Order of 14 June 1982 and International Public Policy: What Landlords Need to Know

Imagine: you own a flat in Porto-Vecchio, and you have signed a sale contract with a foreign buyer. Delivery is fixed for a specific date, but a ministerial order occurs the day before, modifying the monetary compensatory amounts. Who must bear the difference? This question, which may seem technical, was decided by the Court of Cassation in 1991. And the answer may well surprise you.

In 1982, the French government issued an order to prevent a surge in prices after a devaluation. But in international relations, this order does not have the same force as in domestic disputes. The Court of Cassation had to decide whether a foreign arbitral award that ignored this order was contrary to international public policy.

In this article, I will explain this decision in simple terms, with concrete examples drawn from my practice in Corsica and elsewhere. Whether you are a landlord in Sartène, a developer in Ajaccio, or simply curious, you will understand how this decision protects you – or exposes you.

The facts: a story that happens every day

The company Grands Moulins de Strasbourg had concluded an international contract for the delivery of goods. The price was fixed, but the Order of 14 June 1982 instituted, as from 16 June at midnight, monetary compensatory amounts (MCAs). These MCAs were intended to compensate for exchange rate variations linked to the devaluation. The contract provided that the exchange risk was borne by the buyer depending on the delivery date.

A dispute arose: the seller considered that the MCAs belonged to him, the buyer contested. The parties submitted the dispute to international arbitration. The arbitral award ruled in favour of the seller, awarding the MCAs under the contract. The buyer then sought annulment of the exequatur (recognition of the award in France) on the ground that this award violated the ministerial order, and therefore French public policy.

The Court of Appeal upheld the exequatur, and the Court of Cassation validated this decision. For the Court, the Order of 14 June 1982 had the objective of preventing a price rise linked to the devaluation. But in this case, the contractual allocation of the MCAs was only a formal infringement of that objective, not a real one. In international relations, public policy is assessed less strictly than in domestic matters.

The reasoning of the court – dissected

The Court of Cassation relied on Article 1502 of the Code of Civil Procedure (old), which lists the grounds for setting aside an international arbitral award. One of these grounds is contrariety to international public policy. But international public policy is not a carbon copy of domestic public policy: it is more flexible, more limited to fundamental principles of French law.

The judges distinguished two levels: on the one hand, the domestic rule (the order); on the other hand, the French conception of international public policy. For an award to be set aside, it must offend fundamental conceptions of French law, such as the prohibition of slavery or tax fraud. A simple temporary economic measure, like the 1982 order, does not reach this threshold.

In this case, the Court of Appeal had found that the allocation of the MCAs did not actually thwart the objective of the order (preventing a price rise). The Court of Cassation therefore approved the reasoning: the enforcement of the award was not contrary to international public policy. This is a confirmation of previous case law, which tends to limit the public policy exception in international arbitration.

What this means for you – concretely

If you are a landlord in Sartène renting a property to a foreign tenant, this decision concerns you indirectly. In the event of a dispute over a contractual clause linked to a currency fluctuation, international arbitration could set aside a French regulation considered too specific.

For a property developer in Ajaccio, this means that international sale or construction contracts can include price revision clauses based on foreign indices, without fear that a French order will invalidate them. Concrete example: a developer buys Italian marble at a price fixed in lire, then euros. If a French decree limits price increases, the arbitral tribunal may not take it into account if the contract so provides.

For an individual buyer, be vigilant: if you buy a property abroad with a French seller, the applicable law may be that of the contract, not necessarily French law. In the event of a dispute, you could be bound by an arbitral award that ignores certain French provisions.

Four tips to avoid this type of dispute

• Draft a precise revision clause: in any international contract, explicitly provide who bears the exchange risk and how variations are passed on. Avoid vague formulas like "in accordance with the legislation in force".
• Choose the applicable law carefully: opt for a stable and predictable law (Swiss law, English law) if your contract involves significant amounts. This reduces regulatory surprises.
• Prefer arbitration with standard clauses: use models from the International Chamber of Commerce (ICC) that incorporate international public policy principles. This secures the enforcement of the award.
• Consult a specialised lawyer before signing: a professional can anticipate conflicts of norms and draft clauses that will withstand judicial review. Whether in Porto-Vecchio or Paris, prevention is better than cure.

Further reading: related case law and developments

The Court of Cassation confirmed this approach in a decision of 20 February 2007 (n° 05-14.082), where it recalled that international public policy does not oppose the enforcement of a foreign arbitral award that applies a foreign law contrary to a domestic rule, unless that rule is fundamental. Conversely, in a decision of 4 June 2008 (n° 06-15.320), the Court set aside an award that violated the principle of free competition, considered fundamental.

The trend is clear: French judges protect international arbitration by limiting the public policy exception to only essential values. For real estate professionals, this means that temporary economic regulations (price controls, moratoria) will not necessarily prevent enforcement of an award. In the future, expect jurisprudential stability, barring major legislative changes.

Checklist before acting

FAQ: 5 practical questions

• Can I ignore a French order in an international contract? Yes, if the contract provides for a foreign law and the order is not of international public policy. But beware of unfair terms.
• What if an arbitral award requires me to pay an amount contrary to a French regulation? You can challenge the exequatur, but you must prove a real infringement of a fundamental principle, not merely a formal one.
• What are the time limits for action? The application to set aside must be brought within one month of notification of the exequatur order. After this period, the award is final.
• What is the cost of such a dispute? Legal and arbitration costs vary from €5,000 to €50,000 depending on complexity. Mediation may reduce costs.
• Should I include an arbitration clause in my sale contract? Yes, especially if the buyer is foreign. This allows disputes to be resolved more quickly and privately.

Are you in a similar situation? A first 30-minute consultation with Maître Zakine (€45) can save you months of proceedings – and often much more. Book an appointment →