‘Best Practices’ for Commercial Litigation in France
Less complicated, less time consuming and less costly
This white paper elaborates on some of the most important jurisdictional factors that determine the time scale of commercial litigation in France. It specifically aims at lawyers and business men who want to get more familiar with the French jurisdiction.
Every now and then popular newspapers report about unfathomable US lawsuits and astounding settlements, such as the case of McDonalds serving (too) hot coffee. More recently, the Austrian energy drink producer Red Bull was successfully sued for not holding their claim to “give you wings”. In fact their marketing slogan was falsified in a series of investigations, which supported the prosecutor’s charge of ‘false advertising’. Eventually Red Bull agreed to settle the case out of court and pay $13m to avoid further trial cost. A result rather unsurprising, as more than 95% of commercial cases in the US, are settled outside of the court.
Avoid Surprising and Retarding Developments in France
These examples nicely demonstrate how ordinary law in the US is different from French constitutions and laws. The gap between US and the French jurisdiction couldn’t be larger. There are differences which often lead to unexpected or even surprising developments, not to mention cross-boarder litigations which involve parties from foreign countries. Obviously, and for many reasons, the Red Bull lawsuit would have to follow a different approach in France and most likely led to a more subtle outcome if filed. Furthermore if the right strategy was chosen, time scales of commercial litigations in France can be drastically shortened.
General Situation Analysis in France
The Commercial Court in France vs the Jury in the US
In US commercial litigations, either party has the right to demand a trial by jury. The fact that 12 citizens (=the Jury)are deciding on issues of liability and justice in complex commercial cases, which often have potentially high damages, gives this process a certain amount of unpredictability and therewith promotes settlements. This is not the case in France, as there are no juries at either civil or commercial hearings (nor are witnesses being heard). More specifically, commercial cases are being heard in front of a respective court. The official instance to lead those trials are the Commercial Courts (‘Tribunal de commerce’), which are primarily responsible for disputes regarding
– commercial corporate entities;
– undertakings among credit institutions, between business persons and credit institutions, among business persons such as traders;
– commercial matters, such as security or transactions relating to businesses as a going concern (‘Fonds de commerce’), promissory notes, and bills of exchange.
At this point it is important to note that the French commercial courts are not staffed with paid professional judges, but with elected volunteers of the business community, often only working part-time at the court. Even though some Commercial Court judges don’t necessarily have any legal background or training, most of them work in legal departments of companies where they act as lawyers. As a consequence, commercial cases are held by courts composed of a mixture of company directors, managers, and lawyers who have graduated and been elected to seat there. Practical business professionals bring often practical solutions.
Mediation gains more traction in France
Due to the tightly organized commercial jurisdiction, large scale punitive damages as a result of out-of-court settlements are rather seldom. Instead the main resolution processes to settle commercial disputes are arbitration and court litigation. Further, mediation, although not compulsory, has gained more traction in the commercial sector and is likely to find more recognition.
Class Action suits on the rise in France
Contrary to US courts, class actions and other forms of collective redress have just started to find their way into jurisdiction. Since 2014, French law ensures that certain associations can now bring actions on behalf of their clients or similarly groups of individuals to advocate their interests, allowing some sort of quasi-class action lawsuit. For example, consumer groups can jointly go to court and represent a collective motive to protect tenants from illicit charges by property companies.
Best Practices for stages of commercial litigation
1. Letter of corrective demand
Before a court actually gets involved, an entity’s legal council sends a registered letter (‘Mise en demeure’ or MED) to the other party, in which a payment of a debt or other corrective measures are demanded. The date of delivery of this letter determines when the interest of an outstanding debt or other liability will begin to accrue, in case further legal measures need to be taken.
2. Writ of summons
Only if satisfaction is not forthcoming, a writ of summons (‘assignation’) will be handed to the other party, which sets out the factual and legal arguments to enforce the prosecutor’s claim. Usually it comes with a number of documents on which the claimant relies as supporting evidence. These documents are then filed with the Commercial Court.
3. Fast-track procedures
The next stage is the actual trial. Here it is important to note that the time required for a matter to come to trial, i.e. with effect from the service of the writ or claim form, often depends on the geographical location within France. Accordingly it is possible to apply for a so-called fast-track procedure, which if accepted, can reduce the waiting time down to 4 months. However if the process follows regular procedures, it may take 12 to 24 months to pass between the service of the writ and the trial at First Instance.
4. Written submissions are pivotal, no time consuming oral argumentations
As soon as the trial has begun the biggest difference between the French commercial litigation procedure and that of other countries becomes apparent. While most countries heavily rely on oral hearings, the oral advocacy part of proceedings in France carries far less weight. As a matter of fact the dispute is decided on the basis of the exchange of written submissions prior to the trial. In addition, cross-examination of witnesses does not exist either, as the court solely relies on written statements drafted in a specific format. As the normally time-consuming oral argumentation only lasts up to 30 minutes in France, the trial itself is usually quick and simple. Within the following 1 – 3 months the tribunal will declare a written decision which immediately becomes enforceable. Filing an appeal is possible from the moment the prevailing party has officially notified the other party of the decision by serving an executory copy by a bailiff.
Following best practices in France for commercial litigation leads to much less complicated, time consuming, and costly trials. Yet specific skills and jurisdictional knowledge are required to successfully achieve summary judgment within much shorter timescales. Make sure your legal advisor provides assistance advice and tight follow up in all kind of commercial litigations.