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Incompetence of the French Judicial Tribunal

Decree n°2019-1333 dated 11 December 2019 (Article 2) has this year introduced a new Article 82-1 in the French Code de procédure civile, which is said to simplify incompetence exceptions (heading of the Section 2 of the said decree : the simplification of incompetence exceptions).

This new Article 82-1 came into force on 1 January 2020 and establishes a new derogatory scheme creating a possibility to challenge the competence of the judicial tribunal. The judicial tribunal was recently created with the merger of the TGI (Tribunal de Grande Instance) and the TI (Tribunal d’Instance), such jurisdictions dealing with civil matters. Due to the coronavirus Covid-19 sanitary crisis, legal practitioners did not really have the time to test this new regime.

As a general rule (Article 74 of the French Code de procédure civile), an incompetence exception has to be raised in limine litis, that is to say, at the first hearing, before any discussions on the ground of the case, and by way of principle, before the same judge ruling on the case. On the contrary, and by way of derogation, the new scheme sets up a possibility to raise an incompetence exception, before the first hearing, either the parties or the judge raising it. If trigged, the parties or their lawyers are informed right away by any means giving fixed date (date certaine). In this perspective, the file is transmitted to the registry (greffe) of the judicial tribunal, which in turn, transfers the case to a designated judge. The competence of this newly appointed judge may also be challenged, by him or the parties, during a period of 3 months, by the transfer of the case to the President of the judicial tribunal. According to the new regulation, the President of the judicial tribunal has to transfer the case to a new appointed judge, and such a decision cannot be challenged. However, the competence of this new appointed judge may be challenged before this new judge by the parties, and the decision ruling on the competence may be appealed within a period of 15 days, as of the date of the notification of the decision.

The President of the judicial tribunal appears to be the keystone of the scheme, which is in line with the role usually attributed to him, as already in charge for example of summary proceedings (e.g. référé). The fixed date (date certaine) and the 3 months timeframe appear to be crucial, and purport to avoid endless discussions on the competence.

However, and surprisingly, this new scheme creates a very sophisticated legal architecture, not to mention the potential right to call the case before the French Cour de cassation (Supreme Court). In such a context, these new rules may unfortunately be used to artificially challenge a procedure and lengthen it. An author has recently described this mechanism as a potential Trojan Horse, allowing dilatory procedures (Katia Bennadji, Dalloz actualité, 22 July 2020, « L’article 82-1 du Code de procédure civile : cheval de Troie au service de manœuvres dilatoires »). This remains true to a certain extent, as this new Article 82-1 has been introduced in a context where, on the contrary, a lot of other procedural rules are aimed at streamlining the procedure e.g. concentration of the legal means (concentration des moyens), estoppel or prohibition of dilatory procedures.

In a constant movement, the French Cour de cassation draws the outlines of the concentration of the legal means principle. The French Cour de cassation (C. cass. civ. 2, 11 April 2019, n°17-31785), recently stated that the plaintiff, before any ruling on the case, has to expose all the legal means considered as the ground for the claim. This means that, in a same instance, an overruled legal claim cannot be raised again in connection with another ground based on the same object, as the one on which the tribunal has already definitely stated. According to this case law, the rule of the concentration of the legal means, uses the same underpinned concept as the fin de non-recevoir (i.e. res judicata pro veritate habetur), but is not an exception procedure as rather deals with the ground of the case. It remains to be seen however how this case law and all the case law hereof, will be used by legal practitioners to limit the import of this new Article 82-1. In this perspective, it is reasonable to think that they may wish to use the concentration of the legal means principle, also in connection with procedure exceptions, such as incompetence.

In addition, the estoppel theorie, albeit originally English law concept, is now part of the French legal system. In a considerably important decision, the French Cour de cassation, recognised and introduced into French law, this Anglo-Saxon concept (C. cass. Ass. Plen., 27 February 2009 (n°07-19.841)) and considers it as a fin de non-recevoir (i.e. a legal mean aiming at having declared the claim of the other party as not receivable). In this respect, the French Cour de cassation has stated that actions of the same nature based on the same conventions, opposing the same parties may give rise to a sanction, provided that a party kept contradicting itself, at the expenses of others. More specifically, the French Cour de cassation, Civ. 2, dated 15 March 2018 (n°17-21.991) reiterated this position, ruling that « (…) the principle according to which no one may contradict itself at the expenses of others, sanctions the procedural attitude consisting, for a party, during a same instance, to adopt contrary or incompatible positions leading the adversary in error as to its intentions ». Thus, it is reasonable to think that legal practitioners will use, inter alia, the estoppel theory to limit the possibility to use incompetence exceptions. In addition, even if the contradiction may occur in the same instance, it cannot be excluded that a judge may wish to streamline the procedure and prevent a party from utilising incompetence exceptions several times, in a same context.

A judge would also have the possibility to use article 32-1 of the French Code de procédure civile, which states that a person acting in justice in a dilatory manner may be convicted to a civil fine up to 3.000 euros, without prejudice of damages that would be claimed. In that event, the amount related to the civil fine is paid to the French Trésor Public.

To remain in the real trend of the procedure regulation, i.e. constant equilibrium between defence rights and efficiency of the legal system, judges and legal practitioners are in the position to put forward a strict construction of Article 82-1 of the French Code de procédure civile. Constructions rules are clear in this respect : exceptions or derogations have to be interpreted strictly, and the scheme created is created by way of exception. This means that each time a lawyer would invoke a competence exception on the basis of this new Article 82-1, the judge would have to conduct a teleological construction, in the view of maintaining a sufficient level of efficiency of the procedure, especially in a context where (i) ECHR (European Convention of Human Rights) already imposes an effective recourse in every steps of the procedure and (ii) numerous litigations deal with international matters, allowing the parties to raise incompetence exceptions, also on the ground of judicial international private law.

Up to date as of 22 July 2020

Coronavirus (Covid-19), French continuing plans and economy

On 13 March 2020, French Ministry of Justice issued a press release just after the announcements of the President of the French Republic. The aim, due to the emergency, is to protect citizens who are the most vulnerable and to curb the epidemic. Chancery has now prepared continuing plans to allow Justice to face core obligations of the Nation.

According to a CNB (Conseil National des Barreaux) release dated 15 March 2020, the continuing plans will be triggered as from 16 March 2020 by the Ministry of Justice to avoid propagation of Covid-19. Tribunal and courts will be closed, except for cases relating to core litigations.

Core litigations are limited to (i) criminal tribunals and courts including (a) pre-trial custody (détention provisoire) and probation (contrôle judiciaire), (b) immediate criminal summary trials (comparution immédiate), (c) appearance before the liberty and custody judge (juge des libertés et de la détention), (d) appearance before the enforcement judge (juge de l’application des peines) including appeals, these latest in the events of emergency only, (e) permanence of public prosecutor’s office (permanence du parquet), (f) hearings relating to investigation chamber for custody (audience de la chambre d’instruction pour la détention) and (ii) civil tribunals and courts including (a) children’s courts and permanence in the events of emergency only (audiences du tribunal pour enfants et du juge pour enfants et permanence du tribunal pour enfants) – including educational assistance (assistance educative), (b) summary judgments (including relating to family matters), but based on emergency only, (c) civil liberties and custody judge hearings (juge des libertés et de la détention civil).

Due to the risks of contamination, instructions are, to the extent possible, to cancel criminal court sessions related to crimes (cour d’assises). It is also allowed to postpone hearings (taking into account reasonable time extension and pre-trial custody time-frame).

Legal public facilities (services d’accueil du public) will be closed as well as justice centers and legal access points. Even if justice civil servants will not be allowed to receive public, they will be reachable by phone to address emergency situations.

As far as Paris is concerned, the first President of the court of appeal of Paris issued an ordinance dated 16 March 2020 (N°105/2020) named ordonnance de roulement modificative (amending rotation ordinance), on the basis of, inter alia, the decision of the Ministry of justice dated 15 March 2020 triggering continuing plans, article L1142-7 of the French Code de la Défense and emergency. Such article not only states that (i) the Ministry of Justice ensures in all circumstances the continuity of the legal criminal services as well as enforcement of criminal sanctions, but also (ii) he participates in fighting against elements adversely affecting fundamental interests of the Nation (this including preservation of the population in and outside France, according to article 410-1 of the French Code pénal).

Aside to the public authorities, the legal profession, as a whole, may support the economy : it can be suggested that business lawyers may wish to consider advising their clients to enter into settlement agreements (within the meaning of article 2044 of the French Civil Code) to solve pending litigations and to unlock commercial situations created by the current sanitary crisis.

This would give the economy a possibility to maintain a flow of activity.

Up to date 16 March 2020

Paternity leave (Paris Bar) and indirect civil liberties

Article 14.0.3 of the RIBP (Réglement Intérieur du Barreau de Paris – Internal Regulation of the Paris Bar) states that man liberal practitioners have the possibility to put their contract on hold for four weeks spread over a period of six months following the birth of a child.

This new possibility is granted by an article created in Council meeting dated 3 November 2015 (official bulletin of the bar dated 17 November 2015) and echo to the already existing possibility to put the performance of the woman liberal practitioner contract performance on hold for a period of sixteen weeks.

It also creates a more balance regime which leads towards equal rights between men and women lawyers, and more comprehensively, between men and women.

This new right created for the benefit of men is of nature to create indirectly new rights for the benefit of women and / or make those already existing more efficient for women. In this perspective, the suspension of the man liberal practitioner contract and the effective contribution of the man lawyer during the post-birth period allow a real support from the lawyer father for the benefit of the mother (lawyer or not, incidentally). In light of this, such a real support indirectly leads to a more efficient right to rest for the mother (due to the regulation which is applicable to her i.e. her own right to rest). This is due to the fact that article 14.0.3 of the RIBP makes the father lawyer more available. It is therefore possible to contemplate, with a more efficient right to rest of the mother, the indirect parallel creation for her of a new (and second) right to rest.

The Paris bar should be honored to have introduced this paternity leave.

It remains that this new right should be vested with more effectivity in practice. Such an effectivity may, for example, be improved by (i) further regulation allowing more guarantees that the man liberal practitioner be reintegrated within his law firm and (ii) the creation of a more efficient mutualization legal regime of the costs associated with the birth of a child, not only the lawyer but also the law firm not being in the position (or rarely) to bear the whole financial and commercial cost of this paternity leave.

Up to date 24 June 2019

Jerôme Kerviel trader’s case: 19 December 2018

On 19 December 2018, the French Court of Appeal of Paris (RG 16/09186) stated that the dismissal of Jerôme Kerviel, French trader from SGCIB (Société Générale Corporate and Investment Banking), the investment bank of Société Générale is fair (on the basis of a gross negligence – faute grave).

This overrules the decision (jugement) of the Conseil de Prud’hommes (French jurisdiction dedicated to labour law) dated 7 June 2016, whereby the dismissal was considered unfair (i.e. without a material and true reason) (cause réelle et sérieuse). In this first instance, Jerôme Kerviel obtained not only €100,000 because of the unfair dismissal but also (i) €20,000 due to the vexatious nature of the dismissal, (ii) €18,083.32 as regards to compensation in lieu of notice (indemnité compensatrice de préavis), (iii) €1,808.33 in relation to unpaid vacation pay (congés payés), (iv) €13,609.23 in connection with conventional severance pay (indemnité conventionnelle de licenciement) and (v) €300,000 as to the unpaid bonus for 2007 (plus €2,000 in relation to article 700 of the French Code de procédure civile).

The ratio decidendi of the Court of Appeal of Paris is based on the characterization of the conduct of Jérôme Kerviel during his contract. The blames in the letter of dismissal are considered grounded by the Court of Appeal of Paris (even if previously been ruled purged due to the knowledge of them by the employer). In particular, the blame considered crucial by the Court is the taking of directional positions (i.e. at a highest analyzed value), while at the same time going over authorization (€50 billion for an authorization of €125 million for the whole desk only).

The Court of Appeal of Paris states however that the wilful misconduct (faute intentionnelle) is not characterized: Jérôme Kerviel did not mean to cause the loss of the estimated circa €5 billion. The position of the Court is in line with the statements of Jérôme Kerviel who considered himself as being part of a spur gear (as mentioned in his book “L’engrenage, mémoire d’un trader”). This decision gives a warning to the traders: taking inconsiderate risks could lead to a dismissal (with maybe prison), and at the same time a balance: a bank which loosens internal regulations (or admits implicitly / explicitly / or maybe intentionally some inappropriate derogations) cannot fully blame a trader.

The ratio decidendi of the Court of Appeal of Paris is also grounded on the force of res judicata (for res judicata pro veritate habetur – autorité de la chose jugée). This means that, once the decision is final, such a decision is considered as representing the judicial truth. Jérôme Kerviel was indeed convicted with offences (délits pénaux) by a distinct decision of the French Cour de cassation dated 19 March 2014 (Ch. Crim., pourvoi n°12-87416). In this respect, the Court of Appeal of Paris qualifies the force res judicata principle, as absolute. As a consequence, other civil French pending decisions are to be linked (and bound) by the decision of the French Cour de cassation. In this perspective, the conviction of the trader by the French Cour de cassation influes on, and binds the decision of the Court of Appeal of Paris, ruling the labor decision.

It should however be considered that the absolute feature of the force res judicata, as stated in the ruling of the Court of Appeal of Paris, should be subject to challenge. As such, since any legal concept, even considered as absolute, are, in a democratic country, subject to other legal concepts tempering (within the meaning of qualifying) such absolute rights.

It should also be considered that this characterization by the Court of Appeal of Paris is more in line with what would be acceptable in a context where the bank is considered as being itself in default, since being itself convicted by the French banking regulator – Commission Bancaire for the lack of control and monitoring of the trading systems.

In light of this, the Court of Appeal of Versailles ruled on 23 September 2016 (room 9 – RG: 14/01570) (ruling by a review of the case decided by the French Cour de Cassation dated 19 March 2014 (Ch. Crim., pourvoi n°12-87416)) that Jérôme Kerviel is only partially responsible for the prejudice caused to the Société Générale and convicts him to pay €1 million only (instead of circa €5 billion).

Up to date 19 December 2018

Increase in share capital (employee share schemes)

The French Supreme Court related to private matters (Cour de cassation) ruled as a ratio decidendi on 28 November 2018 that the single vote on the resolution related to an increase in share capital reserved to employees is considered satisfactory to regularize an increase in share capital not subject to a vote on a preceding general meeting. This allows the possibility for a general meeting to ratify an increase in share capital reserved to employees (due to the relativity of the nullity – nullité relative). The legal concept that may be considered as underpinning the ratio decidendi is the French appearance theory: the ratification is being made possible by the subscribers (employees) having legitimately believed that the increase in share capital was regularly made. This is in line with the spirit of company law to allow ratification as much as possible to ensure legal safety.

Up to date 28 November 2018

Increase in share capital (reserved to employees)

The French Supreme Court related to private matters (Cour de cassation) ruled as a ratio decidendi on 28 November 2018 that the single vote on the resolution related to an increase in share capital reserved to employees is considered satisfactory to regularize an increase in share capital not subject to a vote on a preceding general meeting. This allows the possibility for a general meeting to ratify an increase in share capital reserved to employees (due to the relativity of the nullity – nullité relative) and is in line with the spirit of company law to allow ratification as much as possible to ensure legal safety.

Up to date 28 November 2018