French reform on provisional enforcement by Law and why it matters to civil and commercial disputes strategy in France
Recent changes to the French Civil Procedure Code significantly enhance the efficacy of judgments, even when an appeal has been filed.
1. To appeal was equal to suspending the effects of judgments…
The French judicial system broadly comprises three “degrees” of jurisdiction allowing the parties to submit their dispute to: (1) first instance tribunals; (2) courts of appeal and, finally, (3) the Court of Cassation.
In general terms, a civil or commercial judgment handed down by a first instance tribunal is expected to become enforceable shortly after having been issued and notified to the parties. This is the position in many other civil law and common law legal systems as well.
But what happens when an appeal is filed against that judgment? Should the respondent be able to carry out enforcement operations, whilst the appeal is pending?
As a matter of French Law, up until very recently, the answer to this question was negative.
An appeal against a decision rendered by a first instance tribunal would suspend the decision’s effects, unless the tribunal had specifically decided otherwise and with a few exceptions, among which was the notable exception of interim proceedings deemed provisionally enforceable (Procédures de référé).
This meant that filing an appeal could be done for tactical purposes as in most cases it would postpone the effects of the first instance judgment for several months, depending on the duration of the appeal proceedings.
At the same time, it also provided a backstop against the risk of having to pay the damages of an already-enforced judgment subsequently reversed by a court of appeal (a situation well summed up by the phrase: “enforcement is pursued at the creditor’s own risk”). From the debtor’s perspective, suspending enforcement guaranteed additional protection and the promise that their case be heard again and possibly more thoroughly.
2. … but not anymore
Things have recently changed with the entry into force of a new law decree n° 2019-1333 of 11 December 2019 reforming French civil procedure.
Among the major developments brought by this reform, is that:
“The decisions of the first instance shall be provisionally enforceable by law unless the law or the decision issued provides otherwise.” - Art. 514 of the French Civil Procedure Code
This principle is called “Provisional enforcement by Law” (Exécution provisoire de droit) and applies to proceedings commenced on or after 1 January 2020.
It means that first instance judgments will be enforceable notwithstanding the fact that an appeal has been filed.
In other words, appealing a judgment will no longer serve the purpose of deferring, and potentially deterring, the judgment’s effects.
3. Exceptions to the principle of provisional enforcement
However, practitioners and litigants should be aware that a few exceptions exist:
- Legal exceptions: whilst applicable to the vast majority of civil and commercial disputes, provisional enforcement does not automatically apply to judgments rendered in some matters of civil status (nationality, modification and annulation of civil status records, including modification of name and gender), declaration of a missing person, certain family matters (e.g. divorce, liquidation of assets), parentage and adoption.
- A first “judicial exception” relating to first instance proceedings: the tribunal can discard provisional enforcement “in full or in part” when “incompatible with the nature of the case”, either of its own accord or at a party’s request. In such cases, however, the tribunal will have to provide sound reasoning for doing so (Art. 514-1 of the French Civil Procedure Code).
- A second “judicial exception” relating to appeal: according to Article 514-3 of the French Civil Procedure Code, the appellant can make a specific application to the First President of the Court of Appeal in order to obtain a stay of the provisional enforcement of the first instance judgment.
The appellant must prove that three requirements are met:
- There is a serious argument for obtaining the reversal of the judgment; and
- Enforcement is likely to entail manifestly excessive consequences; and
- The appellant had already requested the stay of provisional enforcement during the first instance proceedings. This last condition falls away if new circumstances have arisen since the rendering of the first instance decision that would entail manifestly excessive consequences.
As regards the critical requirement of “manifestly excessive consequences” within the meaning of Article 514-3, the Paris court of appeal recently held:
“These manifestly excessive consequences are to be assessed in relation to the debtor's ability to pay and the other party's ability to reimburse in the event of reversal of the decision accompanied by provisional enforcement.
The risk of manifestly excessive consequences presupposes irreparable damage and an irreversible situation in the event of reversal.” - Paris court of appeal, decision n° 20/00429 of 5 March 2020
4. Exceptions to the exceptions (reinstatement)
It is worth noting that, if one party succeeds in obtaining the dismissal of the provisional enforcement from the first instance tribunal (by virtue of the first “judicial exception” referred to above), that will be without prejudice of the other party’s ability to request the reinstatement of the same to the First President of the Court of Appeal.
To this end, Article 514-4 of the French Civil Procedure Code outlines three mandatory conditions:
- There must be “urgency” to grant the judgment’s effects immediately;
- Reinstatement of the provisional enforcement must be compatible with the “nature of the case”; and
- Reinstatement must not entail manifestly excessive consequences for the party facing provisional enforcement.
Favouring efficiency (and possibly public finances!) over precaution, French lawmakers have made a bold move, aligning - to some extent - the effects of first instance judgments on the merits to those of interim proceedings or international arbitration awards.
Among the main consequences expected in the wake of this paradigm shift are:
- First instance proceedings will gain more significance as the outcome will carry immediate consequences for the parties, regardless of an appeal being filed;
- As a result, an appeal will lose most of its tactical relevance, as it won’t prevent the judgment creditor (and defendant to the appeal) enforcing immediately;
- Enforcement will increasingly be performed at the judgment creditor’s own risk, as they will be exposed to the possibility of having to “restore” the debtor as well as pay damages if the judgment is overruled (which, in turn, leads to further complications if the enforced overruled decision is reversed – again – by the Cour de Cassation).
- The number of appeal cases heard by French appeal courts will possibly decrease (which is likely to be among the main objectives sought by French lawmakers);
- There is widespread concern among practitioners that many parties may de facto be deprived of the “double degree of jurisdiction”, a principle deeply embedded in the French judicial landscape and tradition, which consists in the right to challenge a first instance decision by appealing to a higher authority.
- A surge in disputes related to suspension and reinstatement of provisional enforcement may be expected, which is likely to burden the already congested agendas of civil and commercial jurisdictions;
- Litigation strategies should be adapted to this additional layer of complexity.
Time will tell whether this reform, stemming from the Government’s effort to restore reliability and maintain trust in the French judicial system, will help curb the congestion of courts whilst at the same time limit the parties’ exposure to juridical and financial risk.
This note has been provided for informative purposes only and is by no means exhaustive. It should not be relied upon as legal advice. For more information, please do not hesitate to contact us.
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