EUPillar BNP Parisbas v R.L. - C.12.0330.F

Summary

The defendant has an engineering degree in automatics. He works for the French listed company “Altan”. In 1989, the defendant opens an account in one of the Paris branches of the bank of the appellant. In 1999, the defendant moves from France to Belgium and as such, he needs to pay an important sum to the French taxman as a fiscal discharge. The bank account stays operational and the bank statements show that the defendant kept handling considerable amounts of money, eventually creating a debit balance to pay the fiscal discharge. On 20 December 2000, the parties opened a credit account in the amount of 80,000 EUR with a maximal duration of 4 years until 1 January 2005. The parties enter into additional credit agreements on 11 May 2001 and on 14 May 2012. Every one of these credit accounts provides for the application of French law. The defendant provides a security in respect of the reimbursement of the opened credit accounts by pledging its financial instruments accounts to the bank, which hold securities of Altran gained under its employee stock ownership plan. According to the terms of the credit account agreement, these securities accounts should stay at a level of 300% of the credit opening. When the value hits 150% of the credit opening, the bank may accelerate the debt. From the year 2000 onwards, the level decreases to 150% and even 140%, but the appellant does not contact the defendant to ask for additional security until July 2002. After failed negotiations, the appellant calls for the acceleration of the debt on 15 March 2004 in respect of the second and third credit openings and again on 30 April 2004 in respect of the first debt. The appellant then proceeds to the forced sale of the Altan shares in the hands of the defendant. The defendant sues the bank, arguing that if the bank had contacted him earlier to notify him of the decreasing level of security, he would have gotten a better price for the sold shares. Under French law, the banker has a duty to warn and inform its clients. The Brussels Court of Appeal agrees that the appellant was in breach of this duty and should have warned the defendant as soon as the contractual levels were reached that this could lead to the termination of the contract. The appellant is ordered to pay 18,318.81 EUR and 1,122,147.87 EUR in damages, plus legal interest. The appellant files an appeal with the Court of Cassation. It is undisputed that the credit accounts are governed by French law, since this is the law chosen by the parties in accordance with Art. 3(1) Rome I Regulation. While it is true that under French law, the banker has a duty to warn and inform its clients, this duty suffers an exception with regard to “informed” or “knowledgeable” clients who had or should have had knowledge of the risks involved. The Brussels Court of Appeal mentioned in its conclusions that the defendant, as an employee of Altan with a management function as departmental head, was or should have been aware of the evolution of Altan’s stock price. He should therefore have known when the security levels of 150% and 140% were breached. Despite these conclusions, the Brussels Court of Appeal still found the appellant in breach of its duty to warn. Therefore, the Brussels Court of Appeal did not justify its decision under French law. The Court of Cassation rescinds the decision under appeal. Short critique This case offers an example where a Belgian court applies French law. The Belgian courts must interpret foreign provisions of law in a way which is consistent with the interpretation given in its country of origin.