Sylvie Gallage-Alwis provides an insight into the recent developments and reforms in French litigation, and the factors international companies should consider when pursuing litigation in France.
What factors should global general counsels consider when deciding whether to pursue litigation or alternative dispute resolution in France?
Initiating a lawsuit in France is simple and not costly. First, you do not even have to justify why a specific court is seized nor justify that the claim has grounds. This will come at a later stage when the admissibility of the claim is discussed. Such a debate can take several years to take place as submissions need to be exchanged and hearing postponements are easy to obtain. Depending on the court, the discussion on the admissibility of the claim can even occur the same day as the merits of the claim is being discussed, forcing the defendant to work on both the procedural and the merits arguments, again, years after the claim is initiated. This shows that if there is a will to have a company being sued and exposed, this can be done easily and can last for years, which is unfortunate. The damages requested can also be at first unjustified. Some plaintiffs therefore tend to ask for millions of euros in damages at first, to put the company under pressure to settle.
The length of the proceedings must also be borne in mind. A case, without any specific complexity, usually takes up to two or three years before being tried before the lower court. This length can be multiplied by four if there are expert proceedings or specific admissibility-related stages, requests for documents, questions raised to the Constitutional Court or to the European Court of Justice, etc. After that, there is a right to appeal. There is no filter as in some Common Law jurisdiction to seize a Court of Appeal. An important point is that the latter will rule on the case de novo, meaning that all factual and legal issues will be reopened. This usually takes another couple of years. There is then the possibility to lodge an appeal before the Supreme Court. The latter can only be seized to rule on legal issues. If the Supreme Court decides that the Court of Appeal misinterpreted a legal provision, the Supreme Court can either rule on the merits or refer the case back to a second Court of Appeal, with again the possibility, even if limited, to seize again the Supreme Court. A claim can therefore last for a decade and even more, depending on its complexity and the strategy applied by the plaintiffs and/or the defendant. This can be a significant deterrent.
This is why the French legislator and French courts are pushing for Alternative Dispute Resolution (ADR) mechanisms, and in particular mediation. It can now be imposed before the court is seized or right after. The court can also at any point in time encourage the parties to try to mediate, even at an appellate level.
How does French law handle pre-trial procedures, including discovery and evidence gathering?
France is a civil law jurisdiction, as opposed to a common law jurisdiction. This means that there is no discovery or disclosure as there would be in the United States, Canada or the United Kingdom. There are however numerous presumptions against companies as plaintiffs cannot easily access their documents. For instance, when there is exposure to specific chemical substances, there will be a presumption that the disease developed is due to these substances following exposure in the workplace – and not due to any other personal factor (eg, smoking).
More generally, because of the lack of discovery/disclosure process, French courts tend to be favourable to claimants by giving credit to evidence that does not prove adequate causation or equivalence of the causes (the two co-existing causation theories pursuant to French law), but that merely gives rise to presumptions, provided they are serious, precise and concordant.
For instance, most product liability cases giving rise to preliminary expert proceedings, whereby a court-appointed expert tries to determine the origin of the damage, manufacturers tend to put in much more work in order to demonstrate the lack of defect, notably by ordering tests, filing technical documents and providing explanations. Manufacturers can also rely on an established line of case law which states that the mere involvement of a product in the occurrence of damage is not sufficient to establish its defect within the meaning of Article 1245-3 of the French Civil Code.
This being said, a party can request the production of evidence that is not disclosed by the other party, or detained by a third party, but only under very strict conditions. Parties can indeed request legally permissible preparatory inquiries before proceedings, ‘if there is a legitimate reason to preserve or to establish […] evidence of facts upon which the outcome of the dispute depends’ (article 145 of the French Code of Civil Procedure). If the conditions are met, the court may order investigative measures for the collection of evidence (mesure d’instruction in futurum). This way, a party has the possibility of preserving or establishing crucial evidence for use in a possible trial. The requesting party must properly identify the sought document, because so-called ‘fishing expeditions’ are not allowed (articles 138 and 139 of the French Code of Civil Procedure).
What are the rules and limitations regarding legal representation and attorney-client privilege in French litigation proceedings?
This is an extremely touchy issue in France.
As in many jurisdictions, legal advice provided by lawyers to clients and their communications are protected by lawyers’ professional secrecy, as defined by article 66-5 of Law 71-1130 of 31 December 1971. This encompasses legal opinions, communications between lawyers and clients; meeting notes and all case-related documents.
Under the National Rules of Procedure of the French Bar Council, lawyer-client communications are protected as a matter of public order. Lawyers are prohibited from disclosing any information contrary to professional secrecy, except in very specific legal circumstances.
In civil litigation, documents and communications between lawyers and clients are, as such, protected by secrecy and cannot be disclosed to third parties or used as evidence without the client’s consent. However, clients are not bound by professional secrecy and can use such communications or documents in their defence if they want to.
Pursuant to article 226-13 of the Criminal Code, all professionals (eg, lawyers, judges, doctors, journalists) are prohibited from disclosing confidential information obtained in their professional capacity.
However, in-house counsels at companies are not protected by privilege, so their communications (except those with their lawyers) will not be covered by professional secrecy. This is a very important point to know as it is different from the United States for instance. The advice of an in-house counsel to his/her company will not be privileged. As such, for instance, negotiations conducted by an in-house counsel will not be protected by absolute confidentiality, even if an NDA is signed. This is why, in France, most negotiations are carried out between outside counsels, to protect their confidentiality.
Very specific rules in communication therefore need to be established at the pre-litigation phase to avoid any difficulty afterwards in the handling of the litigation.
What are the common challenges and pitfalls faced by international companies involved in litigation in France, and how can they be addressed?
The consequence of the lack of discovery or disclosure is two-fold for businesses. The first one is that courts tend to shift the burden of proof on the defendants, on the ground that businesses are the ones who know best their products, services, technology and should therefore be the one demonstrating that they are compliant.
The second consequence is that many plaintiffs now choose to file a criminal complaint rather than a civil lawsuit as a criminal complaint can result in the Public Prosecutor, if he/she is interested in the case, initiating an investigation. This can be seen as a discovery financed and managed by the French State.
Another specificity in France relating to product liability cases is that, absent any discovery/disclosure, courts would appoint experts specialised in the relevant field to investigate, on behalf of the court, the root cause of the accident/incident. In the scope of the expert investigation, the defendant must share the data the expert requests, with commercial secrecy being protected under certain circumstances.
Finally, we are seeing an increasing involvement of the French government in litigation, with declarations in the media made by Ministers against targeted businesses. The impact on the companies’ reputation is in these cases very significant as well as the pressure on the other Member States of the European Union to take measures. The politicisation of litigation is a worrying trend, especially when companies win their cases, after usually years of litigation, the attention of the media is minimal. It is therefore important for businesses to take this change into account to try to mitigate the impact of French decisions in the rest of the European Union, and even the world, given that companies increasingly adopt a ‘fit it all’ approach when it comes to marketing, labelling, business model, etc.
Companies receiving a warning notice or a claim coming from France should therefore be very careful as this is usually only the tip of the iceberg. Furthermore, a very small value claim can be the starting point of numerous small value claims initiated around France to create case law, a criminal complaint, a complaint to the relevant market surveillance authority and a media focus. The conclusion is that no claim should be underestimated, even if of low value at first. We have seen this for instance in asbestos-related claims where the first individual claims were below €5,000. After case law being established before random courts in France, companies suddenly faced thousands of claims with the plaintiff’s counsel being able to put forward a ‘consistent trend of case law’ against companies, which for some, did not even appear in court because of the low value of the first claims.
Can you provide insights into recent developments or reforms in French litigation law that may impact global companies?
When it comes to commercial litigation, it is worth noting claims filed on the ground of alleged sudden termination of a business relationship. Such claims are filed when the plaintiff considers that the notice period granted by the defendant after informing of its intention to terminate the contract would be too short, despite such period being compliant with the terms of the contract. This is an exception to the rule according to which the contract is the ‘law of the parties’. French courts can rule that the notice period provided by the contract is too short and order for damages. The law has been clarified recently to state that a period of 18 months to terminate a contract would be a reasonable one.
Also, when it comes to contracts, the French Regulator can analyse them to determine if there is a significant imbalance or if they contain forbidden clauses. Case law condemning companies which are deemed to have imposed unfair or forbidden terms on other companies or consumers is prolific, with fines which can amount to millions of euros ordered by the French Regulator.
We are also seeing claims filed by consumers or individuals or NGOs on multiple grounds against companies, with a significant development of toxic tort claims or ESG-related claims. Claims on the ground of the anxiety to develop a disease in the future due to the exposure to a substance have been recognised in the scope of asbestos-exposure and are now being extended to other substances. Criminal investigations on the pollution of soil, air, crops, water are pending, one of the latest ones relating to the presence of PFAS (forever chemicals) in water. Climate-related claims are multiplying, especially on the ground of the so-called Duty of Vigilance, introduced in France in 2017 and discussed at EU-level. In other words, all manufacturing activities are scrutinised and even the more general impact of finished goods or of services can become the ground of claims.
Criminal claims on the ground of misleading commercial practices have also developed these past couple of years. The labelling of products, the description of services, the information provided on applicable warranties and obligations of the sellers, even the description of company-values (in particular any green claims) are analysed by NGOs and the French Regulator as they are easy ways to indict and condemn companies. In this respect, the complexity of regulations, national specificities and their constant evolution makes it very hard for businesses to be up to speed and easy for the French Regulator or NGOs to find a mistake or omission to target. Fines can go up to 10% of the annual turnover of the business, which is significant. The French Regulator can also since recently decide to delist a website that it believes creates a risk for the French population. While one could think that such a drastic measure would be taken against sites that are intrinsically dangerous (such as sites promoting illegal acts), the French Regulator has shown that it can use it against marketplaces on the grounds that it identified non-compliant and/or dangerous products, giving another dimension to this power.
How does French law regulate class actions and collective redress mechanisms in litigation cases?
At the EU level, the Collective Redress Directive (EU) 2020/1828 of 25 November 2020 requires Member States to enact regulations providing for a collective redress mechanism by 25 December 2022 and which would enter into force as from 25 June 2023. This Directive will allow collective actions to be brought by a representative body against businesses if they breach EU laws intended to protect consumers. This includes laws in a broad range of areas such as data protection, travel and tourism, financial services, energy, and telecommunications.
In France, the Hamon Law was enacted on 17 March 2014 (Law No 2014-344) and a decree implementing this Law (Decree No 2014-1081 of 24 September 2014) entered into force in October 2014. The mechanism was governed by the French Consumer Code as it was initially only applicable to consumer law matters (damage resulting from the sale of goods, the provision of services or anti-competitive practices). The actions could only be brought by, at the time, 15 consumer associations that were duly authorised and are representative at the national level; they were and are still not available to individual claimants.
By two laws of 2016, the French class action regime was extended to health and cosmetics (Act No 2016-41 of 26 January 2016), discrimination, the environment, and the protection of personal data (Law No 2016-1547 of 18 November 2016). Each of these class actions are closed to individual claimants and only open to authorised entities such as associations complying with specific criteria of representation and activity or trade unions (depending on the type of class actions). Articles 848 and following of the French Code of Civil Procedure, introduced by Decree No 2019-1333 of 11 December 2019, specify the procedural rules applicable to French class actions, except for consumer class actions, which are still regulated by specific procedural rules set out in articles L 623-1 and following of the French Consumer Code.
In spite of this extension, very few class actions have been initiated in France. Indeed, while there is no official record of class actions in France, according to the Observatory of Class Actions (Observatoire des Actions de Groupe), 37 group actions have been launched since 2014. Furthermore, it is public knowledge that a company was held liable in a class action for the first time on 5 January 2022 by the Paris Civil Court. This action was a class action in the health area in which the liability of the manufacturer of Depakine (Sanofi) was sought. The claimant association alleged that this medicine caused physical malformations and neurodevelopmental disorders in utero in foetuses of pregnant women treated with this medicine. The Civil Court held the manufacturer liable. Appeals have been lodged both by the claimant and the defendant, so the proceedings are still ongoing. While not final, this judgment is the first out of the 37 group actions launched in France so far in which the defendant has been held liable.
Mass litigation is more common in France, ie, a significant number of individual claims filed by the same counsel before the same court, and which are generally subject to the same procedural schedule and heard during the same trial hearing. Such cases are a challenge for defendants as claimants are likely to present these cases as one large case with exactly the same evidence for all claimants, without that evidence being personal and showing specific damage. However, procedurally, these cases should be treated as individual cases, each of which could be tried individually. Defendants need to insist on this point to stand a chance and avoid a general sentence being passed against them.
E: sylvie.gallage-alwis@signaturelitigation.com