RE: simplified French pleadings, very limited pre-trial discovery, choice of forum, legal fees and disbursements and working with your French legal counsel
During this seminar, we will examine the following subjects:
1. How is a French commercial litigation conducted and very briefly how is it different from an American commercial litigation
- Special Commercial Court (« TDC »)
- Simplified pleadings
- Very limited pre-trial and trial proceedings
- Low legal fees and disbursements
- Executions of a money judgments – the « référé » option
- French Court of Appeals
2. Can a French Tribunal be avoided and should a potential non-French litigant take steps to avoid finding itself before a French Tribunal?
- Choice of forum
- Choice of applicable law
3. Some thoughts about effectively working with your company’s French legal counsel (« Advocate »)
4. Further French Limitations on Pre-Trial Discovery
1. How is a French commercial litigation conducted and how is it different from an American commercial litigation?
A. In France, commercial litigation between merchants (for example, two companies) will be held before a Tribunal of Commerce (« Tribunal de Commerce« ) (« TDC »), a court specialized in commercial litigation.
B. Magistrates of the TDC in France are normally lay judges, but they generally have good training in the law in their respective fields (banking, import/export, particular industries, etc.). In smaller cities, these lay judges who may not have significant legal training but are well known business men/women in the local community.
C. In France, commercial litigation is much less:
– time consuming
than American litigation.
D. The chronological and substantive steps of a French commercial litigation before a TDC are different from those encountered in comparable litigation in the United States. Here is a summary of the French steps:
– Plaintiff’s legal counsel sends to the other party a registered letter demanding payment of a debt or other corrective measures. This is called a « mise en demeure« .
– The date of delivery of the « mise en demeure » will set the date on which statutory interest on an outstanding debt will commence to accrue, if ever a French judgment is obtained against a debtor. A sample « mise en demeure » in French and an English translation are attached.
– If satisfaction is not forthcoming, the next step is the delivery of a « Summons and Complaint » (« assignation« ). This document is prepared by an Advocate and served by a bailiff (« huissier« ) to other party at its official address. The « assignation » briefly states the relevant facts and may possibly refer to the applicable law by simple reference to a code provision. .
-In the absence of payment, legal counsel to the parties will commence a monthly cycle of Tribunal mandated exchanges of pleadings and supporting document wherein they alternately refine the alleged facts and issues of law. These are called « conclusions » and « conclusions en réponse« .
– If either Advocate wishes for an expert to be designated by the tribunal, the Advocate files a motion (« demande d’expertise« ) with the TDC. A hearing is scheduled and the tribunal decides to grant or deny the motion.
– If an expert is appointed, the expertising process becomes a mini proceeding where the expert formally notifies the parties of the steps he intends to take (e.g., an inspection of goods or records) and the parties and the Advocates may generally accompany the expert when he effects his inspection, if it is appropriate, as in the case of issues of non-conforming goods.
– At times, the expert will issue a draft report (« pré-rapport« ) and submit it to the Advocates for comments. Then (or sometimes without having issued a « pré-rapport« ), the expert files his report with the TDC, which will usually adopt the report as fully dispositive of the issues within its scope.
– It is exceptionally possible to obtain an interlocutory order the opposing side be compelled to produce a precise document or object. The TDC will be very reluctant to authorize such production and American-type pre-trial « fishing expedition » discovery procedures are absolutely out of the question.
– The matter is then set for trial. The trial is generally quick and simple. The matter is set for oral argument by the TDC. The Advocates present to the Magistrate(s) their oral arguments based upon the facts and arguments developed in the « conclusions« , the exchanged documents and the expert’s report, if there is one.
– Normally this oral argument lasts 10 to 30 minutes, not the days of an American trial. Naturally, there is no jury and no oral testimony.
– In support of the oral arguments, each Advocate presents to the TDC his/her written summary of his/her arguments and supporting documents. This document is called (« dossier de plaidoirie« ) which is composed of series of folder A3-sized pages called (« côtes de plaidoirie« ).
– In Paris and in other Tribunals all around Paris, the hearing is usually held by one judge (« juge rapporteur« ) who will prepare the judgment which will be co-signed by two other judges before it becomes the « judgment of the Tribunal ».
– The TDC will then render a written decision, often within 1-3 months.
– The judgment becomes enforceable and the period to file an appeal commences to run, only once the prevailing party has officially « notified » (« signifié à« ) the losing party of the judgment, even though the losing party has a copy of the judgment.
– To do this, the Advocate for the prevailing party causes an official executory copy (« copie exécutoire« ) of the judgment to be served on the losing party by a bailiff (« huissier« ). (Notification to a non-French party is effected in conformity with the Hague Convention of 15 November 1965.)
Execution of a Money Judgment in France
In a matter involving a commercial debt or other relief fixing monetary damages, one of the parties may have asked in its pleadings that the judgment be provisionally enforceable (« exécution provisoire« ). With respect to a provisionally enforceable judgment, the following points should be kept in mind:
– this form of relief is widely granted if the prevailing party has so requested,
– it is also very useful for the prevailing party because payment by the non-prevailing party must be effected quickly to avoid the attachment and sale of assets to satisfy the judgment,
– if the Tribunal does not require the prevailing party to post an appeal bond and the judgment is eventually reversed upon appeal, the party which received the money at the order of the TDC might no longer have the funds and be « judgment proof ». Thus, the reversal on appeal could be of no or little value, and
– accordingly, a proactive client in a commercial litigation should discuss with its Advocate the availability/danger of requesting « provisionally enforceable judgment » or an « appeal bond ». This discussion should occur well before the end of the pleading cycle described above.
The « Référé » Option.
– there is great urgency in a commercial matter,
– there is danger of irreparable harm, or
– the issues of facts and law are clearly in favor of the moving party,
it may be possible to avoid the normal time consuming TDC procedure and to bring an expedited proceeding (« référé« ) before a special session of the TDC. In such proceeding, a judgment may be obtained in a matter of days or a couple of weeks. Typically, this type of relief is available in commercial cases when the debtor has failed to honor a draft or check, as the check or draft is an admission of debt.
French Courts of Appeals.
Any party not pleased with the decision of the TDC has a right to appeal to the Court of Appeals and the matter will be heard within 1-2 years.
Unlike the American system where the appeal is based upon on the written record recorded at the trial level, plus briefs and oral argument, the French appeal process resembles a new trial, a trial de novo, where evidence is reintroduced to the court. This is partially necessary because there is no stenographic record of the trial tribunal (TDC) proceedings.
(However, at least in theory, the arguments are on circumscribed to the issues of whether the judgment of the TDC should be upheld or overruled in whole or in part.)
The process of preparing a case for appeal is substantially identical to the preparation for the initial trial. After the appeal is filed, the Advocates exchange « conclusions » and may introduce legal theories not presented to the TDC.
At the appellate trial, the Advocate « through » his appellate counsel (« Avoué« ) follows the same procedures used before the Court of Appeals. (Often the Avoué’s role is limited to that of an experienced paper pusher of pleadings, but not necessarily so.)
In commercial matters, a judgment of the Court of Appeals is executory (« exécutoire« ), even if it is appealed by one of the parties to the « Cour de Cassation« . The executory judgment can be important, if one of the parties wishes to enforce the judgment in either France or a foreign country, such as the United States.
2. Can a French Tribunal be avoided and should a potential litigant take steps to avoid finding itself before such a French Tribunal.
When commercial disagreements arise and the parties are not of the same nationality, there are a number of questions that need to be examined, including (A) the countries in which there is a Tribunal which has jurisdiction and (B) the applicable law.
A. What court or other quasi-judicial body might be competent to hear the controversy?
It is possible that a commercial dispute between a French and an American or an English company might be subject to litigation in France, England, Holland, or even Belgium or the United States. In fact, more than often, Tribunals in several countries may have jurisdiction to hear the controversy. The following are some of the factors which may determine which courts may have jurisdiction:
Among the jurisdictional considerations to be considered include the following:
1. Articles 14 and 15 of the French Civil Code which contain French long-arm provisions if one of the parties is French,
2. the Brussels and Lugano Conventions, if both parties are domiciled in Western Europe.
3. American long-arm jurisdiction, an introduction.
– Due process provision of the United States Constitution (International Shoe case).
– Property, receivables, bank accounts or other assets in an American State.
A legal action is brought first in a competent foreign jurisdiction – called « Litis pendance« . Normally, a court in a second country will decline to hear a matter if the matter is being judged in another country as there is « Litis pendance« . Thus, it may be strategically important to get to the right court house first!
B. What law will be applied?
When appropriate, a French Tribunal will apply American or English law and an American court will apply French law. In determining what law will be applied, a Court or Tribunal might consider the following factors:
1. law provided in the contract.
2. other indications of the intent of parties.
3. Vienna Convention to which both the United States and most important European countries are a party (if the international sale of goods is the basis of the conflict).
4. forum where contract made and the place of performance/delivery (« éléments de rattachement« ).
5. forum of greater interest (U.S. « contact theory »).
In certain instances, the choice of applicable law will have little effect over the outcome of the litigation. At other times, it can be very important. For example, certain contract provisions (non-compete provisions, distributor severance [indemnity] benefits) may be legal and enforceable under the laws of one country or State in the United States and unenforceable in another country, as a violation of « public policy » (« ordre public« ). (Generally, an Advocate who is aware and knowledgeable about this choice-of-law issued can better counsel his commercial client in both the drafting of contracts and in conflict resolution situations.)
3. Effectively Working with French Counsel.
An informed and proactive non-French client who actively works with its French Advocate will generally obtain better legal services and better results than a more passive client.
The following factors support this observation:
A. Certain Advocates rely too much on « inspiration » and not enough on « perspiration ».
B. Too often pleadings (« conclusions« ) and even a « dossier de plaidoirie » may be prepared at the last moment and not reviewed by the client. (In my judgment, a proactive client should, when retaining French counsel, have a written retainer agreement wherein the Advocate undertakes to furnish to the client in a timely manner with a final draft of each round of its Advocate’s pleadings and the supporting document a week before they are to be finalized.)
C. The amount of malpractice premiums in Paris, and presumably everywhere else in France, are not tied to the malpractice cases previously lost by the particular Advocate. In contrast, in the United States, such premiums can increase dramatically, if the Advocate has been the subject of malpractice litigation.
D. Under normal circumstances, all communications between your company’s French Advocate and the opposing side’s French Advocate are confidential and can neither be introduced into evidence nor communicated any client. The sole exceptions are the follows:
- written communications marked « Official » and not containing any reference to a prior confidential communications between the French advocates, and
- written communications strictly of a procedural nature such as the communication of a copy of pleadings or documents being introduced into evidence or a demand that a certain document be produced.
This French rule has both an advantage and a disadvantage from the point of view of an American client.
- The principal advantage is that the French attorneys are free to explore in writing or otherwise if and how a settlement might be achieved.
- The principal disadvantage is that the American client will not be entitled to receive a copy of the settlement negotiations exchanges and may feel somewhat frustrated. But this frustration can be partially avoided because the client is entitled to receive from his legal counsel summaries which at times are very detailed.
E. In the United States, the functional equivalent exists, but it is done in what seems to be a more restrained manner. In the case of correspondence sent solely to an American lawyer, it is essential that the letter be marked:
« PERSONAL AND CONFIDENTIAL (PRIVILEGED SETTLEMENT DISCUSSIONS) »
or other words to that effect.
If the correspondence with American counsel is so marked, it is protected in civil litigation from being used against the interests of the Advocate’s client.
5. Further French Limitations on Pre-Trial Discovery
If the matter is to be litigated in France, there will be no depositions and pre-trial discovery is almost non-existant.
If the matter is to be litigated in the United States, American attorneys who contemplate conducting depositions in France or at the American consulate in France should proceed with the utmost care and only after retaining French counsel who will file for an authorization to take the deposition.
This is necessary because France enacted in 1968 a law (the so-called « Blocking Statute »), as amended in 1980. This law seeks to control what France deems to be a foreign legal proceedings on French territory and ignorance of this law could subject the « legal tourist » in France to criminal sanctions. This law also seeks to shield French companies from the duty to produce documents in U.S. proceedings, but is naturally not overly effective. (There is an abundant number of articles on the French « Blocking Statute » issue which can be found with WESTLAW and elsewhere.)
|French Law 80-538, 1980 J.O.1799, 1980 D.S.L. 285 (July 16, 1980) provides as follows:
Subject to treaties or international agreements and the laws and regulations in force, it is prohibited for any person to request, seek or disclose, in writing, orally, or otherwise, economic, commercial, industrial, financial or technical documents, or information leading to the constitution of evidence with a view to foreign judicial or administrative proceedings or in connection therewith.
See also Societe Nationale Industrielle Aerospatiale v. United States District Court 482 U.S. 522, 526 n. 6 (1987).
N.B.: As a pratical matter, in normal modest commercial matters, the applications of the blocking statute can be avoided.