Employment & Labour Law
The question of the liability of banks for the provision of payment services requires them to comply with a number of sometimes contradictory requirements: on the one hand, the obligation to be vigilant with regard to transactions ordered by the customer and, on the other, a duty not to interfere in transactions carried out by the customer.
In a ruling handed down on 14 February 2024, the Commercial, Financial and Economic Division of the French Supreme Court (Cour de cassation) addressed the issue of the liability of a banking institution with regard to its duty of vigilance and supervision in the event of a transfer order from its customer in a currency other than the euro.
In July 2016, a company instructed its bank to make three transfers in US dollars to pay invoices issued by a supplier. The company discovered that a third party had assumed its identity and fraudulently accessed its email system, and that the transfers had been made to accounts that did not belong to the said supplier.
Some of the funds transferred were returned by the bank of one of the recipients, when it became aware of the fraudulent actions of the third party.
The victim company sued its bank for the return of the misappropriated funds, claiming that the bank had failed in its duty of vigilance and supervision.
In a ruling handed down on 10 November 2021, the Saint-Denis Court of Appeal dismissed the company's claim for an order against the bank on the grounds that the financial transactions carried out with the new supplier were not of an " unusual nature ", and that the amount of these claims did not demonstrate an " exceptional nature ".
Following an appeal, the French Supreme Court (Cour de cassation) clarified the rules applicable to transfers made in a currency other than the euro.
The Court ruled out the application of the liability regime for payment service providers set out in the Monetary and Financial Code, pursuant to Article L. 133-1 as amended by Order no. 2014-158 of 20 February 2014. This article provided that the Monetary and Financial Code was intended to apply only when the banking institution and the payer are located in France and its overseas departments and regions, the European Union and the European Economic Area, and the transfer is made in euros or in the currency of a member state of the European Union or a state party to the European Economic Area.
The Court therefore applied the system of contractual liability under ordinary law and the traditional principles governing the liability of a banking institution.
On the basis of this system, the Cour de cassation (French Supreme Court) sets out the banker's various obligations towards his customer when receiving a transfer order from one of his customers.
The banker must ensure that:
- The transfer originates from the holder of the account to be debited or his representative,
- there are no apparent formal or intellectual irregularities in the transfer, and that the transaction is not manifestly irregular or unusual in the customer's commercial practice.
To determine whether these various conditions are met, judges use the cluster of evidence technique.
In this case :
- To check whether the transfer originated from the account holder, the courts noted that the disputed transfer orders originated from the company, were signed and accompanied by details identifying the bank accounts to which the funds were to be transferred.
- In order to verify whether the transfer presented an apparent anomaly, whether formal or intellectual, and whether the transaction was unusual or irregular in terms of the client's commercial practices, the courts noted that the instructions given were in line with the business relations maintained with suppliers based in Asia, that the amounts of the transfers " were in no way exceptional ", that the company initiating the transfer was in possession of the invoices to be paid and that it was not unaware of the corporate names of its suppliers.
Accordingly, the Court did not uphold the defendant's arguments to justify a breach of the bank's duty of care, including :
- The bank's knowledge of the defendant company's practices (payment on account, then balance of the purchase price),
- The change in the bank account details of the three suppliers, even though these accounts were listed as " offshore ",
This ruling allows the solution to be transposed into new law by basing itself not on the old article 1147 of the Civil Code, but on the new article 1231-1 of the Civil Code.
This ruling confirms established case law concerning the obligations of vigilance of banking institutions, inviting the courts to carry out an in-depth investigation in order to characterise the apparent anomaly of a transfer order.
As a result, the judgment under review does not make any substantial changes to the liability of banking institutions in respect of transfer orders, requiring them to strike a fair balance between the duty of due diligence and the duty of non-interference.
