Have you bought a faulty appliance in a shop and the seller refuses to honour the guarantee? Are you a company director and a contract that you thought was purely professional has become entangled with aspects of your private life? The question of which court has jurisdiction to settle your dispute is not always a simple one. Contrary to popular belief, just because a trader or commercial company is involved does not mean that the case automatically falls within the jurisdiction of the Commercial Court. It all depends on the legal nature of the act or fact giving rise to the dispute.
French law distinguishes between "civil" and "commercial" acts. This distinction is fundamental because it largely determines which court has jurisdiction. Even more complex is the situation of "mixed acts", acts that are commercial for one party but civil for the other. The aim of this article is to shed some light on these concepts: we will explain in detail what a commercial document is, the sometimes confusing way in which mixed documents work and their impact on the choice of court, and finally we will outline the important areas in which the (civil) courts still have jurisdiction, even when the case appears to be in the business world.
Identifying a "commercial act": more than just a contract
To determine whether the Commercial Court has potential jurisdiction, it is first necessary to establish whether the dispute relates to a "commercial act". The Commercial Code does not provide a general definition, but it does list a series of activities and operations that are considered to be commercial. These can be grouped into several categories.
Commercial acts by their very nature: economic activity at their heart
These are acts that are commercial by their very nature, as they are typically part of a business, speculation or professional intermediation logic. Article L. 110-1 of the Commercial Code gives a non-exhaustive list:
- Buying to resell : This is the most classic form of trading. Buying goods (merchandise, raw materials, etc.) or even real estate with the intention of reselling them to make a profit is a commercial activity. Shopkeepers and wholesalers, as well as property dealers, are by nature engaged in commercial activities.
- Industrial activities : Processing raw materials or semi-finished products ("manufacturing" as the code used to call it) is a commercial activity.
- Various service companies: Many service activities are considered commercial when they are carried out in-house. Examples include furniture rental companies (equipment, vehicles), transport companies (land, sea, air), the organisation of public performances (cinemas, theatres, concerts - under certain conditions), business agencies (estate agencies, travel agencies, debt collection companies, etc.).
- Financial transactions : Banking transactions (receipt of funds, credit transactions, management of means of payment) are commercial acts by nature when carried out by a banking establishment. The same applies to most insurance transactions (with the notable exception of mutual insurance companies, which retain their civil status and are therefore subject to the jurisdiction of the courts).
For an activity to be classified as commercial in nature, it must generally be carried out habitually, repeatedly and for profit (i.e. with the intention of making a profit).
Acts that are always commercial, regardless of the person: acts by form
Certain acts are considered commercial by law by virtue of their very form, irrespective of the status of the person carrying them out (trader or not) and the objective pursued.
- Bills of exchange : It is a very specific payment and credit instrument, used mainly between professionals. Simply signing a bill of exchange (whether as drawer, drawee, endorser or principal) constitutes a commercial act for the person signing, even if that person is an individual acting for non-business reasons. Consequently, any dispute relating to a bill of exchange falls within the jurisdiction of the Commercial Court.
- Guarantee of a commercial debt (since 1 January 2022) : A major reform resulting from an order dated 15 September 2021 has changed the nature of surety bonds. From now on, the act of acting as surety to guarantee a commercial debt is deemed to be a commercial actThis is the case "between all persons". This means that even if you are an individual and you act as guarantor (for example, for a loan taken out by your child's company), your commitment is considered to be commercial if the principal debt is commercial. The Commercial Court therefore has jurisdiction over disputes relating to this guarantee. There is, however, an important nuance introduced by the same reform: if the guarantor did not enter into this commitment in the course of his or her professional activity, any arbitration clause (clause providing for recourse to arbitration) contained in the deed cannot be invoked against him or her.
When a civil deed becomes commercial: the accessory follows the principal
Sometimes an act that would normally be civil in nature acquires a commercial character because it is performed by a trader. for the direct needs of its professional activity. This is the "commercial accessory" theory.
The principle is simple: the accessory (the civil act) follows the regime of the principal (the commercial activity). Thus, a loan taken out by a trader to finance his stock, the purchase of a commercial vehicle for his deliveries, or even a guarantee given by him to secure a debt linked to his business (before the 2021 reform, which makes it commercial in form) are considered to be commercial acts by accessory.
To make things easier, case law has established a presumption Any act performed by a trader is presumed to have been performed for the purposes of his business. It is therefore up to the trader, if he wishes to escape the jurisdiction of the commercial court or the commercial rules, to prove that the act in question was purely private and had no connection with his professional activity.
Mixed deeds: a frequent situation, specific rules
The distinction between civil and commercial deeds is complicated by the concept of "mixed deeds". This is a very common situation in everyday life and a source of many questions about the jurisdiction of the courts.
What is a mixed deed?
A document is said to be "mixed" when it has a different nature for each of the parties: it is commercial for one and civil for the other.
The examples are legion:
- Retailer / Non-retailer relationship :
- The purchase of a consumer good by an individual in a shop: the act is commercial for the seller (purchase for resale) but civil for the buyer (personal use).
- A loan granted by a bank to an individual for a personal need (property purchase, consumer credit): commercial for the bank, civil for the borrower.
- A home or motor insurance policy taken out by an individual: commercial for the insurer (except mutual), civil for the insured.
- The employment contract: commercial (incidental) for the employer-company, but civil for the employee.
- Relationship between Traders, but one is acting in a private capacity: A baker (trader) buys a car for his personal use from a car dealer (trader). The transaction is commercial for the dealer, but civil for the baker, who is not buying for his business.
The rule of choice for non-traders: who can go to which court?
In the case of a mixed deed, the question of jurisdiction is resolved by a fundamental rule designed to protect the party for whom the deed is civil (the non-trading party or the trading party acting in a private capacity):
- If the non-trading company is the claimant (the person initiating the procedure): He benefits from a competence option. He may choose to summon the trader either before the judicial tribunal (the civil court, which is its "natural" judge), or before the commercial court (the "natural" jurisdiction of the commercial defendant). This choice may depend on various factors: geographical proximity, perception of the court's speed or specialisation, procedural strategy, etc.
- If the trader is the claimant against the non-retailer: He has not no choice. It must mandatory enter the judicial tribunal. Under no circumstances may the trader impose the jurisdiction of the commercial court on the civil party. This rule is a matter of public policy.
This asymmetry is at the heart of the mixed deeds regime and is designed to prevent a party considered "weaker" or less familiar with the commercial courts from being forced to plead before a court that is not its natural judge.
Areas reserved for the courts (even in a commercial context)
In addition to mixed deeds, there are specific areas where, despite an obvious link with the business world or commercial activity, the law has expressly given exclusive jurisdiction to the judicial court (the civil court). In such cases, the Commercial Court cannot intervene, even if both parties are traders.
Commercial leases: a traditionally civil jurisdiction
This may come as a surprise, but litigation relating to the status of commercial leases (leases entered into for the operation of a business or craft) falls largely within the jurisdiction of the judicial tribunal. Historically, this area was linked to real estate and property law, which came under the jurisdiction of the civil courts. Disputes concerning :
- Setting the price of the revised or renewed lease (often specifically entrusted to the President of the judicial court, nicknamed the "commercial rents judge").
- Disputes over the right to renew a lease.
- Setting the eviction compensation due to the tenant in the event of an unjustified refusal to renew.
- The validity of a notice of termination or an application for renewal. ... fall within the jurisdiction of the judicial court.
However, this civil jurisdiction is not absolute. If the dispute does not relate directly to the application of the specific rules of the commercial leases statute, but, for example, to a simple recovery of unpaid rent between two commercial companies, the Commercial Court may regain its natural jurisdiction for disputes between traders. The distinction is sometimes subtle.
Intellectual property (trademarks, patents, copyright, etc.): protection by the civil courts
Protecting intellectual property rights is a major issue for businesses. However, litigation in this area is a matter for the courts. exclusive jurisdiction of the judicial court. Whether it's an action for trademark or patent infringement, an action for invalidation of an industrial property title, or a dispute relating to copyright over software or a creation, the civil courts have jurisdiction. The law has even designated a limited number of judicial courts in the territory as being specially qualified for these technical matters, in order to guarantee a certain level of expertise among magistrates.
Certain real estate transactions
Lastly, actions that directly affect real property itself, such as actions to claim ownership of a property (actions pétitoires) or to protect its possession (actions possessoires), fall within the exclusive jurisdiction of the court, even if the property is used for a commercial activity.
The legal classification of your dispute is crucial to choosing the right court. A mistake can have major consequences in terms of delays and costs. Our firm can help you analyse the nature of your case - commercial deed, civil deed, mixed deed - and initiate the appropriate procedure before the competent court. Please do not hesitate to contact us.
Sources
- French Commercial Code, in particular articles L. 110-1, L. 110-2 (list of commercial acts) and L. 721-3.
- Civil Code (for the definition of civil acts and the system of contracts).
- Code of Civil Procedure (for jurisdictional rules).
- Code de l'organisation judiciaire, in particular article R. 211-4 (specific powers of the TJ).
- Intellectual Property Code, in particular articles L. 615-17, L. 716-3 (jurisdiction of the TJ).
- Constant case law on the system of mixed deeds.
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