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Commercial Law — The concept of business ("commerce") — The State and business

Date Citation Note
23.01.1989 Conflicts Court Case SCOPD Manufrance v. Etat   The somewhat rigid structure of the different courts in France, particularly the strict distinction between the civil and administrative courts, can give rise to certain difficulties of jurisdiction, and therefore of redress; and this is specially the case where the State is involved in business transactions (as it is from time to time). Such difficulties of jurisdiction are submitted to the Court of Conflicts. This case illustrates one such difficulty referred to that Court. It concerns a provision of the law on insolvency, Article 99 of the Law of 13 July 1967 (now, in an amended form, Article 624-3 of the Commercial Code), which allows the insolvency court to extend the insolvency proceedings to designated managers, whether official or de facto, if the assets are insufficient to meet the liabilities because of faulty management. Such managers then become liable (in whole or in part, and jointly or severally, however as the court decides) for the corporate debts. This case concerns the insolvency of Manufrance, a large engineering company based in Saint Etienne, an impoverished region. The State had given financial aid to the company in order to help it to meet its difficulties, albeit in vain. The liquidator attempted to have the commercial court hold the State liable for the company’s debts on the grounds that its intervention amounted to a de facto management role, in the course of which it been at fault. This raised the question whether the commercial court had jurisdiction over the State in such circumstances. The Préfet of Haute Loire decreed no; his decision was referred to the Conflicts Court which upheld it on the grounds that in coming to a judgement, the commercial court would have to pass on matters which were outside the domain of private law.