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Termination of established business relationships: an action for damages does not fall within the scope of tort matters within the meaning of the Brussels I regulation (Granarolo case commentary)

15/02/2017

Under the terms of Article L.442-6 I 5 of the Commercial Code, a party who causes the abrupt termination - even partial - of an established business relationship without serving written notice that takes into account the length of the business relationship may be held liable.

According to the Commercial Division of the Court of Cassation, this constitutes tort liability, whether under domestic or international law (Cass. com., 15 September 2009, No. 07-10.493).

That said, what may be contractual in nature under French law is not necessarily so under European law, as the Court of Justice of the European Union (CJEU) has provided an autonomous interpretation of contract and tort matters, within the meaning of the Brussels I Regulation (Regulation 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgements in civil and commercial matters).

In a judgement of 14 July 2016, the CJEU notably contradicted the French case referred to above in a decision whose solution nevertheless seems somewhat removed from the circumstances of the case (CJEU, 14 July 2016, C-196/15 Granarolo).

In this case, the CJEU holds that an action for damages based on the abrupt termination of a long-standing business relationship does not fall under tort or quasi-tort law within the meaning of the Brussels I Regulation as a tacit contractual relationship bound the parties.

The Court indicates that the demonstration of the existence of this type of relationship falls under the jurisdiction of the national courts and is based on a series of corroborating factors, including:

  • the existence of a long-standing business relationship;
  • good faith between the parties;
  • the regularity of the transactions and their development over time expressed in terms of quantity and value;
  • any agreements as to prices charged and/or discounts granted;
  • and the correspondence exchanged.

As a simple tacit contractual relationship allows the CJEU to qualify the action for damages referred to in Article L. 442-6 I 5 of the Commercial Code as contractual, it seems that the abrupt termination of an established business relationship should constitute a contractual breach in most international litigation. In this regard, the applicability of tort liability therefore seems to be reduced to highly residual scenarios.

Therefore, the future of the case law of the Court of Cassation's Commercial Division, which qualifies the liability for an abrupt termination of an established business relationship as tort liability both in domestic and international litigation, seems quite uncertain. It is up to our High Court to rapidly settle this issue and bring an end to the legal uncertainty that reigns today in many actions for damages based on Article L. 442-6 I 5 of the Commercial Code.

Authors

Picture of Aliénor Fèvre
Aliénor Fevre
Associate
Paris
Stéphanie de Giovanni