In a ruling of 18 December 2024 (Civ. 1ère, pourvoi n° 23-19.224), the Cour de cassation clarified the obligations of the French judge when applying foreign law in matters of unfair competition and economic parasitism. The case, which pitted the SEB-Moulinex group against several French and foreign companies, concerned the imitation of household electrical appliances and the infringement of an operating licence granted to Egyptian companies.
This dispute arose in a context of international commercial relations where the question of applicable law was central.
Background to the dispute and the issue of applicable law
The case arose out of an agreement concluded in 2002 between the SEB group, the purchaser of Moulinex’s assets, and two Egyptian companies, Misr Intercommerce and Blendex Egypt. Under the terms of the agreement, the former was granted exclusive distribution rights for Moulinex products in Egypt, while the latter was granted a licence to operate and manufacture under the Moulinex brand, including the loan of moulds for the manufacture of products.
A dispute arose following the termination of these commercial relations.
Groupe SEB accused Mienta France and several other companies of unfair and parasitic competition. The Paris Court of Appeal ruled that Egyptian law was applicable. It ordered the companies in question to pay €3 million in civil liability for unfair competition, on the basis of article 66 of the Egyptian Commercial Code. However, it also prohibited them from manufacturing and marketing certain disputed products, this time on the basis of French law.
This reasoning led the Court of Cassation to reiterate a fundamental principle of private international law: when a court applies foreign law, it must investigate its content and draw all the consequences from it.
The application of foreign law to unfair competition
The Court of Appeal applied Egyptian law, considering that unfair competition was governed by article 66 of the Egyptian Commercial Code. This law punishes behaviour that damages a competitor’s reputation or that may create confusion about the origin of products, without requiring the prior existence of a private right (patent, trademark, model).
The claimants challenged this analysis, criticising the Court of Appeal for having simply reproduced one of the conflicting legal opinions submitted to the court, without itself investigating the exact content of Egyptian law. However, the Court of Cassation upheld the lower court’s analysis, holding that it had correctly exercised its discretion in assessing the scope of the applicable law.
The Court of Appeal had prohibited the companies from manufacturing and marketing the products in question on the basis of French law, even though it had ruled that Egyptian law was applicable to the dispute. Now, in private international law, when a foreign law is declared applicable, the French judge cannot alter its scope by superimposing rules derived from French law unless those rules are of public policy or ‘lois de police‘.
📌 A reminder of the principles of private international law
This judgment provides an opportunity to recall the principles applicable to determining the law governing an international dispute:
The law applicable to the contract
- In accordance with the Rome I Regulation (no. 593/2008), the parties to an international contract are free to choose the law applicable to their contractual relationship. In the absence of an express choice, the applicable law is generally that of the country where the characteristic service is provided, unless the contract is most closely connected with another country. (articles 3 and 4)
The law applicable to liability in tort
- In matters of non-contractual liability (unfair competition, parasitism), the Rome II Regulation (no. 864/2007 ) provides that the applicable law is, in principle, that of the country where the damage occurred or is likely to occur. (article 4)
In this case, since unfair competition was invoked in relation to events that took place in Egypt, Egyptian law was chosen.
The role of the French judge in relation to foreign law
- When a French court recognises that a foreign law is applicable, it is obliged to investigate its content, with the assistance of the parties if necessary. It cannot then substitute French law for some of the claims. It was on this point that the Court of Appeal erred in issuing a prohibition based on French law when it had accepted that Egyptian law governed the unfair competition dispute.
📌 A pedagogical ruling on the application of foreign law by a French court
This decision illustrates the need for the French court to consistently apply the foreign law it recognises as applicable. While the Cour de cassation validates the trial judges’ assessment of the existence of acts of unfair competition under Egyptian law, it nevertheless sanctions the inconsistency of a prohibition based on French law. The judges obviously could not apply Egyptian law to some of the claims and French law to another consequence of unfair competition.
When a judge applies a foreign law, he must research its content and render a decision in accordance with that law, without incorporating solutions derived from French law.
This ruling thus reminds practitioners of the importance of a rigorous analysis of foreign law in international litigation, particularly in matters of tort and unfair competition.
This decision is yet another example of how French courts can perfectly well rule by applying foreign law. In such a situation, the judge must receive legal advice from the parties as to the law to be applied.
Article written by Olivier Vibert, member of the Paris Bar association, Kbestan
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