to reappear at a fixed date, when the judgment will be handed down.
Expert determinations play an important role within the framework of court proceedings and are often used by the courts as a means of fact finding. The CPC contains specific provisions dealing with expert proceedings. Whenever an expert is appointed by a court to perform a fact-finding mission, there is a natural tendency for the courts to place considerable weight on the conclusions reached by the expert. Participation by the parties in any expert proceedings is therefore of great practical importance. Two decisions of a mixed chamber of the Supreme Court for Civil and Commercial Matters dated 28 September 2012 clarify the consequences of a lack of adversarial debate in the presentation of an expert’s findings. The Court has reaffirmed the possibility of using extrajudicial expert reports in proceedings as long as these are submitted to adversarial debate in court, and provided they do not provide the sole basis for the judge’s decision; they must only constitute one element in the body of evidence used by the judge to reach his or her decision. In addition, that mixed chamber has clarified the applicable sanction for a failure to guarantee the principle of adversarial debate in the presentation of the judicial expert’s findings when the parties attend the hearings. It has declared that the applicable sanction will be the nullity of the expert’s submitted report, under Article 175 of the Code of Civil Procedure.
Judgments are pronounced in open court and take effect on the date of pronouncement. Usually it is only the operative section of the judgment (the dispositive) that is read out, the reasoning being communicated to counsel later.
To enforce the judgment, the prevailing party must retrieve an original of the judgment from the court. It must then serve the judgment on the losing party by way of signification. This is done by a bailiff. Upon notification, the time limits for appeal start to run. Default judgments must be served within six months of retrieval of the original of the judgment, otherwise the judgment lapses. Judgments given in adversarial proceedings may be served during the 30 years following retrieval of the original of the judgment.
Proceedings before the other first instance courts (small-claims courts, commercial courts and labour tribunals) follow similar rules to those applicable to the superior court, although they tend to be less formal given the right to litigate in person.
If a party wishes to appeal a first instance judgment, notice of appeal must be lodged with the relevant court of appeal within one month of notification of the judgment. This used to be done by an attorney, special counsel who enjoyed a monopoly on representation before the court of appeal. While this monopoly was abolished in 2012, given the specificity of appellate procedure, lawyers often have recourse to former attorneys to represent their clients before the court of appeal for procedural matters. The notice of appeal is usually succinct, identifying the parties, the judgment under challenge and, since the 2017 reform, those parts of the appealed decision that are being challenged (an overall appeal is no longer available). The registrar of the court of appeal communicates the notice of appeal to the respondent. The matter is then assigned to a particular chamber of the court of appeal. Written submissions are then exchanged. The instruction of the appeal is similar to that at first instance bearing in mind that appeal is a rehearing of the facts and law of the case. Although new claims are no longer allowed, parties can still invoke new legal arguments and present new evidence.
Decisions of a court of appeal (or judgments of lower courts of last resort) may be challenged before the Supreme Court for Civil and Commercial Matters only on the five grounds of error of law, incompetence of the court, formal defects of procedural orders and judgments sanctioned by nullity, lack of reasons, or denaturation. Recourse to the Supreme Court for Civil and Commercial Matters does not suspend enforcement of the judgment. The cassation appeal is lodged by a notice submitted to the registrar of the Supreme Court for Civil and Commercial Matters in a succinct form similar to that before the court of appeal. The lawyers with rights of audience before the State Council and the Supreme Court have a monopoly on representation before the Supreme Court for Civil and Commercial Matters.
Following notification of the cassation appeal, the petitioner has five months to submit its written submissions. The respondent then has three months to answer.
One of the judges of the chamber assigned to hear the case is designated as the reporting judge, who prepares a written analysis of the written submissions made by the parties. The report is sent to the Public Prosecutor, who represents the state’s interest in the proper functioning of the legal system and who is required to express his or her view in writing in all cases before Supreme Court for Civil and Commercial Matters.
Depending upon the importance of the point of law at stake, the further appeal will be heard by a single chamber, a mixed chamber or a plenary chamber of the Supreme Court for Civil and Commercial Matters.
A decision rejecting the cassation appeal constitutes a definitive resolution of the action. If the cassation appeal is allowed in full or in part, the parties must appear before the court to which the case is remitted by the court within two months of service of the decision. That court will then judge those parts of the case affected by the rejection in the same manner as the court whose decision was annulled.
ii Procedures and time frames
Case management is the responsibility of the court.
Before the High Court and the court of appeal, a judge is specifically assigned to oversee the proceedings (the procedural judge). This judge sets the procedural timetable within certain mandatory time limits, especially before the court of appeal. Most delays set by the CPC are extended in the case of foreign parties.
There is no procedural judge before a commercial court or labour tribunal. The period between the filing of the case and the hearing is therefore not supervised.
As a general rule, the parties have no direct influence over case management. Although parties may apply for extensions of deadlines and for leave to file additional briefs or evidence, the final decision lies with the court.
The French courts are overloaded with work and under-resourced. It is difficult to predict the time required for a case to be heard at first instance. A period of at least 10 to 12 months is not uncommon. The timescale for the two levels of appeal is often longer, with 18 months not being uncommon for each stage.
Proceedings on the merits may be accelerated if circumstances so merit by way of a summons for a specific date. In such cases, rather than serving a summons on the defendant, the plaintiff presents unilaterally an ex parte request to the court to be authorised to serve a summons for a specific date in the near future. The urgency of the matter must be explained in such a request and a complete written brief with supporting documentary evidence must be filed. If leave is given, the plaintiff will serve a summons in the normal manner indicating a specific day and hour for the hearing. The defendant must file its documents before the hearing date.
Exceptionally, a plaintiff may be authorised to issue a summons on the same day as the hearing. If counsel does not appear for the defendant, the case is treated as a default proceedings and judgment is entered. If counsel for the defendant does appear but has not filed any documents, the case is still heard provided that the judge is confident that there was adequate time for the defence to be prepared. If it transpires that the case is more complex than originally thought, the judge may transfer the case to the ordinary docket where it will be overseen by the procedural judge.
The principal pre-action remedies available relate to the protection or establishment of evidence. Parties may seek a court-supervised inquiry into the facts of a dispute before the start of formal proceedings to preserve or even establish proof (Article 145 CPC). The range of the inquiry is wide, including personal and site inspections, the ordering of parties and non-parties to appear for questioning and the appointment of court experts.
Applications are made ex parte to the relevant court that would have jurisdiction over the proceedings on the merits. A real and pressing risk of the loss of the evidence must be shown.
In addition to the limited pre-action remedies discussed above, French law provides a summary procedure by way of emergency interim proceedings by which a party may obtain protective or other urgent or provisional orders from the court. Such orders are always inter partes and in theory do not finally determine the dispute on the merits.
Certain protective measures may be obtained on an ex parte application for the purpose of securing a defendant’s assets with a view to enforcement. One such protective measure is the protective attachment. Applications must be made to the court with subject-matter jurisdiction in the area where the defendant is domiciled or where the assets to be attached are situated. The application must set out the grounds for seizure showing a prima facie case on the merits and must specify the amount for which security is claimed. It must also demonstrate some urgent threat to the satisfaction of the claim and the assets over which security is sought. If proceedings in respect of the claim have not already been started, the order of the court will set a time limit within which they must be commenced, failing which the order will lapse.
In addition to the protective attachment, the courts have power to direct the provisional registration of a charge over the defendant’s business or property or on shares or stocks owned by him or her. Attachments on earnings and other monetary debts are also available.
If judgments are not voluntarily complied with, enforcement of judicial decisions settling the dispute – thus excluding acts of judicial administration – can be sought in two cases: either the court has ordered the provisional enforcement of the decision, or the decision has been duly imposed on the judgment debtor and the time period to file an appeal has elapsed. Enforcement will not be available in cases of ongoing insolvency proceedings, and special rules apply in respect of the property of states based on their immunity from enforcement measures. On this latter point the Sapin 2 Law of 9 December 2016 clarified which state assets are presumed unavailable for seizure. More strikingly the reform introduced a preliminary judicial authorisation procedure. Although the authorisation is obtained on an ex parte application, it is no longer possible to directly seek enforcement of a decision having recourse to a bailiff (as is in regular cases) against the assets of a foreign state.
Although exchanges between parties and courts are traditionally made via courier, the decree on simplification of civil procedure dated 11 March 2015, together with the circular dated 20 March 2015, encourages the use of emails and text messages. All information said to be communicated by courts without formal conditions can be sent to parties via emails or text messages, provided the receiving party had previously agreed to the use of this means of communication. The party is held responsible in case of modifications of an email address or phone number. Since 1st January 2013 exchanges in appeal proceedings or in any court proceedings requiring legal representation by a lawyer are made via a virtual private network for lawyers and the courts which ensures secure electronic transmission.
iii Class actions
Class actions were introduced in France by a statute promulgated on 17 March 2014. These actions de groupe are defined at Article L.432-1 of the French Consumer Code. They were initially limited in scope, such that only consumers (i.e., persons not acting in the course of their profession) who have opted into one of the 15 nationally approved consumer associations are entitled to compensation from a business sued successfully by the consumer association. Also, consumer compensation for pecuniary losses has been extended by the Law on the Modernisation of the Justice System in the 21st Century. Class actions may now be brought in respect of discrimination claims, environmental claims and disputes over data protection.
iv Representation in proceedings
Litigants (individuals or corporate entities) may represent themselves or be represented by any other person of their choice before any court in any proceedings in which legal representation is not compulsory.
Legal representation by a lawyer is compulsory in ordinary civil proceedings before the High Court except for emergency interim proceedings before that Court. Legal representation is not required before any other courts of first instance.
In the court of appeal, litigants must be represented by a lawyer although procedural matters are often entrusted to those attorneys, mentioned previously, who used to have a monopoly on the right of audience before the appellate courts. Representation before the Council of State and the Supreme Court for Civil and Commercial Matters is reserved to approximately 120 specially appointed lawyers.
There is no geographical restriction on the rights of audience of a lawyer, although he or she may only formally represent a client in the courts for the court of appeal district in which he or she is enrolled. In practice, a lawyer in one court of appeal district will instruct a lawyer in the district that has geographical jurisdiction over the client’s case to act as an agent, to be on the formal record and to accomplish administrative tasks associated with the proceedings.
v Service out of the jurisdiction
Civil proceedings are generally commenced by the service of a summons on the defendant by a bailiff. The summons must be served personally on the defendant, although if this is not possible, it may be served on a member of the family, an employee, a neighbour or guardian at their domicile or, if this is not known, at their place of work. If there is no appropriate person who is able or willing to accept service, the bailiff delivers the summons at the relevant town hall and sends a registered letter to the defendant at his or her last known address informing him or her of this fact. If the domicile, residence or place of work of the defendant is unknown, the bailiff records any attempts to effect service in a formal minute that is sent to the defendant’s last known address by registered letter.
Service on a foreign defendant who is present or resident in France or on the branch of a foreign company established in France is effected in the same manner.
In the absence of any other provision in an international convention, or EU Service Regulation No. 1384/2000, service on a defendant abroad (whether a natural person or corporate entity) is effected by the bailiff delivering the summons to the representative of the state. The summons is then transmitted to the defendant through diplomatic channels. Regardless of whether or when the summons is actually received by the foreign defendant, service is deemed to be complete when the summons is delivered to the representative of the state.
Service of documents after the commencement of the proceedings is made by simple delivery to the address of the lawyer representing the litigant whenever this is compulsory or is effected voluntarily or, where representation is not required, to the address of the litigant provided for the purposes of service by registered letter.
vi Enforcement of foreign judgments
As mentioned in Section II, supra, pursuant to Chapter III of the Brussels I bis Regulation, any judgment rendered by (and enforceable in) a Member State must now be recognised and equally enforceable in all other Member States without any special procedure. However, the recognition and enforcement of a judgment can still be challenged on grounds of French international public policy or if it is irreconcilable with another judgment between the same parties in France or with an earlier judgment rendered in another state on the same cause of action and between the same parties.
In the absence of an enforcement treaty, enforcement proceedings for foreign judgments are the exclusive jurisdiction of the superior court and will succeed if the court is satisfied that the court that rendered the decision had jurisdiction under French rules of jurisdiction, that enforcement would not breach French international public policy and that the judgment was not obtained by fraud. The procedure is commenced by a summons and is made inter partes.
vii Assistance to foreign courts
The taking of evidence in France that is likely to be used in foreign proceedings (of any nature) is a criminal offence unless carried out under an international treaty. The main multiparty treaty that provides for rules and procedures for the taking of such evidence is the Hague Convention on the Taking of Evidence Abroad in Civil or Commercial Matters. This Convention was signed by France on 24 August 1972 and officially incorporated into French law with the publication of the Decree dated 9 April 1975.
The Convention sets forth two procedures – one by a letter rogatory and one by diplomat, consulate agent or commissioner (i.e., an attorney mandated by the requesting party) – that both entail an order, issued by the foreign court in which the litigation is pending, granting the request for the collection and communication of French-based documents to a foreign signatory state for the purposes of eventually being submitted in a foreign judicial or administrative proceeding.
In a similar vein, the London Convention on Information on Foreign Law entered into force in France on 11 July 1972. The Convention provides for the obligation of state parties to give information on law and procedure in civil and commercial fields as well as on their judicial organisation to any judicial authority in another state party when requested.
With respect to other forms of assistance to foreign proceedings, there are no specific provisions in the CPC other than the measures of interim and urgent relief available to the parties (and not to the foreign judge) in ex parte proceedings where the French courts have jurisdiction.
viii Access to court files
Public access to documents and information regarding pending civil proceedings is extremely limited. Generally, rights of access are limited to the parties and their counsel. Further, the use of documents produced in the course of proceedings is limited to the purposes of the proceedings themselves.
Except for rare cases where the court decides that the hearing should be held in camera (usually for reasons of public interest), hearings are held in public, although again members of the public that are present do not have access to any of the documents on file.
Judgments are public, although there is no generalised system for the publication of all judgments. Members of the public can obtain copies of any such judgment from the court offices in question. Documents on the court file are, however, not available to the public.
ix Litigation funding
Legal aid is available to anyone resident in France who has insufficient resources to enforce or protect his or her rights. It is also available to non-residents when so provided by international treaty. It is not available to commercial companies. The process of obtaining legal aid usually takes several months, although an expedited procedure is available for urgent cases. Access is means-tested (currently, full legal aid is available to persons with a monthly income of less than €1,007, and partial aid is available to persons with a monthly income of up to €1,510). The applicant also has to show that he or she has prospects of success, although in practice few applications are refused. When granted, the application is passed to the head of the local Bar, who appoints counsel to act for the legally aided party (who can be a lawyer already chosen by the party). Legal aid covers the court fees and the costs of enforcement of any judgment. Since 2017 legal aid is also available to persons taking part in participatory procedures and settlement agreements. Counsel receive a fixed-scale fee from the state. If the legally aided party loses, he or she is not protected, by reason of lack of means, from an order to pay the winning party’s costs.
Partial contingency or conditional fee arrangements are permitted under French law. Full contingency fees are not.
Disputes over fees are brought before the head of the local Bar, who must rule on the matter within four months. The decision may be appealed to the president of the relevant court of appeal within a further month.
Given the limited scope and effect of the rules on costs, there are no specific provisions in French law regarding security for costs. Claimants domiciled outside France are no longer required to give security for costs.
There is to date no regulation of third-party litigation or arbitration funding in France.
IV LEGAL PRACTICE
i Conflicts of interest and Chinese walls
The professional rules of conduct governing the exercise of the legal profession in France require all lawyers to avoid any conflicts of interest in the practice of their profession. A relatively wide definition of ‘conflict of interest’ is applied that covers not only individual lawyers but also any grouping of lawyers, whatever the nature of their structure.
Each case is, however, considered individually. This means in practice that, provided that a Chinese wall can be shown to be fully effective, there is no reason in principle why it should not be sufficient to avoid breaching the professional rule of conduct in any given grouping of lawyers.
Breaches of the no-conflict rule are treated as disciplinary matters and sanctioned by the Bar Association.
ii Money laundering, proceeds of crime and funds related to terrorism
French law imposes two types of obligations on a lawyer advising a client in non-judicial matters with respect to money laundering, etc. The first is an obligation of awareness and the second is an obligation to inform of any suspicion of money laundering, etc.
The obligation of awareness requires the lawyer to undertake certain due diligence steps to know exactly who the client is, the transactions on which he or she is to advise, to conserve certain documents and to put in place internal procedures to ensure that these due diligence steps are always accomplished for any new client or any existing client that comes with a new matter.
The obligation to inform of any suspicion of the commission of money laundering or similar offence applies whenever the lawyer has reason to believe that such an offence may have been committed – there being no statutory definition of suspicion. The information must be given first to the head of the local Bar, who must then make an assessment of the case before deciding whether to inform Tracfin (the competent government body) or not.
iii Data protection
The EU Data Protection Directive of 1995 was implemented in France by the Data Protection Act 1978 (as amended) (DPA). Under the DPA, the competent national regulatory authority is the National Commission for Information Technology and Civil Liberties (CNIL), based in Paris. The CNIL has the power to take enforcement action in France including imposing fines, which may be publicised. Prosecution of criminal offices for violation of the DPA (and other sector-based data protection laws) are brought before the French criminal courts.
The DPA applies to personal data (i.e., any information relating to a natural person who is or can be identified, directly or indirectly, by reference to an identification number or to one or more factors specific to that person). It regulates the processing of personal data if the person determining the purposes and means of the data processing is established or carries out its activity in France or such a person uses a means of processing located in France.
The usual regime permitting the processing of personal data involves a prior declaration to the CNIL using a form available on the CNIL’s website. In a limited number of cases, however, express prior authorisation by the CNIL is required. These latter cases include:
- a the processing of certain types of sensitive data (i.e., personal data revealing racial or ethnic origin, political opinions, religious or philosophical beliefs, trade union membership and data concerning health or sex life);
- b the transfer of data outside the European Economic Area to a country without adequate protection;
- c automated processing consisting of a selection of people aimed at excluding some from the advantages of a right or the benefit of a contract;
- d automated interconnection files; and
- e biometric identity checks.
The processing of data relating to criminal offences and proceedings, health or social security numbers is also restricted. There are also a number of exceptions to the usual regime covering, for instance, the maintenance of public registers.
All personal data must be processed fairly and lawfully, collected for and processed in accordance with specific, explicit and legitimate purposes, collected in an adequate, relevant and non-excessive way, be accurate, comprehensive and when necessary kept up to date and kept in a form that permits identification of the data subject only for as long as is necessary for the purposes for which the data was collected. Certain information must be given to data subjects about the processing of their personal data.
The consent of data subjects is required before processing personal data unless an exemption applies (such as to enable performance of a contract to which the data subject is a party, to protect the data subject’s life, or to allow the data controller to perform a public service entrusted to it).
V DOCUMENTS AND THE PROTECTION OF PRIVILEGE
Correspondence between outside legal counsel is privileged. It is confidential to the lawyers in question and may not even be disclosed to the lay client. This privilege may be waived by the counsel themselves (but not by the lay client). When counsel wishes a particular piece of correspondence to be capable of disclosure, it will be marked as being ‘official’ or ‘not confidential’. While confidential correspondence between the parties themselves will normally not be admissible in proceedings, this is not on the grounds of privilege but simply upon the confidentiality agreement between the parties, which can be set aside by the court.
Privilege does not attach to correspondence with or between in-house lawyers.
There are no specific rules governing privilege between French and foreign lawyers. The European Code of Conduct, which has legal force by way of incorporation in the rules governing the profession, provides that exchanges between foreign lawyers are not confidential unless specifically agreed. Whenever a French lawyer works with a foreign correspondent, it is important to check on the rules of privilege and professional conduct that apply to the foreign lawyer and ensure that they provide sufficient protection for the client’s interests. If not, the best that the lawyers can do is to establish a contractual framework from the outset in which their correspondence and exchanges will take place to ensure that professional secrecy and confidentiality is not breached. There is no certainty, however, that any such contractual protection will be sufficient to fully protect the client’s interests.
ii Production of documents
French law requires litigants to prove the facts on which they intend to rely. Judgments can only be based on the evidence produced during the proceedings. Evidence may be introduced in two ways: disclosures by the parties or enquiries supervised by the court.
While no party is required to produce all documents relevant to its case, court proceedings are governed by the adversarial principle, which implies that each party must be able to examine the documents relied upon by the other. The production of documents must be spontaneous and timely. The judge may refuse to take account of documents produced late, although this power is rarely exercised.
The parties are obliged to cooperate with the court in its enquiry into the facts of a dispute. The court may draw such inferences as it sees fit from a failure by a party to cooperate. Failure to comply with disclosure orders may be punished by a fine. The same may apply to third parties if there is no legitimate reason for the documents to be withheld.
There are no specific classes of document that do not require disclosure, subject to the rules on privilege (see Section V.i, supra). Conversely, there are no specific rules regarding documents stored overseas, whether electronically or otherwise. Similarly, there are no specific rules regarding electronically stored documents and their reconstruction. All such documents, if within the possession or control of a litigant, may be subject to production if relied upon by that party or if ordered by the court.
There are no specific rules regarding disclosure by third parties, and indeed the measures available to the court include orders on third parties to disclose documents that are not privileged.
In general, documents obtained by disclosure in civil proceedings may not be used for any other purpose than as evidence in those proceedings.
VI ALTERNATIVES TO LITIGATION
Arbitration is a widely used form of ADR in France. The original French international arbitration rules contained in the CPC predate the first UNCITRAL Model Law and were considered to be flexible and among the most liberal of all arbitration rules. French law on arbitration has been reformed by a decree that came into force in May 2011 designed to render the legal regime applicable to both domestic and international arbitrations taking place in France more user-friendly. The fundamental principles of the old law have been retained; what the new law has done is to codify much of the case law that has allowed the old law to evolve over the past 30 years.
Arbitration is the submission of a dispute by agreement for resolution by a panel of private decision-makers (composed of an odd number of members – usually either one or three) who are mandated to apply either the substantive law of a given jurisdiction or to decide the case on the basis of equity. The proceedings may be brought under the auspices of an institutional body, such as the International Chamber of Commerce (ICC), whose headquarters are based in Paris, or the French Arbitration Association, or on an ad hoc basis where the arbitrators determine and supervise all aspects of the procedure to be followed. Typically a written phase of the procedure is followed by a hearing of oral evidence and argument. The arbitral tribunal issues an award that is enforced by way of a court decision granting an exequatur order.
Only French law on international arbitration is considered here. The rules of French law on international arbitration apply provided that the interests of international trade are at stake and that the case bears some connection with France (e.g., the chosen place of arbitration is France). The interests of international trade will be concerned each time the dispute relates to an arrangement involving cross-border movement of goods, services, payments or involving the economies of two states.
The rules are distinct and distant from the French national legal system. The parties and the tribunal are given the widest possible freedom to organise the procedural aspects of the arbitration.
International arbitration agreements are not subject to any formal requirement or content. Provided that they evidence the intention of the parties to resort to arbitration, they are enforceable.
If the parties encounter difficulties in constituting the arbitral tribunal, they may apply for assistance to the president of the superior court who has authority to nominate the members of the tribunal in place of the parties.
French international arbitration law grants the parties and the arbitral tribunal wide freedom to organise the arbitration proceedings, the only true limits being due process and respect of the principles of French international public policy (since a failure to respect either will constitute grounds for annulment of the award).
The general principle is that French courts will interfere in arbitral proceedings only on an exceptional basis and even then only when the urgency of the circumstances so require.
There is no requirement as to when and in what form the award is to be issued (as opposed to domestic arbitration, which imposes an extendible six-month period). However, parties and arbitrators are bound to a duty of loyalty and celerity in the conduct of the proceedings. No appeal lies against an international arbitration award (again as opposed to domestic arbitration, where awards may be subject to appeal before the court of appeal if parties agreed to it). The only recourse is for annulment on certain limited specific grounds, namely: that the arbitrator wrongly asserted or denied jurisdiction; that the tribunal was irregularly constituted; that the arbitrator exceeded his or her terms of reference; that the principle of due process was breached; or that recognition or enforcement of the award would be contrary to French international public policy. The courts interpret the last ground very strictly, and apply a high threshold for a finding of violation of international public policy. The courts will never review the merits of the award or set it aside for a wrong application of the law. Courts indeed follow a minimum control approach except in cases of alleged corruption. Since 2011, the parties can waive (in writing and in an express and specific waiver) their right to bring an action for annulment to challenge the validity of an arbitral award before French courts.
The arbitral tribunal will normally make an order for costs as part of its award. The general practice today is for the tribunal to order at least part of the costs to follow the event.
France has ratified the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards of 10 June 1958. The New York Convention came into effect in France on 24 September 1959. The only outstanding reservation made by France is the ‘reciprocity reservation’ to recognise and enforce only awards that are made in the territory of another contracting state.
The rule that the enforceability of arbitral awards is suspended if there is an appeal against the grant of an order for enforcement (or an action for annulment of the award) has been reversed by the 2011 decree. The filing of an appeal no longer suspends the enforceability of the award, although the court may stay or set conditions for enforcement of an award if enforcement could severely prejudice the rights of one of the parties, including by ordering payment into court of award amounts in the event of an appeal to avoid a successful appellant being unable to recover such amounts paid to the award creditor if such amounts are substantial.
The general rule as to the arbitrability of any given matter is set forth in Article 2059 of the Civil Code, which provides that ‘all persons may agree to arbitration in relation to rights which they are free to dispose of’. Article 2061 of the Civil Code has been rephrased following the 18 November 2016 Act No. 2016-1547 on the modernisation of the 21st century justice system (the Law on the Modernisation of the Justice System in the 21st Century) to state that ‘where one of the parties has not contracted in the course of his or her professional activity, the clause may not be opposed to him or her’. Arbitration is therefore an available dispute resolution mechanism for non-professionals as well, provided that they do not object.
Certain types of dispute cannot, however, be submitted to arbitration:
- a matters of civil status and capacity of individuals;
- b matters relating to divorce or judicial separation of spouses;
- c disputes concerning public communities and public establishments (i.e., municipalities);
- d matters relating to domestic employment (except for arbitration agreements concluded after the termination of the employment agreement);
- e bankruptcy proceedings (although arbitration is possible where provided for by the underlying contract for claims against the insolvent debtor); and
- f matters relating to the validity of compulsory licensing or the validity, nullity and infringement of patents (although arbitration is possible where ownership or exploitation of the patent is the main issue).
ii Conventional mediation and conciliation
Decree No. 2012-66, which entered into force on 20 January 2012, promulgates a separate book (Book V) of the CPC, dedicated specifically to the amicable settlement of disputes. It provides a common definition for conventional mediation and conciliation, directly inspired by Directive 2008/52/CE of 21 May 2008. Yet, while some of the new provisions apply to both mediation and conciliation, some are specific to one or the other procedure.
As to common provisions, the Code provides that both the extrajudicial mediator and the conciliator must accomplish their mission with impartiality, competence and due diligence. The Decree does not refer to any independence requirement, however, and simply refers to Article 21-3 of law No. 95-125 of 8 February 1995 concerning confidentiality.
There is a significant difference between the level of training required for mediators and for conciliators. Mediators are not required to have received specific mediation training or to have any experience of mediation, as long as they are qualified to understand the nature and object of the dispute. By contrast, conciliators are unpaid officers of the court, who must have had at least three years of legal experience.
In addition, while the views of the conciliator are not binding upon the parties, the agreement reached through mediation can be given binding force with the consent of both parties, which is a novelty brought by the ordinance of 16 November 2011. The binding force of such an agreement will then be recognised in all Member States of the European Union.
In 2014, a particular focus was placed on mediation by the ICC, the latter issuing its Mediation Rules (accompanied by the ICC Mediation Guidance Notes), comprised of 10 articles dealing with such issues as the selection of the mediator, the conduct and termination of the mediation, and confidentiality issues, as well as fees and costs.
The Law on the Modernisation of the Justice System in the 21st Century has underlined the policy in France of favouring mediation and conciliation by rendering conciliation mandatory for small claims (of up to €4,000). An implementing decree established an official list of mediators in October 2017.
iii Participatory procedure
In addition, the Decree of January 2012 provides for ‘participatory procedure’, a negotiation mechanism that is both procedural and contractual in nature. This amicable method of dispute settlement was first introduced into the Civil Code by Law No. 2010-1609 of 22 December 2010. The 2012 Decree defines its scope and effects, and deals with confidentiality issues.
iv Other forms of alternative dispute resolution
In certain specialist areas French law provides for specific tribunals, commissions or quasi-judicial organs with jurisdiction (examples include matters of social security, competition, journalism and broadcasting). Proceedings before such specialist tribunals or quasi-judicial bodies are governed by their own particular rules.
VII OUTLOOK and CONCLUSIONS
Today’s landscape is shaped by the necessity of the French judicial system to adapt to a scarcity of financial resources, which has led to intense debate regarding the funding of legal aid, the encouragement of alternative dispute resolution methods and the dematerialisation of part of the proceedings. The practical application of the procedural provisions of the Law on the Modernisation of the Justice System in the 21st Century will be an interesting topic to follow in 2018. Now that this reform has been the subject of implementing decrees in all major areas, such as the appellate procedure and class actions, it will be possible to assess how this reform fares in terms of efficiency and justice for both litigants and other participants in the justice system.
1 Tim Portwood is a partner at Bredin Prat.