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THE RISE AND FALL OF THE FRENCH BLOCKING STATUTE

rise fall french blocking statueSabrina Mannai (White & Case) discusses the enforceability of the blocking statute in France which makes it a criminal offence for a French person to provide information to an enforcement authority. The case is important because French persons and entities have been invoking the French Blocking Statute more frequently in the past few years in cross-border investigations cases. 

Speed read

In an important judgment, the Court of Appeal (22.10.13) has rejected an argument in separate competition proceedings that disclosure and provision of further information should not be made because it would put the defendant French companies in breach of a French “blocking” statute and at risk of criminal prosecution in France.

Commentary

The French Blocking Statute has once again been defeated in foreign courts.

French law No 68-678 of 26 July 1968, also known as the “French Blocking Statute”, prohibits a French person to provide any documents or information, whether in writing or orally, regarding economic or financial information (among others) with a view to gathering proof in the context of foreign administrative or judicial proceedings other than through official channels using the mutual legal assistance process.

These provisions were implemented in 1980 to counter what was perceived as the abusive long arm reach of US extraterritorial laws. Breaching the law can expose a person or a company to criminal proceedings leading to a fine up to 18 000 Euros and up to 6 months in prison for a person and / or a fine up to 90,000 Euros for a company. That said, prosecutions for this offence are rare. In 2007, the French Supreme Court punished a French attorney for violating the French Blocking Statute by imposing a fine of 10 000 Euros (Chambre Criminelle, Cour de Cassation, 12 December 2007, Bull. Crim. 2007, no. 309).  However, this is the sole reported criminal conviction upheld on the basis of the French Blocking Statute.

Nonetheless, French persons and entities have been invoking the French Blocking Statute more frequently in the past few years in cross-border investigations cases. Indeed, the blocking Statute has enjoyed certain popularity among French lawyers who sought arguments to turn down direct requests from the US authorities to send documents abroad.

The US Courts have long sought to resist the effect of the French blocking Statute. The US Supreme Court has held more than once that the French blocking statute does not have any effect since it is well settled that such statutes do not deprive an American court of the power to order a party subject to its jurisdiction to produce evidence even though the act of production may violate that statute (Société Nationale Industrielle Aerospatiale v. U.S. District Court (482 U.S. 522 (1987)).

Most recently, the Civil Division of the English Court of Appeal has also rejected the French blocking Statute as a reason for refusing to produce relevant information in regulatory proceedings. (Secretary of State for Health v Servier Laboratories [2013] EWCA Civ 1234). This decision highlights the struggle for French nationals to comply with their national law in foreign courts.

In the above case, the Court of Appeal was heavily influenced by the small likelihood of the French authorities prosecuting for breach of the French Blocking Statute by highlighting the existence of only one decision in the French jurisprudence pointing to the Blocking Statute. Moreover, the Court also invoked European law as a basis not to apply the French Blocking Statute by stating that “French law must generally give way to the principle of the supremacy of EU law.” It will be interesting to see if other European domestic courts reach the same conclusion if the point should arise.

Image credit: FlickrWhite-Case-logo

R v JEFFRIES & OTHERS [2013] NZCA 188
WHO SHOULD PROSECUTE FRAUD, CORRUPTION AND FINANCI...
The views expressed in this article represent those of the author and not Bright Line Law.

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