French Supreme Court Declines to Align French PIL with Granarolo
In a judgment of 12 March 2025, the French supreme court for civil and criminal matters (Cour de cassation) decided that it would not align characterisation for the purpose of its national rules of international jurisdictional with the EU characterisation adopted in Granarolo.
As already reported on this blog, a few weeks later, the Court also asked the CJEU to reconsider Granarolo in the light of Wikingerhof.
Background
The case was concerned with a contract whereby a US company imported French beverages in the US. The US company had bought thousands of liqueurs each year from the French company between 2011 and 2015. In 2015, the US company informed the French company that it would not continue to import the products. A first dispute arose, which eventually lead to a New York court ruling that the American party owed nothing to the French party. The parties then continued to do business together for another few years, negotiating in parallel a distribution agreement. In 2019, the French company eventually sued in a French commercial court for brutal termination of the commercial relationship.
The French commercial court ruled that the action was delictual and retained jurisdiction on the ground that the damage (ie the termination) had occurred in France, but then dismissed the action on the merits. The Court of Appeal ruled that the action was contractual and declined jurisdiction on the ground that the place of performance of the import and distribution of the products was not in France.
The French Tort
Article L. 442-1, II of the French Commercial Code (renumbered in 2019) provides that one is liable for ‘terminating brutally’ an ‘established commercial relationship’. This provision is widely used in France for seeking damages where a commercial partner terminates a relationship without giving proper notice.
The Cour de cassation had charaterised this provision as tortious in nature for decades. In the context of private international law, this had led the Court to rule in 2014 that the applicable law to an action based on this tort was not to be determined pursuant to the 1980 Rome Convention, but rather by the lex loci delicti.
The characterisation was also relevant for the determination of the applicable jurisdictional rule. In the early 2000s, the Cour de cassation ruled several times that the action was delictual for jurisdictional purposes. As the reporting judge has recognised in this case, this issue was not merely technical, as the applicable rule allowed French courts to often retain jurisdiction in such cases.
EU Characterisation
As most readers will know, the issue of the characterisation of the French rule was referred to the CJEU, which ruled in Granarolo (Case C‑196/15) that, for the purpose of Article 5 of the Brussels I Regulation, the action is to be characterised as contractual ‘if a tacit contractual relationship existed between the parties’.
Article 5(3) of Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters must be interpreted as meaning that an action for damages founded on an abrupt termination of a long-standing business relationship, such as the termination at issue in the main proceedings, is not a matter relating to tort, delict or quasi-delict within the meaning of that regulation if a tacit contractual relationship existed between the parties, a matter which is for the referring court to ascertain. Demonstration of the existence of a tacit contractual relationship of that kind must be based on a body of consistent evidence, which may include in particular the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged.
Aligning French PIL with EU PIL?
The detailed preliminary report of Justice Ancel and the conclusions of Advocate General Mallet-Bricout show that the members of the court debated the desirability of aligning the solutions of French law with EU PIL.
The first proposal put to the court was to align French PIL with EU PIL and to characterise the French rule, for PIL purposes, as contractual in nature “if a tacit contractual relationship existed between the parties”. AG Mallet Bricout argued, however, that this would amount to “a politically marked renunciation to the autonomy of national PIL”. She also argued that it would oblige the French supreme court to adopt a nuanced position, and distinguish on the basis of the existence of a tacit contractual which, she further argued, would introduce legal uncertainty compared with the French clear characterisation.
The second proposal put to the court was to partly align French PIL with EU PIL, only for jurisdictional purposes, but not for choice of law purposes. The AG recognised, however, that the benefits of this solution would be unclear, as the characterisation would continue to differ for choice of law.
The third proposal was not to align French PIL, and thus to keep a coherent characterisation between French PIL and French substantive law. The AG gave three main reasons in support of this solution. The first was that she was more convinced by and preferred the tortious characterisation over a contractual one. The second was that a delictual characterisation would grant more often jurisdiction to French courts. The third was that, she argued, the law governing a French action based on the relevant provision should be considered to fall within the scope of Article 6(3) of the Rome II Regulation. She remained silent, however, on whether having different solutions for EU and French PIL raised any problem of legal certainty and created unnecessary complexity.
The Judgment
The Court eventually ruled that, under French substantive law, the French rule was delictual in nature, and that, as a consequence, outside of the scope of EU law, an action based on the French tort should also be characterised as delictual in nature.
The French supreme court thus allows the appeal against the judgment of the Court of appeal, and refers the case to another court of appeal.
Many thanks, Gilles! A point I have never understood is how you can characterize an action as delictual when its very letter presupposes the existence of a commercial relationship. What is the underlying reasoning given by the French courts? Is it because the claim is provided in a statute, and thus cannot be said to be based on a ‘voluntary obligation’ by the defendant?
Excellent question, dear Matthias !
The starting point is that French law applies the non cumul principle. Where a contract exists between the parties, all actions must be contractual, and tort law is unavailable. As a result, there can be no distinction based on whether the claim is based on the statute or not: in a contractual context, the claim is necessarily contractual.
The Cour de cassation, however, derogates from this analysis for certain claims. This is the case for restrictive (ie anti competitive) practices that the court has always characterised as delictual, irrespective of whether a contract existed between the parties.
As far as brutal termination of established relationships is concerned, the members of the courts have formulated two main reasons for characterising the claim as delictual. The first is that it would belong to anti competitive practices. Hence the reference to Art 6 Rome II. The second is that the tort applies, in rare cases, to non contractual scenarios. For instance pre or post contractual acts. Or between successive contracts.
Ultimately, the French view lacks nuance. It wants a single, one fits all, characterisation. The AG argues this is better for legal certainty. The view of the CJEU is more nuanced. The rule should be considered as contractual where the long standing relationship amounts to a tacit contract. This case is quite frankly a perfect example, as will be 90% of cases where this rule is relied on. And the distinction based on whether a contract exists between the parties is, I think, better aligned with the non cumul principle.
From a policy perspective, it makes perfect sense to have an autonomous interpretation of specific tort jurisdiction that does not apply the non-cumul principle within EU PIL (against EU defendants), while simultaneously applying the non-cumul principle within French PIL (against non-EU defendants). EU defendants must be subject to fair and predictable rules, irrespective of the characterisation under national substantive law. But if France wants to ensure that France-based claimants have a jurisdictional gateway to sue non-EU defendants based on substantive French tort law, it is well within its rights to do so. There is nothing inherently bad or illogical about an incongruence between EU and national PIL: they serve radically different policy goals.
Was there ever any more to this than the straightforward answer given as a matter of European (rather than French) law in Arcado v Haviland ? It seemed simple enough then…
In the end, a US-style interest-based analysis will become necessary in EU law. Characterization will always follwo interest, not vice versa. And the more experience I gain, the more I believe that, contrary to what I thought when I was younger and dreamt of a “perfectly forseeable PIL system”, there is nothing wrong with it.