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The Prudential Supervisory Authority has confirmed the feasibility of using a French trust in cash pooling operations and has clarified the relationship between a trust and the banking monopoly principle. Clarification was awaited as the sanctioned use of a trust as a master account holder significantly strengthens the safety of a cash pooling arrangement in a zero-balance account.
The Supreme Court recently rendered a key decision for the international practice of syndicated financings by recognising, in the context of French insolvency proceedings, certain effects of the trust and the mechanism of parallel debt which were both governed by the laws of New York state.
The Dijon Court of Appeal has confirmed the effectiveness of the technique of parallel debt, whereby the security agent of a syndicated credit is recognised as the creditor of all amounts due and takes the collateral in its own name. Since the creation of this technique, French law has introduced two legal regimes that purport to implement the effects of the Anglo-Saxon trust.
Following the G20 meeting in Pittsburgh in September 2009, the French government has finalized a bill to implement a number of the G20 decisions on strengthening the international financial regulatory system. The bill fulfils EU implementation obligations on credit agencies that were adopted on the French presidency's initiative and is expected to be submitted to Parliament by the end of March 2010.
The level of systemic risk to the banking system and the economy brought about by the international financial crisis cannot be properly mitigated through existing prudential responsibility and guarantee mechanisms. This crisis has been the stimulus for a series of exceptional recovery measures.
A review has been conducted into the French legal approach to the four main domains of Islamic finance: asset management, structured finance, retail finance and insurance. Not only are a number of Islamic financial principles shared by French law, but the French legal system also includes mechanisms which allow the structuring and implementation of Islamic finance products and arrangements.
An ordinance of October 15 2005 has created a new type of fund devoted to real estate investments, in order to encourage domestic investment in the French real estate market and to maintain current growth rates in pension savings. The new funds essentially consist of privately held funds invested in real property, shares of real estate companies and liquid investments.
The Financial Security Act has amended Section L 228-97 of the Commercial Code to enable French companies to issue super-subordinated notes. The Banking Commission recently acknowledged that super-subordinated notes may now be included within tier one capital instruments, subject to certain conditions.
Recent case law has raised concerns over (i) the conditions under which the chairman of a simplified joint stock company may delegate his or her authority to senior management, and (ii) the consequences of the lack of authority of human resources directors where such delegation fails to comply with legal provisions.
A series of laws has recently been enacted in order to favour the employment and recruitment of employees aged over 50. The purpose is to promote seniors' employment in companies with more than 50 employees before January 1 2010. As of that date, companies that fall within the scope of this new legislation and that have not fulfilled their obligations will be subject to a financial penalty.
The rules on Sunday working have been reformed. The new legislation aims to reaffirm "the principle of Sunday rest and...[adapt] this principle to cities and tourist and thermal areas, as well as to certain large cities for voluntary employees". Among other things, it confirms the previous exceptions to the Sunday working rules and introduces some new ones.
On July 26 2005 Parliament enacted the Corporate Protection Law, which entered into force on January 1 2006. Pursuant to the new Article L611-11 of the Commercial Code, if an order of conciliation is approved by means of formal judgment, creditors making new money (or goods or services) available to the debtor in connection with the order will rank in priority to other creditors.
The Supreme Court has held that a commercial agent must perform its obligations with loyalty towards the other party. In the case, which arose after the termination of contractual relations for telecommunications services, the court also held that the agent lost its right to compensation when it committed serious negligence, which was discovered only after the cessation of the contract.
The Paris Court of Appeal has recently held that a French citizen who brought a claim against a foreign company may not refer to the jurisdiction of the French courts under Article 14 of the Civil Code where the parties have agreed to submit any dispute to arbitration.
The Supreme Court recently ruled on the application of the EU Insolvency Regulation. It held that the French courts had to recognize main proceedings opened in the United Kingdom and were not entitled to review the grounds of the British judgment. The Supreme Court also limited the scope of the public policy exception under Article 26 of the regulation.
The Paris Court of Appeal has upheld a judgment ordering Google to stop using on its websites the trademarks LOUIS VUITTON, VUITTON and LV as keywords for advertising and promoting products. This decision is significant as regards issues of territorial jurisdiction and liability for torts based on trademark infringement and other violations through the use of keywords on websites.
Some commentators argue that a recent Supreme Court decision, in which it appears to have approved of the delivery of an anti-suit injunction à la française, provides a useful tool for international proceedings. However, others fear its consequences and point out that anti-suit injunctions can be subject to retaliations.
A Belgian distributor brought an action for damages against a French manufacturer, claiming that the latter had breached a contractual notice requirement in terminating the distribution contract. The Supreme Court ruled that since the products were supplied by the French company and Article 4(2) of the Rome Convention applied, the contract was governed by French law; but this decision may be incorrect.