Attachment is a formidable enforcement procedure for creditors, but its scope is strictly limited by law. It can only apply to claims for sums of money. This apparent simplicity conceals considerable legal complexity, particularly when the seizure involves modern financial instruments such as lines of credit or foreign exchange transactions. Our firm's enforcement practice shows that the exact nature of the garnishee's obligation is often a source of dispute. Understanding the fundamental distinction between an obligation to 'give' a sum of money and an obligation to 'provide' a financial service is essential in determining what can be seized from a bank account. A misunderstanding of this distinction can lead to invalid proceedings and liabilities being incurred, a complexity that often requires the intervention of a lawyer specialised in seizure of assets to assist the creditor or debtor concerned.
Introduction to unseizability in attachment: principles and legal framework
Attachment allows a creditor with a writ of execution to immediately obtain the sums of money that the debtor holds from a third party, usually a bank. This procedure, which is governed by the Code of Civil Enforcement Procedures, is distinguished by its formidable effectiveness. However, its scope is strictly limited. Before analysing in detail the unseizability of certain financial instruments, it is useful to put seizure-attribution in its proper context. the various procedures for seizing debts existing under French law. Each seizure procedure has its own purpose and rules, and seizure of assets is specifically designed to seize liquid assets or claims that are directly convertible into money, such as the credit balance on an account.
Attachment: purpose and conditions of attachable claims
Article L. 211-1 of the French Code of Civil Enforcement Procedures states that the attachment of assets relates exclusively to "claims for sums of money". This excludes other intangible rights, such as company shares or securities, which are subject to separate attachment procedures. For a claim to be subject to seizure, it must be certain, liquid and due on the date of seizure, in accordance with the law. how attachment works which aims to immediately transfer ownership of the claim to the distraining creditor. A claim is certain when its principle is indisputable on the date of the writ of attachment served by the court commissioner. It is liquid when its amount is determined or can be determined by a simple calculation. It is due when the creditor can demand immediate payment, without any time limit or suspensive condition. These conditions are cumulative and fundamental to the validity of the act of execution; their absence may give rise to a dispute.
The fundamental distinction between an obligation to give a sum of money and an obligation to do something
The validity of an attachment order depends on the nature of the obligation owed by the garnishee to the debtor. The law of obligations traditionally distinguishes between the obligation to "give" (transferring ownership of a thing), the obligation to "do" (performing a service) and the obligation "not to do". In the monetary context, this distinction takes on particular importance. Attachment is based on immediate attributive effectwhich applies perfectly well to an obligation to give a sum of money, but runs into conceptual difficulties when faced with a simple obligation to do. A sum of money may in fact be the object of a debt to be extinguished or the subject of a service to be provided. This in-depth study helps us to understand what makes an account or a financial product elusive.
The obligation to pay a sum of money: nature and purpose of the payment
When one person owes another a sum of money, they are under an obligation to give. Money acts here as an instrument of payment intended to extinguish a debt. The debtor is discharged by paying the nominal amount of the debt, as specified in article 1343 of the Civil Code. This remittance of funds is an impersonal transaction that extinguishes a pre-existing obligation. It is this nature that makes the claim perfectly seizable: the seizing creditor, via a court-appointed agent, simply substitutes himself for the seized debtor to receive the payment that was due to him. The claim pre-exists the seizure; it is simply forcibly transferred, blocking the account for the duration of the operation.
The obligation to act: making funds available and banking services
Money can also be the very object of a service, particularly in banking. When a bank grants a credit facility, it is not paying a debt to its customer; it is undertaking to provide a service, that of making funds available to the customer's account. This is an obligation to perform. The cause of this obligation is not the extinction of a debt, but rather the creation of a new debt: the repayment of the credit by the customer. This type of contract is strongly marked by intuitu personae, the trust that the bank places in its customer. The bank's obligation is therefore to "make available" and not to "give" in the sense of a payment, which has a direct effect on the seizure.
Unseizability of unused credit facilities and lines of credit in the event of an attachment order
The application of the distinction between an obligation to give and an obligation to do logically leads to the unseizability of credit facilities. An unused line of credit does not represent a claim for a sum of money that currently exists and is available in the debtor's assets. It merely represents a promise by the bank to grant a loan. The creditor of the bank's customer cannot therefore force the bank to fulfil this promise for his benefit, making this type of financial facility unseizable.
Jurisprudential foundations of the unseizability of credit facilities
The Court of Cassation clearly established this principle in a landmark ruling that has since been regularly upheld. In this ruling, it held that "the current account credit facility, up to its unused portion, only constitutes a promise to lend to a named person; it follows that the unused portion of the credit facility cannot be seized". (Cass. 2e civ., 18 Nov. 2004, no. 00-19.693). The customer's claim against his bank only arises when he actually draws on his line of credit. Before that moment, there is only a potential right, a mere faculty, which is not a claim that is certain, liquid and due and capable of attachment. No sum can therefore be seized from the account.
Scope of unseizability: irrelevant of the purpose or form of the credit
The principle of unseizability applies regardless of the form of credit facility: overdraft facility, discount credit or consumer loan. It is also irrelevant whether the credit is allocated to a specific expense, such as housing benefit. As long as the funds have not actually been used by the debtor and paid into his account, they do not constitute a seizable claim. Even the characterisation of the loan of money as a consensual contract (formed by the mere exchange of consents) does not change the nature of the bank's obligation, which remains an obligation to do, that of making the promised funds available, and not an obligation to give a sum of money already due.
The unseizability of foreign exchange transactions in attachment proceedings
The same legal logic applies to foreign exchange transactions. A foreign exchange contract, in which one party undertakes to exchange a certain quantity of one currency for another, is not a simple payment obligation. Once again, it is a service, an obligation to perform, which renders the seizure of assets ineffective until the transaction has been completed, even if it is carried out by the Treasury via an administrative seizure by third party holder (SATD).
Analysis of monetary obligations specific to foreign exchange transactions
Legal doctrine makes a useful distinction between "generic currency", which is the abstract monetary unit used for payment (the euro, for example), and "specific currency", which is a particular currency sought for its own sake (dollars, yen, etc.). A foreign exchange transaction involves specific currency. The obligation to deliver dollars is not an obligation to pay a debt in euros, but an obligation to supply a particular good. This obligation to "deliver" a specific currency is an obligation to do something that cannot be enforced by attachment, which can only relate to generic currency claims on an account.
Documentary credits: a separate system for seizure of assets
Documentary credits are a notable exception to the principle that credit facilities cannot be seized. A payment and guarantee instrument widely used in international trade, its legal nature means that it can, in principle, be seized. This particularity stems from the nature of the commitment made by the bank. It is an example of the complexity of enforcement law.
Fundamental differences between documentary credit and simple credit facility
In a documentary credit, the bank does not make a simple promise to lend to its customer (the principal). It makes a direct, autonomous and irrevocable payment commitment to a third party, the beneficiary (the seller). The beneficiary becomes the holder of a genuine claim to a sum of money against the bank, payable on presentation of the appropriate documents. This is no longer an obligation to do (make funds available on an account) but an obligation to give (pay a sum due). As a result, this claim can be seized by the beneficiary's own creditors.
The role of fraud as an exception to the unseizability and freezing of documentary credits
The principle of the autonomy of the documentary credit, which makes it independent of the underlying commercial contract, has one major limitation: fraud. If the beneficiary presents fraudulent documents or if the entire transaction is tainted by obvious fraud, the payment mechanism may be blocked. Fraud defeats the beneficiary's right. In such a situation, the bank may refuse to pay, even if the documents appear to be formally in order. Similarly, if the originator provides proof of fraud, he or she can take legal action to block the payment mechanism, such as seizure, in order to prevent payment. Any such action must be taken within a short period of time.
The challenges and prospects of unseizability: ethical aspects and legal adaptations
The principle of the unseizability of credit facilities raises complex issues, particularly from an ethical point of view. It can potentially be used to organise insolvency or to favour certain creditors to the detriment of others, raising the question of the limits to the exercise of a right and the necessary adaptations to our legal arsenal in the face of developments in finance. Regular updating of the texts is therefore essential.
Ethical problems and classification as a breach of trust
Enforcement law, by enshrining the unseizability of the unused portion of a credit, creates a paradoxical situation. A debtor could continue to use his line of credit to pay "friendly" creditors while leaving a creditor with an enforcement order destitute. Criminal law offers a partial response. It has been ruled that for a credit institution to deny seizure to a seizing creditor while allowing the debtor to continue to use the funds for other payments may constitute a breach of trust. The use of a credit facility to evade one creditor in favour of another raises ethical issues that may, in certain circumstances, amount to a breach of trust. wrongful levy of executionwhich may give rise to a seizure incident.
The impact of dematerialisation and the nature of scriptural money on seizure-attribution
The increasing dematerialisation of financial instruments and the ubiquity of scriptural money call for ongoing reflection on the fundamental concepts underlying attachment. A payment into a bank account transforms the currency into a claim by the account holder against the bank. This reflection on the impact of dematerialisation is directly linked to the controversy over the legal nature of book moneywhich contrasts the concepts of debt and money. While the distinction between the obligation to give and the obligation to do remains relevant, its application must constantly be adapted to economic realities where financial flows are increasingly immaterial and instantaneous, posing constant challenges to enforcement law. For example, the question arises in relation to the seizure of savings or crypto-assets.
The distinction between the obligation to give a sum of money and the obligation to provide a credit service is key to understanding the limits of seizure by way of assignment. While this subtlety protects certain financial instruments from action by creditors, it is not absolute and there are notable exceptions, such as documentary credit. Given the complexity of these mechanisms and the need to challenge them within the 1-month time limit, the assistance of a law firm with expertise in enforcement procedures is crucial if you are to defend your rights effectively, whether you are a creditor, debtor or third party holder.
Sources
- Code of civil enforcement procedures
- Civil Code
- Monetary and Financial Code
- Court of Cassation, 2nd Civil Division, 18 November 2004, No. 00-19.693
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