As a creditor, how do you protect your rights when your debtor owns assets abroad? Protective measures offer a practical solution, but their international implementation raises complex issues.
1. Guaranteeing your international receivables
Precautionary measures make it possible to secure a debt by making certain assets of the debtor unavailable. These tools take on their full meaning in an international context where debtors may disperse their assets between several countries in order to escape their obligations.
" The purpose of precautionary measures is to ensure the preservation of the creditor's pledge. "(article 139 et seq. of the French Code of Civil Enforcement Procedures). However, their international dimension is still subject to specific rules.
2. Jurisdictional competence
The principle of territoriality
The law on protective measures comes up against the principle of territoriality. The Cour de cassation confirmed this on 21 January 2016: " by virtue of the principle of the independence and respective sovereignty of States, a French court may not, unless authorised to do so by an international agreement or Community legislation, order or authorise a compulsory or protective enforcement measure to be carried out in a foreign State "(Civ. 2e, 21 January 2016, no. 15-10.193).
This principle limits the action of creditors, but there are exceptions.
Exceptions to the principle
Article R. 121-2 of the Code of Civil Enforcement Procedures provides that if the debtor lives abroad, the court with jurisdiction is that of the place where the measure is enforced.
Jurisprudence has specified: " the jurisdiction conferred on the court of the debtor's domicile by article 211 of the decree of 31 July 1992 is not exclusive of the application of article 9, paragraph 2, of the same decree, the public policy provisions of which confer jurisdiction on the enforcement court of the place of enforcement of the measure when the debtor lives abroad "(Civ. 2e, 9 November 2006, no. 04-19.138).
This means that a French judge can order a protective measure against assets located in France, regardless of the debtor's foreign domicile.
The Brussels Ia Regulation
Regulation 1215/2012 of 12 December 2012 (Brussels Ia) provides clearer solutions. Article 35 states: " application may be made to the courts of a Member State for provisional, including protective, measures under the law of that State, even if the courts of another Member State have jurisdiction as to the substance of the matter" .
The Court of Justice of the European Union has confirmed that " the court with jurisdiction to hear the substance of a case in accordance with Articles 2 and 5 to 18 of the Regulation shall retain jurisdiction to order any necessary provisional and protective measures "(ECJ, 17 November 1998, Van Uden, case C-391/95).
3. The law applicable to precautionary measures
The principle of lex fori
The main rule is the application of the law of the forum (lex fori), i.e. the law of the country where the measure is sought. In France, the conditions and effects of a protective attachment carried out on national territory will be governed by French law.
The Court of Cassation ruled that " the principle and system of provisional judicial mortgages are governed solely by the law of the location of the property, and the same applies to the definitive registration of such mortgages "(Civ. 1re, 17 November 1999, no. 97-20.624).
The nuances to be taken into account
The assessment of the claim to be protected may, however, be governed by a different law. A French court considering a request for a protective measure for a claim governed by German law will have to apply German law to determine the existence and extent of the claim.
However, the Court of Cassation adopted a controversial position in 1996, ruling that ". the court hearing an application for a protective measure does not have the power to apply the conflict of laws rule, which concerns the substance of the law "(Civ. 1re, 16 April 1996, no. 94-15.531).
This decision has been criticised by academic writers as an "epiphenomenon", according to Jean-Pierre Rémery, and contrary to the principles of private international law.
4. Enforcement of foreign judgments
Recognition of foreign prescriptions
Can a protective measure ordered abroad take effect in France? The Brussels I bis Regulation provides an answer for decisions issued in the European Union.
Article 40 provides that a decision enforceable in a Member State automatically entails authorisation to proceed with precautionary measures under French law.
For judgments outside the European Union, the situation is less favourable. A foreign judgment that is not enforceable in France may nevertheless justify a French protective measure, as recognised by the Court of Cassation (Civ. 2e, 28 September 2017, no. 16-17.381).
The effect in France of foreign protective measures
Some foreign measures have no equivalent in French law. This is the case of the Mareva injunction in English law, which " is intended to prevent the debtor from organising his insolvency by prohibiting him from disposing of his assets on pain of civil and criminal penalties " (Civ. 2e, 3 October 2018, no. 17-20.296).
The Court of Cassation ruled that it differs from the French protective attachment and does not render the assets legally unavailable, thus allowing the adoption of French protective measures despite the existence of a Mareva injunction.
5. Immunities from execution
The Sapin 2 Act
The law of 9 December 2016 (the Sapin 2 law) strengthened the protections of foreign states against precautionary measures.
Article L. 111-1-1 of the French Code of Civil Enforcement Procedures now requires that: ". Precautionary measures or compulsory execution measures may only be implemented on property belonging to a foreign State with the prior authorisation of the judge by means of an order made on application." .
Article L. 111-1-2 strictly limits the cases in which this authorisation can be granted, in particular when :
- The State has expressly agreed to the measure
- The State has reserved the property to meet demand
- A judgement or arbitration award has been rendered against the State and the property is used for non-diplomatic purposes
Vulture funds
The Sapin 2 Act is specifically designed to hinder the action of "vulture funds", which buy up the debts of governments in financial difficulty at low prices and then demand payment in full using aggressive legal means.
This protection has been criticised by doctrine as potentially contrary to France's international commitments and the European Convention on Human Rights (Bollee, "Les dispositions de la loi Sapin 2 relatives à l'immunité d'exécution", D. 2016. 2560).
The French judge must now verify the purposes of the property in question, in particular whether it is used for diplomatic purposes. Article L. 111-1-3 specifically protects property "used or intended to be used in the exercise of the functions of the diplomatic mission".
Sources
- Code of civil enforcement procedures, articles L. 111-1 to L. 111-1-3, R. 121-2, L. 511-1 et seq.
- Civ. 2e, 21 January 2016, no. 15-10.193, Bull. civ. II
- Civ. 2e, 9 November 2006, no. 04-19.138, Bull. civ. II, no. 310
- ECJ 17 November 1998, Case C-391/95, Van Uden
- Civ. 1st, 17 November 1999, no. 97-20.624, Bull. civ. I, no. 305
- Civ. 1st, 16 April 1996, no. 94-15.531, Bull. civ. I, no. 183
- Civ. 2e, 28 September 2017, no. 16-17.381
- Civ. 2e, 3 October 2018, no. 17-20.296
- Regulation 1215/2012 of 12 December 2012 (Brussels Ia)
- Regulation No 655/2014/EU of 15 May 2014 (Attachment of bank accounts)
- Law no. 2016-1691 of 9 December 2016 (Sapin 2 Law)
- S. Bollée, "Les dispositions de la loi Sapin 2 relatives à l'immunité d'exécution", D. 2016, p. 2560.
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