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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

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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

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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

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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

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Corporate law (exclusion of partners)

The current situation of partners of limited liability companies carrying on a civil professional purpose (SEL – Société d’Exercice Libéral) is protected by law and the constitutive documents. This is due to the fact that they have to be protected as they are running the business activity. This is particularly the case in the event of exclusion of partners, when a decision is made to exclude a partner from the company.

In this respect, Article R.4381-16 of the French public health Code (Code de la Santé publique) states that a partner practicing within the company can be excluded when (i) he is prohibited from practicing or providing care to covered parties for a period equal to three months or (ii) the said partner contravenes operating rules of the company.

Article R.4381-16 of the French public health Code gives guarantees as to the exclusion decision: no exclusion decision can be taken if the partner was not legally convened and if he has not been in the position to plead his case on specific facts for which he was charged.

However, as to the voting process, Article R.4381-16 of the French public health Code states that the decision of the partners to exclude a partner is taken on the reinforced majority calculated excluding not only the vote of (i) the partners having been sanctioned for the same facts or related facts but also (i) the concerned partner (unanimity of other partners practicing within the company and entitled to vote having as well to be obtained).

The fact that the concerned partner does not take part to the vote is not in line with the ratio decidendi of the Cour de cassation (i.e. com. 9 July 2013) and the challenged provision is deemed not to have been written. Such a provision may as well be considered in breach of the ECHR (European Convention on Human Rights), in this particular case of Article 6 (right of a fair trial) or of Article 13 (right of an effective remedy).

The business activity is also protected in the event of temporary prohibition from practicing or providing care to covered parties (Article R.4381-16). In this perspective, provided that the partner is not excluded, the person concerned keeps his partners’ rights and duties, to the exclusion of the remuneration linked to his professional activity (Article R.4381-17).

This protection is crucial to ensure management stability, legal safety and thus, to foster business activity.

Up to date 17 August 2018

French Law

Experiment of new rulings (procédures de rescrit) under French Law

Law dated 10 August 2018 (n°2018-727) creates by way of experiment the possibility for a plaintiff to raise a written question in order to obtain a legal position related to the application of the law. The particularity of such a new regulation is that such a question may be raised before French administration (Article 22 of the law) or before the administrative judge (Article 54 of the law) (depending on the applicable procedure).

Inspired by the historical roman institution (rescrit du préteur), this new legal institution is additional to the already existing ones, such as the question préalable (for administrative law), the question préjudicielle (for EU law), the question prioritaire de constitutionnalité (QPC) (for constitutional law) or the tax ruling (for tax law).

The mechanism underpinning the procedure is the same: raise a question on the application or construction of the law. The addressee is however different: judge for a question préalable, a question préjudicielle or a QPC, administration for the tax ruling and administration or judge for the new rulings. The experiment will last for a period of three years starting the date of publication of a specific decree.

These procedures aim at improving legal safety (even if it can be alleged that the drawback of the multiplication of these rulings may lengthen the process).