Background

Concept of sovereign immunity

What is the general approach to the concept of sovereign immunity in your state?

Until the 20th century, French courts considered state immunity to be absolute. It was settled law that foreign states could not be brought before the French courts.

During the 20th century, when states became increasingly involved in financial and commercial matters, French courts sought to protect the rights of private persons contracting with states. As such, the courts began to adopt a more restrictive approach to immunity. In a landmark decision of 19 February 1929, the Court of Cassation departed from the concept of absolute immunity. It ruled that jurisdictional immunity would not benefit states acting as commercial agents, as ‘the concept of sovereignty is alien to commercial acts.’

Nowadays, to grant jurisdictional immunity, courts usually consider both the quality of the beneficiary (who must be a sovereign entity), as well as the nature of the acts carried out by the sovereign entity, which must be of a sovereign nature (iure imperii), and not of a private or commercial nature (jure gestionis). Similarly, enforcement immunity is no longer absolute. The assets states allocate to the performance of purely commercial operations can now be attached.

Legal basis

What is the legal basis for the doctrine of sovereign immunity in your state?

Historically, the French doctrine of sovereign immunity developed through case law, based on the courts’ interpretation of international law principles regarding jurisdictional and enforcement immunities, such as the principles of mutual respect of sovereign entities and sovereign equality, as well as international rules of courtesy.

Today, while the contours of the doctrine of jurisdictional immunity continue to be defined exclusively through case law, the French legislator has recently intervened to enact a set of rules specific to enforcement immunity. Up until December 2016, absent any Treaty or international convention applicable on sovereign immunities, French law lacked a comprehensive set of rules regulating this matter. Article L 111-1 of the Code of Civil Enforcement Procedures and article L 153-1 of the Monetary and Financial Code, were the only provisions that dealt with the concept of sovereign immunity in terms of enforcement. These provisions and their related case-law provided that, as a general principle, states’ assets should be immune from enforcement, unless the state had waived its immunity, acted jure gestionis or allocated said assets to an activity governed by private law rules.

Nevertheless, after certain creditors had launched aggressive enforcement tactics against the assets of foreign states located in France, the government decided, in December 2016, to push for the enactment of a bill (the Sapin II Law) that would strengthen foreign states’ immunity from enforcement.

Since then, articles L 111-1-1 to L 111-1-3 of the Code of Civil Enforcement Proceedings, as well as article 153-1 of the Monetary and Financial Code, constitute the new legal framework of enforcement immunities.

Multilateral treaties

Is your state a party to any multilateral treaties on sovereign immunity? Has the state made any reservations or declarations regarding the treaties?

France is party to the 1961 Vienna Convention on Diplomatic Relations, which has occasionally served as the basis for the granting of immunity.

On 12 August 2011, France signed the United Nations 2004 Convention on Jurisdictional Immunities of States and Their Property, which is yet to come into force.

France is not, however, a party to the 1972 European Convention on State Immunity.

Jurisdictional immunity

Domestic law

Describe domestic law governing the scope of jurisdictional immunity.

As explained in question 2, in contrast to many common law states, there exist no provisions in French law dealing with jurisdictional immunity of foreign states. The rules governing this issue are derived from case law. As a general rule, foreign states benefit from jurisdictional immunity with respect to sovereign acts.

In a decision dated 25 February 1969, the Court of Cassation held that ‘jurisdictional immunity is founded on the nature of the activity, rather than on the quality of the person exercising said activity’ (Court of Cassation, civ 1, 25 February 1969, Levant Express Transport v Railways Administration of the Iranian Government). In line with the Court of Cassation’s findings, although jurisdictional immunity ratione personae only benefits certain entities, French courts will mostly look at whether the concerned entity’s act can qualify ratione materiae as sovereign acts.

From a ratione personae perspective, sovereign jurisdictional immunity can benefit to foreign states, their organs and their instrumentalities. This usually encompasses the state itself, such as the persons and the organs empowered to represent it (ie, the head of state, the government of that state or any of its departments), as well as emanations of the state that act under order, or for the account, of the state (Court of Cassation, civ 1, 25 February 1969). In contrast, jurisdictional immunity is not granted to entities that are distinct from the state. As such, entities that have a distinct legal personality and that possess their own assets, or that have an independent budget from the state, will not benefit from jurisdictional immunity (Court of Cassation, com, Sté nationale des transports routiers v Cie algérienne de transit). In some instances, French courts have nevertheless considered that entities acting under order and on behalf of the state may still benefit from jurisdictional immunity, notwithstanding their distinct legal personality distinct from the state (see Court of Cassation, civ 1, 28 May 2002, Cts Daninos v Scté tunisienne de banque, in a case concerning the central bank of a foreign state). Jurisdictional immunity does not cover all subnational divisions of a state, such as the constituent territory of a federal state (Paris Court of Appeals, 19 June 1894, city of Geneva v Cts de Civry), unless jurisdictional immunity has been expressly extended to said subnational division (Court of Cassation, soc, 4 November 2009, in which the highest court confirmed that Canada’s jurisdictional immunity had been extended to the Province of Quebec, by way of a letter from the French government of 1 December 1964).

That said, jurisdictional immunity only covers the entity’s acts that constitute sovereign or jure imperii acts. As judged by the Court of Cassation in a 2003 decision:

Foreign states and entities that constitute their emanations will benefit from jurisdictional immunity only if the act giving rise to the dispute, by its nature or by its purpose, participates in the exercise of that state’s sovereignty, and thereby is not a commercial act.

To determine whether a state’s act is sovereign (jure imperii), courts will either look at its nature (ie, if the act is an act of state) or its purpose (ie, if the act has been performed in the interest of a public service). As an example, French courts have refused to grant the benefit of jurisdictional immunity to a foreign state in a case concerning a lease concluded for the purpose of hosting the staff of an embassy (Court of Cassation, civ 1, 1 September 2006, Prony Habitations v Guinea State).

State waiver of immunity or consent

How can the state, or its various organs and instrumentalities, waive immunity or consent to the exercise of jurisdiction?

Foreign states can always waive their jurisdictional immunity. As held by the Court of Cassation in GIE La Réunion Aérienne v Jamahiriya Arabe Libyenne, such a waiver must nevertheless be ‘certain, express and unequivocal’ (Court of Cassation, civ 1, 9 March 2011).

Also, French courts have ruled that certain acts of the state can be interpreted as a waiver of its jurisdictional immunity. For instance, a state that has brought an action before a French court will generally be considered as having waived its jurisdictional immunity. In contrast, a state’s intervention, in proceedings, for the sole purpose of invoking such jurisdictional immunity will not result in a waiver of its jurisdictional immunity. Courts also consider that the execution by a foreign state of an arbitration agreement, whereby the state agreed to submit to arbitration disputes related to a commercial transaction, constitutes a waiver of its jurisdictional immunity.

In which types of transactions or proceedings do states not enjoy immunity from suit (even without the state’s consent or waiver)? How does the law of your country assess whether a transaction falls into one of these categories?

As stated in question 4, jurisdictional immunity does not cover acts of the state that are of a commercial nature, or put otherwise, that ‘could have been accomplished by a private person’ (Court of Cassation, civ 1, 19 November 2008). Courts consider that jurisdictional immunity covers the foreign state’s acts in so far as they constitute iure imperii acts.

Two alternative criteria are decisive to determine whether an act should be deemed iure imperii or iure gestionis: the ‘formal’ criterion (the nature of the act) and the ‘purpose criterion’. When the act performed by the foreign state is iure imperii by nature (ie, it is an act of state), or by purpose (ie, it serves a public purpose), courts will grant said state the benefit of jurisdictional immunity. On this basis, courts have decided that jurisdictional immunity should be granted to a foreign state in relation to disputes concerning:

  • public procurements;
  • military activities;
  • acts of nationalisation; or
  • public loans made by a foreign state, when the purpose of such loans is to provide it with the necessary financial resources for the exercise of its sovereignty.

In contrast, courts have decided that jurisdictional immunity should not be granted to a foreign state in relation to disputes concerning:

  • a contract concluded in the form of, and following, the norms and practice of a private contract (Court of Cassation, civ 1, 7 October 1969);
  • legal relationships governed by private law exclusively (Court of Cassation, civ 1, 7 December 1977); or
  • a lease concluded in relation to housing of embassy employees (Court of Cassation, civ 1, 20 September 2006).

In addition, foreign states may not invoke their jurisdictional immunity before French courts in the context of employment disputes, unless the employee is a representative of that state, such as a diplomatic agent, or if the dispute concerns an employee exercising specific functions related to the exercise of governmental prerogatives.

If one of the exceptions to sovereign immunity set out above applies, is there any related principle that could prevent a court having jurisdiction over the state?

French courts do not apply any other principles, such as the principle of non-justiciability and the ‘act of state’ doctrine, that would prevent a court from having jurisdiction over the state. Courts are empowered to examine foreign states’ acts of a non-sovereign nature.

Proceedings against a state enterprise

To what extent do proceedings against a state enterprise or similar entity affect the immunity enjoyed by the state? Is there precedent for piercing the corporate veil to subject the state itself to those proceedings?

As explained in question 4, jurisdictional immunity is conferred upon entities that act on order, or for the account, of the state. As such, courts will grant immunity to entities that are considered dependent from the state. They will typically consider that an entity is not dependent from the state when it has a legal personality distinct from the state and is independent from a budgetary standpoint (Court of Cassation, civ 1, 12 June 1990, Kuwait News Agency v Parrott), as well as when the company follows accounting principles of a commercial nature (Court of Cassation, civ 1, 15 July 1990, Dumez v Iraqi state). To determine whether or not an entity is dependent from the state, courts may also scrutinise other elements, such as the constitutive texts of the entity, or the manner in which the entity is being financed, as well as its links to the state. For instance, in a matter involving the state oil company of Congo, after having looked at its constitutive texts, the Court of Cassation ruled that the company, which gave back part of its benefits on a weekly basis to the Public Treasury of Congo, ‘prevented [it] from having any real autonomy and power to decide of its own policy based on its auto-financing’ (Court of Cassation, civ 1, 6 February 2007). In any event, jurisdictional immunity only covers sovereign acts, and therefore, state enterprises will not benefit from such immunity with respect to acts of a commercial nature.

Standing

What is the nexus the plaintiff needs to have standing to bring a claim against a state?

No specific standing requirements have been articulated by French courts for claims to be brought against sovereign states. Accordingly, when litigants want to bring claims against a foreign state, they must comply with the general nexus for a plaintiff to have standing, namely article 31 of the Code of Civil Procedure. Pursuant to said article, the right of action is available to:

those who have a legitimate interest in the success or dismissal of a claim, without prejudice to those cases where the law confers the right of action solely upon persons whom it authorizes to raise or oppose a claim, or to defend a particular interest.

Nexus of forum court

What is the nexus the forum court requires to exercise jurisdiction over a state if the property or conduct that forms the subject of the claim is outside the forum state’s territory?

There are no specific rules to that effect under French law.

Interim or injunctive relief

When a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what interim or injunctive relief is available?

Pursuant to article L 111-1-2 of the Code of Civil Enforcement Procedures, conservatory and enforcement measures targeting assets of a foreign state may only be granted if one of the following conditions is met:

  • the state expressly consented to such measures;
  • the state allocated these assets for the satisfaction of the claim object of the proceedings; or
  • the assets targeted by the enforcement measures are used for commercial purposes, and have a connection with the entity against which the enforcement proceedings are directed.

There are no interim or injunctive relief specifically available to state-related proceedings in French law. When a state is subject to proceedings in France, all of the interim or injunctive measures foreseen under French law will be available and applicable, provided that the conditions of article L 111-1-2 of the Code of Civil Enforcement Procedures are met.

Final relief

When a state is subject to proceedings before a court or arbitral tribunal in your jurisdiction, what type of final relief is available?

There are no provisions specifically providing for, or restricting the type of final relief available when a state is subject to proceedings before a court or arbitral tribunal. Hence, any type of relief may be claimed against a state.

Service of process

Identify the court or other entity that must be served with process before any proceeding against a state may be issued.

There exist no specific court or entity that must be served directly by the plaintiff initiating proceedings against a foreign state. Hence, pursuant to article 684 of the Code of Civil Procedure, and subject to any international or European treaty providing otherwise, a party intending to initiate proceedings in France against a foreign state must serve said state by submitting a bailiff’s deed to the Public Prosecutor’s Office.

How is process served on a state?

As stated in question 13, pursuant to article 684 of the Code of Civil Procedure, foreign states are to be served by submission of a bailiff’s deed to the Public Prosecutor’s Office. The Public Prosecutor’s Office will then notify through diplomatic channels the Ministry of Justice of the State.

Judgment in absence of state participation

Under what conditions will a judgment be made against a state that does not participate in proceedings?

In the absence of any provisions specific to proceedings involving states in French law, judgment might be made against a state that does not participate in proceedings in accordance with the general rules regarding in absentia proceedings (articles 471 to 479 of the Code of Civil Procedure).

There exist several tools for a judge to encourage a responding state to take part in proceedings. For instance, prior to hearing a case, the judge may decide, either sua sponte or at the claimant’s request, to send a letter informing the responding state of the consequences of its failure to appear, or even issue a second citation when the respondent state has failed to comply with the first.

Nonetheless, pursuant to article 472 of the Code of Civil Procedure, the fact that a respondent fails to appear will not prevent a ruling from being made on the merits of the case. Hence, even when the responding state does not appear, the judge might uphold the claim to the extent it is deemed valid, admissible and well founded and render a judgment by default. This judgment, however, can only be made ‘if the decision is at the final instance and where the citation has not been served in person’, and after the limitation period for appearance provided for in the citation has elapsed.

Enforcement immunity

Domestic law

Describe domestic law governing the scope of enforcement immunity.

Assets belonging to a foreign state are, in principle, immune from enforcement in France. There, nevertheless, exist some exceptions to this rule, which are laid out at articles L 111-1-1 to L 111-1-3 of the Code of Civil Procedures of Enforcement.

Prior to the enactment of the Sapin II Law in 2016, France allowed enforcement measures over a foreign state’s assets without prior consent from a judge. Nowadays, any creditor wishing to obtain interim measures or enforce a decision against state property shall obtain judicial authorisation prior to undertaking any enforcement measures (article L 111-1-1 of the Code of Civil Procedures of Enforcement). The decision on whether an authorisation for enforcement should be granted is usually made by judges who are specialised in such matters within a few days.

Where the envisaged enforcement measures target diplomatic assets, judicial authorisation will be granted only if the state consented to the taking of enforcement measures against said diplomatic assets, by an express and specific waiver (article L 111-1-3 of the Code of Civil Procedures of Enforcement).

Pursuant to article L 111-1-2 of Code of Civil Procedures of Enforcement, where the enforcement measures target non-diplomatic assets, judicial authorisation will be granted only if:

  • the state expressly consented to such measures;
  • the state allocated these assets to the satisfaction of the claim at stake in the proceedings; or
  • the assets targeted are used for commercial purposes, and have a connection with the entity against which the enforcement proceedings are directed.
Application of civil procedure codes

When enforcing against a state, would debt collection statutes and the enforcement sections of civil procedure codes or similar codes also apply?

YSave for articles L 111-1-1 to L 111-1-3 of the Code of Civil Procedures of Enforcement, setting out the framework to enforcement immunity of foreign states, there exists no other sets of rules specific to enforcement proceedings against states. Pursuant to article L 111-7 of Code of Civil Procedures of Enforcement, a creditor holding an enforceable title may decide what enforcement measure to carry out, provided that such measure is implemented in a way that does not exceed what is necessary to obtain payment. To the extent enforcement immunity would not be applicable (see question 16), all of the enforcement measures of the Code of Civil Procedures of Enforcement are available.

Consent for further enforcement proceedings

Does a prior submission to the jurisdiction of a court or tribunal constitute consent for any further enforcement proceedings against the property of the state?

A prior submission to the jurisdiction of a court or tribunal cannot constitute consent for any further enforcement proceedings against the property of the state. Under French law, immunity from jurisdiction and immunity from execution are two independent concepts. As seen above (question 16), even if the state’s creditor were to obtain a waiver of jurisdictional immunity from the state, it will still have to comply with the provisions laid out in articles L 111-1-1 to L 111-1-3 of the Code of Civil Procedures of Enforcement, to initiate enforcement measures against the states’ assets.

Property or assets subject to enforcement or execution

Describe the property or assets that would typically be subject to enforcement or execution.

As explained in question 16, under French law, a state’s assets might be subject to enforcement measures in three cases: when the state has waived its enforcement immunity regarding these assets; when the state has assigned these assets to the satisfaction of the claim at stake; and when the assets have been used or are intended to be used for commercial purposes rather than public service purposes.

While article L 111-1-2 of the Code of Civil Procedures of Enforcement sets forth a non-exhaustive list of protected assets and property, it does not provide a list of assets that would typically be subject to enforcement. French courts are also yet to develop case-law on determining what assets should be deemed as ‘used for commercial purposes and connected with the entity concerned by the proceedings’ under the Sapin II Law.

That said, among the assets that would typically be subject to enforcement and execution, one can think of property used or intended for use for commercial purposes, including movable and immovable property, such as debts owed to a state by third parties in relation to commercial transactions. To illustrate this point, prior to the enactment of the Sapin II Law, French courts had ruled that receivables related to the purchase and the management by a foreign state of real estate property would be subject to enforcement or execution, as it constituted a mere ‘commercial operation governed by the rules of private law’ (Court of Cassation, civ 1, 19 November 2009).

Assets covered by enforcement immunity

Describe the assets that would normally be covered by enforcement immunity and give examples of any restrictive or broader interpretations adopted by the courts.

Article L 111-1-2, third paragraph of the Code of Civil Procedures of Enforcement lists assets that are deemed to be non-commercial, and therefore, would be covered by enforcement immunity, including:

  • the assets, including any bank account, which are used or are intended for use in the performance of the diplomatic mission of the state or its consular posts, special missions, missions to international organisations or delegations to organs of international organisations or to international conferences;
  • the assets of a military character or used or intended for use in the performance of military functions;
  • the assets forming part of the cultural heritage of the state or part of its archives and not placed or intended to be placed on sale;
  • the assets forming part of an exhibition of items of scientific, cultural or historical interest and not placed or intended to be placed on sale; and
  • labour or tax revenues of the state.

However, this list is not exhaustive. French courts could extend the non-commercial qualification to other assets of a foreign state.

Pursuant to that same article, it is the creditor seeking to enforce a decision who bears the burden of proving that the assets targeted by the measures are not covered by enforcement immunity.

Explain whether the property or bank accounts of a central bank or other monetary authority would be covered by enforcement immunity even when such property is in use or is intended for use for commercial purposes.

In principle, assets that are held by or managed for the account of the state by central banks are covered by enforcement immunity (article L 153-1, paragraph 1 of the Monetary and Financial Code). Nonetheless, if the creditor seeking to seize such assets can prove that these are held by the central bank for its own account, and that they are assigned to an activity governed by private law, no immunity may be invoked by the central bank before the courts (article L 153-1, paragraph 2 of the Monetary and Financial Code).

Test for enforcement

Explain whether domestic jurisprudence has developed any further test that must be satisfied before enforcement against a state is permitted.

No such further test has been developed by French courts.

Service of arbitration award or judgment

How is a state served with process or otherwise notified before an arbitration award or judgment against it (or its organs and instrumentalities) may be enforced?

Service of process is generally effected in the same way as described previously (questions 13 and 14).

History of enforcement proceedings

Is there a history of enforcement proceedings against states in your jurisdiction? What part of these proceedings is based on arbitral awards?

There is a history of enforcement proceedings against foreign states in France. A significant number of these proceedings relate to the enforcement and execution of both commercial and investor-state awards.

Public databases

Are there any public databases through which assets held by states may be identified?

No.

Court competency

Would a court in your state be competent to assist with or otherwise intervene to help identify assets held by states in the territory?

There are no specific courts that would be competent to assist with or otherwise intervene to help identify assets held by states in the territory. Nevertheless, article 145 of the Code of Civil Procedure might help to identify assets of foreign states. It provides that:

If there is a legitimate reason to preserve or to establish, before any legal process, the evidence of the facts upon which the resolution of the dispute depends, legally permissible preparatory inquiries may be ordered at the request of any interested party, by way of a petition or by way of a summary procedure.

Immunity of international organisations

Specific provisions

Does the state’s law make specific provision for immunity of international organisations?

Although there are no specific provisions under French law providing for immunity of international organisations, France has entered into several treaties granting immunities to said organisations. One can refer to the organisation’s host agreements or to the organisation’s constitutive treaty to determine whether an organisation may benefit from immunity, as well as to analyse the extent and scope of such immunity.

Domestic legal personality

Does the state consider international organisations headquartered or operating in its territory as enjoying domestic legal personality and could such organisations be subjected to proceedings before a court or arbitral tribunal?

France has recognised many international organisations as enjoying legal personality, either by way of their host agreements or their constitutive treaties. As explained in question 27, French courts will refer to the organisation’s host agreements or to the organisation’s constitutive treaty to determine whether an organisation may benefit from immunity. International organisations will be prevented from invoking their immunity before French courts if they have waived such immunity; if their constituting treaty host agreements provide for exception to the immunity; or if maintaining such immunity would result in a denial of justice.

Enforcement immunity

Would international organisations in the state enjoy enforcement immunity? Are there any cases where debtors sought to enforce against a state by attaching or executing assets held by international organisations?

In France, international organisations are not automatically immune from enforcement. They may benefit from enforcement immunity only if their constituting treaties or their host agreements provide for such immunity. When these instruments provide for the organisation’s immunity from enforcement, such immunity is said to be ‘quasi-absolute’. To illustrate this, in a matter between the Bank of Central African States (the BCAS) and a former employee, a French court awarded the former employee damages. The former employee then attempted to enforce the decision by attaching the BCAS’ assets located in its BNP Paribas bank account. The BCAS requested the lifting of the attachment before the Paris Court of Appeal. The Court declined on the ground that the absolute nature of the BCAS’ enforcement immunity amounted to a denial of justice (no effective remedy was available to the former employee). The Court of Cassation overturned the Court of Appeal’s’decision. It held that such a decision violated the treaty between the BCAS and France regarding the establishment of a BCAS branch in Paris, which provided that the BCAS was to benefit from enforcement immunity (Court of Cassation, Cir 1, 15 May 2016).

Updates & Trends

Recent developments

Are there any other current developments or emerging trends that should be noted?

Key developments of the past year30 Are there any emerging trends or hot topics in your jurisdiction?

The impact of the Sapin II Law on states-related enforcement proceedings remains a hot topic in France.

Practitioners and scholars have articulated some critics with regards to the new provisions of the Code of Civil Procedures of Enforcement. Some practitioners voice concerns regarding the negative impact that this may have on companies dealing with foreign states that are bad payers. Others fear that the newly judicial authorisation required prior to enforcing a decision in favour of the foreign state’s creditor will delay proceedings and increase the costs of solving international disputes. Concerns have also been raised over the negative impact that the Sapin II Law may have on Paris as a seat of arbitration.