Precautionary measures: protecting your claims before it's too late

When a debtor delays payment, time is rarely on the creditor's side. Between the time when a debt becomes due and the time when an enforcement order can be obtained, the debtor's assets may evaporate. Precautionary measures are therefore an effective legal tool for preserving the debtor's chances of recovery.

What is a precautionary measure?

Definition and objectives

A protective measure makes certain assets of a debtor unavailable in order to guarantee the future payment of a claim. Article L. 511-1 of the Code of Civil Enforcement Procedures (CPCE) defines it as a measure designed to prevent "the recovery of the debt from being jeopardised".

This measure can take two forms:

• Attachment for safekeeping: this makes the debtor's tangible or intangible assets unavailable to the public
• Judicial security: this confers a preferential right over certain assets without making them unavailable.

Distinction from enforcement measures

Unlike enforcement measures, which allow ownership of a property to be transferred by force, precautionary measures merely freeze the situation temporarily.

The Court of Cassation clearly marked this distinction in a ruling on 3 October 2018: "Unlike the seizure of assets under French law, the purpose of which is to guarantee the recovery of debts, the Mareva injunction does not render the assets concerned legally unavailable". (Civ. 2e, 3 Oct. 2018, no. 17-20.296).

This nuance is crucial. The purpose of a protective measure is not to satisfy the creditor immediately, but to preserve his rights until an enforceable title is obtained.

Conditions for obtaining a protective measure

A claim that appears to be well-founded in principle

The first condition relates to the claim itself. Article L. 511-1 of the CPCE requires that the claim appears to be "founded in principle". This is not a requirement of absolute certainty.

Unlike enforcement measures, the claim does not need to be :

• Certain
• Liquid
• Required

The mere appearance of a claim is sufficient. Case law has confirmed this flexibility: "The appearance of a claim is sufficient to justify a precautionary measure without it being necessary for the claim to be certain, or even not seriously contestable, and due". (Paris, 16 Nov. 2017, RG no. 16/20739).

Unpaid invoices, a legal expert's report or even a letter of intent can constitute this appearance of right.

Circumstances threatening recovery

The second condition is the existence of a threat to the recovery of the debt. This condition is assessed on a case-by-case basis by the court.

The threat can arise from a number of different situations:

• The debtor's precarious financial situation
• Attempts to organise insolvency
• Repeated late payments
• Failure to respond to formal notices

The judge pays attention to the concrete elements. In a judgment of 6 September 2018, the Court of Cassation recalled that this assessment falls within the sovereign power of the trial judges (Civ. 2e, 6 Sept. 2018, no. 17-16.187).

However, a simple refusal to pay is not enough to constitute a threat. The Paris Court of Appeal ruled that "the refusal to pay the sum claimed is not sufficient to characterise a threat to its recovery". (Paris, 16 Nov. 2017, RG no. 16/20739).

The procedure for obtaining a protective measure

Judicial authorisation: when is it required?

In principle, obtaining a protective measure requires the authorisation of the enforcement judge. Article R. 511-1 of the CPCE stipulates that the application must be made by petition.

This request must include :

• A statement of the reasons for the request
• The amount of the claim
• Assets covered by the measure
• Supporting documents

The judge rules without hearing the parties, to preserve the element of surprise. It determines the amount of the sums for which the measure is authorised and specifies the assets to which it applies (art. R. 511-4 CPCE).

Exemptions from authorisation

Article L. 511-2 of the CPCE provides for cases in which the creditor may take protective measures without judicial authorisation:

1. When it has an enforceable title
2. When it benefits from a court order that is not yet enforceable
3. In the event of non-payment of an accepted bill of exchange
4. In the event of non-payment of a promissory note
5. In the event of non-payment of a cheque
6. In the event of unpaid rent resulting from a written property rental contract

These exemptions help to enhance the value of the enforcement order and speed up proceedings. However, they do not exempt the creditor from proving that the substantive conditions have been met.

In a ruling dated 12 May 2011, the Court of Cassation reiterated that even where authorisation is waived, the creditor must provide evidence of circumstances threatening recovery (Civ. 1re, 12 May 2011, no. 10-15.700).

Recourse by the debtor against the protective measure

Request for release

Debtors are not helpless when faced with a protective measure. They can apply to the enforcement judge in their place of residence for the measure to be lifted (art. R. 512-1 CPCE).

This request may be based on :

• No claim founded in principle
• No threat to collections
• Procedural irregularities

An application for release may be made "at any time", as specified in article R. 512-1 of the CPCE. It opens an adversarial debate in which the creditor can defend its position.

Burden of proof

A crucial point in the debtor's defence is that the creditor bears the burden of proving that the conditions for the protective measure have been met.

Article R. 512-1, paragraph 2, of the CPCE clearly states this principle: "The judge may at any time, at the request of the debtor, modify or retract his order, even if the creditor has lodged an appeal. The burden of proof lies with the creditor.

This reversal of the burden of proof was confirmed by the Court of Cassation in a judgment of 6 October 2005 (Civ. 2e, 6 Oct. 2005, no. 04-12.063). It censured a court of appeal that had placed the burden of proof on the debtor.

If the creditor fails to demonstrate that the conditions have been met, the measure will be discharged. The judge may also order the creditor to pay damages if the protective measure has caused harm to the debtor (art. L. 512-2 CPCE).

Sources

• Code of civil enforcement procedures, articles L. 511-1 to L. 512-2 and R. 511-1 to R. 512-3
• Court of Cassation, 2nd Civil Chamber, 3 October 2018, no. 17-20.296
• Paris Court of Appeal, 16 November 2017, RG n° 16/20739
• Court of Cassation, 2nd Civil Chamber, 6 September 2018, no. 17-16.187
• Court of Cassation, 1st Civil Division, 12 May 2011, no. 10-15.700
• Court of Cassation, 2nd Civil Chamber, 6 October 2005, No. 04-12.063