Conflicts of interests: the French Law approach

The conflict of interests has become a crucial issue in virtually all branches of French law: public and private law, civil and business law, property law, professional codes of ethics and criminal law, etc. The issue appeared a long time ago (and in fact, it must be as old as Mankind!), but the fact that it now increasingly receives legal treatment is more recent. Moreover, the current legal solutions applicable to conflicts of interests situations suffer from a lack of coordination resulting from the coexistence of, on the one side, mechanisms deriving from the general regime, and on the other side, ever more numerous ad hoc mechanisms. 

 « When I am President of the Republic, there will be an ethical code for the ministers who may not be able to take part in a conflict of interests« . This sentence, pronounced during the TV debate which took place between the two rounds of the 2012 Presidential election by François Hollande, who was to become the next President, confirms the introduction of the notion of conflict of interests into the field of legal notions understood by the general public. Such notion, beyond its ethical aspect, is also legal since it is handled by the rule of law, which in a certain number of conflicts of interests situations impose a specific behavior or simply prohibits such situations.   

The popularization of the notion is relatively new in France. It has particularly been built on several “cases” which were given a large coverage: in particular the Woerth-Bettencourt case, followed by revelations of conflicts of interests in which Mrs. Bettencourt’s lawyer may have been involved, and the Mediator case. Other crisis, which occurred less recently but also received large media coverage, such as the Enron scandal, or in France the contaminated blood affair, did not awake the general public’s interest on the issue of conflicts of interests in a similar way.

In a conflict of interests situation, a person is given an assignment, whether of a public or a private nature, and such person is simultaneously put, or puts himself/herself in a situation which may disturb the good course of the initial assignment. The nature of the jeopardized interest varies very much depending on the cases, ranging from public health (Mediator, contaminated blood), to the interest of the attorney’s client (Mrs. Bettencourt), the good course of his/her mission by a Minister (Woerth-Bettencourt Affair), or the information of a company’s shareholders and stakeholders (Enron). 

Numerous professions have their own mechanisms aimed at preventing and/or monitoring conflicts of interests: members of the Parliament, physicians, statutory auditors, investment service providers, architects, etc.

Some time ago, in 2011, the Commercial Court of the Cour de Cassation (French supreme court) firmly judged that loyalty and fiduciary obligations applicable to the manager of a SARL (Limited Liability Company) prohibited him from  “negotiating a market in the same business area, acting as manager of another company”. Such prohibition constitutes a material restriction to the activity that the manager of several companies may exercise, despite the fact that the French Commercial Code has not set forth any restriction regarding the plurality of mandates in SARL.

Currently, coexist Under French Law both rules deriving from the general regime and numerous specific sets of rules.

Bruno DONDERO

(This is an excerpt from a paper I wrote and published in 2012)

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