You have determined that your commercial dispute falls within the jurisdiction of the Commercial Court. This is an essential step. But there is another, equally fundamental question that arises immediately. what Which commercial court should you take your case to? The one in your town? The one where your opponent's head office is located? Or perhaps another? Welcome to the world of "territorial" or geographical jurisdiction.
After understanding what type court can judge (subject-matter jurisdiction, discussed in our previous articles), it is necessary to identify which, geographicallyis designated by law or contract to resolve the dispute. This territorial jurisdiction, governed mainly by the Code of Civil Procedure, is subject to precise rules that you should be aware of. Bringing proceedings before a court that is geographically incompetent can result in procedural exceptions, delays and additional costs. This article offers you a practical guide to navigating these rules: the basic principle, the options sometimes open to you, and the often decisive impact of contractual clauses.
The basic rule: the defendant's court ("Actor sequitur forum rei")
The starting point for any consideration of territorial jurisdiction is an ancient principle, inherited from Roman law and enshrined in Article 42 of the Code of Civil Procedure: Actor sequitur forum rei. Literally, "the plaintiff follows the defendant's forum (court)". In simple terms, this means that subject to certain exceptions, the court with territorial jurisdiction is that of the place where the person you are suing (the defendant) lives..
Why this rule? Its main purpose is to facilitate the defence. It is considered fairer and more practical for defendants to defend themselves in "their" local court, rather than being forced to travel, sometimes a long way, to respond to a legal action.
How is this "place where the defendant resides" determined? The Code of Civil Procedure (article 43) states:
- If the defendant is a natural person (for example, a sole trader): His place of residence is his home (in the civil sense of the term, i.e. the place of its principal place of business, where its personal and professional interests are centred) or, if the domicile is not known or does not exist, of its residence (the place where he actually lives).
- If the defendant is a legal person (the most common case in commercial matters: a company such as a SARL, SAS, SA, etc.): The place where it is domiciled is the place where it is establishedwhich in principle corresponds to its head office.
The registered office is therefore the main territorial connection criterion for a company. However, the concept of a registered office can itself be a source of debate. A distinction is made between registered office (as set out in the company's Articles of Association and declared to the Registre du Commerce et des Sociétés) of actual registered office (the actual location of the administrative and financial management, where decisions are taken). In principle, the registered office is decisive. However, if this registered office is purely fictitious (a simple letterbox, for example) and the real management of the company is located elsewhere, third parties (like you, if you sue this company) may choose to ignore the registered office and sue the company in the court of the place where its real registered office is located. The company itself cannot normally invoke its real seat against third parties in order to escape the jurisdiction of the court of its registered office.
The "main stations" exception: assigning a place of business to a secondary establishment
There is one notable exception to the head office rule, stemming from an old case law concerning railway companies (hence its picturesque name of "main station case law"). Today, this exception allows a company, subject to certain conditions, to be sued not in the court where it has its registered office, but in the court in whose jurisdiction it is located. one of its secondary establishments (agency, branch, etc.).
The idea is simple: if you have dealt exclusively with a local branch of a large company whose head office is at the other end of France, it may be more logical and practical to bring the dispute before the local court. But there are limits to this option:
- The establishment must have sufficient autonomy: It's not enough to simply have a shop or a warehouse. The establishment (agency, branch) must have a certain permanence, its own organisation and, above all, the power to deal with third parties and bind the company. For example, a bank branch that opens accounts and grants loans locally meets this condition. A simple representative office with no decision-making powers would not suffice.
- The dispute must be directly related to the activity of the establishment: You cannot use just any branch as your point of entry. The contract must have been negotiated or performed by that establishment, or the fault giving rise to the dispute must have been committed within the jurisdiction of that establishment. For example, if you have a problem with a product purchased in a specific branch of a national chain, you will probably be able to sue in the court for the location of that branch.
This "main station jurisprudence" is an option for the claimant; he always retains the possibility of assigning to the head office if he prefers.
Options available to the claimant (Art. 46 CPC)
In addition to the basic rule (defendant's court) and the "main stations" exception, Article 46 of the Code of Civil Procedure offers the plaintiff a number of possibilities additional skills options in certain matters, allowing it to choose a court other than that of the defendant's domicile or registered office.
With regard to contracts
If your dispute arises from a commercial contract, you may choose to take your opponent to court:
- Either before the court in the place where it is domiciled or has its registered office (basic rule).
- Either, of your choicein front :
- The jurisdiction of the place of delivery effective of the thing (if the contract was for the delivery of goods). Please note that "effective" means the place where the delivery should actually take place according to the contract, even if it did not actually take place.
- Or the jurisdiction of the place of performance of the service (if the contract was for a service). For example, the place where work was carried out, the place where a consultant carried out his assignment, or even the place where an online service is mainly used by the customer.
This is a valuable option, as it often enables the case to be brought before a court closer to the place where the relevant events took place.
Torts and quasi-torts (liability)
If your action seeks to hold your adversary liable for a fault that has caused damage (for example, unfair competition, brutal breach of established commercial relations, misleading advertising, etc.), you also have an option:
- Either the court for the defendant's domicile/registered office (basic rule).
- Either, of your choicein front :
- The jurisdiction of the location of the harmful eventthe place where the fault was committed.
- Or the jurisdiction of the the place where the damage occurred. Case law often considers that the economic loss suffered by a company is incurred at its registered office. For example, in the event of a sudden termination of commercial relations, the victim company will often be able to sue the party responsible for the termination before the court of its own registered office, as it is there that it feels the financial consequences of the termination.
In the event of multiple defendants
If your action is against several defendants (for example, a company and its director, or several co-contractors), Article 42 offers you a facility: you can choose to summon all defendants before the court for the place where any of them. This avoids the need for multiple proceedings in different courts. However, this option presupposes that the action against the "attractive" defendant is serious and not simply a pretext for choosing a convenient court.
Beware of jurisdiction clauses in your contracts!
In the business world, it is very common for contracts to contain "jurisdiction clauses". These are stipulations by which the parties designate in advance the court that will be exclusively competent to settle any dispute arising from their contractual relationship. These clauses are an important tool for predictability, but their validity and scope are strictly governed by French domestic law.
Very limited validity in domestic law: Article 48 of the Code of Civil Procedure
Article 48 of the Code of Civil Procedure sets out a very clear principle: any clause that derogates from the legal rules on territorial jurisdiction is deemed unwritten (i.e. null and void). However, there is a major exception to this prohibition: the clause is valid if two cumulative conditions are met:
- It must have been agreed between persons having all contracted as traders. This means that if one of the parties is not a trader (an individual, a liberal profession, a civil association, etc.), the clause is automatically null and void and unenforceable against the non-trading party. Even between two commercial companies, if one of them contracts for needs unrelated to its business (which is rare but possible), the clause could be set aside.
- It must have been very clearly specified in the commitment of the party against whom it is asserted. Case law interprets this condition strictly. The clause must not be buried in illegible general terms and conditions, printed in tiny type or in a pale colour. It must attract attention (e.g. by a clear title, distinct typography, logical location). In addition, it must be possible to prove that the party against whom it is being challenged was aware of it and accepted it at the time the contract was concluded (a simple mention on an invoice received after the fact is generally insufficient, except in the case of very established business relationships where this practice is constant and undisputed).
To sum up: between traders, a clause designating a specific court is possible, but it must be particularly visible and clearly accepted. In all other cases (contracts with non-traders), it is null and void.
Limits to the application of the clause (even if valid)
Even where a clause conferring jurisdiction is validly concluded between traders, it may come up against certain limits:
- Collective proceedings (business difficulties) : The rules designating the court with jurisdiction to open and oversee a safeguard, reorganisation or compulsory liquidation procedure (generally the court where the debtor's registered office is located) are considered to be public policy. A contractual clause designating another court cannot prevent this.
- Summary proceedings (urgency) : When an urgent measure is required (summary proceedings), the case law accepts that the matter may be referred to the interim relief judge with territorial jurisdiction in accordance with the legal rules (place of the defendant, place of execution of the measure, etc.), even if a jurisdiction clause designates another court for the substance of the dispute. Urgency takes precedence over the clause for interim measures.
The special case of international contracts
It is important to note that the rules are much more flexible for international contracts (contracts with links to several countries). In this context, the jurisdiction clauses (designating a French or foreign court) are in principle validEven if the parties are not all traders. Contractual freedom takes precedence here, as these clauses are seen as an essential element of legal certainty in international trade. There are, however, limits, particularly where the clause seeks to override the mandatory exclusive jurisdiction of the French courts (for example, in the case of a dispute over a building located in France).
Choosing the right commercial court geographically is crucial to avoid challenges to jurisdiction. Checking your contracts and knowing the applicable rules can save you time and money. Analysing jurisdictional options and the validity of contractual clauses often requires legal expertise. Our firm can assist you in this process and represent you before the appropriate court. Contact us to discuss your case.
Sources
- Code of Civil Procedure, in particular articles 42, 43, 46 and 48.
- Commercial Code, in particular article R. 600-1 (territorial jurisdiction for business difficulties).
- Constant case law of the Cour de cassation on the interpretation of these articles (e.g. "main stations", conditions of validity of article 48, options of article 46).
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