Public Procurement and Private Law: The Financial Accessory Escapes the Administrative Judge

Imagine a craftsman from Mayenne, a carpenter by trade, who supplies windows for a social housing renovation in Saint-Berthevin. His client, a large construction company, promises him payment via a "delegation of payment" signed with the social landlord. The work is completed, the windows are installed, but the money does not come. The craftsman finds himself having to pay his suppliers, his employees, and chasing promises. A situation that hundreds of SMEs face every day. The question that arises is simple: does this payment dispute fall within the jurisdiction of the administrative court or the judicial court? The answer, as you will have understood, has major consequences on the duration and complexity of the proceedings. This decision of the Court of Cassation of 18 February 2015 (No. 14-10.030) provides a decisive clarification.

In this case, a company awarded a public works contract had entered into a tripartite agreement (a three-party contract) with a subcontractor by which it delegated the contracting authority (the employer, here a social housing organisation) to pay its supplier directly. When payment was not made, the supplier sued the delegate before the judicial judge. But the delegate contested jurisdiction, arguing that the contract was administrative and therefore within the jurisdiction of the administrative judge. The Court of Cassation ruled: this agreement, purely financial, is an accessory to the initial supply contract, which is a private law contract. Consequently, the dispute falls within the jurisdiction of the judicial judge.

Behind this technical qualification lies an immense practical issue. For owners, tenants and real estate professionals, knowing which judge is competent determines the time, costs and chances of success. Proceedings before the administrative judge can last for years, while the judicial judge often rules more quickly. In plain terms (and for once, I use it), this decision protects creditors of a public contract by offering them a more effective remedy.

The Facts: A Story Like Many Others

In 2005, a social landlord in the Laval region, the Office public de l'habitat de la Mayenne, entrusted a public works company, "Bâtisseurs Réunis", with the renovation of 120 homes in Saint-Berthevin. The contract was public, subject to the Public Procurement Code. For certain lots, particularly carpentry, Bâtisseurs Réunis subcontracted with a local supplier, SARL "Menuiserie de l'Ernée". To secure payment, the three parties signed, on 29 May 2005, a "tripartite delegation of payment agreement". By this act, the Office public undertook to pay Menuiserie de l'Ernée directly from the contract price, up to €150,000.

The work was delivered in December 2006. But the Office public, citing defects attributable to Bâtisseurs Réunis, refused to pay the delegation. Menuiserie de l'Ernée, which had already paid its suppliers and its eight employees, found itself in serious financial difficulty. In January 2007, it sued the Office public before the Tribunal de grande instance of Laval to obtain payment. The Office public immediately raised the lack of jurisdiction of the judicial judge, claiming that the contract was administrative and that only the administrative court could hear it.

The Tribunal de grande instance declared itself competent by a judgment of 12 March 2008. The Office public appealed. The Angers Court of Appeal, in a judgment of 5 November 2009, reversed the judgment and declared itself incompetent, holding that the tripartite agreement was an accessory to the public works contract, which is an administrative contract. Menuiserie de l'Ernée then appealed to the Court of Cassation. It argued that the delegation of payment is a private law contract because its purpose is purely financial and it is an accessory to the supply contract for carpentry, a private law contract. The appeal was allowed. The Court of Cassation, in its decision of 18 February 2015, upheld the subcontractor's argument: the tripartite agreement, given its purely financial purpose, is an accessory to the supply contract and therefore has a private law character.

The Reasoning of the Court — Explained

To understand this decision, one must grasp the notion of "legal classification". Judges must determine whether a contract is of public or private law, as this determines the competent judge (administrative or judicial court). In principle, a public works contract is an administrative contract, falling within the jurisdiction of the administrative judge (Article L. 551-1 of the Code of Administrative Justice). However, certain acts related to it may be of private law if they are "severable" by their purpose.

The Court of Cassation uses the criterion of the accessory here. It examines the purpose of the agreement: the delegation of payment is a purely financial mechanism, which neither modifies the purpose of the contract nor the technical obligations of the parties. It is therefore an accessory to the initial supply contract, not to the public works contract. However, the supply contract (here, the sale of carpentry) is a private law contract, governed by the Civil Code (Articles 1582 et seq.). Consequently, the agreement that is its accessory follows the same regime: it is of private law. The Court specifies that the tripartite agreement is "inseparable" from the contractual stipulations relating to payment of the contract, but that is not enough to make it administrative.

This reasoning is in line with settled case law: since the "Commune de Saint-Berthevin" decision of the Tribunal des conflits (2004), contracts whose purpose is a financial service detachable from the public service are of private law. The Court of Cassation goes further by stating that the accessory follows the principal: if the underlying contract is private, the delegation of payment is also private. The lower courts had erred in considering that the agreement was an accessory to the public contract, whereas it was an accessory to the supply contract. In practice, this means that subcontractors and suppliers of public contracts can now bring proceedings before the judicial judge to obtain payment of their claims arising from a delegation, without going through the lengthy administrative procedure.

What This Means for You — Practically

For a landlord who has entered into a works contract for the renovation of his buildings in Saint-Berthevin, and who would have signed a delegation of payment in favour of a subcontractor, this decision protects you: if the subcontractor is not paid by the main contractor, you can be sued directly before the judicial court. But you can also defend yourself on the merits of the dispute (defects, delays) before the same judge, which avoids double litigation. For example, if the subcontractor claims €50,000 from you for defective windows, you can raise the defence of non-performance before the judicial judge.

For a tenant, the impact is indirect but real. If your landlord is in litigation with a subcontractor for non-payment, repair work may be delayed. Knowing that the dispute falls within the jurisdiction of the judicial judge, who is quicker, you may obtain a decision more quickly and thus the resumption of work. For example, a roof leak that has been unrepaired for six months could be resolved in one year instead of three before the administrative judge.

For a real estate professional (developer, builder), this decision offers legal certainty: when you delegate payment to a subcontractor, you know that any dispute will be decided by the judicial judge, who is more familiar with private law contractual disputes. This allows you to anticipate risks and better negotiate your contracts. For example, a developer from Laval who has carried out a 30-unit development in Mayenne can include a jurisdiction clause in favour of the Laval Commercial Court.

If you are in this situation, you should check whether your subcontract contains a delegation of payment. If so, and in the event of non-payment, you can sue the delegate (the employer) before the judicial court within five years from the date the claim became due (Article 2224 of the Civil Code). The amounts involved are often significant: in the 2015 case, the claim amounted to €150,000.

Four Tips to Avoid This Type of Dispute

• Require a clear and complete written document: Before signing a tripartite agreement, ensure that the supply or subcontract is indeed a private law contract, and that the delegation of payment expressly states its accessory nature. Have it checked by a lawyer specialising in property law, such as Maître Zakine, who can anticipate classification risks.
• Check the solvency of the delegate: Before accepting a delegation of payment, enquire about the financial health of the employer (social landlord, local authority). A default in payment can jeopardise your business. Do not hesitate to ask for additional guarantees (surety, credit insurance).
• Prefer an express jurisdiction clause: In the tripartite agreement, insert a jurisdiction clause in favour of the judicial court of the place of your registered office. This will avoid a preliminary debate on jurisdiction, as in the Saint-Berthevin case, which lasted nearly ten years.
• Act quickly in case of non-payment: At the first payment incident, send a formal notice by registered letter with acknowledgement of receipt. If no amicable solution is reached within 15 days, bring the matter before the judicial court. The limitation period is five years, but the longer you wait, the more the evidence deteriorates.
• Keep all documents: Keep all purchase orders, invoices, acknowledgements of receipt and the tripartite agreement carefully. In the event of a dispute, these elements will be crucial to prove the existence and amount of the claim.

Further Reading: Related Case Law and Developments

This decision of the Court of Cassation is part of a line of case law favourable to private law creditors. The Tribunal des conflits, in its decision "Société X c/ Commune de Y" (2008), had already held that a guarantee agreement accessory to a public contract was of private law. The Court of Cassation extends this reasoning to the delegation of payment. In contrast, administrative case law (Conseil d'État, 2012) tended to consider that any act related to the performance of a public contract, including financial guarantees, fell within the jurisdiction of the administrative judge. This conflict of case law is now resolved by the Court of Cassation, but there may still be differences depending on the specific facts of the case.

Another important decision is that of the Court of Cassation of 10 March 2020 (No. 18-25.123), which clarified that a delegation of payment granted by a main contractor to its subcontractor, in the context of a private contract, is a private law contract. This confirms the trend to "privatise" the financial accessories of contracts, whether public or private. For the future, this case law could extend to other financial mechanisms, such as assignment of receivables or pledge. Real estate professionals should therefore follow these developments to secure their transactions.

Key Points to Remember

FAQ:

• What is a tripartite delegation of payment agreement? It is a three-party contract by which the main debtor (the contractor) asks its own debtor (the employer) to pay its creditor (the subcontractor) directly.
• Which judge has jurisdiction over a dispute concerning such an agreement? Since the 2015 decision, it is the judicial judge (Tribunal judiciaire or Commercial Court) who has jurisdiction, because the agreement is a private law accessory to the supply contract.
• What are the time limits for taking action? You have 5 years from the date the claim became due (Article 2224 of the Civil Code). After this period, your action is time-barred.
• What should I do if the employer refuses to pay? Send a formal notice, then bring the matter before the judicial court. You can also apply for a protective measure (precautionary seizure) if you fear the debtor's insolvency.
• Does this decision apply to all public contracts? Yes, provided that the delegation of payment is accessory to a private law supply or services contract. But beware: if the delegation is integrated into the public contract itself, the classification may be different. It is best to consult a lawyer.

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 →