Focus on the ruling of the Plenary Assembly of the Court of Cassation of January 20, 2020

Why talk about this decision, which is already more than 6 months old?

The wave caused by this decision was abruptly stopped by the appearance of Covid-19, but the lifting of lockdown measures is leading practitioners to – finally – give it the echo it deserves.

Because this decision deserves attention for two reasons: one of form, the other of substance.

First, the form: the judgment is rendered according to the new drafting standards that the Court of Cassation has set for itself.

What are these new standards and do they imply major changes?

The "whereas" sections disappear in favor of a "direct" style and the paragraphs are now divided according to the following nomenclature: 1. Facts and procedure; 2. Examination of the means; 3. Disposition.

The most important judgments will now include "enhanced" reasoning. Under this promising term, we should find the highlighting of the method of interpretation of the texts submitted to the Court, of alternative solutions rejected, and the history of "precedents" within the High Court, even if it means highlighting the divergences of position between the different chambers... revolutionary!

That's the form.

Let's get to the heart of the matter. The question submitted to the Plenary Assembly is well known to legal experts: what is the liability regime applicable to a claim brought by a third party who has suffered harm due to the non-performance of a contract?.

Why is this question important?

The question is crucial because depending on the answer (contractual or quasi-delictual liability), the defaulting contracting party may or may not be able to invoke against the third party the clauses of the contract that protect him in such a case (limitation of liability, competent jurisdiction).

Examples of damages are very numerous in practice. In the case at hand, a sugar company suffers damage due to the cessation of electricity supply to one of its business partners, due to poor execution of the electricity supply contract, without any other fault.

What had the Court of Cassation decided before this case?

In 2006, the Plenary Assembly seemed to have established as a principle that " a third party to a contract may invoke, on the basis of tort liability, a contractual breach provided that this breach has caused him damage" .

This was unsuccessful, as part of the legal doctrine had strongly criticized it, prompting some chambers to moderate and then depart from the stated solution.

Why this resistance?

Two opposing views exist: on the one hand, the proponents of "predictability", who believe that a contracting party should be able to invoke against third parties the clauses of the contract which protect it (limitation of liability, competent jurisdiction), and on the other hand, those who believe that the victim of the non-performance of a contract should be able to obtain full compensation, regardless of what was provided for in that contract.

What is your position?

On a purely personal note, it seems to me that when we enter into a contract, it's with the intention of making a profit, and therefore the corresponding obligation should be to bear the cost of any damages that this profit causes to third parties. It is this second interpretation that I prefer.

But with a caveat: not all third parties are equal, and if a third party is aware of the contract in question, or even derives an indirect benefit from it, then they should be protected differently against the risk of damage, as has been proposed in some draft laws.

What would be the right system?

For third parties completely unrelated to the contract, the principle of full compensation seems to me totally justified for the reasons already stated.

For other third parties, two situations could be considered: if the fault causing the damage consists solely of poor performance of the contract, the party at fault should benefit from the contractual clauses that protect them. If the fault is compounded by a breach of a general duty of care, then full compensation should apply.

And what solution did the Court of Cassation adopt?

The High Court chose not to distinguish according to the victim's situation in relation to the contract and adopted the principle that the victim must be entitled to full compensation for their injury.

So, those in favor of predictability have lost, unless one of the bills proposing a different solution is revived and adopted.

Won't there be further resistance?

In legal theory, certainly. At the judicial level, I don't think so, because by issuing a ruling that identifies the solution it rejects and explains its reasons, the Court of Cassation makes divergent interpretations impossible. Consequently, adopting a contrary solution would amount to directly challenging it and therefore risk having the decision overturned.

That's the power of works in which form and content meet!