Article 17 of the Law for the balance of trade relationships in the agricultural and food industry of October 30, 2018 (known as the “EGalim” Law) authorized the French Government to recast by means of an ordinance Title IV of Book IV of the French Commercial Code on transparency, practices that restrict competition and other prohibited practices. This has now been done with the publication of Ordinance No. 2019-359 of April 24, 2019.
The objective pursued by the legislator is to make the rules governing business relationships, practices that restrict competition and prohibited practices easier to understand and more transparent, and to ensure greater legal certainty.
In two decisions issued on the same day, the Commercial Chamber of the Cour de Cassation (French Supreme Court) provided two illustrations of situations in which it can dismiss a claim for sudden breach of an established business relationship.
These two decisions are worth noting in a case law landscape where this concept defined by Article L. 442-6 I 5e of the French Commercial Code and relied upon on a recurrent basis before the courts, frequently results in a judgment being entered against the breaching party.
In a recent decision, the Commercial Chamber of the Cour de Cassation (French Supreme Court) has qualified the conditions for the application of disparagement by incorporating the right to freedom of expression in its reasoning.
This case-law development is not neutral for economic players likely to be confronted with situations of disparagement in the conduct of their business operations, particularly in case of unfair competition disputes.
This decision provides an opportunity to revisit the notion of disparagement and its application by French courts in recent years.
Arbitration clauses and jurisdiction clauses are frequently included in contracts entered into between merchants. Both types of clauses are designed to set out the procedure that shall govern any dispute arising from or in connection with the contract. However, they should not be confused as they are not exactly the same and are subject to two different sets of rules. This has been recalled by the First Civil Chamber of Cour de Cassation (French Supreme Court) in a decision dated September 5, 2018.
This decision also provides the opportunity to review the competence-competence principle that applies in arbitration matters and to address the complex implementation of this principle.
In a decision dated February 7, 2018, the Cour de Cassation (French Supreme Court) overturned existing case-law by holding that the limitation of liability clause survives the rescission of a sale transaction despite the retroactive cancellation of the sale contract.
By ruling so, the Cour de Cassation aligned its case-law with the new provisions introduced in the French Civil Code as a result of the reform of French contract law that came into force on October 1, 2016. Indeed, according to some of these new provisions, certain contractual clauses survive even in case of rescission of the underlying contract. This decision of the Cour de Cassation also provides the opportunity to go back over these new provisions.
The action for damages for breach of an established business relationship brought in the context of an intra-EU dispute is not an action in tort if a tacit contractual relationship existed between the parties.
This is the principle laid down by the Cour de Cassation (French Supreme Court) in a decision dated September 20, 2017. By ruling so, the Cour de Cassation followed the findings of a recent judgment handed down by the Court of Justice of the European Union, and departs from the case-law it traditionally applies in domestic disputes.
The validity of clauses imposed by suppliers on their authorized distributors prohibiting the online sale of their products has given rise to numerous disputes in recent years. French and EC courts generally hold that such clauses are invalid because they restrict competition.
Yet, in a decision dated September 13, 2017, the Cour de Cassation (French Supreme Court) softened its stance by recognizing suppliers who have a selective distribution network the right to impose on their distributors – subject to conditions – contractual terms prohibiting them from selling products on unauthorized online sale platforms.
Six years after the entry into force of Decree n°2009-1524 of December 9, 2009 referred to as the “Magendie” Decree, the appellate procedure is about to be significantly amended. Indeed, Decree n°2017-891 of May 6, 2017 relating to pleas of lack of jurisdiction and appeals in civil matters, published in the Official Gazette on May 10, 2017, brings about substantial changes to this procedure.
Such changes, which are primarily aimed at speeding up the appellate procedure and limiting court congestion, introduce strict rules that must be followed to avoid serious pitfalls such as invalidation, inadmissibility or nullity which may in the worst case scenario entail the sudden and final end of the appellate proceedings.
This article addresses the main procedural innovations brought about by the reform, such innovations to become effective on September 1, 2017.
Appeals lodged in disputes based on Article L. 442-6 of the French Commercial Code (the “FCC”) on restrictive trade practices – including, but not limited to, significant imbalance in the rights and obligations of contractual parties and sudden breach of established business relationships – fall within the exclusive jurisdiction of the Paris Court of Appeals. This rule had been so far applied extensively by the Cour de Cassation (French Supreme Court).
In a decision dated March 29, 2017, confirmed by a second decision dated April 26, 2017, the Cour de Cassation reversed its case law and ruled that in certain circumstances such disputes can escape the exclusive jurisdiction of the Paris Court of Appeals and be validly brought before another court of appeals.
The Cour de Cassation (French Supreme Court) recently held that a price reduction clause contractually agreed upon between a supplier and its distributor can create a significant imbalance in the rights and obligations of the parties, within the meaning of Article L. 442-6 I §2 of the French Commercial Code.
The concept of “significant imbalance”, sometimes criticized for its vagueness, is addressed in a growing number of court decisions that provide a concrete illustration thereof through a factual analysis of behaviors and contractual provisions agreed upon between business partners.
The decision commented in this article is particularly noteworthy because it recalls that, as per the terms of the above-mentioned Article, the judge is empowered to check the price set by the parties.
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