Special edition LFA Covid 19 : Litigation I Update April 16, 2020

Since 16 March 2020, the French courts have activated emergency operations to slow down the spread of COVID-19 in France.

The courts are therefore closed and the hearings are postponed. Only litigation that is considered essential will be proceeded, namely:

• Custodial hearings for pre-trial detention and judicial review measures,
• Hearings in criminal proceedings,
• Hearings before the examining judge and the magistrate in custody,
• Hearings of enforcement judges in emergency cases,
• Custody disputes and juvenile court hearings, including educational assistance,
• Prosecutor’s standby duty,
• Emergency and urgent measures under the jurisdiction of the family court judge (e.g. dilapidated buildings, domestic violence),
• Hearings before the so-called judge of civil liberties (e.g. hospitalisation under duress, detention of foreigners),
• Emergency service of the juvenile courts, pedagogical emergency aid,
• The hearings of the criminal chamber of examination on detention,
• Hearings of the criminal chambers of appeal and the criminal chambers of custody.

The meetings shall be adjourned within reasonable time limits in view of the risk of contagion to court staff and the public.

Except for cases of utmost importance, all hearings scheduled for April 2020 will be postponed either indefinitely or until September 2020, depending on the jurisdiction and chambers.

Nicole Belloubet, Minister of Justice, explained that it is for the courts to determine these measures at their level on a case-by-case basis. For example, the Paris Court of Appeal has set up a permanent office for investigative measures and summary proceedings.

As the COVID-19 crisis has hampered many economic activities, the commercial courts have been instructed by the Ministry of Justice not to initiate any new proceedings that could affect the economic survival of the companies. With this in mind, on 27 March 2020 the Government adopted Regulation No 2020-341, which established a series of adjustments to the provisions of insolvency law during this health emergency.

In general, in ordinary cases that are not urgent, it is still possible to initiate new insolvency proceedings before the courts. During the current period, however, they are not assigned a hearing date.

Act No 2020-290 of 23 March 2020 on emergency measures to combat the COVID-19 epidemic declares a health emergency throughout the country for a period of two months from its entry into force, i.e. until 24 May 2020. This period may be extended by Parliament or shortened by a regulation of the Council of Ministers.

Its purpose is to empower the Government to take the necessary measures to contain the COVID-19 epidemic by regulation.

Among these extraordinary measures, the Act provides for “the adjustment, interruption, suspension or postponement of the duration of deadlines with regard to nullity, lapse, foreclosure, limitation, non-invocability, forfeiture of a right, termination of an authorisation or cessation of a measure, with the exception of measures involving deprivation of liberty and penalties“.

The aim is, on the one hand, to freeze the legal deadlines that cannot be met currently because of the state of emergency of the courts and, on the other hand, to allow the possibility of adapting or suspending the deadlines for proceedings, appeals, limitation periods, etc. 

On 25 March 2020, on the basis of the Health Emergency Act, the Government adopted a number of regulations, including Regulation No. 2020-306 on the extension of legal deadlines and adjustment of Procedures during the Period of Health Emergency, which aims to extend the deadlines for proceedings, with retroactive effect from 12 March 2020.

On 15 April 2020, the Government amended this Regulation in order to resolve certain difficulties with regard to notification (Regulation No 2020-427 of 15 April 2020 on various provisions concerning deadlines for dealing with the Covid 19 epidemic).

These Regulations apply to deadlines and measures that expire between 12 March 2020 and one month after the end of the health emergency period, i.e. by 24 June 2020.

All procedural deadlines that expire during this so-called COVID-19 crisis period will be postponed. 

This concerns the deadlines applicable before the courts for any obligatory act, appeal, action, registration, declaration, notification or publication under threat of nullity, extinction, sanction, enforcement, limitation, unenforceability, inadmissibility, automatic withdrawal, application of a special rule, nullity or revocation of a right. 

This postponement of deadlines also applies to payments required for the acquisition or maintenance of a right (e.g. registration and appeal fees).

However, it does not apply to criminal proceedings and proceedings before juvenile courts or to measures involving deprivation of liberty.

The report to the President of the Republic on Regulation 2020-427 of 15 April 2020 has clarified the mechanism for postponing procedural deadlines: It is not a question of suspending or extending the initial period for action. Rather the act or formality is considered to have been validly performed if it is carried out by 24 August 2020. It is therefore a question of giving the person concerned the opportunity to do afterwards (and as if the deadline had been met) what he or she was not able to do during the period of health emergency plus one month. 

However, the mechanism for postponing deadlines is not applicable to:

• Deadlines that expired before 12 March 2020;
• Deadlines that expire after 24 June 2020;
• Withdrawal, waiver or reflection periods;
• Deadlines for reimbursement of a sum of money in the event of exercise of the right of withdrawal or waiver. 

This postponement of the procedural deadlines provided for in the Regulations has to be considered as a sole option for the parties. Despite the state of emergency, they will be able to continue to prepare their files and pleadings in relation to their proceedings. Only the holding of hearings has generally been postponed due to the confinement.

Moreover, judicial and administrative measures whose duration ends between 12 March and 24 June 2020 will also be postponed until 24 August 2020, unless the judge or the authority that took them decides otherwise. These include interim protective measures, investigation, conciliation or mediation measures, permits, authorisations, etc., which are subject to the same conditions.

The Regulations have also altered contractual relations: they provide for penalty, dissolution, forfeiture and constraint payment clauses (hereinafter referred to as “sanction clauses”) to be paralysed during the COVID-19 crisis period. However, the Contracting Parties may consent that these clauses shall continue to apply normally, even if this is unlikely to happen in practice.

If the contracting party fails to fulfil its contractual obligation, the sanction clauses which should have been in force between 12 March and 24 June 2020 will be postponed to a date posterior to 24 June 2020 for the period between 12 March 2020 and the theoretical date of effectiveness of the sanction clause. For example, a penalty clause sanctioning the non-fulfilment of a payment obligation, whose due date would be 2 April 2020, this due date would be 21 days from 12 March 2020, the beginning of the health emergency period. In this case, the penalty clause would come into force 21 days after the end of the health emergency period, which normally occurs on 24 June 2020. It would therefore enter into force on 15 July 2020.

However, if these penalty clauses apply due to the non-fulfilment of an obligation to act or to omit, and if they are due after 24 June 2020, their effects shall be postponed to a date calculated on the basis of the duration of the health emergency period from 12 March to 24 June 2020 (i.e. 105 days). For illustration, if a contract before 12 March 2020 provides for an obligation that expires on 30 June 2020, the sanction clause sanctioning the non-fulfilment of this obligation will not enter into force until 105 days after 30 June 2020, i.e. 13 October 2020. However, monetary obligations are excluded from this provision.

In addition, periodic penalty payments and penalty clauses which entered into force before 12 March 2020 will be suspended for the entire period from 12 March 2020 to 24 June 2020 and will resume their effects from 25 June 2020.

Finally, contracts such as commercial leases or fixed-term subscription contracts which can only be terminated or renewed within a certain period of time are subject to a two-month extension so that the parties concerned can exercise their right to terminate or renew the contract until 24 August 2020.

Therefore, during the health emergency period, contracting parties should consider alternative dispute resolution methods, in particular mediation, to settle their commercial disputes. Most of the main mediation centres are still accessible: they are accessible electronically and the mediators are available by videoconference or telephone to help the parties to resolve their disputes quickly and efficiently. In this way, companies that use this moment of crisis to resolve disputes can focus on their operational and commercial realignment once the COVID-19 crisis is over.

The extension mentioned here above applies to all time limits applicable to State administrations, local authorities, public administrative establishments, as well as public and private law bodies and persons entrusted with a public administrative service mission (in particular social security bodies). Indeed, it is specified that during the COVID-19 crisis period, all deadlines are suspended that would have required public administrations and bodies to take a decision, an agreement or an explicit or implicit opinion.

The same applies in particular to the recovery of public debts.

On the other hand, the Government has made it clear that the extension of time limits does not apply to declarations used for taxation and the assessment, liquidation and collection of taxes. 

In this connection it should be noted that the Government adopted three other ordinances on the same day to adapt the rules applicable to judicial, administrative and criminal proceedings in the face of the crisis.

On 25 March 2020, the Government issued Regulation No 2020-304, which regulates, inter alia, the functioning of the courts, communication with the court registry and between the parties, the holding of hearings and court hearings, and the delivery of judgments in the civil courts of first instance and courts of appeal in the period from 12 March 2020 to 24 June 2020.

Transfer of judicial activity

Where a court of first instance is wholly or partly inoperative, the first president of the court of appeal falling within its jurisdiction may order the transfer of the functions of that court – wholly or partly – to another court of the same nature and jurisdiction. The duration of such transfer of activity may not exceed the period of one month after the end of the health emergency, i.e. until 24 June 2020.

Simplified communication

Communication between the court registry and the parties and between the parties themselves is simplified.

Communication by the court registry

If an oral hearing during the health emergency period is cancelled, the court registry shall inform the parties of the postponement of the oral hearing by any means. If the parties are represented by an attorney or if they have agreed to receive documents on the “Portail du justiciable”, the information is usually transmitted electronically. In other cases, the information is usually sent by post, by simple letter.

Similarly, the transmission of judgments by the court to the parties can be done by any means. However, the official notification of judgments has not been changed.

Service of procedural documents between the parties

The parties may exchange their written pleadings and legal documents by any means, but must give the judge the opportunity to ensure that the principle of adversarial procedure is respected. In written procedures and without an oral hearing, the parties shall communicate via their attorneys. Each party must therefore ensure in all cases that it can prove that its written pleadings and legal documents have been transmitted to the other party.

Conduct of hearings

The rules on the holding of hearings have been adapted in so far as the courts run in emergency mode and do not have to take into account the principle of publicity during the health emergency period.

First of all, in civil and commercial disputes, the judge or the president of chamber may, in all proceedings in which an attorney is required and in which the parties are assisted or represented by an attorney, decide to rule without an oral hearing and after a written procedure. The parties may not appeal against that decision in summary procedures, in accelerated procedures and in procedures where the judge has to rule within a certain period of time. In other procedures, the parties may appeal against the decision not to hold hearings within 15 days.

For example, by decision of 27 April 2020, the First President of the Paris Court of Appeal decided that hearings scheduled between 16 March and 24 June 2020 before the Paris Court of Appeal, as well as pre-trial hearings scheduled during the same period, would be dealt with in the proceedings without an oral hearing. The parties may appeal against this procedural decision without a hearing within 15 days from 27 April 2020, i.e. until 12 May 2020.

Hearings are reserved for emergency procedures where the appearance of the parties or their attorney during the health emergency period is indispensable. In any case, the president of the court may decide before the hearing that the proceedings shall be held in restricted public. If the conditions necessary to protect the health of the persons present at the hearing cannot be guaranteed, the procedure shall be conducted in the chambers of the court under exclusion of the public.

In addition, the judge may decide that the hearing shall be conducted by means of audio-visual telecommunication. If it is not technically or materially possible to establish this type of hearing, the judge may decide to hear the parties and their legal counsel by any electronic means of communication, including by telephone. In all cases, the judge must guarantee the identity of the parties, the quality of communication and the confidentiality of exchanges between the parties and their attorneys.

The deliberations

The Regulation has amended the way in which judges deliver judgments taking into account of the very limited activity of the courts.

First of all, the court may decide by a single judge at first instance and on appeal by decision of the president of the court if the hearing of the parties’ submissions, the conclusion of the investigation or the decision to rule on the case without a hearing takes place between 12 March and 24 June 2020. However, this possibility is excluded in commercial and labour courts. Thus, hearings, especially in labour court proceedings, are conducted in restricted formation, consisting of an employer and an employee representative.

In addition, the conditions of a judgment by default have changed. As a reminder, a judgment by default gives the losing defendant the opportunity to appeal against the judgment, which obliges the first instance judge to rule again. A judgment is normally considered a judgment by default if the defendant did not engage in proceedings, on the double condition that he was not summoned in person and that the judgment is given at last instance. The Regulation provides that a judgment by default is given if the defendant was not summoned in person and does not appear at the hearing. It therefore exempts the court registry from a second try of personal summons if the defendant does not appear for the hearing. The Regulation thus extends the right of objection of the non-appearing defendant due to the communication and confinement difficulties caused by the health emergency.

Finally, in a preliminary summary proceeding, the competent judge may decide to reject the motion without an oral hearing by non-adversarial order if the motion is inadmissible or if there is no need for summary proceedings.