This book provides a wide-ranging review of the European rules relating to distribution: exclusive purchase and exclusive supply, exclusive and selective distribution, motor vehicle distribution, franchises, commercial agents.

French Distribution Law

Many exclusive distribution contracts are concluded between foreign suppliers and French distributors. Even in the case where the supplier has a subsidiary in France, it is common for the distribution agreement to be concluded directly between the distributor and the foreign parent company with the subsidiary playing a marketing support and network development role. Such relations are generally fo …

Jurisdiction clauses and applicable law in international contracts.

Many exclusive distribution contracts are concluded between foreign suppliers and French distributors. Even in the case where the supplier has a subsidiary in France, it is common for the distribution agreement to be concluded directly between the distributor and the foreign parent company with the subsidiary playing a marketing support and network development role. Such relations are generally formalized in standard agreements allocating jurisdiction to the courts in the supplier's country with the application of the law of that country, but can sometimes be more informal and be based on a series of transactions.

As a general rule, in disputes relating to contract terminations, French distributors will seek to establish the jurisdiction of the French courts, before which claims are less costly and easier than before foreign courts, and the application of French law, specifically Article L. 442-1 of the Commercial Code. After some hesitation, the French courts will now enforce clauses attributing jurisdiction to foreign courts , including actions based on the termination of established commercial relations which come under tortious liability ("responsabilité délictuelle")  as “the tortious nature of the liability incurred [by the party instigating the termination] does not in principle exclude the application of a jurisdiction clause legitimately contracted between the parties” . In international disputes, the courts give a broad interpretation to the scope of jurisdiction clauses, namely by considering that jurisdiction clauses purporting to govern all disputes arising from the contractual relationship are sufficiently comprehensive to cover disputes based on the termination of an established commercial relationship .

The enforceability of jurisdiction clauses is systematically challenged unless they are expressly stipulated in the written distribution agreement. By virtue of Article 25 of Regulation No 1215/2012 of 12 December 2012, the clause is only enforceable if it is agreed by both parties, provided that it is in a form which accords with a usage in international trade or commerce of which the parties are or ought to have been aware. The systematic reference, under the postal address of a German company in all its commercial documents, to the competent Munich court  or a clause in the general terms of sale printed on the back of an order form  were not regarded as jurisdiction clauses as they had not been accepted by the other party. On the other hand, the Court of Cassation has ruled that where a jurisdiction clause is included in the general terms of sale printed on the back of invoices, in an annex to the price list and on the back of order confirmations, the distributor's acceptance is established by the continued payment of the invoices . This is not the position adopted subsequently by the Court of Justice however: in effect it considered that, in the absence of a contract in writing between the parties, a jurisdiction clause set out only in the general terms and conditions of sale listed on the back of the invoices issued by the supplier is not enforceable against the distributor .

Even when the distributor has agreed to the attribution of jurisdiction to the court of another country, he may also decide to bring a claim for interim relief before the French courts on the basis of Article 35 of Regulation No 1215/2012 which provides that “[a]pplication may be made to the courts of a Member State for such provisional, including protective, measures as may be available under the law of that State, even if, under this regulation, the courts of another Member State have jurisdiction as to the substance of the matter”. The way to circumvent such clauses therefore consists not in bringing a claim for damages but in bringing a claim for interim relief for the continuation of the contract subject to periodic penalty payments for manifestly unlawful disturbance ("trouble manifestement illicite") or for imminent harm. However, the possibility of protective measures being taken assumes that there is a genuine connection between the object of the measures and the jurisdiction of the State of the courts seized, which is not the case where the measures are essentially to be implemented in another country . More rarely, the foreign supplier brings the matter before the French interim relief court even though the clause designates the court of its country: in such a case, it must be declared inadmissible if it does not demonstrate the existence of an emergency or a threat to the safety of persons or the preservation of their property that would justify not applying that provision or that its national law allows, like French law, that where a jurisdiction clause has been stipulated in the exclusive interest of one of the parties, that party may waive it . Where the claimant is successful in having the jurisdiction clause declared unenforceable or void and brings a claim before the French courts, he will as a general rule be able to impose the application of French law, here Article L. 442-1, II (former Article L. 442-6, I, 5°) of the Commercial Code as a mandatory provision of public policy ("loi de police")  which supersedes the foreign law . 

Some exclusive distribution agreements contain asymmetrical choice of court clauses attributing jurisdiction to the place in which the supplier is domiciled whilst at the same time giving the latter the option of choosing the court of the place where the distributor is domiciled and sometimes a completely different competent court. The aim of the option of choice of court to the sole benefit of suppliers is generally to facilitate actions for recovery against distributors, while trying to discourage distributors from bringing liability actions. For a long time the Court of Cassation was very reticent in respect of these asymmetric clauses, initially finding them arbitrary , and later corrected the inadequate legal basis for the beneficiary finding a lack of foreseeability when the latter's discretion was too wide . More recently, it found sufficiently foreseeable an asymmetric clause giving the complainant the discretionary option to choose another jurisdiction . In the same judgement, following the in the Court of Justice's ruling inthe Cartel Damages Claims case , the Court of Cassation found that for the jurisdiction clause to apply in cases of claims based on the infringement of competition law, the clause must refer to disputes relating to liability incurred due to anticompetitive practices. These solutions have been subject to much criticism by legal commentators and the debate is probably not yet closed on the matter. Parties are in any event well advised to extensively clarify and define the scope of their jurisdiction clauses in order to ensure their effectiveness.

In the absence of a valid jurisdiction clause, the court competent to rule on the termination of a distribution agreement must be assessed having regard to the criteria laid down in Article 7 of Regulation No 1215/2012 of 12 December 2012. In matters relating to a contract, Article 7 provides that a person domiciled in a Member State may be sued in another Member State in the courts for the place of performance of the obligation in question (Art. 7(1)(a)). The place of performance of the obligation in question is, for the sale of goods, the place in a Member State where, under the contract, the goods were delivered or should have been delivered and in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided (Art. 7(1)(b)). The French courts applying the provisions under former Regulation No 44/2001 considered that an exclusive distribution contract was not the same as a contract for the sale of goods or a contract for the provision of a service and that the court having jurisdiction should be designated in application of [Article 7(1)(a)] . The obligation in question referred to in Article 7(1)(a) had to be determined, by virtue of the conflict rule laid down in Article 4 of the Rome Convention of 19 June 1980 on the law applicable to contractual obligations, replaced by current Article 4 of Regulation No 593/2008 of 17 June 2008 (Rome I), by the law of the country of the party required to effect the characteristic performance. But, according to the Court of Cassation, this performance was that of the supplier who undertook to guarantee the exclusive distribution of his products to the reseller. The Court of Justice did not uphold this analysis ruling that an exclusive distribution agreement constitutes a contract for the supply of services, of which the characteristic performance is that which is provided “by the distributor which, by distributing the supplier's products, is involved in increasing their distribution”. Such contracts are thus governed by the rules of jurisdiction under Article [7(1)(b)] . The Court of Cassation subsequently aligned itself with that position. Specifically referring to the Court of Justice ruling relative to a “distribution agreement concluded further to a selection process and containing specific stipulations concerning  distribution on the French territory” of a supplier's products, it laid down the principle that the rule of jurisdiction pursuant to Article 5(1)(b) of Brussels I (now replaced by Article 7 of Regulation No 1215/2012) must apply, excluding Article 5(1)(a) of the same regulation .

The issue is even more complicated where a claim is brought for sudden termination of an established commercial relationship on the basis of Article L. 442-1, II of the Commercial Code and the parties disagree about whether the matter relates to contract (within the meaning of Article 5(1)(b) of Regulation No 44/2001, now Article 7(1)(b) of Regulation No 1215/2012) or tort (with regard to Article 5(3) of said regulation, now Article 7(2). Although such actions are generally qualified as tort actions in the internal legal order , this qualification does not apply pursuant to the regulation, with the concepts of tort or contract being interpreted autonomously in that context. The Court of Justice, in a request for a preliminary ruling from the Paris Court of Appeal  has ruled that an action for damages founded on a sudden termination of an established commercial relationship is not a matter relating to tort, delict or quasi-delict if a tacit contractual relationship existed between the parties, demonstrated by factors such as the existence of a long-standing business relationship, the good faith between the parties, the regularity of the transactions and their development over time expressed in terms of quantity and value, any agreements as to prices charged and/or discounts granted, and the correspondence exchanged . 

More often than not, the parties will have jointly agreed to the law applicable to their exclusive distribution contract although sometimes they have not, in particular in the context of de facto relations or incomplete contracts, in which case determining the applicable law may give rise to endless disputes. One difficulty derives from the need to determine whether the dispute is of a contractual nature and subject in that case to the Rome I Regulation of 17 June 2008 or is a matter relating to tort and thus comes under the Rome II Regulation of 11 July 2007. 

Article 3 of the Rome I Regulation enshrines the principle of the parties' freedom of choice of the law applicable to the contract. This choice may be express and take the form of an electio juris clause, or tacit, and arise from the terms of the contract or from the circumstances of the case.

Where the parties have not chosen the applicable law, the Rome I Regulation clearly determines which law shall govern the contract (Article 4(1)): a contract for the sale of goods is governed by the law of the country where the seller has his habitual residence; a contract for the provision of services is governed by the law of the country where the service provider has his habitual residence; for a franchise contract, the law of the country where the franchisee has his habitual residence; for distribution agreements, the law of the country where the distributor has his habitual residence. Other types of contracts are governed by the law of the country where the party required to effect the characteristic performance of the contract has his habitual residence (Article 4(2)). The choice under the regulation in favor of the law of the country of the distributor conflicts with the case law of the Court of Cassation, which makes distribution contracts subject to the law of the supplier . 

Obligation arising out of dealings prior to the conclusion of a contract are governed by the Rome II Regulation , of which the principle is laid down in Article 12(1), entitled “Culpa in contrahendo” of either jurisdiction the law that applies to the contract or that would have been applicable to it had it been entered into. Where the applicable law cannot be determined on that basis, Article 12(2) provides that it can be either: a) the law of the country in which the damage occurs, irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occurred; b) the law of the country where the parties have their habitual residence in the same country at the time when the event giving rise to the damage occurs; c) where it is clear from all the circumstances of the case that the non-contractual obligation arising out of dealings prior to the conclusion of a contract is manifestly more closely connected with a country other than that indicated in points (a) and (b), the law of that other country.

Finally, if the dispute concerns an issue of tort liability, it falls within the scope of the Rome II Regulation.

3) Overriding mandatory provisions (lois de police) 

The existence of mandatory provisions, the immediate application of which is necessary to safeguard interests regarded as crucial by a country or the international community may prevent the application of the law chosen by the parties. Adopting the definition of Francescakis, the Rome I Regulation defines overriding mandatory provisions as “provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organization, to such an extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract under this Regulation” (Article 9). Although overriding mandatory provisions of the law of the forum cannot be restricted (Article 9(2)), foreign mandatory provisions are subject to special rules: effect may be given to the overriding mandatory provisions of the law “of the country where the obligations arising out of the contract have to be or have been performed”, insofar as “those overriding mandatory provisions render the performance of the contract unlawful” (Article 9(3)).  The first civil chamber of the Court of Cassation adopts a position contrary to EU law by rejecting the application of the overriding provision of the law of the forum in the presence of jurisdiction clauses in favor of a foreign court .

In French law, only those public policy provisions in the general interest (ordre public de direction) or those regulating the organization of the market - such as the rules of competition - make it possible to deviate from the intention of the parties. Those provision which fall in the category of public protection [ordre public de protection), which relate to private interests alone, are regarded as overriding mandatory provisions only in internal law.

Is Article L. 442-1 of the Commercial Code part of the public policy provisions in the general interest or for private interests? Legal doctrine appears to be divided and the cases law fluctutates . The Court of Cassation and the Constitutional Council only not recognize the prerogatives of the Minister of the Economy on the basis of the protection of competition and of the market while the Paris Court of Appeal upholds the compatibility of Article L. 442-1 with the principle of the precedence of European competition law through its role of protecting competitors. 

See in particular CA Aix-en-Provence, 30 March 2023, LawLex202300004858JBJ.

Cass. com., 6 February 2007, LawLex200700000219JBJ. For the classification of tortious liability see Cass. com., 6 March 2007, LawLex200700000349JBJ; Cass. 1re civ., 6 March 2007, LawLex200700000349JBJ,

For the classification as a mandatory public policy provision, 22 October 2008, LawLex200800001850JBJ.

T. com. Pontoise, 2 February 2012, LawLex201200001949JBJ, LD, April 2012, setting aside the Rome and the Hague Conventions  relative to the law applicable to contractual relations and therefore not applicable to the sudden termination of an established commercial relationship and applying French law insofar as “Article L. 442-1, II of the Commercial Code is a rule of economic public order and is recognized in that respect as a mandatory rule of public law within the meaning of private international law”; CA Grenoble, 5 September 2013: declaring inapplicable the law of Luxembourg as stipulated in the contract insofar as deliveries took place on the territory of France and that the contract has sufficient connection to France, with Article L. 442-1 applicable to the parties as a mandatory provision of public law.

Cass. 1re civ., 26 September 2012, No 11-26.022.

Cass. 1re civ., 25 March 2015, No 13-27.264.

Cass. 1re civ., 7 October 2015, LawLex201500001216JBJ; also see, in exclusive distribution, Cass. com., 11 May 2017, LawLex201700000880JBJ, stressing that a jurisdiction clause in an international exclusive distribution contract is not contrary to Article [25 of Regulation No 1215/2012]merely on the ground that it is imposed on only one of the parties.

Case C-352/13 Cartel Damage Claims, Judgment of 21 May 2015, LawLex201500000644JBJ.

Cass. 1re civ., 27 January 2007, 5 March 2008 LawLex200700000184JBJ, LawLex200800000316JBJ; 16 April 2008, LawLex200800000529JBJ; 9 July 2008, LawLex200800001139JBJ.

Case C-9/12 Corman-Collins SA, Judgment of 19 December 2013, LawLex201300001876JBJ; Case C-64/17 Saey Home & Garden NV/SA, Judgment of 8 March 2018, LawLex201800000386JBJ.

Cass. 1re civ., 19 November 2014, LawLex201400001289JBJ; also see CA Paris, 14 December 2016, LawLex201700000015JBJ.

Cass. com., 18 January 2011, LawLex201100000083JBJ; Cass. com., 20 May 2014, LawLex201400000700JBJ.

CA Paris, 5 March 2013, LawLex201300000341JBJ; 26 November 2010, LawLex201100000417JBJ.

CA Paris, 7 April 2015, LawLex201500000484JBJ.

Case C-196/15 Granarolo SpA, Judgment of 14 July 2016, LawLex201600001361JBJ.

CHRISTOU, International Agency, Distribution and Licensing Agreements, Sweet & Maxwell, 2011.

Cass. 1re civ., 23 January 2007, LawLex200700000184JBJ; 16 April 2008, LawLex200800000529JBJ.

Regulation No 864/2007 of 11 July 2007 on the law applicable to non-contractual obligations.

Cass. 1re civ., 6 March 2007, LawLex200700000349JBJ and 22 October 2008, LawLex200800001850JBJ  regarding to the sudden termination of commercial relations of an exclusive concession agreement containing a clause conferring jurisdiction on the US courts. 

For an analysis, see CEPC (Commission for the Examination of Commercial Practices) Opinion No 15-08 of 17 April 2015 for an application for an opinion by a company on the position of the General Terms and Conditions of Sale and of the General Terms of Purchase. See also CA Paris, 8 October 2015, LawLex201500001245JBJ, finding in favor of the applicability of Article L. 442-1, II of the Commercial Code, law of the place where the harmful event occurred, for the sudden termination of a commercial relationship between a French distributor and a Dutch supplier, whereas the contract provided that it was subject to the law of the supplier.

Cass. com., 20 March 2012, LawLex201200000495JBJ; CA Paris, 15 December 2015, LawLex201500001824JBJ.

T. com. Pontoise, 2 February 2012, LawLex201200001949JBJ.

Cass. com., 18 January 2011, LawLex201100000083JBJ.

CA Paris, 26 November 2010, LawLex201000001339JBJ, upheld by Cass. com., 20 March 2012, LawLex201200000495JBJ.

CJEU, Case C-64/17 Saey Home & Garden NV/SA, Judgment of 8 March 2018, LawLex201800000386JBJ.

Cass. com., 20 March 2012, LawLex201200000495JBJ.

CA Aix-en-Provence, 16 October 2024, LawLex202400007962JBJ.

French Distribution Law

164. Jurisdiction clauses and applicable law in international contracts.

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164. Jurisdiction clauses and applicable law in international contracts.

Demandez un accès gratuit au contenu exclusif Livv – juristes d’entreprise

Les décisions de justice citées dans ce paragraphe :

Les notions juridiques connexes

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au contenu exclusif Livv – juristes d’entreprise