French damages law “being reshaped”

French law is currently being reshaped in a modernization project designed to increase legal certainty and efficiency, reports Pierre-Louis Merer on the Shipowners’ Club web site:

“Hopefully this will pay dividends for Members operating in the country, in terms of more certainty over their liabilities and, in time, lower overall claims costs”, he wrote.

France is a civil law system, meaning its core principles were codified and did not come from court judgments. Reforming the civil codes was therefore necessary to keep the law up to date with the expectations of people and businesses present in the jurisdiction, Merer said.

The legal regime on obligations and liabilities in the French Civil Code had remained mostly untouched since its introduction by Napoleon in 1804, but was now being redrafted.

The French Parliament recently agreed a first revision to French contract law and now a project to reform it further, together with tort law, was being discussed.

If the proposal submitted by the Ministry of Justice was ratified, the duty to mitigate would make its first ever appearance in the French Civil Code.

The duty to mitigate was a pillar of common law present in many civil jurisdictions, including the Netherlands, Switzerland, Germany, Italy, Portugal and Québec. It was incorporated in the Vienna Convention on the International Sale of Goods.

Under this principle, a party that suffers some form of injury or loss has an obligation to minimize it by taking reasonable steps. But French courts do not currently recognize a duty to mitigate as it is absent from the Civil Code. This has created a discrepancy between France and its neighbours when assessing the damages due to an aggrieved party.

Merer noted that French law has a reputation for favouring the claimant and this was notably illustrated by the Court of Cassation’s (the French Supreme Court) refusal to impose on the claimant a duty to mitigate its loss. Most such decisions were issued under article 1382 of the Civil Code, the heart of French tort law (now article 1240) and concerned personal injury. The Court of Cassation held that “the person responsible has the duty to offer compensation for all the losses resulting from the accident; a victim does not have to mitigate its loss in the interests of the tortfeasor”.

In subsequent cases the refusal to impose a duty to mitigate on the claimant was extended to contract law. The Court of Cassation issued similar decisions under article 1147 of the Civil Code, which contained the principle of contractual liability in French law (now article 1231-1).

As Merer observed “this case law might come as an unwelcome surprise for practitioners familiar with litigation under common law, possibly making French law less attractive in international disputes.”

Many authors and lawyers in France regretted the hard stance taken by the French Courts and repeatedly encouraged the Court of Cassation to adopt a different approach. They argued that, at least with contracts, an obligation to mitigate losses could result from either the duty of good faith existing between contracting parties under article 1134 of the French Civil Code (now article 1104), or the measure of damages stated in article 1151 (now 1231-2 and foll).

Maritime arbitrators in France shared this view, and some decisions of the Court of Cassation took into account the failure of a claimant contracting party to take action when calculating damages. However, the most recent position held that a claimant bore no such obligation in tort and generally not in contract either. This meant that reform of the Civil Code was necessary to achieve real progress in this area and avoid any doubt.

A Project of Reform presented by the Ministry of Justice on March 13th 2017 was expected to be debated before the Parliament during the current legislative term.

Although the introduction of this article in the French Civil Code was welcome Merer said that it was important to note that its application was limited in two ways. First, it expressly excluded cases relating to personal injury. Secondly, the article states that the claimant was expected to avoid an aggravation of its loss which was not quite the same as imposing an obligation on them to minimize their loss. The degree of the claimant’s obligation would therefore be lesser than under common law, where the claimant was required to reduce its loss if reasonably possible.

https://www.shipownersclub.com/pierre-loius-merer-the-dawn-of-a-duty-to-mitigate-damages-in-french-law/