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Cazeau & Associés’ Newsletter – February – March 2019

February – March 2019



  • NEWS: Has your company a fundamental purpose ?
  • IN-BRIEF : International contracts of employment : Whistle signal of the Cour de cassation on the choice of court clauses!



Has your company a fundamental purpose ?

The year 2019 will see a new major reform in the economic field. This reform which is carried out by the Economy Ministry was baptized « Action Plan for the Growth and the Transformation of the Companies » or PACTE law (after the French acronym).

Among the numerous dispositions aiming at ease and dynamize the life of the companies, appears a notorious innovation : the « mission company ».

This notion is intended to operate a paradigm change in the companies’ world by completing the financial and commercial interest with a social interest.

The PACTE law, which should be adopted on the beginning of this year contains various provisions in that sense that need to be analysed .

Reform’s context

The PACTE law is one of the main projects initiated by the government in the field of economy. It was built on the observation of a negative feeling that French people seem to have on companies. On the one hand, entrepreneurs find the system to heavy and expensive to be able to develop business with serenity. On the other hand, French people tend to appear suspicious of companies and their capitalistic and financial interests.

Based on studies and reports, the Minister of Economy Bruno LEMARIE presented a law project to the Parliament including numerous propositions aiming at ease the life of companies and promote growth and innovation.

More concretely, as concerns our topic, the PACTE law project draws in big part from the observations and recommendations of Nicole NOTAT and Jean-Dominique SENARD’s report entitled « The company, a subject of collective interest ». Indeed, this report mentions the necessity to place collective interest in the heart of companies and the need to materialize the philosophy of the mission company.

In order to underline the urgency to reform, the government chose the path of the accelerated parliamentary process which should lead to the adoption of the text in the beginning of this year.

PACTE law’s provisions on the companies’ place

At this point, the PACTE law project provides for different interesting innovations regarding the collective interest of the companies.

Thus, in addition to the « mission company » which will be the subject of a longer development hereinafter, the government proposes to include in the Civil code and the Commercial code, the notion of social interest. This refers to the social and environmental stakes for the companies.

This notion has already been suggested by the jurisprudence in particular for the breach of trust and the undue use of majority. The text is intended to impose a new philosophy to the companies by assigning them a sort of general interest goal. However, those who drafted the text didn’t want to give a definition to this interest in order to safeguard the flexibility of this notion.

In addition, the provisions also plan that the administrators and some limited companies’ bodies, such as the administration board or the executive committee shall consider the social and environmental stakes before each and every one of their decision.

To go a step further, the project proposes other innovations such as the creation of a sustainability fund. This is a sort of foundation designed for gathering, freely, the shares of one or various companies in order to allocate them to philanthropic or general interest actions.

Concept and implementation of the mission company

As regards more concretely the new mission company, the definition covers in fact every companies which will have integrated in their articles of association their « fundamental purpose (« raison d’être ») composed with the principles which the company wants to promote and for the respect of which it the company intends to allocate resources as part of its activity ».

In other words, the government intends to propose to the companies the integration in their purpose of a collective interest’s search (the “fundamental purpose” or “raison d’être”) in addition to their commercial interest (the “capitalistic purpose” or “raison d’avoir”).

Such companies already exist in other countries like the United-States, the main goal being to restore companies’ reputation.

For the companies which are already constituted, this change should necessarily be subject to a dedicated Shareholders’ General Meeting’s decision.

Moreover, the Limited Companies which will make the choice to adopt this model will have to implement a specific body charged with the monitoring and the check of the new mission’s respect.

The mission company’s creation will have various consequences, in particular regarding the administrator’s responsibility.

However, those who drafted the project provided for a safeguard by discarding every possibility of invalidation of the acts and decisions of the social bodies, including the existence of the company itself, in case of an absence of a general interest in the Articles of association. In fact, this provision remains a faculty for the companies

Finalization et adoption of the project

The government chose to submit the adoption of its PACTE law project to the accelerated parliamentary process. In other words, the project has only been analysed once by the National Assembly and the Senate. This option avoids the often-extended parliamentary shuttles.

At this point, the text has already been analysed by the National Assembly and the Senate. The latter has expressed serious doubts on the mission company’s notion. The law project is currently in the hands of a joint committee composed with both “députés” and senators. Therefore, a new consensual version should be submitted to both Chambers in the next weeks.




International contracts of employment :

Whistle signal of the Cour de cassation on the choice of court clauses!

The Cour de cassation (French judiciary Supreme Court) has recently confirmed the French jurisdictions competence to resolve the dispute between a French athletic trainer and his foreign employer : the AS Monaco (Cass. Soc., 5 December 2018, n°17-19935). This sentence was ruled beside the inclusion, in the contract of employment, of a choice of court clause benefiting to the Monegasque judge.

The Social Chamber based the French judges’ competence on the forum of the employee’s regular workplace. Indeed, the judges validates the reasoning whereby he usually worked in France.

This sentence is an opportunity to remind the rules of the conflict of jurisdictions and, in particular, of the choice of court clause regarding the international contracts of employment.

First, it should be reminded that Monaco, a sovereign state, isn’t part of the European Union. It is then considered as a « Third State » for the European Law.

Then, as regards international contracts of employment, the conflict of jurisdictions’ rules are set, for the EU, in regulation 1215/2012 of the 12 December 2012 called « Brussels I bis ».

This regulation provides for protective rules of the employees. Thus, article 23 of the regulation admits the validity of choice of court clauses provided that they had been concluded before the dispute occurrence or that they allow the employee to seize other jurisdictions than the one he could seize without a clause.

Nevertheless, the sentence doesn’t rule on the matter of the clause’s validity, what we find regrettable. Indeed, the supreme judges  simply referred to article 21§1 of the regulation which provides that the employer whose domicile is on a third State territory can be attracted before the European jurisdiction of the employee’s usual workplace.

Therefore, the question is whether the rule of conflict set in article 21§1 is an alternative or a default rule for a possible choice of court clause. If these provisions are only applicable in the absence of a choice of court clause, the supreme judges should have previously ruled on the clause’s validity.

The redaction of the regulation leaves no doubts about the fact that the replacement solution is the only sustainable one. In fact, article 23 clearly indicates the choice of court clause « derogates » to the rules set in the other provisions.

In that case, it is still arguable that the choice of court would certainly have been cancelled because it limited the employee’s options.

However, one question still needs to be asked : what would have done the supreme judges if the clause had been alleged by the employee at his own benefits ? For instance, if he had seized the Monegasque judge on the basis of the clause and then had tried to make his decision recognized or applied in France ?

The traditional inclination of the French judges toward a stronger protection of the employees may have led the Court to consider that the clause was in fact valid in such circumstances.

In that case, we would be facing a kind of variable geometry rule which would obstacle the legal logic. We will have to rely on the European jurisprudence to find a solution to that matter.

In conclusion, these observations underline once again the importance of an appropriate redaction of the choice of court clause. Therefore, when their labour relations reveal international elements, the employers must be very careful with this type of clauses.



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