Real Estate News – Commercial Leases : the Court of Cassation specifies the regime of the deemed unwritten clause

 

In a decision dated 19 November 2020, the French Supreme Court (Cour de cassation) clarified the regime for clauses contrary to Article L. 145-15 of the French Commercial Code, as amended by the law of 18 June 2014 (known as the Pinel Law).

Prior to the Pinel Act, Article L. 145-15 of the French Commercial Code sanctioned the nullity of clauses, stipulations and arrangements that were contrary to the public policy provisions of the Commercial Lease Statute. This action was subject to the two-year statute of limitations provided for in Article L. 145-60 of the French Commercial Code.

The legislator, with the Pinel Act, gave an unwritten character to these clauses in place of the previous nullity regime.

In the present case, a lessee had summoned his landlord to cancel the order to pay on the ground that the sums sought resulted from the application of a clause in the lease that had to be declared unwritten.

According to the lessor, the lessee’s action was affected by the two-year statute of limitations.

In a judgment dated 19 December 2018, the Paris Court of Appeal declared the clause in the lease relating to the revision of rents to be unwritten on the basis of Article L. 145-15 of the French Commercial Code, as it was contrary to Article L. 145-38 of the French Commercial Code relating to the three-year revision.

This clause provided for a review of the rent every year, while referring to the provisions of the statutory review which can only take place every 3 years.

The rent had been revised by the landlord annually pursuant to the disputed clause, so that the amount indicated to the order to pay was partly unfounded.

The Court of Appeal infers from this that the order is valid only up to the justified sums.

The landlord appealed and complained, inter alia, that the court of appeal had found the clause unwritten despite the limitation period for the lessee’s action concerning a lease entered into in 1998.

The issue was to determine the regime for actions challenging clauses contrary to the public policy provisions of the Commercial Lease Statute contained in leases entered into prior to the coming into force of the Pinel Act.

By this decision, the Court of Cassation specifies that the action is applicable to leases entered into prior to the Law of 18 June 2014 (1) and that actions seeking to have clauses of a lease declared unwritten on the basis of Article L. 145-15 of the lease are not subject to the statute of limitations (2).

  1. Application of the sanction provided for in Article L.145-15 of the French Commercial Code to leases entered into before the Pinel Act came into force.
  2. The imprescriptibility of clauses contrary to Article L.145-15 of the Commercial Code.

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