Facts and Points Decided

Financing by means of the assignment of commercial receivables for a sum equal to their present value on the date of assignment is playing a rapidly increasing role in the modern commercial world, sometimes in factoring transactions, sometimes in operations of securitisation. The assignment of future receivables arising under a contract to be performed over time raises many delicate questions of law, particularly as, for reasons of commercial confidentiality, the assignor usually does not wish the assignment to be notified to or accepted by its customer. This case concerns firstly the position under French insolvency law when future receivables arising under a contract to be performed over time have been assigned by a party which is declared insolvent before the contract has been fully performed by it; and secondly the problem whether the mere production to the court of the contract under which the receivables arise is sufficient to prove the existence of the latter, particularly if the debtor disputes it.

Held:

(1) the judgement commencing the procedure of insolvency of the assignor invalidates the rights of the assignee in respect of receivables arising after the judgement date under a contract to be performed over time which is continued after such date;

(2) unless the assignment is accepted by the debtor, the assignee has the burden of proving that a receivable is actually due.

THE COURT, at the public hearing of 29 February 2000 […]

Giving judgement both on the incidental Appeal made by Socpresse and the main Appeal made by the Westpac Banking Corporation;

Whereas, according to the judgement currently under Appeal (Noumea, 22 August 1996), 1) under the contract signed on 23 October 1986, Socpresse hired Mr. Leyraud to carry out the role of Advisor for their South Pacific business, from 1st January 1987 to 31 December 1991; 2) under a first assignment of receivables dated 28 June 1988, the receivables corresponding to the payments due to [Mr. Leyraud] pursuant to this [Socpresse] contract, and falling due on 31st December 1988 and 31st March 1989, were assigned by Mr. Leyraud to Banque Indosuez, whose rights have been assumed by Westpac Banking Corporation (the Bank); 3) under a second assignment dated 17 December 1988, Mr. Leyraud transferred to the Bank, which notified the assignments to the debtor, Socpresse, certain receivaables relating to the payments due under this [Socpresse] contract; 4) Mr. Leyraud was put into liquidation on 20 December 1989; 5) Socpresse paid the receivables transferred under the first assignment but refused to pay those transferred under the second; 6) the Bank has issued a writ against it for the payment of these latter receivables;

As regards the only argument pleaded in the main Appeal:
Whereas 1) the Bank challenges the judgement for having declared inadmissible its request regarding the payment of claims falling due after the liquidation judgement, whilst, according to the Appeal, the transfer of future receivables which was effected during the suspect period [ie the period prior to an insolvency in respect of which certain obligations of the insolvent debtor may be disaffirmed by the judge overseeing the insolvency] is valid, and the debtor cannot plead as against the assignee the commencement of an insolvency procedure against the assignor in order to refuse to pay the claims on due date; 2) by holding that Mr. Leyraud’s going into liquidation put an end to the Bank’s right to all claims falling due after the judgement, the Court of Appeal has violated articles 1 and 4 of the law of 2 January 1981 and 107 and 152 of the law of 25 January 1985;

But whereas the Court of Appeal was justified in holding that the judgement commencing the insolvency of the assignor invalidates the rights of the assignee bank to those claims arising from the continuation, after the date of this judgement, of a contract to be performed over time; the argument has no legal basis;

But as regards the only argument pleaded in the incidental Appeal:

In view of article 1315 of the Civil Code;

Whereas, in order to condemn Socpresse to pay the receivables which fell due before the judgement of liquidation, the judgement holds that (1) producing the contract signed between that company and Mr. Leyraud – performance of which has commenced - proves the existence of the receivables; 2) it is assumed that the provision of services continued in the manner provided for by the contract, and it is for Socpresse to prove failure to perform;

Whereas by coming to this conclusion, whilst, unless the assignment is accepted by the supposed debtor, it is for the party making the claim against the latter to prove it, the Court of Appeal has violated the aforementioned text;

ON THESE GROUNDS:
Dismisses the main Appeal;

QUASHES AND ANNULS, but only in the clauses which ordered Socpresse to pay three claims of Francs CFP 4,545,455 each, with interest, the judgement rendered between the parties on 22 August 1996 by the Noumea Court of Appeal; it thus reverts both the the matter and the parties involved to their respective positions prior to the aformentioned judgement, and, that justice may be done, sends them back to the Noumea Court of Appeal, with a different panel of judges;

Awards costs against the company Westpac Banking Corporation;

In the light of article 700 of the new Code of Civil Procedure, dismisses the claim of Socpresse.
[Based on……….]

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