FRANCE Law and Practice Contributed by: Fernand Arsanios, Delphine Guillotte, Guillaume Chaboureau, Houda Idaroussi and El Sayegh, King & Spalding
secured obligations, without any judicial interven- tion. To be available, this foreclosure mechanism must be expressly provided for in the pledge agreement. The value of the pledged asset must be determined (i) by an expert appointed by the parties or the court, or if the pledged assets are financial securities admitted to a regulated market, multilateral trading facility or organised trading facility; (ii) by reference to the latest available clos- ing price on such a trading platform. Any surplus or between the value of the pledged assets and the amount of the secured obligations must be repaid (as the soulte ) to the pledgor. This manner of enforcement is not available for security over going concern. • Public auction or judicial sale process – under French law, a secured creditor is not permitted to directly sell the pledged assets to a third party. Such assets must be sold either through (i) a public auction ( vente publique ); or (ii) in respect of enforcement of security securing non-professional debt and security over real estate assets, through a judicial sale process; or (iii) if the pledged assets are financial securities admitted to a regulated mar- ket, multilateral trading facility or organised trad- ing facility, via the sale on such trading platforms or pursuant to a private placement or accelerated book building. This manner of enforcement is not available for security over receivables and bank accounts. In the event of an assignment of receivables by way of security, enforcement must occur through the assign- ee becoming the definitive owner of the assigned receivables. Any monies paid to it in respect of such receivables will be allocated against the secured obli- gations when it is due. 6.2 Foreign Law and Jurisdiction Foreign Law The parties are generally free to choose the governing law of a contract concluded in civil and commercial matters, even without a specific connection to the case, provided that the contract or underlying trans- action has an international component. The choice of a foreign law would be recognised and upheld by the French courts, provided that the cho-
sen foreign law is not contrary to the mandatory rules of French law or manifestly incompatible with French international public policy. It should also be noted that a French “ loi de police ”, or overriding mandatory pro- visions, will apply even if a foreign law is chosen by the parties. Furthermore, certain mandatory laws will override the choice of applicable law (for example, in real estate matters, the applicable law in France will always be the law governing the property’s location). Foreign Jurisdiction If the foreign jurisdiction chosen by the parties is a member state of the EU, a choice of court agreement is valid if (i) the clause has been agreed by the parties, being specified that this consent must be expressed in a written contract; (ii) the clause clearly designates the courts of a member state; and (iii) the dispute involves foreign elements (in accordance with the provisions of the Brussels I bis Regulation). Similarly, when the foreign jurisdiction chosen is in a state outside the EU, the submission to a foreign jurisdiction would be recognised and upheld by the French courts provided that: • the dispute has an international component; • the submission to a foreign jurisdiction is not con- trary to the mandatory exclusive jurisdiction of the French courts; • the choice of jurisdiction provision is not asymmet- ric; and • the choice of jurisdiction does not create a signifi- cant imbalance between the rights and obligations of the parties. Finally, choices of jurisdiction provisions may be asymmetric by allowing one of the parties the right to bring proceedings either before the court or courts designated in such clause, or before any other com- petent court or the courts of another state, provided that (i) they designate courts located in member states of the EU or in states that are parties to the Lugano II Convention; (ii) they are based on objective and pre- cise elements that allow the competent courts to be determined; and (iii) they do not contravene specific provisions of the Brussels I bis Regulation, such as those relating to exclusive jurisdiction.
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