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11 February 2014
A damning report slams French commercial courts' flaws. Geraldine Gadbin reports. Geraldine Gadbin, a solicitor with Sherwin Oliver in Hampshire, is a French national and a qualified avocat.
As the French bask in the glory of World Cup victory, few are aware that their commercial courts, the tribunaux de commerce, are being given a dressing-down in a report, Une Justice en Faillite, prepared by Arnaud Montebourg, a socialist MP and a practising avocat.
Created 200 years ago but tracing its origins back as early as the 16th century, the commercial courts have suffered dramatic change. The courts' initial purpose - to allow merchants to be judged fairly by their peers and not by legally trained professional judges who might not be conversant with all trades or businesses - has been bent to accommodate the needs of a number of privileged people. Ironically, those people are the commercial judges themselves, the French official receivers or liquidators and the commercial court service.
Along with the conseils de prud'hommes - the equivalent of the English industrial tribunals - the commercial courts are courts in which professionally trained judges do not practise. Commercial judges are elected by businessmen. Few have a legal background although all undergo basic training.
Like professionally trained judges, commercial ones are expected to comply with a code of ethics. But Montebourg's report points out that, while considering whether the provisions of a contract should be construed in favour of companies A or B, a judge may take into account, for example, the fact that company B is a direct competitor of company C for which he used to work and where he retains a financial interests.
Although the report states that the disloyal attitude of some judges is difficult to prove, it does highlight a high number of cases where personal interests overrode those of the litigant. Judges are meant to act independently, as referees, to maintain a healthy market. But the commercial game is no longer a fair one.
The problem does not stop with judges. French receivers and liquidators are self-regulated, so no outside control is exercised by the judicial authority. Again, confusion exists between the financial interests of the creditors of the company represented and the receivers' or liquidators' personal interests.
The more money that goes through receivers' and liquidators' hands while dealing with a company's affairs, the higher the fees will be. Hence the temptation to deem a company unable to keep its head above water, to prompt the commercial judge to wind it up, and thus speed up the sale of the company's assets.
Friendship between a commercial judge, a receiver, a liquidator or a businessman keen on buying the remaining assets of a company may lead to unfair situations.
For example, Mick Hucknall, lead singer of Simply Red, was recently reported to be taking over The Palace, a famous Parisian night club in financial difficulty. It is understood that over the last few months, while a receiver had been appointed, the singer had invested about £500,000 in the company running the club and had paid for it to be renovated. He then applied to take over the company. Despite this, the commercial court did not consider him as a possible buyer. Someone else had obviously already been considered as the buyer, irrespective of the company's interests.
Unlike the traditional court service, French commercial courts are run much like a business, to the detriment of justice. Unlike traditional court clerks, those assigned to the commercial courts will charge for nearly everything. It is not that the cost of justice is high, but that the cost of the private administration of it is exorbitant. The litigant has become a hostage in the hands of the clerks.
Montebourg's report, which is set to be adopted by the government, suggests that professional judges - those who are legally trained to render justice - should get involved by way of echevinage in the judicial process, as opposed to the non-professional juges consulaire. Judges without legal training would merely assist the legally trained ones who would keep an eye on the compliance with the code of ethics. The report also suggests that the professions of official receiver and liquidator should disappear and the commercial court service, just like that of the traditional civil courts, should become a civil one.
Any reform will be very costly. On the one hand, about 1,000 new professional judges might have to be appointed. On the other, a whole economic sector, which holds a monopoly, might disappear, thus leading the government to pay compensation to its members. However, at the end of the day, it is the litigant's interests which must be safeguarded, not those of a group of people who damage the image of justice and threaten to destroy democracy.