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Absence of retroactive application of article L.341-2 of the French Commercial Code
Cass. Com, 16 February 2022, n° 20-20429
Article 31 of Law No. 2015-990 of 6 August 2015 for growth, activity and equal economic opportunity (known as the "Macron" Law) created Article L.341-2 of the French Commercial Code relating to the conditions of enforceability of post-contractual non-competition clauses in distribution agreements in the retail sector.
Pursuant to this article, post-term non-competition clauses are deemed null and void unless they meet the following cumulative conditions: (i) they relate to goods and services competing with the contractual goods and services, (ii) they are limited to the premises and land from which the operator carried on its business during the term of the contract, (iii) they are essential to the protection of the substantial, specific and secret know-how that has been transmitted under the agreement, (iv) their duration does not exceed one year after the termination or expiration of the agreement.
Previously, apart from when European law was applicable, the rules applicable to these clauses were to be found in the case law of the Court of cassation, according to which "the validity of a post-contractual non-competition clause inserted in a franchise agreement is only subject to the condition that this clause be limited in time and space and that it is proportionate to the legitimate interests of the franchisor having regard to the purpose of the agreement" (Cass. Com., 24 November 2009, No 08-17650).
According to paragraph II of Article 31 of the Macron Law, Article L.341-2 of the French Commercial Code took effect on the expiration of a one-year period as from the promulgation of the law, i.e. as from August 6, 2016. However, the text of the Macron Law was silent about the possible applicability to ongoing contracts.
Likewise, the French Constitutional Council's decision n°2015-715 DC of 5 August 2015 did not provide a clear answer in this regard, merely concluding that there was no ‘manifestly disproportionate infringement’ of contractual freedom and of legally concluded agreements (Constitutional Council Decision n°2015-715 DC of August 5, 2015).
Nevertheless, the Constitutional Council, in its Press Release of the same date (5 August 2015) paved the way for the application of the new text to ongoing contracts by stating, "Article 31 [...] requires the compliance of ongoing contracts one year after the promulgation of the law." (Decision n°2015-715 DC of 5 August 2015 - Press Release).
The situation was equally confusing in the case law of the Paris Court of appeal as some rulings had held that the law applied to ongoing contracts as of 6 August 2016 (CA Paris, 22 November 2018, No 18/06688) whereas other rulings had denied this application to ongoing contracts (CA Paris, 13 December 2019, n°19/02615).
In its decision of 16 February 2022, the Court of cassation finally settled the debate on the application of article L.341-2 of the French Commercial Code to ongoing contracts and overruled the decision of the Court of appeal that had declared this text applicable to a contract already in force on 6 August 2016. The Court of cassation thus held that "a new law cannot, except in the case of retroactivity expressly stipulated in said law, which does not exist in the present case, call into question the validity of a contractual clause governed by the provisions in force on the date when the contract was entered into".
This solution is to be welcomed, in that it puts an end to the legal uncertainty which existed until then and is consistent with the principle of non-retroactivity of the law.
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