Action ut singuli, company law, associations, Court of Cassation, legal framework, liability, directors, shareholders, Civil Code, Civil Procedure Code
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Abstract
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Abstract
The Court of Cassation rules that members of an association cannot exercise the action ut singuli against a director, as it is reserved for company shareholders.
Extract
[...] Article 32 of the Code of Civil Procedure stipulates that legal action must be brought by a person with the capacity and interest to act. However, the Court also mentions that exceptions may be provided by law. For example, specific legislation may allow members of an association or economic interest group to take legal action under particular circumstances. The action ut singuli traditionally allows shareholders of a company to defend the interests of the company when the management is failing or involved in harmful acts. [...]
[...] It will be a matter of analyzing the specifics of the action ut singuli in company law in order to study its legal framework and the conditions of its exercise by shareholders before explaining the reasons why the Court of Cassation judges the action ut singuli inapplicable to associations (II). I. The specificity of the action ut singuli in company law Thus, company law traditionally reserves the exercise of social action for legal representatives under specific conditions The principle reserving the exercise of social action to the sole legal representatives of a legal person First, the Cour de cassation states that 'under Article 32 of the Code of Civil Procedure, except as otherwise provided by law, only persons authorized to represent a legal entity may bring legal action on its behalf.' The Cour de cassation recalls a fundamental principle of the law of legal entities: only persons expressly authorized by the articles of association or by law may represent a legal entity in court. [...]
[...] The action must be brought within a reasonable time limit. In general, this period is three years from the discovery of the fault, as stipulated in Article 1843-5 of the Civil Code. The prescription period begins to run from the moment the damaging fact was discovered (Cass. com. 23-10-1990 n° 89-14.721: RJDA 1/91 n° 30). However, the exercise of the action ut singuli is subject to strict legislative and jurisprudential limits to prevent abuses and ensure that this action is used appropriately. [...]
[...] 23-10.571 - To what extent can the action ut singuli, reserved for companies, be extended to associations to allow their members to act in justice against the directors? In 2003, Professor Michel GERMAIN was already questioning the opportunity to limit the social action ut singuli too strictly. He wondered if it was 'desirable to make the social action ut singuli so difficult when the examination of the global situation [ . ] shows that elsewhere, victims can find more welcoming rights'. [...]
[...] Finally, the action ut singuli cannot be used to circumvent the decisions taken by the management bodies of the company. If the general meeting of shareholders has decided not to pursue a director, a shareholder cannot use the action ut singuli to override this decision, except in cases of fraud or manifest abuse of power. These criteria and limits ensure that the action ut singuli remains an effective tool for protecting the interests of the company while avoiding abuses and unnecessary disputes. [...]
