Order for Payment: Which Court to Seize When a Jurisdiction Clause Exists?

You are the owner of a property in Saint-Julien-en-Genevois and have just signed a guarantee contract for a mortgage loan. The principal debtor no longer pays. You wish to initiate an order for payment procedure to recover what is owed. But which court should you seize? The court of the debtor's domicile, the court of the property's location, or the one you chose in the contract? The question is crucial: a mistake on jurisdiction can cost you months of procedure.

This decision of the French Supreme Court of 16 October 1978 precisely answers this question. It confirms that, even if the decree of 28 August 1972 sets strict territorial rules for the order for payment, a jurisdiction clause inserted in a contract can derogate from these rules. In other words, if you have provided in your contract that any dispute will be brought before the Paris Commercial Court, you can invoke it.

What does this principle imply for you? That contractual freedom prevails, to a certain extent, over procedural rules. But be careful: the clause must be clear and not contrary to public policy. Let us decipher this decision together.

The facts: a story that happens every day

Imagine a bank, Banque Populaire de la Région Ouest de Paris, which grants credit to a company, Néguev. To secure this loan, an individual stands as guarantor: he signs a guarantee contract containing a jurisdiction clause in favour of the Paris Commercial Court. The principal debtor does not repay. The bank then initiates an order for payment procedure before the President of the Paris Commercial Court, in accordance with the clause.

The debtor contests. He argues that, under Article 2 of the decree of 28 August 1972, the order for payment falls within the exclusive territorial jurisdiction of the court of the debtor's domicile. However, Néguev has its registered office in the provinces, not in Paris. For him, the jurisdiction clause cannot override this rule of public policy.

The Paris Court of Appeal, in a judgment of November 1976, rules in favour of the bank. It considers that the clause is valid and that the President of the Paris Commercial Court has jurisdiction. The debtor appeals to the Supreme Court. The Supreme Court dismisses his appeal and upholds the Court of Appeal's decision. It holds that Article 1 of the 1972 decree leaves the choice between civil and commercial proceedings, and that the jurisdiction clause may validly designate the commercial court.

The reasoning of the court — explained

The judges of the Supreme Court made a subtle distinction between two provisions of the same decree. Article 2 of the decree of 28 August 1972 determines the exclusively competent court on a territorial basis: in principle, it is the court of the debtor's domicile. But Article 1 of the same decree enshrines the possibility of submitting the dispute, depending on the case, to civil or commercial proceedings. In other words, the nature of the claim (civil or commercial) is not fixed by the decree.

The Court deduces that nothing prevents the parties from agreeing, by a contractual clause, that the dispute will be brought before a commercial rather than a civil court, even if the territorial rules of Article 2 are mandatory. In this case, the guarantee contract contained a jurisdiction clause in favour of the Paris Commercial Court. This clause was lawful and had to be respected.

The Court does not rule on the validity of the clause itself (it was not contested on its merits), but it confirms that its existence is sufficient to override the exclusive territorial jurisdiction provided for in Article 2. This is a classic application of the principle of contractual freedom, tempered by respect for rules of public policy. Here, the clause did not contravene any mandatory rule.

This decision is a confirmation of case law: the Supreme Court had already admitted, in earlier decisions, the validity of jurisdiction clauses in contracts, even in matters of order for payment. It does not create a reversal, but it clarifies the limits: the clause must be express, unambiguous, and not harm public policy.

What this means for you — concretely

For a landlord owner in Sallanches: if you have signed a guarantee contract with a jurisdiction clause in favour of the commercial court of your choice, you can invoke it to obtain an order for payment more quickly, even if the debtor lives far away. For example, if your tenant is in Annecy but the clause designates the Paris Commercial Court, you can seize Paris. Potential time saving: several months.

For a tenant or debtor: you must be vigilant when signing a guarantee contract. If a jurisdiction clause obliges you to defend yourself before a court far from your domicile, this can complicate your defence and increase your costs. Do not hesitate to request the removal or modification of this clause before signing.

For a real estate professional (agent, developer): this decision confirms that you can secure your claims by inserting a jurisdiction clause in your contracts. Choose a court near your registered office to facilitate your remedies. However, be careful: the clause must be drafted in clear and precise terms, and must not be unfair within the meaning of the Consumer Code if the debtor is an individual.

For a co-owner: if your co-ownership association must recover unpaid service charges, a clause in the co-ownership regulations designating the commercial court of your town can speed up the procedure. Check that this clause exists and is valid.

Four tips to avoid this type of dispute

• Insert a jurisdiction clause in your contracts: if you are a creditor, provide that any dispute will be brought before the court of your choice (preferably a commercial court competent for commercial acts). This will save you from having to seize the debtor's court.
• Check the validity of the clause: ensure that it is drafted in conspicuous characters and is not unfair. For contracts concluded with consumers, the clause may be deemed unfair if it creates a significant imbalance (e.g., a court very far from the consumer's domicile).
• Keep a copy of the contract and the clause: in case of a dispute, you will need to prove the existence and content of the clause. An original signed copy is preferable.
• Consult a lawyer before initiating proceedings: the question of territorial jurisdiction is technical. An initial analysis can save you from a procedural error that would result in the rejection of your claim.

Further reading: related case law and developments

The Supreme Court had already ruled on the validity of jurisdiction clauses in order for payment proceedings. In a decision of 2 May 1973 (Bull. civ. II, No. 157), it held that a jurisdiction clause inserted in a loan contract was enforceable against the debtor, even in order for payment proceedings. The 1978 decision therefore follows this line.

Since then, case law has evolved to further regulate these clauses, particularly under the influence of consumer law. Today, a jurisdiction clause in a contract concluded with a consumer is presumed unfair if it has the effect of depriving the consumer of the possibility of bringing proceedings before the court of his domicile (Art. R. 212-1 of the Consumer Code). Courts frequently annul such clauses.

For the future, the trend is towards protecting the weaker debtor. While clauses between professionals remain valid, those involving a consumer are increasingly fragile. It is therefore crucial to correctly identify the status of the parties before drafting such a clause.

What you absolutely must remember

FAQ

Can I seize a commercial court even if the debtor is an individual? Yes, if the contract contains a valid jurisdiction clause. But be careful: if the individual is a consumer, the clause may be unfair.

What should I do if the debtor contests the court's jurisdiction? You must demonstrate that the clause was accepted and is valid. A lawyer will help you prepare your arguments.

What is the time limit for obtaining an order for payment? Generally, a few weeks to a few months depending on complexity. Territorial jurisdiction can extend the time limit if contested.

Can a jurisdiction clause be drafted in any contract? Yes, but it must comply with public policy rules and not be unfair. For guarantee contracts, it is common and valid between professionals.

Do I have to go through a lawyer for an order for payment? No, the procedure can be done without a lawyer, but professional assistance is recommended to avoid procedural errors.

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