The sudden termination of a business relationship between a French company and a foreign company may lead to compensation being awarded to the company that has suffered the termination. However, in an international or European business relationship the question of the applicable law and jurisdiction arises. It is therefore necessary to determine whether the concept of “sudden termination” falls within the scope of contractual or tortious litigation.
The termination of a contract, even if made in compliance with said contract, can trigger a right to compensation as provided for in article L. 442-1, II° of the French Commercial Code.
Indeed, the party responsible for terminating an established commercial relationship may be liable if the commercial relationship is abruptly terminated, i.e., if the terminating party fails to give reasonable written notice[1] to the other party. If the notice period is insufficient, the termination is considered to be wrongful and the party suffering the termination is entitled to claim damages before the competent court.
Under French law, this liability is tortious and not contractual as it does not concern the termination of the contract itself (which can give rise to a separate action in contractual liability) but rather the suddenness of the termination.
Case 1: A Relationship Between Two French Companies
Determining the competent jurisdiction for disputes relating to the sudden termination of a commercial relationship is linked to the nature of the liability involved: as this liability is tortious and not contractual, the legal rules regarding the competent jurisdiction for tort claims apply.
Consequently, pursuant to article 46 of the French Code of Civil Procedure, the claimant has the option of territorial jurisdiction between
It should be noted that in the case of legal entities the damage resulting from a sudden termination is suffered at the head office, whereas the event causing the loss occurs at the head office of the entity terminating the relationship.
Case 2: A Relationship Between a Non-European Company and a French Company
In the case of a commercial relationship between a French company and a non–European Union company, case law has recently reiterated[2] that, in the international context, the sudden termination of an established commercial relationship is a tortuous act since the purpose of such an action is to compensate for the damage caused by the sudden termination and not the termination itself.
The option of territorial jurisdiction in tort under article 46 of the French Code of Civil Procedure is therefore open to the claimant who wishes to bring the case before a French court.
Case 3: A Relationship Between a European Company and a French Company
In this case, determining which action should be brought and which court has jurisdiction raises a number of questions. At the European level, the case law of the Court of Justice of the European Union (CJEU) in determining whether the dispute is contractual or tortious and which court has jurisdiction is not entirely clear.
The Granarolo Case Law
In its 2016 Granarolo case law,[3] the CJEU ruled that the sudden termination of a commercial relationship falls within the scope of contractual claims as there was a contractual relationship between the parties.
For a contractual claim, Article 7, 1°, b) of the Brussels I bis Regulation stipulates that the plaintiff must sue at the place where the obligation is performed, that is:
These jurisdictional rules may prove less protective for French companies wishing to sue a European company as both locations may potentially be outside of France and in a country that does not compensate the victims of a sudden termination of commercial relations.
The Wikingerhof Case and the Court of Cassation’s Preliminary Question
In its Wikingerhof case law of 2020,[4] the court ruled that an action against the perpetrator of a sudden termination of a commercial relationship was a tortious claim since it was not necessary to analyze the content of the contract in order to reach a decision. On the contrary, if such analysis is required to settle the dispute, it falls within the scope of contractual claims.
Without an express statement from the court, it is not possible to determine whether this second ruling represents a reversal of the case law or whether the Granarolo case law is still intended to apply.
To clarify the European position, on April 2 the French High Court (Cour de cassation) referred a prejudicial question (question préjudicielle) to the CJEU for a preliminary ruling.[5] One can hope that the answer to this question will provide greater predictability to the parties facing this difficult issue.
Law clerk Marion Duval contributed to this Insight.
[1] The reasonable notice period is determined by the courts on the basis of a number of criteria, including the length of the business relationship, the difficulty of replacing the co-contractor, and the situation of economic dependence.
[2] Cass. civ. 1ère, March 12, 2025, no. 23-22.051.
[3] CJEU, July 14, 2016, no. C-196/15, Granarolo.
[4] CJEU, November 24, 2020, no. C-59/19, Wikingerhof.
[5] Cass. civ. 1ère, April 2, 2025, no. 23-11.456.