The Judicial Court of Paris has sole jurisdiction to hear actions in Duty of Vigilance – Environmental law

Parent companies and large companies acting as principals may be held liable in the event of a breach of their duty of care.

This duty of care takes into account among others the risks of damage to the environment linked to the activities of these companies, as well as those of their subsidiaries, subcontractors or suppliers.

The debate on the jurisdiction competent to assess a vigilance plan has just been definitively settled: the Court of Paris (Judicial Court of Paris) has sole jurisdiction to hear disputes relating to the duty of care.

First of all, it should be recalled that it is Law No. 2017-399 of March 27, 2017 which imposed a duty of care on certain parent companies and large companies acting as principals. This law was developed in response to various human and environmental disasters involving multinational companies, including the collapse of Rana Plaza in Bangladesh in 2013.

This duty of care translates into an obligation (i) to establish a vigilance plan to identify risks and prevent serious violations of human rights and fundamental freedoms, serious violations of the health and safety of people and the environment, and (ii) to effectively implement and publish it. We recently mentioned in another article the changes made by the Climate and Resilience Law with regard to the duty of vigilance.1

With regard to the sanctions and penalties applicable in the event of non-compliance with this obligation, in accordance with Article L. 225-102-4 of the French Commercial Code, when a company is formally invited to comply with the obligations provided for in this section but fails to do so, the matter may be referred to a court at the request of any person having an interest in bringing proceedings. The case can also be brought before the president of the court, ruling in summary proceedings. Article L. 225-102-5 of the same code provides that the liability of those responsible for breaches of the duty of vigilance may be engaged on the basis of extra-contractual civil liability, as provided for in articles 1240 and 1241 of the civil code. , for the purpose of compensation for the damage that the performance of these obligations would have prevented. These provisions are not accompanied by any specific rules of jurisdiction.

It is in this context that the first disputes relating to the implementation of these obligations raised the question of jurisdiction in the event of summary proceedings, following a formal notice that remained unsuccessful:

  • In a first case, known as the “Total in Uganda” case:

Six associations have filed an application for interim relief before the interim relief judge against the oil company Total for breach of its duty of vigilance in connection with its activities in Uganda. They claim that Total’s oil development project had significant social and environmental impacts that were not taken into account in the company’s vigilance plan.

By order dated January 30, 2020, the president of the Nanterre court, ruling in summary proceedings, declared himself incompetent and ruled that the case should be brought before the commercial court. This order was confirmed by a judgment of the Court of Appeal of Versailles of December 10, 2020. In order to retain the exclusive jurisdiction of the Commercial Court, the Court of Appeal of Versailles ruled that the vigilance plan, whose development and implementation are directly related to the management of the company, constitutes a commercial operation (trading), not a mixed transaction (mixed act) which would confer on the plaintiffs a so-called right of option, that is to say an option of jurisdiction allowing them to choose to bring the case either before a civil court or before a commercial court.

  • In a second case, called “Total for climate inaction”:

This time, the dispute opposed five associations and 14 local authorities on the one hand and Total on the other. The plaintiffs argued that Total had made insufficient climate commitments, as expressed in its vigilance plan, with regard to the objectives set by the Paris Agreement.

In a procedural matter raised in limine litis (i.e. before any defense on the merits), Total challenged the jurisdiction of the Court of Nanterre, as it had done in the previous case.

By order dated February 11, 2021, the magistrate of the Nanterre court dismissed Total’s objection to jurisdiction. It noted that while the dispute relating to vigilance did indeed fall within the jurisdiction of the Commercial Court, the option of jurisdiction between the Judicial Court and the Commercial Court was open to the non-commercial party. According to him, the purpose of the plan goes beyond the commercial dimension of management and falls within the social responsibility of the company.

In December 2021, the file is settled in two stages which follow one another quickly:

  • Firstly, by the decision rendered on December 15, 2021 by the commercial chamber of the Court of Cassation (French Court of Cassation) in the “Total in Uganda” case: The
    Court of Cassation ruled that the vigilance plan did not constitute a commercial transaction (trading) and that, if the development and implementation of such a plan have a direct link with the management of a company, justifying the jurisdiction of the commercial court, the non-commercial claimant has the choice of seizing either the court court or before the commercial court.
  • Secondly, by law n° 2021-1729 of December 22, 2021 on confidence in justice: A new article L. 211-21 was introduced on December 24, 2021 in the Code of judicial organization according to which “The Paris Court of Justice hears appeals relating to the duty of vigilance based on Articles L. 225-102-4 and L. 225-102-5 of the [French] Trade code“.

Obviously, the stake is not only symbolic. The question is whether a commercial judge, rather than a civil judge, should evaluate a vigilance plan. The French legislator decided that the Judicial Court would have jurisdiction, in accordance with a general trend towards the specialization of jurisdictions for the most technical disputes.

It is true that the growing technical nature of environmental litigation has already led to the designation of courts with special jurisdiction to hear ecological damage, civil liability actions based on the environmental code and breaches of this code.

In the present case, it was considered that the object of the legal actions relating to the vigilance plan went beyond the framework of corporate litigation – a type of litigation for which the Commercial Court has sole jurisdiction – since the object of the duty vigilance is nothing more and nothing less than “identify[ing] serious risks and violations of human rights and fundamental freedoms, serious harm to human health and safety and the environment“.

Footnote

1. See the article entitled Climate and Resilience Law: What impact on company law? published on our Blog in December 2021

To read in French, please click here.

The content of this article is intended to provide a general guide on the subject. Specialist advice should be sought regarding your particular situation.

Thelma J. Longworth