ODI-SÉ AVOCATS is an independent law firm registered with the Paris bar focusing on the aviation and defense & security sectors, in France and internationally.Show more
Court uses foreign-language versions of EU regulation to provide interpretation of compensation provisionFrance | 24 March 2021
The Court of Cassation recently had, for the first time, the opportunity to provide its interpretation of Article 3(3) of EC Regulation 261/2004. It confirmed that lump-sum compensation for flight cancellations or delays may not be awarded to passengers who are travelling at a reduced fare that is not directly or indirectly available to the public or free of charge. To support its interpretation, the court used foreign-language translations of the regulation.
Airlines, lenders and lessors often send process servers to French aircraft manufacturers to ensure that assignments and transfers are enforceable against the manufacturer – an approach which is based on an old provision of the Civil Code. However, the position has been clear since the code was amended in 2016: assignments of rights no longer require notification to be delivered to a debtor by means of a process server.
The French Aircraft Registry, previously located in Paris, recently moved to Athis-Mons, approximately 20km south of Paris. Due to this relocation, the registry has been closed from 9 November 2020 until 13 November 2020 (however, the registry may be in a position to answer to emails as of 12 November 2020). Applicants to the registry that wish to register aircraft, and any related leases and mortgages, will have to use new registration forms which will refer to the registry's new location.
The French Civil Aviation Authority's Registration Office recently moved from Paris to Athis-Mons. As a result, aircraft mortgage beneficiaries must elect domicile in the jurisdiction of the Evry Tribunal Judiciaire. This will not prove too difficult for French banks, which may elect domicile at a branch in the Court of Evry's territorial jurisdiction; however, foreign lenders and non-banking mortgagees will have to find someone (eg, a notary) who will accept such election of domicile on their behalf.
The Court of Cassation recently rendered a decision concerning an AirAsia Airbus A320 which crashed in the Java Sea in December 2014, killing all crew and passengers on board. Notably, this decision reaffirms that, under French law, a manufacturer's liability cannot be limited or excluded on the grounds that another party or some other cause contributed to the damage if the product was defective and caused the damage.
French drone legislation was recently updated to require telepilots who fly drones for leisure purposes to undergo specific training. In addition, Law 2016-1428 on enhancing drone operational safety recently entered into force. Among other things, the law requires telepilots who fly drones weighing more than 800g to undergo mandatory training and requires certain civil drones to be registered.
In 2016 French contract law was restructured to render it more predictable and commercially attractive. The reform extended to the currency limitation rule, which was considered both restrictive and unclear. A recently passed implementing law is expected to provide greater flexibility for aviation transactions, as the currency limitations no longer apply to transactions between professionals where payment in a foreign currency is common practice in the relevant industry.
While developing its French network, Ryanair received support from various regional airports, including the Mixed Syndicate of Charente Airports (SMAC). The European Commission ultimately found this financial support to be illegal and, as a result, Ryanair had to repay the illicit subsidy to the SMAC. When Ryanair failed to make the payment in full, the SMAC requested the Bordeaux court to order the arrest of a Ryanair aircraft on its arrival at Bordeaux-Merignac Airport.
Bird strikes are not uncommon in civil aviation: every year there are approximately 5,000 to 6,000 incidents costing $1.2 billion worldwide. But this begs the question of who should be held responsible for bird strikes where an airport subcontracts the prevention of bird risk to a third party. The Supreme Court for Administrative Law recently had to decide which party was responsible for this collision, as previous case law on the matter was unclear.
Banking & Financial Services
Bank account pledges are often part of the security package in secured lending. To avoid the risk of the account being emptied prior to enforcement, practitioners have developed a blocking notice that may be delivered to the account holder where a default occurs. This aims to prevent the debtor from sweeping the account ahead of enforcement actions. However, following two recent court decisions, bank account pledges may not be as bulletproof as previously thought.
The Court of Cassation recently clarified its position on first-demand guarantees. Considering the significant consequences for the beneficiary of a guarantee (depending on whether it is characterised as a first-demand guarantee or suretyship), the court's reasoning should be looked at carefully by any drafter of a first-demand guarantee.