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French Case on Foreign Mandatory Rules

There are very few cases ruling on the application of foreign internationally mandatory rules (lois de police). Readers of this blog should therefore be interested by this recent decision of the French Cour de cassation discussing the application of a mandatory law of Ghana to a contract governed by French law.

A French company had sold frozen meat (beef) to a buyer based in Ghana. The goods were carried to Ghana by sea, but they could not be delivered because Ghana had passed a law providing for an embargo of French beef. The goods had thus to be repatriated to Le Havre, France. The seller sued various parties involved in the carriage for breach of contract.

In the French proceedings, nobody disputed that the law governing the contract of carriage was French law. But the carrier argued that the contract was void for illegality because it violated the embargo law of Ghana. More specifically, the carrier argued that the contract was void pursuant to one of the provisions of the French Civil code avoiding contracts for illegality, namely Article 1133 which provides that contracts with an illegal cause are void. In other words, the carrier argued that the contract was void pursuant to French law, but as the consequence of the existence of the foreign embargo law. This did not convince the Court of appeal of Angers which ruled that the law of Ghana did not govern the contract, that it had thus no authority over the parties, and that the argument that the contract was void, as a matter of French law but because of the law of Ghana, had to be dismissed.

In a decision of March 16th, 2010, the Cour de cassation affirmed reversed the decision of the Court of appeal. It held that the Court of appeal should have explored whether the law of Ghana was a mandatory rule in the meaning of  Article 7.1 of the 1980 Rome Convention on the Law Applicable to Contractual Obligations, and should thus, as such, have produced effect in France. 

The Cour de cassation referred explicitly to the first sentence of Article 7.1, which provides

When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract.

It then ruled that the Court of appeal should have explored whether “effect should have been given” to the foreign law pursuant to Article 7.1. The words “giving effect” were probably chosen with care. The preparatory report written by one of the members of the Cour de cassation makes clear that the Cour de cassation was well aware of the fact that the issue in the case might not have been to actually apply foreign law, but rather to take into consideration its existence and impact on the contract  for the purpose of applying French law. It seems indeed that the carrier had not argued that the embargo law governed the issue of the validity of the contract, but rather that it should be taken into consideration for the purpose of applying French law to that issue.

Finally, it does not seem that the argument that foreign law might have been taken into consideration for the purpose of assessing whether the performance of the contract was possible was made before any of the courts.

Many thanks to Horatia Muir Watt for the tip-off.

Comments on this entry are closed.

  • Martin Jarrett March 19, 2010, 1:38 pm

    Can the judgments of either (or both) the Court of the appeal and the Cour de cassation be accessed online?

  • Gilles Cuniberti March 19, 2010, 1:43 pm

    The judgment of the Cour de cassation should be available on the site of the court in a few days.

  • Toni Marzal March 19, 2010, 6:14 pm

    Gilles, I do not really understand why exactly the Cour de cassation is censuring the Court of Appeal… It states that the lower Court ought to have explored whether effect should have been given to the embargo from Ghana, but just before the Cour de cassation indicates that the decision of the Court of Appeal “holds that the embargo… does not bind the parties”… So if the Court of Appeal did consider explore whether effect should have been given to the ghanean loi de police, should we understand that the real motive for censure is the fact that the Court simply chose not to apply it/take it into consideration?

  • Gilles Cuniberti March 19, 2010, 8:17 pm

    Toni,

    that is a very good point. As you probably know, the Cour de cassation is not exactly great at providing reasons for its decisions, so it is always delicate to assess what it actually means.

    The Court ruled:

    Attendu qu’en statuant ainsi, alors qu’il lui appartenait de déterminer par application de la Convention de Rome l’effet pouvant être donné à la loi ghanéenne invoquée devant elle, la cour d’appel a violé le texte susvisé (art. 7.1)

    Possible interpretations are: 1) the CA should have ruled that foreign law was a loi de police, 2) the CA should have taken into consideration the foreign law.

  • Andrew Dickinson March 22, 2010, 8:10 am

    Happily, Art. 7(1) has been disposed of in the Rome I Regulation. It is to be hoped that its corpse will not be re-discovered.

  • Gilles Cuniberti March 22, 2010, 9:11 am

    Art. 7(1) has indeed left us, but it has a son which looks very much like him. The Court merely insisted on the fact that the foreign law might be applicable irrespective of the law otherwise applicable to the contract, and that it should be “given effect”. All this has been kept by Art. 9 of the Rome I Regulation.

  • RB September 15, 2010, 12:41 pm

    “In a decision of March 16th, 2010, the Cour de cassation affirmed the decision of the Court of appeal. ”

    There is a typo here, isn’t it ? It should be “infirmed”.

    It seems to me that the technique used by the cours de cassation to “give effect” is very closed to the technique used to handle French “loi de police” : the law in consideration is superposed on the applicable law. The censorship of the court then probably comes from an application of the wrong text to the situation (1133 instead of the convention): the result is the same, but the reasoning is wrong.

    An interesting point here would be the controle of such foreign “loi de police” with respect to the French “ordre public international”.

  • Gilles Cuniberti September 15, 2010, 1:05 pm

    You are quite right, it should have been “reversed”. I am not sure there is such verb as “to infirm” in the English language.

  • SALAH December 19, 2010, 3:42 pm

    what are the mandatory rules and when do they apply?

  • Gilles Cuniberti December 19, 2010, 5:52 pm

    Salah,

    I suggest you read article 9 of the Rome I Regulation.

    Best,

  • SALAH December 19, 2010, 6:55 pm

    Do you consider provisions of Rome-1 makes in relation to
    (a) Sales
    (b) Contracts of carriage
    (c) Foreign currency obligations to be satisfactory in the view point of the international business community