Sequestration under French law: definition and fundamental principles

Securing assets pending a court ruling is a major issue in many disputes. Sequestration meets precisely this need by providing a protective legal framework. This often little-known protective measure is a valuable tool for both private individuals and businesses faced with a dispute over the ownership or possession of an asset.

Legal definition of receivership

Etymological and historical origins

The term "sequestration" comes from the Latin sequestrare meaning to detain, isolate or confine. In the 14th century, the term sequestrum first appeared in the French language under the pen of Oresme (1370), and refers to the deposit of a disputed item in the hands of a third party responsible for keeping it for the duration of a dispute and returning it, after the dispute has been resolved, to the party recognised as the rightful owner.

In everyday language, the word "sequestration" is used to describe both the legal measure and the person depositing the object. Roman law distinguished these two aspects using different terms (sequester for the custodian).

Current legal framework

Sequestration is currently governed by articles 1955 et seq. of the Civil Code, in Title XI "Deposit and sequestration" of Book III. Other provisions are scattered throughout the Code of Civil Procedure (articles 145, 834, 835 and 845) and the Code of Civil Enforcement Procedures.

Article 1955 of the Civil Code defines sequestration as "the deposit by one or more persons of a disputed item in the hands of a third party who undertakes to return it, once the dispute is over, to the person who is deemed to be entitled to it".

French law recognises three types of sequestration:

• Conventional escrow (established by contract)
• Judicial sequestration (ordered by a judge)
• Legal receivership (provided for by law in certain situations)

Distinction from sequestration

Do not confuse sequestration with confinement. Sequestration is the criminal offence of arbitrary arrest, detention and confinement. It concerns people, not property. This offence infringes the fundamental rights and freedoms of individuals, whereas sequestration is a temporary measure to protect the disputed assets.

Sequestration as a measure prior to confiscation

Sequestration can serve as a preparatory and protective measure for confiscation. Sequestration involves the removal or seizure of property managed by a third party pending liquidation or restitution.

Historical applications

This concept of sequestration has had many applications throughout history:

• Confiscation of the property of criminals sentenced to banishment
• Spoliation of the property of enemies and belligerents
• Confiscation of assets of political opponents

In France, there are many historical examples of this use:

• Confiscation of émigrés' property by the revolutionaries (1792-1793)
• Sequestration of the property of Communards and Boulangistes (1871-1874 and 1889-1891)
• Receivership of German companies in Alsace-Moselle (1919-1939)
• Sequestration of enemy assets at the end of the Occupation (1944-1978)
• Sequestration of press companies at the Liberation (1944-1966)

Modern applications

Today, sequestration is an effective tool in the fight against terrorism and war crimes. It is used as a means of exerting pressure and as an instrument of prevention, often decided at international level.

The American Patriot Act of 26 October 2001 and the French Daily Security Act (no. 2001-1062 of 15 November 2001) bear witness to this desire to use sequestration as a weapon against international terrorism.

The essential conditions of receivership

Existence of a dispute

The fundamental condition of sequestration is the existence of a dispute concerning the ownership or possession of the thing. If there is no dispute, the sequestration loses its raison d'être. As soon as the dispute is settled, the interim relief judge may order the release of the sequestration (Civ. 1re, 11 June 1960).

In practice, the mechanism is sometimes used for other purposes. Joint heirs, for example, may appoint a receiver to manage the estate assets. This situation is frequently encountered in the liquidation of joint estates, successions or in the management of property co-ownerships.

Necessity of the precautionary measure

The validity of the sequestration must be examined from the point of view of necessity. Case law requires that the dispute between the parties be of a serious nature (Civ. 2e, 14 February 1973). However, the Cour de cassation has also accepted that "the animosity established between the parties could give rise to difficulties between them" (Civ. 1re, 31 March 1971).

The need for sequestration is a matter for the court to decide. Sequestration cannot be justified simply on grounds of convenience or ease.

Things that can be sequestered

Article 1959 of the Civil Code specifies that sequestration can apply to both movable and immovable property. This distinguishes it from an ordinary deposit, which is reserved for movable property only.

Assets in the possession of persons not involved in the dispute may not be subject to sequestration. In the case of immovable property, legal publicity measures must be taken to ensure that the receivership is enforceable against third parties, particularly if the measure is to be in force for a long period.

Distinction from other legal mechanisms

Sequestration is very different from other legal mechanisms:

1. Right of retentionSequestration: exercised by the creditor who retains the item, whereas in the case of sequestration, the item is entrusted to a third party custodian.
2. Loggingsimple deposit of a sum of money, without the obligations of administration and conservation specific to receivers.
3. DepositThis only provides a guarantee and does not involve the ownership of an asset.
4. Endorsement(Civ. 2e, 24 May 1982).
5. Paymentthe sequestration of funds does not constitute payment and does not protect these funds from the direct action of creditors (Civ. 3e, 6 January 1999).

It is essential to distinguish between these different mechanisms in order to determine the rights and obligations of each party. The choice of the appropriate mechanism can have a major impact on the outcome of the dispute and the protection of the parties' interests.

A legal tool with multiple applications

Escrow remains a remarkably flexible legal mechanism. Whether the aim is to protect a property during divorce proceedings, to secure the sale price of a business, or to safeguard the interests of the parties in a disputed succession, it offers a balanced solution for maintaining the status quo for the duration of the dispute.

The appointment of a receiver is particularly appropriate when an asset requires active administration or when its preservation requires specific skills. Unlike a simple protective seizure, a sequestration enables dynamic management of the disputed asset.

If your situation involves property whose ownership or possession is disputed, the use of a receiver could be an effective preventive measure. Our firm can help you analyse the legal options available in your particular case and set up a receivership that is in your best interests.

Sources

• Civil Code, articles 1955 to 1963 (conventional and judicial sequestration)
• Code of Civil Procedure, articles 145, 834, 835 and 845
• Code of civil enforcement procedures, articles L. 141-2, L. 321-2, R. 321-3
• Law no. 2001-1062 of 15 November 2001 on everyday security
• CEZAR-BRU, HEBRAUD and SEIGNOLLE, Traité théorique et pratique des référés et des ordonnances sur requête (Theoretical and practical treatise on summary proceedings and petition orders)