Articles

The Impact of the French Doctrine of Significant Imbalance on International Business Transactions

D. RESTREPO AMARILES, E. M. BASSILANA, M. M. WINKLER

Journal of Business Law

février 2018, n°2, pp.148-168

Départements : Droit et fiscalité, GREGHEC (CNRS)

Mots clés : Applicable law; Commercial contracts; France; Inequality of bargaining power; Unfair contract terms


This article examines the concept of “significant imbalance” (SI) under Frenchlaw and its impact on international business transactions. “Significant imbalance” is a legal standard meant to assess whether a contractual clause is unfair (abusive). Although initially restricted to consumer law, it has been extended to general contract law with the implementation of a reform entered into force on 1 October 2016. Previously, the Commercial Court of Parisin the ruling Ministry of Economy v Expedia, Inc (2015) had qualified SI as an “overriding mandatory provision” (loi de police) under Regulation 593/2008 on the applicable law to contractual obligations (Rome I). As a consequence, SI became operative in respect of international contracts despite an express choice of a foreign governing law made by the parties to the transaction. This article argues that, as a result of Expedia and the 2016 reform, French courts can interfere with international business transactions by striking down contractual terms that they deem unfair according to the SI standard. The analysis focuses on two key issues. On the one hand, notwithstanding recent judicial precedents, SI still fails to provide a reliable test for predicting which clauses or contracts are at risk of being deemed unfair. On the other hand, the legal arsenal supporting the French legislator’s disapproval of SI allocates great powerto French courts and the French Government to pursue tort lawsuits against foreign companies allegedly oppressing their commercial partners with SI clauses. Empirical evidence shows that these actions are highly successful compared with those commenced by private actors. The article concludesthat all these aspects, together with SI’s turbulent case law throughout the years, will give rise to uncertainty in international business transactions and may eventually disadvantage France in the global competition in such a field


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