Unfair international competition: what can you do if the problem crosses borders?

In the age of globalisation and e-commerce, markets know few borders. Your company may be selling its products abroad, or you may be up against competitors based outside France. This international openness is a source of opportunities, but it can also complicate disputes. What happens if the company competing unfairly with you is based in another country? Or if its actions, for example via the internet, cause you damage in several national markets? Unfair cross-border competition raises specific legal questions: can a foreign company take action before the French courts? Which court has jurisdiction over an international dispute? And above all, which law will the judge apply to decide the case, as well as applicable penalties and procedures ? Tackling these questions requires special expertise in private international law, but understanding them is not enough. the main principles of unfair competition in domestic law can help you understand the situation better.

Can foreigners act in France and vice versa?

The first question is simple: is the judicial playing field open to all? The answer is clearly yes. French law, like most modern legal systems, is based on a fundamental principle of equality.equal treatment between nationals and foreigners before the courts.

A foreign company, or even a foreign individual, that believes it has been the victim of acts of unfair competition committed in France or having an effect on the French market can quite simply bring an action before the French courts to defend its interests. There is no discrimination based on nationality or place of establishment.

This openness is based on two pillars:

1. La Paris Union Convention for the Protection of Industrial Propertysigned in 1883 and ratified by the vast majority of countries in the world (including France). This fundamental text stipulates that the nationals of each member country benefit, in all other member countries, from the same protection as nationals, particularly with regard to the suppression of unfair competition (article 10 bis). This is the principle of "national treatment".
2. Le French domestic law itself, which, since a seminal decision by the Cour de cassation (the Lefait ruling of 1948), recognises that foreigners enjoy in France all the rights that are not expressly denied to them by law. No law denies foreigners the right to take legal action for unfair competition.

Conversely, a French company that is the victim of acts of unfair competition committed by a foreign company or having effects abroad may, depending on the case, consider taking action either in France (if the French courts have jurisdiction, see below), or directly before the courts of the foreign country concerned, again generally benefiting from the principle of national treatment if that country is a member of the Paris Convention.

Which court should I refer my case to? The international jurisdiction of French courts

This is often the thorniest question: if a dispute has links with several countries, which court has jurisdiction to hear it? It is essential to identify the nature of the dispute, because the distinctions between unfair competition and other types of litigation (such as counterfeiting or anti-competitive practices) can complicate the choice of jurisdiction. The rules vary depending on whether the defendant (the one you are suing) is domiciled in the European Union or outside.

If your competitor is domiciled in an EU country (Germany, Italy, Spain, etc.), it is the unified European rules of the Brussels I bis Regulation (no. 1215/2012) which apply. This regulation provides:

• The basic rule: you can always take your case to the courts of the country where the defendant is domiciled (in the case of a company, its registered office, central administration or principal place of business). This court will have general jurisdiction to judge the entire dispute and compensate for the entire loss, wherever it occurred.
• A an important option for you as an applicant (Article 7.2 of the Regulations): in matters relating to tort (which is the case of unfair competition based on Article 1240 of the Civil Code), you may also choose to refer the matter to the "place where the harmful event occurred or is likely to occur".. The Court of Justice of the European Union has specified that this expression refers to two possibilities :
  • Either the location of thecausal event where the fault was committed (for example, the country from which a disparaging advertisement was conceived and broadcast).
  • Either the place where the damage occurs where the loss is suffered, i.e. typically where your market is affected (for example, the country where you are losing customers through confusion or denigration).

This option therefore gives you strategic leeway. If a German company commits unfair acts that primarily affect your market in France, you can choose to attack it either in Germany (where it is domiciled) or in France (where the damage occurred).

What happens if the damage is sustained in several countries (for example, denigration on a website accessible throughout Europe)?

• If you take the case to the court in the place where the event causing the claim occurred or where the defendant is domiciled, the court will be able to rule on the claim.in full of the damage suffered in all countries.
• If you choose to bring your case before a court in one of the countries where the damage occurred (for example, France), that court will only have jurisdiction to rule on the damage suffered. on its own national territory (in this case, in France). This is the "Fiona Shevill" jurisprudence.

With specific regard to internet-related disputesHowever, the courts generally consider that the mere fact that an offending website is accessible from France is not always sufficient to justify their jurisdiction. It is often necessary to demonstrate a sufficient connecting link with the French market: does the site specifically target the French public (language, delivery possible in France, etc.)? Does it have a real economic impact in France?

If your competitor is based outside the EUIn France, the rules of ordinary French law apply. They are fairly similar: you can bring an action in the French courts if the defendant has an establishment in France, if the event giving rise to the fault took place in France, or if the damage was suffered in France. The specific rules of Articles 14 and 15 of the Civil Code (which give jurisdiction to the French courts if the plaintiff or defendant is French) may also apply, but their application is increasingly limited by international conventions and European rules.

Finally, don't forget the jurisdiction clauses. If you had a contract with your competitor (even if it is not directly the cause of the unfair competition dispute) and that contract designated a competent court in the event of a dispute, this clause could apply and determine the competent court, even for your unfair competition action if it is linked to that contractual relationship.

Which law applies to the dispute? Conflict of laws

Once the competent court has been identified (for example, a French court), another question arises: what national law will this court apply to judge whether the acts are unfair and what the consequences are? It will not necessarily apply French law, even if it is a French court. This is the question of the "conflict of laws", which again is resolved by specific rules.

If the dispute falls within the European scope of application (most intra-European disputes arising after January 2009), it is the Rome II Regulation (no. 864/2007) which designates the law applicable to non-contractual obligations. This regulation contains a specific article (Article 6) on unfair competition:

• The main rule is the application of the law of the land where competitive relations are affected or likely to be affected. This is the law of "affected market. For example, if an Italian company denigrates a French company on the German market, the judge (French, Italian or German) should in principle apply German law. If only the French market is affected, French law will apply.
• What to do if several markets are affected (for example, a parasitic copy sold throughout Europe)? The regulation allows the judge to apply the law of each affected market distributively (which is very complex) or sometimes, if the action is aimed at all the effects, the law of the country where the tortfeasor is established could play a role.
• There is a important exception if the act of unfair competition affects exclusively the interests of a particular competitor (for example, highly targeted denigration or poaching of key personnel aimed at a single company), the law of the market affected is no longer applied, but the general rule for torts (Article 4 of Rome II), which most often refers to the law of the country where the direct damage is suffered by this specific victim.

If the Rome II Regulation is not applicable (older facts, disputes without sufficient link to the EU), it is the french common law of conflict of laws which applies. The traditional rule is lex loci delicti commissi the the law of the place where the offence (or quasi-offence) was committed. As with jurisdiction, however, this may be the place of the fault or the place of the damage. French case law is tending more and more to choose the law that presents the greatest risks. closest links with the situation, which, in terms of unfair competition, very often amounts to applying the law of the market affectedThis is in line with the Rome II Regulation.

Navigating the intricacies of private international law on unfair competition can be complex. Determining the right court and the applicable law requires a detailed analysis of the situation and in-depth knowledge of European and international rules.

International unfair competition litigation requires specific expertise in private international law. Our firm can offer you specialised legal assistance to navigate these complexities and defend your interests across borders. Contact us for a consultation.

Sources

• Civil Code: Article 14, Article 15 (Privileges of jurisdiction), Article 1240, Article 1241.
• Code of Civil Procedure: Article 42, Article 46 (Internal territorial jurisdiction).
• Paris Convention for the Protection of Industrial Property: Article 10 bis (National treatment, CD definition).
• Regulation (EU) No 1215/2012 of the European Parliament and of the Council ("Brussels I bis") : Article 4 (General jurisdiction defendant domicile), Article 7 (Special jurisdiction, in particular in tort).
• Regulation (EC) No 864/2007 of the European Parliament and of the Council ("Rome II") : Article 4 (Law applicable to torts in general), Article 6 (Law applicable to unfair competition).