Category: Legal news

The EU General Product Safety Regulation (Regulation (EU) 2023/988), effective December 13, 2024, establishes a comprehensive framework for consumer safety across the European Union. Replacing Directive 2001/95/EC,

it addresses modern challenges,including those in the digital age, with direct application across all Member States.

This regulation applies to economic operators both within and outside the EU that place products on the Union market. It covers items made available to consumers, including new, used, repaired, or reconditioned products, with exceptions such as medicines, food, and plant protection products. For regulated products (e.g. medical devices, cosmetics, or toys), it complements existing legislation. Its primary goal is to ensure product safety regardless of origin or distribution method.

Manufacturers, importers, and distributors face stricter obligations, including maintaining supply chain traceability, promptly notifying authorities (providing clear details on risks and remedial actions taken, including on the EU portal “Safety Gate” and on “RappelConso” in France) and consumers about dangerous products, and providing clear safety information in accessible languages (warning or safety information must be affixed to the product or on the packaging). Online product sales must meet the same safety standards as physical sales. Businesses must also ensure cybersecurity and AI measures are implemented to protect products from external threats and enable product evolution, learning and adaptive capabilities.

French national authorities, including the DGCCRF, Customs, and Labor Inspectorate, have expanded powers to enforce compliance. They can recall dangerous products, impose stricter penalties, and coordinate at the EU level to ensure harmonized market surveillance.

Businesses must adapt by conducting product risk assessments, updating security information, ensuring accurate traceability, and monitoring non-conformity issues. These obligations extend to manufacturers, importers, and distributors alike.

The regulation marks a significant advance in EU consumer protection. Compliance not only fulfills legal requirements but also enhances consumer trust and strengthens market reputation. Compliance is not just a legal obligation but also an opportunity for businesses to reinforce consumer trust and safeguard their reputation in a competitive marketplace.

In a decision dated of 7 November 2024 (Civ.3ème, 7 November 2024, no. 22-14.088), the Court of Cassation recently set a limit, in matters of loss of enjoyment, to the principle prevailing in French law according to which the victim is not required to limit his or her loss in the interest of the person responsible. In this case, the victims of construction defects who had been compensated for the amount of the repair works by the insurer of the company responsible, had not undertaken the works necessary to remove the damage, which had therefore persisted. On the base of the principle of the right to full compensation for the damage as well as the principle according to which the victim is not required to limit his or her loss in the interest of the person responsible, the victims were claiming compensation for their loss of enjoyment of their property after receiving the compensation corresponding to the amount of the repair works for the damage.

After noting that the compensation received allowed them to carry out the works, the Court dismissed their claim, considering that the loss of enjoyment resulting from the failure to carry out the repair works, after receiving the compensation, has no causal link with the builder’s failings.

When the existence of loss of enjoyment is established in its principle by the victim, as well as its causal link with the fault committed, it is up however to the judge to set the amount of
compensation to be paid to the victim, without being able to allege that the claim was not made explicit in its amount. The judge cannot therefore refuse to compensate for loss, certain in its principle, based on the insufficiency of the evidence provided by the parties, unless he is guilty of a denial of justice. This is the principle recalled by the commercial chamber of the Court of Cassation in a decision dated of December 11, 2024 (Com., December 11, 2024, no. 23-10.028).

If the victim cannot rely on his or her own turpitude, the person responsible cannot reciprocally hide behind the evidentiary difficulties attached to the quantum of the loss of enjoyment, to claim to escape his liability.

A French company’s corporate interest must not be conflated with the interests of its shareholders. Foreign banks financing a French borrower or requesting a guarantee from a French company regularly face this constraint.

More specifically, lenders may seek additional security by taking collateral over assets belonging to other solvent group companies, or by lending to more solvent group entities that may not necessarily need a financing. Directors should be reminded of the associated risks and made aware of certain financing arrangements that demand careful consideration.

Any director, acting in their capacity as the company’s legal representative when entering into a transaction, must ask themselves three questions:

• does the transaction fall within the company’s corporate purpose?
• is the transaction in line with the company’s corporate interest?
• could the transaction expose them to civil or criminal
  liability?

Accordingly, granting a third-party guarantee and establishing various intra-group financing arrangements must be analyzed in light of these questions, particularly with regard to compliance with the relevant company’s corporate interest. In particular:

• the issuance of personal guarantees securing obligations of a French borrower’s parent or sister companies (known as “upstream guarantees”), which also carries a risk of misuse of corporate assets or, in the case of civil companies, breach of trust;
• a lender’s right to use a French borrower’s available cash, credited to an account with that lender, to pay the banking debts of another group borrower outside any cash-pooling arrangement (the “cash trap account” mechanism);
• a contractual allocation order, frequently included in intercreditor agreements, governing how proceeds from the enforcement of security granted by a French borrower are to be applied, potentially repaying obligations owed by another group entity to the same lender; or
• joint and several liability among multiple borrowers within the same group.

To ensure compliance with French law, it is crucial to include appropriate limitations or exclusions in the financing documentation for each of these mechanisms.

Law No. 2024-537 of June 13, 2024, aimed at increasing corporate financing and enhancing France’s attractiveness, was published in the French Official Journal on June 14, 2024. Its objective is to strengthen the attractiveness of Paris as a financial center and improve the economic, legal, and tax conditions for companies operating in France, with a particular focus on their international competitiveness.

Among the measures introduced by this new law, Article 25 inserts a new Article L. 311-16-1 into the French Code of Judicial Organization, which establishes the special jurisdiction of the Paris Court of Appeal (Section 5 of Chapter I of Title I of Book III), as follows:

Article L. 311-16-1: The Paris Court of Appeal, which includes an international commercial chamber, has jurisdiction over:

1. Applications to set aside international arbitration awards, under the conditions and circumstances provided for by the French Code of Civil Procedure;

2. Appeals against decisions ruling on a request for the recognition or the enforcement (exequatur) of an international arbitration award, under the conditions and circumstances provided for by said Code.

This provision, which grants the Paris Court of Appeal exclusive jurisdiction to hear applications against international arbitration awards, their recognition, or enforcement, will likely draw the attention of arbitration practitioners. Its impact on Article 1519 of the French Code of Civil Procedure, which currently provides that applications to set aside international arbitration awards must be brought before the court of appeal of the jurisdiction where the award was rendered, will need to be considered by the regulatory authorities.

However, this is not the point on which we wish to focus the reader’s attention. The aforementioned article institutionalizes, for the first time, the existence of the International Commercial Chamber of the Paris Court of Appeal (CCIP-CA).

Until now, the CCIP-CA has been set up within the Paris Court of Appeal under constant law, akin to the International Chamber of the Paris Commercial Court (CCIP-TC), without any dedicated legislative or regulatory text. Their specificities were defined by the Procedural Protocols signed on February 7, 2018, by the presidents of the concerned courts and the Paris Bar.

The absence of a legislative or regulatory framework endorsing these chambers has been highlighted as a hindrance to their visibility and development, as neither held the status of an autonomous court. When the Protocols refer to the “jurisdiction” of these chambers, they actually mean the allocation of cases through simple judicial administration measures within the Paris Commercial Court or the Paris Court of Appeal, which are the actual courts having jurisdiction (see the preface by the First President of the French Court of Cassation, Chantal Arens, and the contributions of the President of the CCIP-CA François Ancel and Maître Alban Caillemer du Ferrage at the colloquium of June 14, 2019, dedicated to international commercial chambers, whose proceedings are published in RLDA 2019/152, suppl., nos. 6819 and 6920).

Since then, it has been observed that the knowledge of the CCIP-CA among international trade actors remains limited, as the CCIP-CA has not yet, to our knowledge, been seized by application of a jurisdiction clause expressly designating it. Its cases are mainly assigned through the mechanisms of international jurisdiction rules, on the one hand, and rules of assignment of cases within the relevant courts, on the other hand, the latter resulting from a judicial administration decision beyond the parties’ control.

The legislative enshrinement of the International Commercial Chamber of the Paris Court of Appeal – pending similar recognition of its counterpart within the Paris Commercial Court – marks a decisive step towards the institutionalization and perpetuation of international commercial chambers, enhancing their visibility on the international scene in business litigation. There is no doubt that it will significantly contribute to strengthening legal security and the effectiveness of jurisdiction clauses designating these international chambers in international commercial contracts.

In response to the ongoing agricultural crisis, a new reform of the so-called « Egalim » law has been announced by the end of 2024. But what exactly is Egalim ?

1. The legal context : a plethora of legislation
   French legislation on commercial negotiations is unique. Since 1986, dozens of legislative texts have modified the system, with the obligation to sign a «single written agreement» between the supplier and the distributor « by 1 March at the latest ». This principle is accompanied by various other obligations: mandatory content, disclosure of general terms and conditions of sale, strict timetable for commercial negotiations, etc.

he so-called « EGalim » laws introduced a principle of fair remuneration for farmers. This was achieved through three laws over a five-year period, followed by the implementation of decrees and an emergency inflation law for 2024.

The objective of the EGalim 1 legislation was to ensure that producers received a fair price for their goods. This was achieved by establishing a pricing framework based on proposals from farmers, with prices being calculated in a manner that takes into account production costs and reference indicators developed by inter-trade organisations. In the event of fluctuations in the cost of raw materials and energy, prices are renegotiated. The promotion of goods is subject to regulation, while the threshold for resale for loss on foodstuffs is increased by 10% in order to rebalance margins in favour of producers and small businesses.

The EGalim 2 law has reinforced the system by requiring written contracts between farmers and their first buyers. The share of agricultural raw materials in the price of food products is now non-negotiable and must be clearly stated in the terms and conditions of sale, according to the three options provided for by the law. Furthermore, a clause has been included which allows for the price to be renegotiated in accordance with the cost of the raw materials in the event of a fixed price.

Finally, the Descrozaille law, also known as «Egalim 3», has been supplemented by the law on the inflationary emergency in France, thereby reinforcing the already robust legal framework in this area. In order to combat the practice of international purchasing groups operated by large retailers, this law stipulates that, from 1 April 2023, relations between suppliers and distributors must be governed by French law and subject to the jurisdiction of French courts when the products or services are marketed in France.

The law also addresses an ambiguity regarding the outcome of commercial negotiations. In the event that negotiations between the supplier and the distributor fail by the 1 March deadline, the law provides for two potential solutions :

• The supplier may terminate the commercial relationship with the distributor concerned, without notice and without the distributor being able to claim that the relationship has been brutally terminated.
• Alternatively, the supplier may terminate the commercial relationship subject to reasonable notice and the « economic conditions of the market in which the two parties operate ». In the event that an agreement cannot be reached on the terms of the notice period before 1 April, a mediator may be called in to assist in the resolution of the dispute. Should no agreement be reached, the supplier may terminate the relationship, without the distributor being able to accuse it of abrupt termination.

Despite the plethora of laws that have been enacted, the various objectives have not been achieved, as evidenced by the agricultural crisis that hit France at the beginning of 2024. Furthermore, the Minister for the Economy observed that 12% of the agreements had not been signed by the 2024 deadline. Consequently, the government has initiated measures to enhance the situation.

2. Egalim 4: a solution to unsolvable problems ?

The designation « Egalim 4 » is unofficial and refers to a parliamentary mission whose objective is to propose a «light» reform of Titre IV du Livre IV du Code de commerce.

The legislative transition could be based on the information report on the Descrozaille law, published on 20 March 2024. A number of issues have been identified in commercial relations between suppliers and distributors.

The primary objective of this new law is to enhance producers’ capacity to negotiate. To this end, the President of the Republic has proposed the introduction of «floor prices» to guarantee a minimum income for producers. Some have suggested that tripartite meetings during trade negotiations between producers, suppliers and distributors may be a viable solution. Contractualisation and the consideration of producers’ production costs could also be reformed in a similar manner.

Secondly, the objective is to facilitate trade negotiations, which are perceived as increasingly challenging in the context of an economic climate characterised by tension between distributors and suppliers. Some have called for the 1 March deadline to be waived, or even for the implementation of a two-tier system based on supplier size, as was the case during the 2024 negotiations.

Finally, it is essential that the new system ensures the strict application of French law. Indeed, the use of international purchasing groups betrays a desire to evade French law. While the legislation already provides for the applicability of French law, it is the sanctions and their application that need to be corrected. In addition, wholesalers are excluded from the provisions of the EGalim law. This situation must be taken into account in order to prevent distributors from escaping the legal regime.

Ultimately, the forthcoming «EGalim 4» law is intended to refine the measures set out in the «EGalim 2» law, without fundamentally reforming the law on commercial negotiations in France. Rather than focusing on the legislation itself, the debate is more concerned with the manner in which it is applied.

When looking at the treatment of secured creditors in French insolvency proceedings, lenders sometimes come to the conclusion that they would be better off circumventing the issue, by creating so-called “double Luxco” structures, i.e. two holding companies located in Luxembourg, the lender being granted a pledge over their shares.

That is because security enforcement proves very challenging in France, any such enforcement being automatically stayed in insolvency proceedings (subject to limited exceptions) : for example, in an LBO structure, the lenders cannot enforce their French law pledge over the shares of the French target company if the French holding company has filed for safeguard proceedings or insolvency proceedings.

Since 2007, however, it is possible for creditors to benefit from a fiducie over any type of assets. The key difference with “traditional” security interest is that fiducie entails an immediate transfer of the ownership of the assets to a third party (the fiduciaire). As a result, those assets do not belong to the insolvency estate if the borrower is subsequently placed into insolvency proceedings.

Interestingly, the efficiency of fiducie was recently put to the test in a case where bondholders were trying to enforce while the issuer was subject to insolvency proceedings. Those bondholders benefitted from a fiducie over real estate assets. The debts had been accelerated shortly before the commencement of the insolvency proceedings. Thereafter, the bondholders had started the enforcement process, by requesting the fiduciaire to sell the assets. The issuer was trying to obtain a freeze of such enforcement, in summary proceedings.

The issuer tried to convince the court that it should benefit from a specific regime protecting the debtor against the enforcement of a fiducie if such debtor retained the right to use or to enjoy the assets transferred to the fiducie. In fact, the issuer had indeed kept receiving the rents paid by the tenants occupying the real estate assets, although the ownership of such assets had been transferred to the fiduciaire. However, this argument was rejected by the Court of Appeal of Bordeaux in a judgment dated 18 December 2023, because in reality the issuer was entitled to receive the rents only on behalf of the bonholders, as their agent. This decision confirms that fiducie is an efficient security interest to consider when it comes to granting loans in France.

The French legal framework for cross-border operations (mergers, spin-offs, partial contributions of assets, transformations) within the European Union has been greatly modified when France transposed the Directive (EU) 2019/2121 by the Ordinance n°2023-393 of May 24th, 2023 and the Decree n°2023-430 of June 2nd, 2023.

The purpose of the Directive (EU) 2019/2121 was mainly to (i) harmonize the laws within the European Union on cross-border mergers while introducing three other cross-border operations (spin-offs, partial contributions of assets, and transformation) and to (ii) strengthen the protection of shareholders, creditors, and employees. The Law n° 2024-364 dated April 22nd, 2024, while ratifying the Ordinance n°2023-393, has introduced some adjustments which impact, at local level, the qualification and timetable of the cross-border operations. The three main adjustments are the following :

In a cross-border merger, the shareholders, creditors and employees (directly or through their representatives) may submit observations on the contemplated operation. The notice sent to them, which is mandatory, will be filed before the clerk (greffier) of the registered office of the French company. The shareholders, creditors and employees may submit their observations at the latest five business days before the shareholder’s meeting approving the operation or, in the event of a simplified cross-border merger where the approval of the sole shareholder is not required, before the completion of the operation. We may question the impact of this notice to protect the shareholders, creditors and employees, since the French regulation doesn’t impose to take into consideration the latter’s’ observations,

The protection of creditors of companies participating in a spin-off or in a partial contribution of assets has increased since a joint and several liability (solidarité) between the participating companies has been reinstated. However, the companies, at their sole discretion, may now expressly decide to limit the beneficiary’s liability to the amount of transferred liabilities, valued on the effective date of the operation. Considering the purpose of Directive (EU) 2019/2121 to strengthen the protection of creditors, this adjustment is questionable, and

The definition of cross-border partial contribution of assets, in Article L. 236-48 of the French Commercial Code, has been amended and now insists on the fact that it’s an operation resulting in a French company contributing to or benefiting from a contribution of a portion of both the contributor’s assets and liabilities. However, in the event only assets are contributed (and no liability) and therefore the operation cannot be automatically considered as a cross-border partial contribution of assets, the parties, at their sole discretion, will decide if the operation falls under either the cross-border spin-off regime or the local regime of partial contribution of assets.

Pursuant to Articles 1382, 544 and 651 of the Civil Code governing fault-based liability and the rights and obligations of property owners, case law has established the principle that no person may cause a disturbance to another which exceeds the normal inconveniences of neighbourliness (Civ., 27 Nov. 1844), based on the idea that inconveniences associated with neighbourliness must be borne only up to a certain limit, to the extent of those inherent in life in society. On the basis of this principle, case law has developed an original autonomous liability regime in which liability is not assessed on the basis of the seriousness of an act – fault is not required – but on the basis of the abnormality of the disturbance caused (noise, smell, sight, pollution, etc.). This jurisprudential creation has now been codified by Law no. 2024-346 of 15 April 2024, in the new article 1253 of the Civil Code, which states that
« the owner, tenant, unauthorised occupant, beneficiary of a title whose main purpose is to authorise him to occupy or use land, the project manager or the person exercising the powers of the latter who causes a disturbance that exceeds the normal inconveniences of the neighbourhood is automatically liable for the resulting damage ».

Taking up and extending the text of article L.113-8 of the Code de la Construction et de l’habitation (CCH), repealed at the same time, the new article 1253 of the Civil Code provides that liability is not incurred «when the abnormal disturbance arises from activities, whatever their nature, existing prior to the deed transferring ownership or granting enjoyment of the property or, in the absence of a deed, on the date of entry into possession of the property by the injured party. These activities must comply with the laws and regulations and have continued under the same conditions or under new conditions that do not aggravate the abnormal disturbance».
A reading of the new text shows that :

• The risk of damage is not mentioned as something that can be repaired, whereas this was accepted in case law,
• The prior existence of the activity that is an obstacle to compensation for abnormal neighbourhood disturbance, already provided for previously, is taken up again but now covers all activities, whatever their nature,
• The criteria for assessing whether an activity has been going on for a long time have changed slightly: it is now assessed with regard to the date of the deed transferring ownership or granting enjoyment of the property, or in the absence of a deed, the date on which the victim took possession of the property;
• Echoing article 2278 of the Civil Code, which protects possession against any disturbance that affects or threatens it, the legislator has also extended the benefit of the action for abnormal neighbourhood disturbance to the date of the transfer of ownership or the granting of enjoyment of the property.

By enshrining long-established legal principles in law, the legislator’s aim is to secure the exercise of certain agricultural, industrial and commercial activities, while respecting everyone’s right to the peaceful enjoyment of their property.

The adoption by the European Parliament on 24 April of the Corporate Sustainability Due Diligence Directive (CSDDD) raises the question of the procedural tools available to stake holders wishing to ensure compliance with the obligations it will introduce.
For the time being, French Law No. 2017-399 of 27 March 2017 on the due diligence of parent and subsidiary companies, codified in Articles L. 225-102-4 and 5 of the French Commercial Code, notably requires companies with at least five thousand employees in France – in their own company and in their direct or indirect subsidiaries – or ten thousand employees worldwide to draw up and implment a compliance plan.
The French judiciary has had the opportunity to begin clarifying the application of the French due diligence law and the procedural aspects of the proceedings initiated by those wishing to compel companies to comply with the law.
In particular, in a judgment dated 1 December 2022 (No. 22/00643), the Versailles Court of Appeal ruled on the use of Article 145 of the French Code of Civil Procedure by Cameroonian individuals against a Cameroonian company, its parent company and the latter’s parents companies, including a major French company, in order to obtain evidence for future litigation concerning the deterioration of the claimants’ environment allegedly caused by the activities of the local company.
Article 145 of the Code of Civil Procedure provides that «if there is a legitimate reason for preserving or establishing, prior to any judicial proceedings, evidence of facts on which the outcome of a dispute may depend, legally admissible measures of inquiry may be ordered at the request of any interested party, on application or by summary procedure». It can be a highly effective tool in the hands of plaintiffs.
French courts may, under certain conditions, have jurisdiction over such a request if the action on the merits, which the evidence sought is intended to support, falls within their jurisdiction or if the measure is to be carried out within their jurisdiction.
In the abovementioned ruling of 1 December 2022, the Versailles Court of Appeal ordered two foreign companies, including the Cameroonian company, to produce various documents requested by Cameroonian citizens in order to establish the control exercised by the French company over them in the context of a future action for breach of duty of care.

The importance of cybersecurity is constantly underlined by recent news in France (i.e the new investigation opened by the CNIL- the French authority responsible for ensuring compliance with GDPR – into the notable data leak affecting France Travail regarding its obligation to ensure the security of personal data according to article 5 f. of the GDPR). Moreover, the ANSSI – French authority for cyberdefence and network and information security – underlines that the methods used by cybercriminals have undergone significant evolution with the use of massive ransom campaigns based exclusively on data exfiltration (without ransomware deployment).

Several regulations engage the responsibility of those who had the obligation to protect the personal data exposed to cybercriminals :

• if the CNIL examination highlights an inadequate response protocol to the personal data breach or, upstream, insufficient technical and organizational security measures (art. 32 of the GDPR), it can hold the data controller or even its processor liable (for example, to financial penalty of up to a maximum of €20 million or 4% of worldwide annual sales). In 2023, 9 penalties were applied by the CNIL for breaches of security obligations including a 32 million euros penalty applied to Amazon France Logistique;
• the civil or criminal liability of the data controller may also be engaged in light of the French Criminal Code provisions providing that « carrying out or causing to be carried out a
  processing of personal data without implementing the measures prescribed in art. 24, 25, 30 and 32 [of the GDPR]” exposes the controller to a five-year imprisonment and a fine of 300,000 €;
• corrective measures and administrative penalties of up to 10 million euros or 2% of annual worldwide sales may be applied by the ANSSI on «operators of essential services» whose failed to implement the preventive measures to strengthen IT networks provided for in the NIS 2 Directive n°2022/2555 of December 14, 2022 on measure for a high common level of cybersecurity across the Union (art. 34). This Directive must be transposed by France before Octobre 17, 2024.

Faced with the risk of personal data leakage, prevention is better than cure: compliance cannot therefore be limited to a one-off action, it must be instilled at all levels of each entity and evolve with it over time, in line with the tools used (particularly those linked to Gen. AI). The ALERION team is at your side to support you in implementing the legal and organizational aspects of your structure’s cyber protection as well as the closely related GDPR compliance. It will also advise you on how to protect your company’s assets against cyber risks as cyber attackers have come to understand the value of the information assets their victims may possess (i.e know-how, intellectual property rights, trade secrets).