France: Does French law recognise a duty to mitigate?
08 December 2014
Posted by: Author: Andrew Tetley
Author: Andrew Tetley (Reed Smith)
Introduction On 2 July 2014, the 1st Civil Chamber of the French Cassation Court reaffirmed that a tortfeasor is liable for all consequences resulting from his or her tort. The victim of the tort has no duty to mitigate losses in the interests of the tortfeasor.
Case summary In the case, the partners of a company, after buying a house, applied for tax reductions on their personal income. The tax authorities refused their application and imposed tax on the partners. The partners then sued the promoters of the house sale and the notaries who drew up the sale documents. The partners sued in tort, based on article 1382 of the Civil Code, for breach of duty to provide advice. Article 1382 is the core, broad statutory provision underpinning most fault based tort liability under French law.
The Court of Appeal allowed the claim against the notaries and ordered them to make good the losses. The notaries took the matter on final appeal to the Cassation Court with respect to application of Article 1382. The notaries argued that the partners could have avoided the full extent of their losses if they had followed the recommendations of the tax authorities, given to the partners after the sale. The partners did not follow the recommendations. By their omission, the notaries argued, the partners failed to mitigate their losses and were thereby at fault.
The Cassation Court dismissed the appeal holding that the victim of a tort has no duty to mitigate his losses.
Comment While the exact nature of the "duty" to mitigate is sometimes debated, it is nevertheless well established in many systems of law – most notably in the English and American systems. It not infrequently arises in international arbitration, placing an onus on the victim of a breach of contract or a tort, as the case may be, to act responsibly once a breach of duty or contract has occurred.
However, in France any such "duty" has long been resisted by the courts, despite academic support for change from some quarters, and despite occasional lapses from France's highest courts. A 2011 decision of the 2nd Civil Chamber of the Cassation Court, in an insurance (and thus contractual) case, was widely commented at the time as opening the door to a duty to mitigate, not only in contract but also in tort matters.
However, a string of decisions of the Cassation Court over 2013 and 2014, ending most recently with the commented case above, would seem to firmly establish that no such duty exists under French law, at least so far as tort claims are concerned. In terms of contract, the jury is still perhaps out. But, of course, in contract it is always possible to stipulate expressly for such a duty, if a party so wishes. It is thus open to contracting parties to address this uncertainty by the terms of their contract.
This article first appeared on mondaq.com.