Uncapped Commercial Rent: Jurisdiction of the Rent Judge Confirmed by the Court of Cassation

Imagine the scene: you own a commercial property in Mandelieu-La Napoule, leased to a restaurant chain. The lease is coming to an end, and you wish to increase the rent to market value. But the tenant disputes this, and you wonder: which judge has jurisdiction? The tribunal de grande instance or the commercial rent judge? A seemingly technical question, but one that can cost months and thousands of euros if you choose the wrong procedure. The Court of Cassation, in a judgment of 9 March 2018 (No. 17-70.040), provides a clear answer: the commercial rent judge has exclusive jurisdiction to set the uncapped rent. A decision that simplifies life for landlords and tenants, and which I will break down for you.

The facts: a story that happens every day

Mr. Dupont (name changed) owns a commercial property in Nice city centre. He has leased it to a clothing retailer since 2010, with an initial rent of €1,500 per month. In 2015, upon lease renewal, Mr. Dupont considers the rent undervalued compared to the market. He therefore requests an uncapping of the rent (i.e., an increase beyond the commercial rent index) to €2,500, corresponding to market value. The tenant refuses, arguing that the conditions for uncapping are not met.

Mr. Dupont then brings the matter before the tribunal de grande instance (TGI) of Nice to have the rent set. But the tenant raises a plea of lack of jurisdiction: according to him, only the commercial rent judge, a specialised division of the TGI, can hear this claim. The TGI declares itself incompetent, and Mr. Dupont appeals. The Court of Appeal of Aix-en-Provence confirms the TGI's lack of jurisdiction, referring the case to the commercial rent judge. Mr. Dupont then appeals to the Court of Cassation.

He argues that the texts provide that the commercial rent judge has jurisdiction to set the uncapped rent only when the uncapping results from a change in the characteristics of the premises or an obligation of the parties, but not when it is a simple readjustment to market value. However, the Court of Cassation does not follow him.

The reasoning of the court — dissected

In its judgment of 9 March 2018, the Court of Cassation dismisses Mr. Dupont's appeal and confirms that the commercial rent judge has exclusive jurisdiction to set the uncapped rent, regardless of the reason for the uncapping. The reasoning is based on Article L. 145-56 of the Commercial Code, which provides that "the commercial rent judge hears disputes relating to the setting of rent for commercial leases." The Court specifies that this jurisdiction is exclusive, including when the setting of the uncapped rent at market value is at issue.

In short, the legislature intended that all commercial rent matters be decided by a specialised judge, to ensure consistency in case law and speed of processing. Mr. Dupont's argument that the rent judge has jurisdiction only for uncappings related to material modifications (works, change of use, etc.) is rejected. The Court of Cassation recalls that the jurisdiction of the rent judge is general: as soon as it is a matter of setting a rent, that judge must be seized.

In other words, whether you are a landlord or a tenant, if you wish to challenge or set a commercial rent, you must apply to the commercial rent judge, not to the tribunal judiciaire (formerly TGI) in its ordinary composition. However, note that this jurisdiction does not extend to other disputes such as lease termination or service charges, which fall within the jurisdiction of the tribunal judiciaire.

This decision confirms consistent case law: it follows a judgment of the Court of Cassation of 13 July 2016 (No. 15-18.286) which had already affirmed the exclusive jurisdiction of the rent judge for rent setting claims. There is therefore no reversal, but merely a clarification.

What this means for you — practically

This decision has important practical implications for landlords and tenants of commercial leases, particularly in the jurisdictions of Grasse and Nice.

For the landlord: If you consider that the rent of your commercial property should be increased to market value (e.g., because the market has boomed in the Nice station area, rising from €200/m² to €300/m²), you must apply to the commercial rent judge, not the tribunal judiciaire. Otherwise, your application will be declared inadmissible, and you will waste valuable time. Example: a 50 m² property in Nice, current rent €1,000/month, estimated market value €1,500. The potential gain is €500/month, i.e., €6,000/year. A procedural error could cost you months of delay in receiving this increase.

For the tenant: If your landlord demands an unreasonable increase, you can challenge the market value before the rent judge. Ensure that the procedure is brought before the correct court. If the landlord has seized the tribunal judiciaire, you can raise the lack of jurisdiction at the outset, which may save you time and legal costs.

For the purchaser of a commercial property: Before buying, check whether the rent is currently being judicially determined. If so, be aware that the forthcoming decision will be binding on you, even if you were not a party to the proceedings. undefined, I have encountered cases where purchasers were surprised by a retrospective rent increase decided by the rent judge.

Four tips to avoid this type of dispute

• Draft a precise commercial lease: Clearly state the conditions for rent review and renewal, and any uncapping clause. Avoid vague phrases such as "rent according to the market."
• Consult a specialised lawyer at the first difficulty: A quick consultation (€45 with Maître Zakine) can prevent you from seizing the wrong court and losing months.
• Keep all rent and service charge records: In case of dispute, the rent judge will need the rent history to determine market value.
• Anticipate renewal: Six months before the lease expiry, have the market value estimated by an expert (estate agent, notary) to prepare your uncapping request.

Further reading: related case law and developments

This decision is part of a line of Court of Cassation judgments aimed at securing the commercial lease regime. For example, the judgment of 13 July 2016 (No. 15-18.286) held that the rent judge has jurisdiction to set rent even in the absence of a triennial review clause. More recently, a judgment of 10 January 2019 (No. 17-27.691) specified that the rent judge may also rule on the effective date of the new rent.

The trend in the courts is therefore towards increased specialisation, meaning that general practitioners must be extra vigilant. In future, the jurisdiction of the rent judge may be further extended, for example to disputes over service charges or works. What few people know is that this specialisation also allows for a faster procedure: the rent judge typically rules within a few months, compared to a year or more for the tribunal judiciaire.

In practice: what to do

Here is a checklist for landlords wishing to request an uncapping of rent:

1. Check the conditions for uncapping: The lease must be at least 9 years old, and you must rely on a significant change in local commercial factors (e.g., new tram line, pedestrian zone) or an obligation of the parties.
2. Gather evidence: Rent statements from other shops in the area, market study, bailiff's report.
3. Apply to the commercial rent judge: By summons before the tribunal judiciaire of the location of the property, stating "commercial rent judge."
4. Consider mediation: Before starting proceedings, attempt conciliation with the tenant. The rent judge may also attempt conciliation during the hearing.
5. Observe deadlines: The application must be made within 2 years of the lease renewal, otherwise the rent is deemed to be agreed amicably.

If you are a tenant and receive a summons before the tribunal judiciaire (and not the rent judge), immediately raise the lack of jurisdiction by filing a note with the registry. You may also claim damages for abusive proceedings if the landlord persists.

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 →