Even in the presence of an arbitration clause or a clause granting exclusive jurisdiction to a foreign court, French courts can issue interim payment orders against a non-paying debtor.
Exceptional jurisdiction of French courts to issue interim payment orders in the presence of an arbitration clause
Under article 1449 of the French Code of Civil Procedure, even in the presence of an arbitration clause in a contract between two parties, interim payment requests may be brought before French courts whenever the case has not yet been referred to an arbitral tribunal.
Pursuant to French law, a creditor may bring a case before French courts against non-paying debtor, if two requirements are met:
- There must be a certain degree of urgency of the payment; and
- The debtor cannot seriously object to the obligation to pay.
These are two separate requirements that need to be proven so as to allow the exceptional jurisdiction of French courts in the presence of an arbitration clause (Court of Cassation, 26 October 2011 No. 10-17.708).
If such requirements are met, French courts consistently order the non-performing party to pay its entire debt on an interim basis.
French courts issue interim payment orders despite exclusive jurisdiction clauses in favour of foreign courts
French courts consider that they have jurisdiction to issue interim payment orders even in the presence of an exclusive jurisdiction clause in favour of courts outside France.
Under French case law, foreign jurisdiction clauses cannot be enforced against creditors seeking interim payment orders before French courts (Court of Cassation, 17 June 1998 No. 95-10.563 and Court of Cassation, 25 June 2002 No.99-14.761).
However, interim payment orders can only be requested before French courts, if the payment obligation is to be performed in France (Court of Cassation, 19 November 2008, No. 08-11.646) and if the debtor cannot seriously object to the payment.
In such event, even if the contract is subject to a law other than French law and the non-performing party is outside of France, French courts order the non-performing party to pay its entire debt on an interim basis.
Pay attention when drafting a contract with a French counterparty
When negotiating an international contract with a French counterparty, careful attention must be payed on the drafting of the jurisdiction clause so as to limit the application of the above mentioned case law and legal provisions.
Foreign companies are often taken by surprise when, in a contract not subject to French law and containing an arbitration clause and/or an exclusive foreign jurisdiction clause, they are issued an interim payment order by French courts.
This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular circumstances. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own circumstances. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Information by ALARIS AVOCATS, English speaking lawyers in France (Paris) specialized in French labor law, especially any kinds of Social Plans, dismissal procedures and labor contract clauses.