After some doubts, this generous French law approach was thought to have been finally settled by a Full Court decision of the French Supreme Court in the Boot Shop case handed down in October 2006.1 However, since then, some residual doubts have been expressed by certain courts (some of which have been reluctant to step into this extraordinary legal panorama), perhaps most eloquently captured by the words of Cardozo J in Ultramares Corporation v. Touche2 and reproduced in the title of this alert.
This year the French Supreme Court has handed down yet another Full Court decision, calling to order those courts (including sections of the Supreme Court itself) that sought to find chinks in its earlier Boot Shop Full Court ruling.
In the particular case,3 an energy supplier suffered a fire following which a factory operated by a cane sugar manufacturer, Bois Rouge, was closed for a number of weeks due to a lack of energy supply caused by the fire.
Under the terms of an agreement that Bois Rouge had previously concluded with another sugar manufacturer, Sucrerie, the latter carried out part of the cane processing that should have been carried out by Bois Rouge.
The subrogated insurer of Sucrerie, having indemnified its client for operating losses, applied to the court to obtain reimbursement of this indemnity from Bois Rouge and the energy supplier. The claim was dismissed by both the court of first instance and the court of appeal.
The insurer appealed to the French Court of Cassation, the Supreme Court for civil and criminal matters. The matter was referred to the Court’s Plenary Assembly, i.e., to a Full Court bench of 19 judges.
Argument focused on the claim made by Sucrerie’s insurer against the energy supplier. The French Court of Cassation was invited to consider whether the insurer, as a third party to the energy supply contract between Bois Rouge and the supplier, could bring a claim in tort against the supplier based on a breach of contract by the supplier. The breach in question was that the supplier had failed to supply energy to the factory operated by Bois Rouge, which had led to Sucrerie suffering operating losses when it came to the assistance of Bois Rouge. A crucial part of the argument centered on the nature of the negligent act committed by the party said to be in breach of contract that must be proven by the third party in order to establish tortious liability.
The Full Court referred to the position previously set out in its Boot Shop decision, in which it held that “a third party to a contract, on a tortious cause of action, may invoke a breach of contract where that breach has caused him loss.”4
The Court of Appeal, while purporting to apply the principle enunciated in the Boot Shop decision, nuanced its application by requiring that the third party show a tortious act committed by the contracting party vis à vis the third party, something akin to a breach of the common law duty of care.
It was on this point that the Full Court took the opportunity to clarify its earlier ruling in the Boot Shop decision. The court held that no burden of proof of any broader tortious act lies on the third party, other than proof of the contractual breach in question and the causal link between the breach and its loss and damage. No distinction is to be drawn between types of breach of contract. The principle applies equally whether the breach is a breach of a contractual duty to exercise due care or a strict contractual duty to achieve a particular outcome. The Court of Appeal’s decision was accordingly set aside as it had not correctly applied the appropriate principles.