In a decision dated 25 March 2014, the French Supreme Court (Cour de Cassation) confirmed that a company based in a country outside the European Union may rely on article L.442-6,I,5° of the Commercial Code against a French partner so as to obtain damages for sudden termination of an established business relationship.

The case arose from the termination by a French perfume manufacturer of a distribution agreement it had entered into 12 years earlier with a distributor in Chile.

The manufacturer contested the application by the Court of Appeal of article L.442-6,I,5° of the Commercial Code, on grounds that the harm had taken place in Chile and that the dispute concerned the territory of Chile only.

In this respect, it should be specified that pursuant to well-established case law, article L.442-6-I-5° is both a public policy rule and a mandatory rule (loi de police), and that liability incurred under this section is a tort liability (and not a contractual liability).

Accordingly, the Court stated that “the law applicable to contractual liability is that of the State of the place where the harmful event was produced and this place means just as well the place where the event giving rise to the harm occurs and the place where the harm is suffered”. The Court then confirmed that in case of a complex offense, i.e. in case of the dissociation between the place where the event giving rise to the harm occurred and the place where the harm occurred, “it should be determined which country presents the closest connection with the harmful event”.

In the instant case, although the claim was not of a contractual nature, the Court considered that there were sufficient links with France to justify the application of French law, as the relationship between the parties had been formalized by a contract entered into in Paris, which contained a choice of law clause designating French law as the governing law and the Commercial Court of Paris as the court having jurisdiction in case of a dispute.