Assignment of Commercial Lease: When the Validity of a Clause Escapes the Commercial Court

Imagine: you own a commercial premises in Avignon, near Place Pie. You lease it to a trader, who one day decides to assign the lease to a third party without asking for your consent. You believe this assignment is contrary to the terms of your contract. Do you take the matter to the commercial court or the Tribunal de Grande Instance? The answer is not so intuitive.

This question is precisely the one that the Court of Cassation decided in a judgment of 20 March 1996 (No. 94-14.869). And the answer is worth considering, because it determines the entire course of your proceedings. A wrong choice of jurisdiction can cost you months, even years.

In this article, I explain this landmark decision, its practical consequences for you, whether landlord or tenant, and give you the keys to avoid falling into the trap of a disputed assignment. And if you are in Sorgues, pay particular attention: I have seen similar cases skyrocket in that area.

The Facts: A Story Like Any Other

Mr and Mrs Z., owners of a commercial premises in Avignon, had granted a lease to Mr A. for the operation of a business. The contract contained a standard clause: any assignment of the lease required the express written consent of the lessor. Without it, the assignment was prohibited.

However, Mr A. assigned his lease to a third party without seeking the owners' permission. Unhappy, they sued the assignee and the assignor before the Tribunal de Grande Instance (TGI) of Avignon, seeking termination of the assignment and the lease, based on Article 35-1 of the Decree of 30 September 1953 (a provision governing commercial leases and prohibiting assignments without the lessor's consent).

But the defendant raised a plea of lack of jurisdiction, arguing that only the commercial court (Tribunal de Commerce) could hear the dispute, as it concerned a commercial act between traders. The TGI dismissed the plea, and the Court of Appeal of Nîmes confirmed this jurisdiction. The Z. parties then appealed to the Court of Cassation. The Court had to decide: which court, TGI or commercial court, has jurisdiction in this type of dispute?

The Reasoning of the Court — Dissected

The Court of Cassation dismissed the appeal, confirming the jurisdiction of the Tribunal de Grande Instance. Its reasoning consists of two essential points.

First, it recalls that the dispute concerns the validity of a clause in the commercial lease relating to assignment, with regard to Article 35-1 of the Decree of 30 September 1953. This Decree is a specific text governing commercial leases, and the Tribunaux de Grande Instance have jurisdiction to hear disputes arising from this Decree, in accordance with Article L. 311-3 of the Code of Judicial Organisation (which assigns to the TGI civil matters not specifically allocated to other courts).

Second, the Court specifies that the claim for termination of the lease and the assignment is based on non-performance of a contractual obligation (the lack of the lessor's consent), and not on a dispute between traders in connection with their commercial acts. Regardless of whether the parties are traders: the matter is that of the commercial lease, and only the TGI is competent to interpret and penalise the clauses of that lease.

In other words, the Court of Cassation resolved a potentially paralysing conflict of jurisdiction: the trial judge must be the natural judge of the commercial lease, not the consular judge. This confirms previous case law, but has the merit of clarity: any action based on Articles 35-1 et seq. of the Decree of 1953 falls within the jurisdiction of the TGI, even if it involves traders.

The arguments of the defendants (jurisdiction of the commercial court) were dismissed because they were based on a confusion between the nature of the contract (commercial lease, governed by a specific text) and the status of the parties (traders). The Court held that the legal classification of the dispute takes precedence over the status of the contracting parties.

What This Changes for You — Practically

For the landlord: if you are faced with an assignment of the lease without your consent, you must bring proceedings before the Tribunal Judiciaire (formerly TGI) and not the commercial court. A mistake in jurisdiction would waste time and money. In Avignon, the TJ is located on Boulevard Saint-Michel. Do not hesitate to check the allocation of your file.

For the tenant assignor: if you are considering assigning your lease, be aware that any restrictive clause (such as the requirement to obtain the lessor's consent) is valid and can be penalised by termination. You must therefore strictly comply with the terms of the contract, otherwise the assignment may be annulled. For example, a client in Sorgues had to reimburse €15,000 in assignment fees after an annulment for lack of written consent.

For the purchaser of the lease: before buying a commercial lease, demand proof that the lessor has given written consent. Without it, you risk losing your right to the lease and the amount of your acquisition. A concrete example: in Avignon, a purchaser paid €20,000 for a premium, but the assignment was annulled because the lessor had not signed the deed. He lost everything.

For real estate professionals: this decision confirms that the drafting of assignment clauses must be precise, and that compliance with the procedure is imperative. Systematically mention the need for express written consent of the lessor, and advise your clients to check the court's jurisdiction before taking legal action.

Four Tips to Avoid This Type of Dispute

• Draft a clear and unambiguous assignment clause: specify that any assignment is subject to the prior written consent of the lessor, and that failure to obtain consent results in automatic termination. Have this clause reviewed by a specialist lawyer.
• Require written consent for any agreement: do not rely on verbal consent, even in the presence of witnesses. A simple email may suffice, but a registered letter with acknowledgment of receipt is safer.
• In case of assignment, request a copy of the lease and the assignment deed: check that the approval clause has been complied with. If you are the purchaser, do not pay the price until you have obtained the lessor's written consent.
• Before taking legal action, check the court's jurisdiction: if your dispute concerns the validity of a clause in the commercial lease under the Decree of 1953, you must bring proceedings before the Tribunal Judiciaire, not the commercial court. A preliminary consultation with a lawyer will save you from a dismissal for lack of jurisdiction.

Further Reading: Related Case Law and Developments

This decision is part of a consistent line of authority. For example, a judgment of the Court of Cassation of 18 November 1998 (No. 96-19.275) confirmed that the TGI has jurisdiction to rule on the validity of a termination clause in a commercial lease, even if the parties are traders. More recently, the Court of Cassation extended this principle to actions for reclassification of leases (Cass. 3e civ., 10 March 2016, No. 15-11.111).

The trend is therefore clear: the civil judge is the natural judge of the commercial lease, and this has been the case since the reform of the Decree of 1953. The commercial courts see their jurisdiction reduced to purely commercial disputes (sale, competition, etc.) unrelated to the status of commercial leases.

In the future, this case law could evolve if the legislator modifies the attribution texts, but currently it is firmly established. Practitioners must therefore integrate this rule into their litigation strategy.

Checklist Before Taking Action

• Am I the right claimant? Check your standing to sue: you must be the landlord or the tenant assignor/assignee directly concerned by the assignment clause.
• Which court should I bring proceedings in? If the dispute concerns the validity of a clause in the commercial lease (assignment, termination, etc.) under the Decree of 1953, bring proceedings before the Tribunal Judiciaire (formerly TGI). For other disputes (rent, charges, etc.), jurisdiction may vary.
• Do I have proof of the lessor's written consent or refusal? Without written evidence, your action risks being dismissed. Gather all correspondence (letters, emails, messages).
• What is the time limit for taking action? The action for nullity of the assignment is subject to a 5-year limitation period from the conclusion of the assignment. For termination of the lease, the period is 5 years from the breach of the clause.
• Do I need a lawyer? Yes, proceedings before the TJ require mandatory representation. A lawyer specialising in property law will assist you and avoid jurisdictional pitfalls.

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