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Arbitration

When French arbitration law was reformed in 2011, one major innovation was to amend the position on the stay of enforcement of international arbitral awards pending the outcome of annulment proceedings or of an appeal against an order granting leave to enforce (exequatur). However, the courts' severity towards requests for a stay of execution has given rise to concerns about exequatur proceedings.

According to the French law on international arbitration, an action to set aside is available against international arbitral awards issued in France. Therefore, such an action may be instituted only against arbitral awards. The distinction between arbitral awards and other communications issued by tribunals can be unclear; however, a decision of the Supreme Court provides useful guidance.

The interaction between insolvency proceedings and arbitration is treated differently in different countries. The French legal position is clear: the supervening insolvency of a party does not render a dispute inarbitrable. In a recent decision the Paris Court of Appeal found that the International Court of Arbitration of the International Chamber of Commerce had committed an "excessive measure" justifying the annulment of an award.

In a recent case the Supreme Court reaffirmed the existence of an arbitral legal order, independent of any national legal order. It held that the arbitral proceedings in question were detached from the French judicial order, since the tribunal's seat was located in Sweden and proceedings were governed by the United Nations Commission on International Trade Law rules.

Since March 2010 the ordinary French courts have been able to challenge the constitutionality of a statute or statutory provision through a specific procedure. However, the reform was silent on the issue of whether arbitral tribunals enjoy similar rights to ask the Supreme Court to refer a matter to the Constitutional Council. In a recent decision, the Supreme Court found no basis for such rights to be allowed to arbitrators.

It is a truism that relativity applies in arbitration. An award can be set aside by the courts of the English seat of arbitration and yet be declared enforceable in France. The conflicting decisions issued by the Paris Court of Appeal and the UK Supreme Court in Dallah illustrate that an arbitral award can have a different fate depending on the approach of the courts of the seat of arbitration and the courts of the places where enforcement is sought.

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Asset Finance

Overview
Including: Securitization Vehicles; Types of Securitizable Receivables; Reloading Ability; Notification; Assigning Matured Receivables; Umbrella FCCs; Offshore Trade Receivables

Future receivables can now be securitized under new legislation. These are an attractive type of asset for companies, and under the new law are now easier and more efficient to use.

This update outlines the legislative framework that governs debt mutual funds and the securitization of corporate receivables.

Structural subordination and contractual subordination are both important elements in the financing of leverage buy-outs in France. This update lists the pros and cons of each, as well as the legal conditions attached.

Aviation

The Versailles Court of Appeal has rendered its much-anticipated judgment in the criminal action arising from the 2000 Concorde crash in Paris. While accepting the sequence of events propounded by the prosecutor, the court overturned the judgment at first instance in relation to the criminal part of the action. Although it acquitted all of the accused of criminal charges, it found a number of them to be civilly liable for damages.

The Court of Cassation recently issued its first decision on the constitutionality of a provision of French aviation law since the 2010 reform allowing submission of such issues to the Constitutional Council. The claimants had argued that it was unconstitutional for the Transport Code to apply different liability regimes depending on whether carriage by air is undertaken for free or for a fee.

Parliament has passed a new law that aims to provide stronger protection for passengers when airline or ground staff decide to go on strike. The law seeks to reconcile two constitutional principles applicable to all companies involved in air travel: the right to strike and the prohibition against interfering with passengers' freedom to travel.

The Court of Cassation has reiterated that the jurisdiction chosen by the plaintiff under Article 33 of the Montreal Convention is the sole jurisdiction before which a claim may be pursued, and that this rule overrides all other domestic rules which could otherwise apply. This case illustrates the problems which arise when identical provisions of the same convention are not applied consistently across jurisdictions.

The First Civil Chamber of the Court of Cassation has reiterated the conditions for establishing an international air carrier's liability under Article 17 of the Warsaw Convention 1929. This is the first French decision to rule expressly that deep vein thrombosis does not constitute an accident under Article 17.

The French civil aviation accident investigation bureau has issued a third interim report on Air France Flight 447, which crashed into the Atlantic Ocean on June 1 2009. Some have suggested that only part of the exchanges from the flight recorders has been made public, in order not to lay too much blame on the pilots; although the pilots' union considers that they are being targeted in order to deflect criticism from the aircraft itself.

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Banking

Overview
Including: Organization of the Banking Sector; Foreign Bank Entry; European Harmonization; E-Business and Banking Law

Capital acquisition through the repurchase of distressed debts could provide a solution to the problems that banks currently face. Stricter banking regulation means that there is a need for additional capital, but banks are still suffering losses incurred in the ongoing financial crisis. This update examines how banks can restore their lending capacity through the transfer of non-profitable liabilities.

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.

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Capital Markets

An Autorité de marchés financiers working group recently published a report containing 21 recommendations to amend regulations on notification of crossing shareholding thresholds and statements of intent. It suggests changes to certain thresholds and deadlines, and assimilation of securities which the shareholder has the right to acquire by virtue of a financial instrument for threshold calculation.

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.

The securitization of future receivables is considered an efficient leverage tool for companies. However, recent and controversial case law has threatened the legality of the securitization of future receivables.

Weather derivatives are a new way of insuring against the weather. They do not specialize in protection against violent storms or floods, but rather the effect of ordinary weather conditions, showing the difference that a sunny day can make to a company’s profits.

Legislation on securitization has recently been amended. The new law now prevents new issuers from being penalized and allows a fund to assign any receivable which becomes mature or for which the maturity has been accelerated.

Commercial Property

When renting out premises in shopping centres, does the lessor have an obligation to ensure the "retention of merchantability"? Previously, the Court of Cassation has repeatedly rejected the argument that the lessor has no obligation to maintain the commercial environment unless a specific clause so provides. However, the court recently overruled its own case law.

Given the current state of the French real estate market, an increasing number of real estate lenders are reluctant to make investments and provide financing and refinancing. Much of this reluctance seems to have stemmed from the Supreme Court's decision in Coeur Défense, which lenders believe shows favouritism to debtors under French law to the detriment of financial institutions.

In recent years, sale and leaseback transactions have increased thanks to an advantageous fiscal and legal framework. Although this framework was changed in 2012, a new regime has since been applied, providing a reduced tax rate for disposal gains on the commercial assets or office assets of property investment companies and any company subject to corporate income tax.

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Company & Commercial

France has so far lagged behind efforts to give shareholders a greater say on remuneration for corporate officers. However, the government has indicated that it may propose legislation later in the year, possibly before the summer, to modernise legislation on corporate executive pay. To this end it is consulting stakeholders on the shape that future changes could take.

Management agreements have become a useful tool for the effective organisation of management structures within group companies. However, their implementation is far from risk free. The most sensitive area is the provision by the holding company of core executive management functions, such as general leadership, supervision and strategy, as opposed to more technical or accessory functions, such as finance or IT.

Hot on the heels of the changes introduced by the 2012 finance law, further amendments have now been made to transfer duties due on the transfer of securities. Under the new provisions, share transfers in listed and unlisted companies will be subject to a single rate of 0.1% instead of the previous three-band scale.

The legislature recently introduced a diverse package of measures designed to modernise French company law by introducing simplified procedures and removing constraints across a wide range of areas. Among other things, the rules on the preparation and filing of annual accounts have been simplified; but the Commercial Court has gained more powers to require companies to comply with their filing requirements.

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Competition

The Paris Court of Appeal recently decided to consult the Competition Authority on the lawfulness of a post-contractual non-reaffiliation clause in a franchise contract. The court considered that a review of the issue was fully warranted as, since the Pronuptia ruling, the courts have examined the lawfulness of such clauses with regard to the need to protect franchisor know-how.

The Competition Authority has found France's national state-owned railway company, SNCF, guilty of several instances of abuse of dominant position within the context of the opening up of the rail transport sector to competitors. The authority imposed a single fine of €60 million and issued an injunction to re-establish effective and sustainable competition on the market.

Combined quantitative and qualitative selective distribution is a flexible way of organising a distribution network. It allows for the selection of distributors based on qualitative criteria, while limiting their number, and the prevention of sales to non-authorised retailers which do not meet the selection criteria. The Court of Cassation recently issued a key ruling on this issue.

In a case relating to the takeover of satellite operator TPS by rival Group Canal Plus, the Constitutional Council was asked to issue a priority preliminary ruling on the constitutionality of the Competition Authority's power to withdraw a clearance decision and impose a pecuniary penalty. The council ruled that such power does not violate the principle of freedom to exercise a trade or profession not justified on economic public policy grounds.

On the same day that it withdrew authorisation of the takeover of TPS by Group Canal Plus (GCP), the Competition Authority authorised Vivendi and GCP's acquisition of the free-to-air digital channels Direct 8 and Direct Star. GCP is subject to a number of commitments; however, given its development potential in the free-to-air television market and its leverage in pay-to-view television, caution is required.

In late 2010 Colruyt France informed the Competition Authority of three mergers that it had carried out, but failed to notify. The authority examined the applicable rules relating to the limitation period in respect of the dates of the operations at issue. With regard to the starting point of the limitation period, it held that the implementation of a concentration without prior notification constitutes an ongoing infringement.

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Construction

The Supreme Court has marked a change in its jurisprudence by restricting the scope of constructor liability under the 10-year guarantee provided to owners regarding building works in connection with 'evolutionary damage'. The effect of this decision should be to restrict the instances in which the court will allow evolutionary damage to fall within constructor liability.

Corporate Finance/M&A

Within the context of a transfer of securities, an independent expert can value the securities under two different statutory regimes laid down in Articles 1595 and 1843-4 of the Civil Code. Each presents its own advantages and drawbacks. In practice, the parties should provide for the application of the former and for the subsidiary application of the latter, so that the deal will not founder for lack of a valuation if the first method fails.

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Corporate Tax

The president has enacted the Finance Act 2013 after it was endorsed by the Constitutional Council. Most of the measures set out in the act relating to corporate tax require immediate attention. Although there has been a reduction in the benefits enjoyed by companies, French tax law remains attractive for corporations - especially for larger multinational firms.

The notion of a 'complete branch of activity' describes a legal benefit involving preferential tax treatment, applicable to both direct and indirect tax, in the context of company restructuring. However, this term is not defined in law or regulation. In the interests of harmonising national tax case law, the high courts have recently intervened to define the parameters of this concept.

The Supreme Court has censured many share-for-share contributions for constituting an abuse of law, resulting in both the taxation of the operation and the imposition of significant penalties to punish inappropriate tax behaviour. However, the replacement of the optional tax deferral system with an automatic deferral system has led to a change in approach by the tax authorities.

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Derivatives

At the 2008 annual public meeting of the Autorité des marchés financiers (AMF), market professionals approved the European Commission's proposals demanding the introduction of a centralized clearing house for credit default swaps. The AMF put in place a working group to draft its own proposals by the end of 2009.

E-commerce

Overview
Includes: Background; Electronic Transactions; Providers' Liability; Governing Law and Jurisdiction; Data Protection; Consumer Protection; '.fr' Domain Names.

The Supreme Court has rendered four anticipated rulings in relation to Google's liability for its paid referencing service, AdWords. The four rulings implement the ruling of the European Court of Justice, which considered the cases in a referral, and annul the appeal rulings that held Google liable for trademark infringement.

In accordance with the government's aim of liberalizing the online gambling sector before the 2010 World Cup, the National Assembly recently adopted the proposed legislation as presented by the Senate so that it could be ratified and promulgated. However, the Socialist opposition has challenged the terms for liberalization before the Constitutional Council.

Search engines are not subject to a statutory liability regime. In a recent case the Paris Court of Appeal reiterated several rules relating to the technical role of a search engine. Within this framework, the court reiterated search engines' obligations and then determined how they may be held liable.

The website Fuzz.fr has been found liable as a publisher for posting a link directing users to a separate website that contained gossip about French actor Olivier Martinez’s relationship with singer Kylie Minogue. One of the main issues faced by French courts is how to determine liability for illicit user-generated content.

The Supreme Court recently endorsed the European Court of Justice's position on the compatibility of member states' gambling legislation with the EC Treaty in a dispute between the French monopoly holder for online betting on horseracing and a Maltese operator of online betting activities. The decision established the criteria under which EU law is possibly breached.

In the recent Axa Case three insurance companies sued Google Inc and Google France for trademark infringement, unfair competition and misleading advertising. In direct contradiction with established precedents of the High Court, the Paris Court of Appeal ruled that courts do not have jurisdiction over a trademark infringement claim brought against foreign websites.

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Employment & Labour

A recent government action plan seeks to increase employee representation on the boards of directors of large companies, with the aim of boosting the competitiveness of French industry. However, it remains to be seen whether greater employee involvement in strategic decision making will achieve this aim, or whether the increased regulatory burden will end up holding businesses back.

Recent judgments passed down by the European Court of Justice and the Supreme Court could have a significant impact on French employment laws, specifically on the accrual of paid holiday, the effect of sick leave on holiday entitlement and the obligation to ensure that employees are able to take paid holiday.

A manager set up a meeting with one of his female employees outside regular work hours in a hotel room. The manager was terminated on grounds of gross misconduct after the employee complained. The Supreme Court ruled that the employer was justified in its decision and confirmed the differences between the definitions of 'moral' and 'sexual' harassment, which do not require the same conditions to be fulfilled.

A worrying new case law trend is exposing companies to a higher risk of litigation when implementing reorganisation processes in France, especially where the reorganisation plan involves a headcount reduction. In such cases the lack of a genuine economic motive can lead to the entire restructuring process being deemed null and void.

Under French law, employers must tolerate employees' reasonable personal use of IT systems. However, there are certain limits to this. Recent cases have shown that the extent to which an employer can take action against employees who act in an inappropriate manner, particularly in relation to pornographic websites or files, depends on the employee's actions and whether the employer has policies in place.

The amended Social Security Financing Law recently entered into force. It has created a controversial new obligation for commercial companies with at least 50 employees to pay an additional profit share to their employees for any year during which the dividends paid to shareholders have increased compared to the average of the two previous years. Much of the controversy is linked to the lack of clarity in the scope of the legislation.

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Energy & Natural Resources

The instability of the legal framework resulting from the restrictive French policy on solar power raises questions as to whether the measures taken comply with the EU principles of legitimate faith and legal security. France has put an end to the strong support given to the development of solar energy, but the method of implementing this radical change has created an unstable situation.

Under French tax law, windmills used by a company for the production of electricity can benefit from a derogatory tax regime with respect to corporate income tax, property tax and business tax. Moreover, a specific tax is applicable to windmill manufacturers established in France; there is thus a risk that a company producing electricity through windmills may be subject to this tax.

The Ministry for Economy, Finance and Industry has decided to suspend an increase in the sale price of gas provided by the public distribution network operator, despite the unfavourable opinion of the Energy Regulatory Authority. Among other things, the authority has issued a document aimed at helping household customers to choose their gas and electricity supplier.

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Environment

Overview
Including: Draft Charter for the Environment; Water; Medical Safety; Genetically Modified Micro-organisms; Natural Risks; Nuclear Energy; Rural Code; Atmospheric Emissions of Pollutants; Underground Water; Controlled Installations; Legionellosis; Water.

Sale and leaseback transactions involving industrial sites can present effective financial solutions in times of crisis. However, careful due diligence is required to ensure that no issues arise under the environmental regulations concerning contaminated sites. Among other things, a key factor is identifying the operator of a site which is responsible for any remediation.

Public consultation as part of project development plans and programmes that may affect the environment has changed considerably in France since July 12 2010, when the Grenelle 2 Law redefined impact assessments and public inquiries. The process has become more effective and there is real public involvement in environmentally sensitive projects.

The Ministries of Ecology and of Industry have announced the launch of a new quality label for the photovoltaic industry: 'AQPV – modules'. This label is part of the government's strategy to develop national industry, and the solar roof programme is completely based on this quality approach. However, industry has criticised the conditions imposed by the new programme for being too restrictive.

On the basis of the Grenelle Acts 1 and 2, France is on course to meet some of its waste management targets for 2012 (eg, reducing the production of household waste and waste of a similar nature per person, and increased recycling of companies' non-hazardous waste). However, it seems unlikely that the 15% reduction target for incinerated and landfilled waste will be met, so further efforts are needed in this regard.

In 2007 the government launched a democratic debate on environmental issues, known as the Grenelle Environment Project. The initiative has now been adopted through the Grenelle 2 Act, the law on the national commitment to the environment. The six major environmental concerns of Grenelle are buildings and urban planning, transportation, energy and climate, biodiversity, governance and risk, health and waste issues.

Recent developments in the field of criminal environmental law highlight new improvements in the traceability of environmental crime and the increasingly prominent role played by criminal law in the protection of the environment. A special National Crime Office report lists all environment-related offences committed during 2008; meanwhile, the fight against environmental crime has recently been stepped up.

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Healthcare & Life Sciences

Following the signature of a national agreement requiring every company to offer health insurance to its employees, the Competition Authority has issued an opinion making recommendations to ensure effective competition between players in the complementary and collective health insurance sectors. The authority is encouraging the legislature to favour a regime where companies choose their own complementary health insurer(s).

The Competition Authority has launched an inquiry into the competitive functioning of the pharmaceutical distribution sector. In the context of stimulating competition through government support for generic medicines and the online distribution of medicines, the authority intends to examine each level in the medicine distribution chain to decide whether it is truly competitive.

An article published by specialist healthcare news website Actusoins has revealed data breaches at several French hospitals and clinics, demonstrating that such incidents can occur even in a highly regulated jurisdiction. France is one of the only countries in Europe to require that health data be stored only with hosting providers approved by the French government. In spite of these precautions, compliance appears to be lax.

Insolvency & Restructuring

In a liquidation case, the Court of Cassation has sent two interlocutory questions to the European Court of Justice. The case revolved around the principle of the intermingling of assets, which provides that opened insolvency proceedings may be extended to other parties if their assets are intermingled with those of the debtor.

The Cour de Cassation recently handed down its decision in the Coeur Défense case, which quashed last year's decision by the Paris Court of Appeal. The consequences of this decision are far-reaching. The position taken by the Cour de Cassation opens the floodgates for appeals by creditors against judgments on opening safeguard proceedings.

The recently published Banking and Financial Law changes French law with regard to insolvency proceedings. The reform will apply to voluntary arrangement, safeguard and judicial reorganisation proceedings. It represents real progress for companies in distress, allowing them to reach an agreement for financing their debts while maintaining supplier confidence.

A recent case shows that a pre-pack can be implemented under French law, but only under specific circumstances. More generally, it demonstrates that French law offers a wide range of possibilities which enable businesses to restructure and find their way back to solvency.

Since the fiducie was introduced, a number of amendments have altered the applicable legal framework, both for the fiducie in general and in respect of contracts for the fiducie as security. Certain changes apply, particularly in the context of insolvency proceedings.

In reaction to apparent failures and in light of the global economic crisis, the legislature and regulatory authorities have proposed further insolvency law reforms. It is hoped that companies will gradually gain confidence in the new procedures and avail themselves of the possibilities offered by the law with a view to the continuation of their business.

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Insurance & Reinsurance

The Supreme Court recently considered a case of premium misappropriation by an insurance broker. The question for the court to determine was against which party the claimant was entitled to claim reimbursement of the funds misappropriated by the broker put into liquidation.

The Supreme Court has reaffirmed its policy to protect an insured against warranty exclusion provisions that deprive the warranty clause of its effect, thus extending common case law to insurance warranties. The court has rung a clear warning bell for the insurance industry that warranty exclusion provisions will be severely controlled not only in terms of their form, but also in regard to their effect on the warranty.

The Court of Cassation recently confirmed the scope of the duty to inform and advise imposed on insurance intermediaries by the Law of December 15 2005. It held that the agent of a brokerage firm had a personal duty to inform and advise the firm's clients, and that this duty did not end upon delivery of an information notice.

The Transport Insurance Order has been published in the Official Journal. The new order updates the rules applicable to transport insurance. Therefore, the reform aims not only to harmonise the insurance legal regime for transported goods, but also to compensate for the lack of rules specifically dedicated to aviation and aerospace risks.

Punitive damages have been receiving attention not only from the legislature, but also from the Court of Cassation, which issued an interesting decision on foreign judgments granting punitive damages. Whether insurance coverage will be available for foreign decisions that award punitive damages may be a vital question for insureds, insurers and plaintiffs.

The Court of Cassation recently issued an unusual decision on how a rescission of sale should affect the positions of buyer and seller in relation to their insurance contracts. The court ruled that after a rescission of sale, the positions of the parties were reset to the way that they stood before the sale occurred, allowing the original owner to claim damages.

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Intellectual Property

There have recently been new developments regarding the ongoing copyright levies saga. The Constitutional Court and the Private Copy Commission have issued new decisions which, while providing useful clarification, are unlikely to bring the heated debates on this issue to a close. Meanwhile, an in-depth review of the system is under consideration and expert reports are currently in the pipeline.

In a much-anticipated decision the Paris Court of Appeal ruled on the author rights of designs for jewellery created by an employee designer during his employment at jewellery firm Van Cleef & Arpels. The court applied the doctrine of collective works provided by French copyright law in author rights.

In a recent case the Paris Court of Appeal considered the liability of a registry and a registrar for the registration of domain names that allegedly infringed trademarks. The decision should help to prevent any future rulings finding the '.fr' registry liable in such cases and serves as a reminder that trademark holders can utilise other fast and cost-effective alternatives for recovery of a domain name.

The Supreme Court has cancelled Christian Louboutin's trademark - representing a red sole - for lack of distinctiveness. Louboutin initiated proceedings after a collection of women's shoes featuring red soles was launched by high-street retailer Zara. However, the court stated that the reputation of Louboutin's red shoe soles related merely to a concept, rather than to the trademark.

The Versailles Court of Appeal has decided that while a domain name without a supporting trademark can be protected under the rules of unfair competition, it must be sufficiently distinctive. This decision clearly articulates the principle applicable to the protection of domain names under French law – namely, that they can be protected alone under the rules of unfair competition provided that they are distinctive.

A recent Supreme Court case dealt with the digitalisation of photographs by a press agency without the photographer's express authorisation. The Paris Court of Appeal had found that the digitalisation of the photographs constituted an unauthorised act of reproduction, but the Supreme Court overturned this decision.

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Litigation

In the past, jurisprudence has been unclear as to whether misconduct by a party in performing a contract can trigger liability towards third parties. However, in 2006 the Court of Cassation brought a welcome end to such uncertainty by recognising the principle of identity of tort liability and contractual liability. The principle has since been applied by all civil chambers of the court in a diverse range of cases.

The Court of Cassation has rendered a decision on the enforcement of foreign decisions granting punitive damages. The decision will be of great interest to common law countries in which punitive damages can be awarded by the judge. In contrast, these principles of deterrence and punishment are absent from French liability law, according to which damages must fully but solely repair the harm caused.

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.

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Media & Entertainment

Over the past 20 years, relations between phonogram producers and musicians in France have been strained by a conflict between producers and SPEDIDAM, the society for the collective management of musicians' rights, which claims the right to authorise any new exploitation of a phonogram. Two judgments issued this year herald significant developments in this relationship.

The Finance Act 2013 and the 2012 supplementary budget have introduced improved tax credit rules in the film and audiovisual sector. The tax credit for music production has also been modified and extended. These changes will enter into force at a date to be fixed by decree, but no later than January 1 2014.

It is vital to demonstrate ownership of rights in infringement actions. In a recent case two companies sued competitors which were reproducing and distributing without their permission a boxset of jazz and music hall phonograph recordings, which the claimants believed they held the sole right to reproduce under the Intellectual Property Code.

French law provides that a contracting party must comply with a notice period to terminate, even partially, an established business relationship. The application of this principle to the relationship between a producer and a broadcaster has led to much litigation. The Supreme Court recently issued its ruling in a long-running case on this issue.

The development of cloud computing poses a number of questions for lawyers, especially with regard to the categorisation of the rights at stake (reproduction and/or performance) and the application of the private copying exception. The Superior Council of Literary and Artistic Property has brought together professionals from the arts and industry to take part in a debate on this issue.

The Court of Cassation has held that a 'stay-down' injunction is invalid in relation to content that has been notified as infringing; however, the court recognised the right to order a search engine to implement preventive measures. Its findings are significant for holders of rights in music and audiovisual works when seeking to prevent copyright infringement online.

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Product Liability

In a referral from the Council of State, the European Court of Justice was asked to consider whether the liability of a service provider which, in the course of providing services such as treatment given in a hospital, uses defective equipment or products and thereby causes damage to the recipient of the service falls within the scope of the EU Product Liability Directive.

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Projects & Procurement

With its recent decision in the Société Tropic Case the Administrative Supreme Court opened the doors to a change in law in respect of the post-execution challenge procedure, in effect dropping the legal fiction in relation to 'acts distinct from the contract as a whole'.

Securitisation & Structured Finance

In three different rulings the Paris Court of Appeal has issued a final judgment - at least for the time being - in Coeur Défense. Given the creditor-friendly nature of the court's rulings, they will be welcomed by participants in the real estate and structured finance markets.

France is examining the creation of a new refinancing instrument for banks: covered bonds based on guaranteed loans instead of mortgages. The draft on the new refinancing instrument is due to be submitted to Parliament in early 2010 and the first issue of covered bonds backed by guaranteed loans is expected in the second quarter of 2010.

Two landmark developments in securitization and structured finance have recently taken place: an attempt at introducing provisions to facilitate Islamic finance - in particular, sukuk - and developments in litigation concerning commercial mortgage-backed securities.

The government is looking to enhance Islamic finance and more specifically the issue of sukuk (Islamic asset-backed securities). France has already taken steps in favour of Islamic finance - the stock exchange regulator has published a recommendation on the listing of sukuk on Euronext Paris regarding the set-up and distribution of Islamic financial products, such as Sharia-compliant collective investment schemes.

The government has made revisions to the securitization legislation which set out to amend the law governing the activities and supervision of reinsurance companies and to reform the legal framework of the French mutual debt fund by providing greater security to securitization transactions, increasing flexibility and transparency and creating a new enlarged French securitization vehicle.

Following Ordinance 2008-556, dated June 13 2008 and implementing the EU Reinsurance Directive, Decree 2008-711 was adopted on July 17 2008. It reforms the legal framework of the French special purpose securitization vehicle, the former debt mutual fund (fonds commun de créances).

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Telecommunications

Overview
Including: Market History; Operators; Licences; Regulatory Authority; Interconnection Regime; Consumer Protection; Competition in the Local Market; Internet Access

The French Telecoms Regulatory Authority has extended the commercial launch and population coverage deadlines for universal mobile telecommunications system services, after operators failed to meet previous targets. In addition, global system for mobile communications operators have agreed licence renewal terms with the government.

The Telecommunications Regulatory Authority has adopted certain guidelines that will apply to electronic communications networks and services until legislation is passed to implement the EU telecommunications directives. The guidelines have established a system of declaration rather than authorization, and have simplified the procedure for making preliminary declarations.

Operators recently began marketing mobile number portability services. Meanwhile, the Telecommunications Regulatory Authority has announced that its calculation of universal service overpayments made by operators totals approximately €2 billion. It has also settled a dispute between France Télécom and new entrants over the fixing of call termination charges.

The Telecommunications Ministry has approved the liberalization of wireless networks which use the 2.4 gigahertz radio frequency band, following demand for the launch of wireless fidelity services. Licensed operators and service providers will now be able to install wireless access points without prior approval from the French Telecommunications Regulatory Authority.

Following a proposal to assist the development of broadband internet access in economically weak regions, the government will allow local authorities to roll out telecommunications networks and function as telecommunications operators. Legislation must be drafted to amend existing prohibitions against public bodies acting as telecommunications operators.

On October 24 2002 the French Telecommunications Authority approved the new call termination charges applicable to SFR’s and Orange's mobile networks (the two French mobile operators deemed to have significant market power) for 2003. The new tariffs are expected to lower the call termination charges on these networks by 15%.

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White Collar Crime

The government recently adopted legislation that strengthens the legal framework combating money laundering and terrorist financing. Two new decrees implement the European Union's risk-based approach by reinforcing prevention obligations in high-risk situations. Further, a new law aims to modernise the regime by including e-money institutions among the professional bodies that are subject to prevention obligations.

According to the Criminal Code, money laundering presupposes the commission of an earlier criminal offence. In a recent decision the Supreme Court confirmed that the statute of limitations for that earlier criminal offence has no bearing on the limitation period for the money laundering offence.

In light of its next evaluation by the Organisation for Economic Cooperation and Development working group on corruption, the Ministry of Justice recently drafted a circular in order to underline new criminal measures, emphasise the current framework on detection, raise awareness of international corruption and set out criminal policy objectives in the field.

The recently enacted France-Lebanon Mutual Assistance Convention marks a major advancement in cooperation on criminal matters between the two countries. Among other things, the convention asserts that the notion of banking confidentiality cannot be upheld in cases of financial crime and provides for cooperation between the authorities of both states in the investigation and prosecution of financial offences.

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