This newsflash regarding a recent ruling by the Cour de Cassation, the highest civil court in France, is for all of you working with international distribution agreements, and especially for those of you with distribution in France. In the ruling in question (Case no. 15-26105, Riviera Motors v. Aston Martin Lagonda Ltd), the Cour de Cassation confirms the importance of jurisdiction clauses in cases of sudden termination of international business relationships and related damages claims and also clarifies the scope of such clauses. The ruling serves a practical example of why a written forum-selection clause in international distribution agreements is essential to avoid unnecessary public policy-related risks.This newsflash regarding a recent ruling by the Cour de Cassation, the highest civil court in France, is for all of you working with international distribution agreements, and especially for those of you with distribution in France. In the ruling in question (Case no. 15-26105, Riviera Motors v. Aston Martin Lagonda Ltd), the Cour de Cassation confirms the importance of jurisdiction clauses in cases of sudden termination of international business relationships and related damages claims and also clarifies the scope of such clauses. The ruling serves a practical example of why a written forum-selection clause in international distribution agreements is essential to avoid unnecessary public policy-related risks.

The Riviera Motors case concerns a distribution agreement between a French distributor and an English supplier, in which the parties had agreed that disputes arising from the agreement would be resolved by the courts of England and Wales. However, when the English supplier terminated the agreement, the French distributor filed a claim in the Paris Commercial Court in France. The distributor's claim was based on article L442-6 I 5 of the French Commercial Code, which concerns sudden termination of a business relationship as a restrictive business practice.

The distributor tried to void the jurisdiction clause by arguing that the clause resulted in “frustrating the overriding mandatory provisions of article L442-6 I 5 which are economic public policy”. The distributor further argued that the jurisdiction clause would not encompass claims related to liability for breach of competition law, because such claims were not expressly mentioned in the clause.

The Cour de Cassation rejected the distributor's arguments and upheld the jurisdiction clause. By doing so, the Cour de Cassation confirmed one of the central principles of private international law, according to which the parties to a contract are free to agree on the forum in which their contractual disputes should be resolved. In short, one can make the following remarks based on the ruling:

  1. Jurisdiction clauses apply to cases of sudden termination of international business relationships regardless of domestic mandatory provisions, such as article L442-6 I 5 of the French Commercial Code.

  2. The scope of a jurisdiction clause extends to all, including competition law-related, damages claims arising from the contractual relationship, even when the jurisdiction clause contains no such specific provision.

Even though the Cour de Cassation's ruling significantly clarifies the applicability and scope of forum-selection clauses, one must still pay attention when drafting such clauses, in order to avoid unnecessary uncertainty on jurisdictional issues. When entering into an international business relationship or drafting international distribution agreements, it is always advisable to consult a specialized counsel.

Please do not hesitate to contact our lawyers for more information.

Link to the Riviera Motors ruling (in French):

http://www.legifrance.gouv.fr/affichJuriJudi.do?idTexte=JURITEXT000033900955

Article written by Sampsa Luttinen, Associate Trainee.