Data

Date:
16-11-2022
Country:
France
Number:
21-17.338
Court:
Cour de cassation (Chambre commerciale)
Parties:
--

Keywords

SUPPLY CONTRACT - BETWEEN A FRENCH COMPANY AND A US COMPANY - REFERENCE IN THE CONTRACT TO "GENERAL PRINCIPLES OF LAW AS APPLIED TO INTERNATIONAL COMMERCIAL RELATIONS AND INTERNATIONAL COMMERCIAL USAGE"

DISPUTE BETWEEN THE FRENCH COMPANY AND THE CREDITORS OF THE US COMPANY (ITALIAN AND US COMPANIES) BEFORE FRENCH COURTS - REFERENCE BY THE DEBTOR TO THE UNIDROIT PRINCIPLES AS REFLECTING THE GENERAL PRINCIPLES AND USAGES OF INTERNATIONAL TRADE, TO WHICH THE SUPPLY CONTRACT AND ITS PURCHASE TERMS AND CONDITIONS REFERRED - APPLICATION EXCLUDED - COUR DE CASSATION DENYING THE VALIDITY OF THE CHOICE OF THE GENERAL PRINCIPLES OF LAW AND OF THE UNIDROIT PRINCIPLES AS LEX CONTRACTUS IN DISPUTE BEFORE STATE COURTS

Abstract

A dispute arose over debts owed by a French home furnishings retailer company (hereinafter the Appellant) to its Supplier, a US company. These two companies were contractually bound between 2004 and 2006, until the amicable liquidation of the US company. An Italian company and an another US company (hereinafter the Respondents), creditors of the Supplier, requested conservatory seizures against Appellant to obtain payment of their claims. Appellant counterclaimed that its debts had been set-off against the supplier’s own debts arising from commercial cooperation contracts concluded in 2005 and 2006. Respondents then sued the Appellant contesting the invoices relating to these contracts.

The Paris Court of Appeal ruled in favour of Respondents. Confirming the first instance decision, it decided that the disputed commercial cooperation contracts were distinct from the supply contract of 2004, which referred to the ‘general principles of law as applied to international commercial relations and international commercial usage’.

Determining the law applicable to the merits of the claim in accordance with Article 4 of the Rome Convention, the Court of Appeal applied French law as the law of the country where the party ‘who is to effect the performance which is characteristic of the contract has its central administration'. The Court of Appeal then found that the Appellant failed to prove that the commercial cooperation contracts complied with the rules on transparency in commercial relationships imposed by Articles L. 441-3 et seq of the French Commercial Code, and that the invoices could not validly be used to set-off the debts of the Appellant against the debts of the US supplier.

The Appellant appealed to the Cour de cassation, arguing that the second instance Court incorrectly applied Articles 3 and 4 of the Rome Convention by excluding the application of the ‘UNIDROIT Principles of International Commercial Contracts’ to the merits of the dispute. According to the Appellant, this soft law instrument could apply in the case at hand as reflecting the general principles and usages of international trade, to which the supply contract of 2004 and the Appellant's purchase terms and conditions referred. The Appellant also claimed that the supply contract expressly provided that the related commercial cooperation contracts should be covered by its purchase terms and conditions. It raised that the choice of law applicable to an international contract may either be express or result implicitly from the circumstances of the case and that – in the case of a series of contracts – the choice of law made to govern the initial contract applied to the other related contracts.

The Court, despite the argument put forward by the Appellant, dismissed the claim and affirmed that it follows from Article 3(1) of the Rome Convention that general principles applicable to international contracts, such as those established by UNIDROIT, do not constitute a law that can be chosen by the parties within the meaning of that provision. According to the Court, the second instance judge had rightly determined the applicable law pursuant to Article 4 of the Rome Convention, namely French law as the law of the country to which the contract was most closely connected.

It should be noted that the Court did not even consider art. 3 of the Hague Principles on Choice of Law in International Commercial Contracts, according to which "the law chosen by the parties may be rules of law that are generally accepted on an international, supranational or regional level as a neutral and balanced set of rules, unless the law of the forum provides otherwise", nor has it acknowledged that the Rome Convention on the law applicable to contractual obligations has long since been replaced by the Regulation (EC) No 593/2008 (Rome I).

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