Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).

• Prohibited or regulated promotions: This law reminds certain prohibitions, subject to criminal and administrative sanctions, stemming from French law on the direct or indirect promotion of certain categories of products and services, under penalty of criminal or administrative sanctions. This includes the promotion of products and services related to:

  – health: surgery, aesthetic medicine, therapeutic prescriptions, and nicotine products;
  – non-domestic animals, unless it concerns an establishment authorized to hold them;
  – financial: contracts, financial products, and services;
  – sports-related: subscriptions to sports advice or predictions;
  – crypto assets: if not from registered actors or have not received approval from the AMF;
  – gambling: their promotion prohibited for those under 18 years old and regulated by law;
  – professional training: their promotion is not prohibited but regulated.

The accountability of influencer behaviour

The law also holds influencers accountable from the contracting of their relationships and when they act as sellers:

• Regulation of commercial influence agreements: This law imposes, subject to nullity, from a certain threshold of influencer remuneration (defined by decree), the formalization in writing of the agreement between the advertiser and the influencer, but also, if applicable, between the influencer’s agent, and the mandatory stipulation of certain clauses (remuneration, mission description, etc.).
• Influencer responsibility as a cyber seller: Influencers engaging in drop shipping (selling products without handling their delivery, done by the supplier) must provide the buyer with all information in French as required by Article L. 221-5 of the Consumer Code about the product, such as its availability and legality (i.e., guarantee that the product is not counterfeit), applicable product warranty, and supplier identity. Additionally, influencers must ensure the proper delivery and receipt of products and, in case of default, compensate the buyer. Influencers are also logically subject to obligations regarding deceptive commercial practices (for more information, the DGCCRF website explain the dropshipping).

The accountability of other actors in the commercial influence ecosystem

Joint and several liability is set by law, for the advertiser, influencer, or influencer’s agent for damages caused to third parties in the execution of the commercial influence contract, allowing the victim of the damage to act against the most solvent party.

Furthermore, the law introduces accountability for online platforms by partially incorporating the European Regulation 2022/2065 on digital services (known as the «DSA«) of October 19, 2022.

French regulation and international influencers

Influencers established outside the European Union (including also Switzerland and the EEA) who promote products or services to a French audience must obtain professional liability insurance from an insurer established within the EU. They must also designate a legal or natural person providing «a form of representation» (SIC) within the EU. This representative (whose regime is not very clear) is remunerated to represent the influencer before administrative and judicial authorities and to ensure the compliance of the influencer’s activity with law of June 9, 2023.

Furthermore, according to law of June 9, 2023, when the contract binding the influencer (or their agency) aims to implement a commercial influence activity electronically «targeting in particular an audience established in French territory» (SIC), this contract should be exclusively subject to French law (including the Consumer Code, the Intellectual Property Code, and the law of June 9, 2023). According to this law, the absence of such a stipulation would be sanctioned by the nullity of the contract. Law of June 9, 2023, seems to be established as an overriding mandatory law capable of setting aside the choice of a foreign law.

However, the legitimacy (what about compliance with the definition of overriding mandatory rules established by Regulation Rome I?) and effectiveness (what if the contract specifies a foreign law and a foreign jurisdiction?) of such a legal provision can be questioned, notably due to its vague and general wording. In fact, it should be the activity deployed by the «foreign» influencer to their community in France that should be apprehended by French overriding mandatory rules, rather than the content of the agreement concluded with the advertiser (which itself could also be foreign, by the way).

The other regulations governing the activity of influencers

The European regulations

The DSA further holds influencers accountable because, in addition to the reporting mechanism imposed on platforms to report illicit content (thus identifying a failing influencer), platforms must ensure (and will therefore shift this responsibility to the influencer) the identification of commercial communications and specific transparency obligations towards consumers.

The «soft law»

As early as 2015, the Advertising Regulatory Authority («ARPP») issued recommendations on best practices for digital advertising. Similarly, in March 2023, the French Ministry of Economy published a «code of conduct» for influencers and content creators. In 2023, the European Commission launched a legal information platform for influencers. Although non-binding, these rules, in addition to existing regulations, serve as guidelines for both influencers and content creators, as well as for judicial and administrative authorities.

The special status of child influencers

The law of October 19, 2020, aimed at regulating the commercial exploitation of children’s images on online platforms, notably opens up the possibility for child influencers to be recognized as salaried workers. However, this law only targeted video-sharing platforms. Article 2 of the law of June 9, 2023, extended the provisions regarding child influencer labor introduced by the 2020 law to all online platforms. Finally, a recent law aimed at ensuring respect for the image rights of children was published on February 19, 2024, introducing a principle of joint and several responsibility of both parents in protecting the minor’s image rights.

The status and remuneration of influencers: uncertainty persists

Despite the diversity of regulations applicable to influencers, none address their status and remuneration.

The status of the influencer

In the absence of regulations governing the status of influencers, a legal ambiguity persists regarding whether the influencer should be considered an independent contractor, an employee (as is partly the case for models or artists), or even as a brand representative (i.e. commercial agent), depending on the missions contractually entrusted to the influencer.

The nature of the contract and the applicable social security regime stem from the missions assigned to the influencer:

• In the case of an employment contract, the influencer will fall under the general regime for employees and assimilated persons, based on Articles L. 311-2 or 311-3 of the French Social Security Code.
• In the case of a service contract, the influencer will fall under the regime for self-employed workers.

The existence of a relationship of subordination between the advertiser and the influencer typically determines the qualification of an employment contract. Subordination is generally characterized when the employer gives orders and directives, has the power to control and sanction, and the influencer follows these directives. However, some activities are subject to a presumption of an employment contract; this is the case (at least in part) for artist contracts under Article L. 7121-3 of the French Labor Code and model contracts under Article L. 7123-2 of the French Labor Code.

The remuneration of the influencer

The influencer can be remunerated in cash (fixed or proportional) and/or in kind (for example: receiving a product from the brand, invitations to private or public events, coverage of travel expenses, etc.). The influencer’s remuneration must be specified in the influencer agreement and is directly impacted by the influencer’s status, as certain obligations (minimum wage, payment of social security contributions, etc.) apply in the case of an employment contract.

Furthermore, the remuneration (for the influencer’s services) must be distinguished from that of the transfer of their copyrights or image rights, which are subject to separate remuneration in exchange for the IP rights transferred.

The influencers… in the spotlight

The law of June 9, 2023, grants the French authority (i.e. the Consumer Affairs, Competition and Fraud Prevention Agency, “DGCCRF”) new injunction powers (with reinforced penalties). This comes in addition to the recent creation of a «commercial influence squad«, within the DGCCRF, tasked with monitoring social networks, and responding to reports received through Signal Conso. The law provides for fines and the possibility of blocking content.

As early as August 2023, the DGCCRF issued warnings to several influencers to comply with the new regulations on commercial influence and imposed on them the obligation to publicly disclose their conviction for non-compliance with the new provisions regarding transparency to consumers on their own social networks, a heavy penalty for actors whose activity relies on their popularity (DGCCRF investigation on the commercial practices of influencers).

On February 14, 2024, the European Commission and the national consumer protection authorities of 22 EU member states, Norway, and Iceland published the results of an analysis conducted on 570 influencers (the so-called «clean-up operation» of 2023 on influencers): only one in five influencers consistently presented their commercial content as advertising. 

In response to environmental, ethical, and quality concerns related to «fast fashion,» a draft law aiming to ban advertising for fast fashion brands, including advertising done by influencers (Proposal for a law aiming to reduce the environmental impact of the textile industry), was adopted by the National Assembly on first reading on March 14, 2024.

Lastly, the law of June 9, 2023, has been criticized by the European Commission, which considers that the law would contravene certain principles provided by EU law, notably the principle of «country of origin,» according to which the company providing a service in other EU countries is exclusively subject to the law of its country of establishment (principle initially provided for by the E-commerce Directive of June 8, 2000, and included in the DSA). Some of its provisions, particularly those concerning the application of French law to foreign influencers, could therefore be subject to forthcoming – and welcome – modifications.

Summary

To avoid disputes with important suppliers, it is advisable to plan purchases over the medium and long term and not operate solely on the basis of orders and order confirmations. Planning makes it possible to agree on the duration of the ‘supply agreement, minimum volumes of products to be delivered and delivery schedules, prices, and the conditions under which prices can be varied over time.
The use of a framework purchase agreement can help avoid future uncertainties and allows various options to be used to manage commodity price fluctuations depending on the type of products , such as automatic price indexing or agreement to renegotiate in the event of commodity fluctuations beyond a certain set tolerance period.

I read in a press release: “These days, the glass industry is sending wine companies new unilateral contract amendments with price changes of 20%…”

What can one do to avoid the imposition of price increases by suppliers? 

• Know your rights and act in an informed manner
• Plan and organise your supply chain

Does my supplier have the right to increase prices?

If contracts have already been concluded, e.g., orders have already been confirmed by the supplier, the answer is often no.

It is not legitimate to request a price change. It is much less legitimate to communicate it unilaterally, with the threat of cancelling the order or not delivering the goods if the request is not granted.

What if he tells me it is force majeure?

That’s wrong: increased costs are not a force majeure but rather an unforeseen excessive onerousness, which hardly happens.

What if the supplier canceled the order, unilaterally increased the price, or did not deliver the goods?

He would be in breach of contract and liable to pay damages for violating his contractual obligations.

How can one avoid a tug-of-war with suppliers?

The tools are there. You have to know them and use them.

It is necessary to plan purchases in the medium term, agreeing with suppliers on a schedule in which are set out:

• the quantities of products to be ordered
• the delivery terms
• the durationof the agreement
• the pricesof the products or raw materials
• the conditions under which prices can be varied

There is a very effective instrument to do so: a framework purchase agreement.

Using a framework purchase agreement, the parties negotiate the above elements, which will be valid for the agreed period.

Once the agreement is concluded, product orders will follow, governed by the framework agreement, without the need to renegotiate the content of individual deliveries each time.

For an in-depth discussion of this contract, see this article.

• “Yes, but my suppliers will never sign it!”

Why not? Ask them to explain the reason.

This type of agreement is in the interest of both parties. It allows planning future orders and grants certainty as to whether, when, and how much the parties can change the price.

In contrast, acting without written agreements forces the parties to operate in an environment of uncertainty. Suppliers can request price increases from one day to the next and refuse supply if the changes are not accepted.

How are price changes for future supplies regulated?

Depending on the type of products or services and the raw materials or energy relevant in determining the final price, there are several possibilities.

• The first option is to index the price automatically. E.g., if the cost of a barrel of Brent oil increases/decreases by 10%, the party concerned is entitled to request a corresponding adjustment of the product’s price in all orders placed as of the following week.
• An alternative is to provide for a price renegotiation in the event of a fluctuation of the reference commodity. E.g., suppose the LME Aluminium index of the London Stock Exchange increases above a certain threshold. In that case, the interested party may request a price renegotiationfor orders in the period following the increase.

What if the parties do not agree on new prices?

It is possible to terminate the contract or refer the price determination to a third party, who would act as arbitrator and set the new prices for future orders.

Son bastante frecuentes las relaciones comerciales con agentes o distribuidores que duran años y sin ningún documento firmado. Y, cuidado, porque ya sabemos que un contrato puede existir incluso verbalmente.

La inexistencia de un contrato escrito va a añadir dificultades en una posible reclamación, por eso, lo que se haga entre la decisión de ponerle fin y el momento de la reclamación es muy importante. Recuerda: “cualquier cosa que escribas será usada en tu contra”.

La decisión de terminar una relación comercial es un momento muy delicado al que, no sé por qué, a los abogados no se nos invita. Os doy algunos ejemplos (todos reales) en los que las empresas o algún empleado con la mejor voluntad escribió al agente/distribuidor. Todos fueron luego muy perjudiciales para la empresa:

Decir “Ponemos fin a nuestra relación comercial” cuando la estrategia será defender que dicha relación comercial no existe, sino que son contratos independientes y encadenados (por ejemplo, suministro en lugar de contrato continuado de distribución; consecuencias de indemnización muy relevantes).

“Usted ya no representa a nuestra sociedad”, lo que puede ser una prueba de que antes sí lo hacía.

“A partir del día X usted ya no puede actuar en nombre de nuestra sociedad” que probaría que antes sí podía actuar en su nombre.

“Usted no puede asistir a la feria de X en nuestro nombre”. Una forma de confirmar que entre las competencias del agente/distribuidor estaba participar en ferias y probablemente acredita los clientes obtenidos.

“Las ventas promovidas por Ud. se han visto reducidas significativamente en el año N”. Cuando no hay contrato escrito ni otra forma de documentarlo, imputar un incumplimiento de una obligación que no está clara, puede ser contraproducente.

Decir “No estás llevando a cabo una promoción activa de nuestros productos” para añadir a continuación: “le instamos a que deje de promocionar la venta de nuestros productos”.

“Usted deja de ser nuestro representante exclusivo”, lo que prueba un tipo de relación (representación/agente) y un acuerdo tácito o expreso (“exclusividad”)

“Hemos designado a otro representante en su zona”, que demuestra que el agente/distribuidor tenía una zona asignada y “representaba”.

“A partir de este momento los pedidos serán asumidos por X” que, igualmente confirma un tipo de relación.

En resumen: a partir del momento en el que la empresa valora poner fin a una relación comercial, sobre todo cuando no está escrita y antes de enviar cualquier carta, es conveniente pensar bien en la estrategia de cara a una posible reclamación. Es el momento más adecuado para asesorarse y evitar sorpresas. Cualquier comunicación que no esté alineada con esa estrategia diseñada desde el principio solo podrá aportar confusión y problemas.

Since the General Data Protection Regulation (GDPR) took effect in 2018, the European Union (EU) has granted adequacy status to only a limited number of jurisdictions — those whose data protection regimes are deemed to provide an «essentially equivalent» level of protection to that of the EU. The current list includes Andorra, Argentina, Canada (under PIPEDA), Faroe Islands, Guernsey, Isle of Man, Israel, Japan, Jersey, New Zealand, South Korea, Switzerland, Uruguay, the United Kingdom, and the United States (limited to companies certified under the Data Privacy Framework).

As of 5 September 2025, Brazil is on the verge of joining this exclusive group. The European Commission has issued a draft adequacy decision concluding that the Brazilian General Data Protection Law (Lei Geral de Proteção de Dados Pessoais – LGPD), in conjunction with Brazil’s broader legal and constitutional framework, offers protections that are essentially equivalent to those found in the GDPR. While Brazil’s rules offer somewhat more flexibility in specific areas of data processing, the foundational principles and safeguards are well-aligned with EU standards.

Once finalized, the adequacy decision will authorize the free flow of personal data from the EU to Brazil without the need for additional contractual clauses or technical safeguards. Such a development is not just regulatory — it also answers a core political argument made by LGPD advocates since its inception: that the absence of a comprehensive data protection framework was undermining Brazil’s international competitiveness by limiting data flows and discouraging investment. For businesses, the EU decision may finally mean the removal of a significant layer of compliance complexity — a development especially welcome by small and medium-sized enterprises engaged in cross-border trade or service provision. The draft is currently under review by the European Data Protection Board (EDPB) and the Member States of the EU.

The Commission’s assessment highlights several key aspects of Brazil’s data protection landscape. It begins by noting that the Brazilian Constitution expressly guarantees the right to privacy and the protection of personal data — a notable distinction among non-EU jurisdictions. These protections are further supported by Brazil’s ratification of the American Convention on Human Rights and its recognition of the jurisdiction of the Inter-American Court of Human Rights, reinforcing a commitment to fundamental rights and democratic oversight.

The LGPD mirrors the GDPR in many critical respects and defines its territorial scope clearly. It applies to: (i) data processing carried out within Brazilian territory, (ii) the offering of goods or services to individuals in Brazil, and (iii) data collected in Brazil, even if subsequently processed abroad. This aligns well with the extraterritorial provisions of the GDPR. The definitions of personal data, sensitive data, controller, and processor are materially similar, as are the key principles governing processing — including lawfulness, purpose limitation, data minimization, accuracy, transparency, and security. The law expressly excludes anonymized data from its scope and establishes specific exemptions for journalistic activities, public security, and scientific research.

Another strength is Brazil’s institutional framework. The National Data Protection Authority (ANPD) was recently transformed into an autonomous regulatory agency, enhancing its independence and technical capacity. The ANPD holds both regulatory and enforcement powers: it can issue binding regulations, impose administrative sanctions, and publish authoritative guidance. To date, it has issued key guidelines on topics such as consent, legitimate interest, the role of the Data Protection Officer (DPO), and security incident reporting. Internationally, the ANPD is an active participant in global data protection dialogue — it is a member of the Global Privacy Assembly and an official observer to the Council of Europe’s Convention 108.

The LGPD’s approach to international data transfers is also structurally aligned with the GDPR. It requires appropriate safeguards such as standard contractual clauses, allows for future adequacy decisions under a regime comparable to Article 45 of the GDPR, and includes detailed provisions for onward transfers and transit data — that is, data merely passing through Brazil without further processing. The rights of data subjects are robust and familiar to European practitioners: access, rectification, erasure, portability, and withdrawal of consent are guaranteed. Lawful bases for processing are also aligned — including consent, legal obligations, contract execution, and legitimate interest. Notably, the LGPD requires a documented balancing test when relying on legitimate interest, bringing additional accountability to this flexible legal basis.

Security incidents involving personal data must be notified to both the ANPD and affected data subjects when there is a significant risk of harm. The standard notification deadline is 72 hours, and the required content aligns closely with Articles 33 and 34 of the GDPR. The ANPD may also order public disclosure of incidents or require remedial measures, depending on the nature and scope of the breach.

Importantly, this process is not one-sided. In parallel to the European Commission’s adequacy decision, the ANPD is conducting its own adequacy assessment of the EU and EEA data protection frameworks. This process is regulated by the Brazilian Resolution CD/ANPD No. 19/2024, which governs international data transfers. Once the technical and legal evaluation is complete, the ANPD’s Board of Directors will issue a formal decision. This reciprocal move reflects Brazil’s commitment to mutual recognition and regulatory symmetry — a positive signal for companies on both sides of the Atlantic.

In conclusion: If confirmed, Brazil’s adequacy status will simplify international operations, reduce compliance costs, and expand opportunities for data-driven business and legal cooperation. For European lawyers advising SMEs with interests in Latin America, this development is a strategic signal: Brazil is emerging not just as a growing market, but as a legally compatible and data-safe jurisdiction for international partnerships.

Remember the USA – EU agreement on 15% tariffs? I wrote that with a negotiator like Trump the game is never over (article here) and—after the recent interlude featuring a threat of 100% tariffs on pharmaceuticals—the U.S. government has announced the imposition of an overall 107% duty on Italian pasta, which could take effect on January 1, 2026.

Where this new duty comes from

The antidumping investigation was launched by the U.S. Department of Commerce at the request of certain competing American companies and is based on a 1996 antidumping order that allows for periodic reviews of imports of Italian pasta. The Department of Commerce conducts these checks annually to assess whether Italian producers are selling pasta at prices lower than the U.S. domestic market, a practice known as “dumping.”

Companies involved in the investigation

The Department of Commerce selected two sample companies for in-depth analysis, defined as “mandatory respondents”: La Molisana and Pastificio Lucio Garofalo. According to the official document published by the U.S. administration, for the period from July 1, 2023 to June 30, 2024, both companies allegedly sold their products below market prices, resulting in the imposition of a duty of 91.74%.

U.S. authorities justified this percentage by claiming the two companies did not provide complete or compliant information as requested by the Department and were therefore insufficiently cooperative during the investigation. What is very important is that, in addition to the two companies directly examined, the additional 91.74% duty is also applied to numerous other Italian producers not individually reviewed. This methodology, while formally permitted under U.S. law as an exception, is being applied without any direct verification of the other companies.

Next steps in the procedure

Italy’s Ministry of Foreign Affairs moved immediately, formally intervening in the proceeding as an “interested party” through the Italian Embassy in Washington. The Foreign Ministry is working in close coordination with the companies concerned and, in concert with the European Commission, to persuade the U.S. Department to revise the provisional duties.

The two companies involved (La Molisana and Garofalo) can submit documentation to contest the dumping allegations. However, if dumping is confirmed, the Department of Commerce will instruct Customs to apply antidumping duties on goods sold and entered into U.S. commerce.

The preliminary nature of this determination means there is still room to change the decision before it becomes final.

Possible effective date

The new super-duty of 91.74%, which will be added to the existing 15% tariff for a total of 107%, is scheduled to take effect on January 1, 2026. This date therefore represents a crucial deadline for all ongoing diplomatic and legal actions.

If confirmed, the economic impact would be significant: in 2024, Italian pasta exports to the United States reached a value of €671 million according to Coldiretti, accounting for nearly 17% of the sector’s total exports. A 107% duty would risk seriously undermining competitiveness in one of the most important markets for Italian agri-food products.

 What to do between now and January 1, 2026?

At this stage, the entry into force of the new duty depends on the outcome of the ongoing procedure: given what has happened in recent months, and the political use the U.S. administration has made of tariffs—well beyond their technical function—it is reasonable to be pessimistic.

So, what to do? In recent months we have seen companies react to the uncertainty over the fate of the tariffs in three ways:

• Some rushed to ship as many products as possible before the potential effective date of the duty;
• Some granted—upfront—discounts equivalent to the threatened duty, in case it came into force;
• Some suspended orders, pending definitive news on the impact of the duties.

These are all  valid options, but other effective tools for managing the uncertainty caused by the flurry of announcements, negotiations, and threats from the U.S. administration should not be forgotten: the risk of new duties being introduced, or existing ones being increased, can be managed in the contract by agreeing with the U.S. importer how any tariff change will affect the product.

The parties can stipulate, for example, that the increase will be split equally; or that the importer will bear it beyond a certain threshold; or that if the duty exceeds a certain level, the contracts may be terminated. You can find a deeper dive in this article.

The only certainty is that trade relations with the U.S. will stay unpredictable for a long time, and it’s vital to carefully manage the risk factors involved in selling products there. Right now, the focus is on tariffs and prices, and I encourage you to take this chance to thoroughly review existing agreements and assess whether—and how—other important points are addressed that could entail significant liabilities: we discuss them, very practically, in this book.

A dedicated notary account in Brazil is a legal mechanism that brings greater security, transparency, and reliability to financial transactions. Regulated under Law 8.935/1994 and Provision No. 197/2025, this service allows notaries to receive, manage, and release funds only after contractual conditions have been fulfilled. By ensuring segregation of assets, traceability, and impartial oversight, dedicated notary accounts provide an effective escrow-like solution for real estate deals, mergers and acquisitions, import/export operations, high-value asset purchases, and complex commercial contracts. This tool not only reduces legal risks and potential disputes but also strengthens trust between parties by guaranteeing that payments are safeguarded until obligations are met.

The legal basis can be found in Law 8.935/1994, § 1 of art. 7-A, which allows notaries to receive, deposit, and manage amounts related to legal transactions, with transactions subject to objectively verifiable facts/conditions. Provision No. 197, dated June 13, 2025, regulates, at the national level, the service of notarial accounts linked to Notary Public Offices.

Practical applications: among others, in the following transactions:

• Real estate: guarantee that the down payment and settlement amounts will be secured in a specific account. This mitigates the risk of misappropriation of funds and ensures that the money will be released only after all contractual conditions have been met.
• M&A: the linked notarial account creates a standardized escrow mechanism for the payment of price/holdbacks/earn-outs and conditional obligations.
• Purchase and Sale of High-Value Movable Property: the linked account can be used to guarantee payment. The buyer deposits the amount and the seller knows that the money is safe, being released only after the transfer of ownership and delivery of the goods.
• Import and Export: the transaction amount can be deposited with the notary and released to the exporter only after confirmation of delivery of the goods in the destination country, for example.
• Guarantee of Obligations: In any contract that provides for the payment of a sum of money as a guarantee, the notary account can be used to provide greater security to the parties.
• Supply, EPC/turnkey, and construction contracts: performance retentions, milestone acceptance (commissioning, as-built, issuance of ART/CREA), and payment against formal acceptance.
• Contractual joint ventures and commercial partnerships: advances conditional on licenses, authorizations, or competitive approval, where applicable.

Reduction of Legal Risks: The use of linked accounts reduces the chances of litigation related to lack of clarity about the origin and destination of funds. Companies can clearly demonstrate that payments were made and held by an impartial and secure institution.

Operational structure: limited to banking entities affiliated with the CNB, which must ensure the segregation of assets, traceability through audit trails, and proof of all transactions. The authorization of the delegate requires prior accreditation and electronic registration of the essential details of the transaction and its conditions in the CNB system, with access restricted to the parties and the notary.

Specific Purpose: amounts received as payment, guarantee, or advance payment as a result of notarial acts must be deposited in a bank account linked to the specific act and may only be moved for the purpose for which they are intended.

Transparency and Traceability: With the linked notarial account, it is possible to clearly track the financial flow of each transaction, which increases transparency for all parties and for supervisory bodies.

Verification of conditions and release. Once the objective conditions have been met, the notary authorizes the transfer to the recipients and files the proof of verification. In the event of a dispute between the parties, the notary suspends any movement, draws up a notarial deed, and advises on a consensual or judicial solution, without deciding on the effectiveness/termination of the transaction; if the transaction is frustrated and no solution is found, the procedure is terminated and the amounts are returned to the depositor, in accordance with the agreed clauses.

Confidentiality and access. In transactions with a confidentiality clause, the notary public maintains confidentiality and does not issue certificates regarding the content of the transaction; documents are accessible only for correctional purposes or by court order.

Remuneration and costs. The notary’s remuneration for the notarial account service is paid by the financial institution under the terms of the agreement, and the transfer of additional costs to the user is prohibited, without prejudice to fees for any related notarial acts.

La constitución de una joint venture en Arabia Saudí puede representar una oportunidad especialmente atractiva para inversores extranjeros. Esta fórmula permite acceder a conocimiento local, experiencia en el mercado, redes comerciales consolidadas y a la solidez financiera de un socio saudí. Asimismo, esta modalidad de colaboración puede generar economías de escala relevantes.

Ahora bien, junto a las ventajas evidentes, la puesta en marcha de una joint venture en Arabia Saudí exige una planificación rigurosa desde el punto de vista financiero, jurídico y estratégico. El presente artículo ofrece una guía práctica sobre los principales aspectos que deben tenerse en cuenta.

Para maximizar las probabilidades de éxito, resulta aconsejable que el inversor extranjero conozca en profundidad el marco fiscal local. Los acuerdos contractuales con el socio saudí deberían regular de forma clara y detallada, entre otras cuestiones, los siguientes aspectos esenciales:

• Aportaciones de capital: Las partes deben definir con precisión qué activos —ya sean aportaciones dinerarias, propiedad intelectual o know-how— se integrarán en la joint venture y en qué proporción. Asimismo, es fundamental realizar una valoración realista de los activos materiales e inmateriales aportados.
• Distribución de beneficios: Deben establecerse los criterios, periodicidad y condiciones para el reparto de los beneficios generados por la joint venture.
• Asunción de pérdidas: Es igualmente necesario pactar de forma expresa el régimen de imputación de eventuales pérdidas.
• Financiación: Conviene analizar las distintas alternativas para cubrir las necesidades operativas y de inversión, incluyendo préstamos de socios y estructuras financieras compatibles con la Sharia.
• Fiscalidad: Las obligaciones tributarias de las partes deben quedar claramente delimitadas. Los inversores extranjeros están sujetos a un impuesto sobre sociedades del 20%, mientras que los socios saudíes deben abonar la Zakat, equivalente al 2,5% del beneficio neto. Asimismo, resulta conveniente analizar la eventual aplicación de convenios para evitar la doble imposición que puedan prever exenciones o deducciones fiscales. Las entidades establecidas en zonas económicas especiales (SEZ) recientemente creadas pueden beneficiarse, además, de incentivos fiscales significativos.
• Estrategias de salida: Es recomendable prever contractualmente mecanismos de salida claramente definidos, incluyendo cláusulas de compra o transmisión de participaciones y criterios de valoración aplicables en caso de separación de uno de los socios.

Por último, el inversor extranjero debe familiarizarse con el marco normativo aplicable en Arabia Saudí, que comprende la legislación societaria saudí, la normativa sobre inversión extranjera y su desarrollo reglamentario, la regulación en materia de arbitraje y jurisdicción mercantil, así como la legislación laboral.

Formas jurídicas de la Joint Venture

Es esencial conocer las distintas estructuras societarias disponibles para articular una joint venture en Arabia Saudí:

• Sociedad de responsabilidad limitada (LLC): Es la forma más habitual, al ofrecer flexibilidad estructural y responsabilidad limitada para los socios.
• Sociedad anónima (JSC): Frecuentemente utilizada en proyectos de gran envergadura que requieren una capitalización significativa.
• Sociedad anónima simplificada (SJSC): Estructura de reciente creación que combina elementos de la LLC y la JSC, proporcionando mayor flexibilidad en materia de gobierno corporativo.

Ley de Inversión Extranjera

Resulta igualmente fundamental conocer las principales disposiciones de la normativa saudí en materia de inversión extranjera, que regula la actividad económica desarrollada en el Reino. Entre los aspectos más relevantes destacan:

• Autorización del Ministerio de Inversiones (MISA): Toda inversión extranjera debe contar con la aprobación del MISA, que actúa como ventanilla única para los trámites necesarios, desde la constitución de la sociedad hasta la obtención de licencias y permisos. El actual sistema de licencias será sustituido por un sistema de registro, cuya regulación detallada está prevista para febrero de 2025.
• Liberalización de restricciones: Arabia Saudí ha flexibilizado considerablemente el régimen aplicable a la inversión extranjera, permitiendo en la mayoría de los sectores la titularidad del 100% del capital por inversores extranjeros. No obstante, determinados sectores estratégicos —como petróleo y gas, medios de comunicación, seguridad y defensa— siguen sujetos a limitaciones específicas.

La importancia del ISIC4

La clasificación de la actividad conforme a la Standard Industrial Classification (ISIC), en su cuarta versión (ISIC4), constituye un elemento clave para el inversor extranjero. Se trata de un sistema de clasificación económica reconocido internacionalmente y desarrollado por Naciones Unidas.

Una correcta clasificación conforme al ISIC4 resulta determinante, ya que incide directamente en la aprobación y supervisión por parte del MISA. En particular, afecta a:

• Procedimientos de autorización: Una clasificación incorrecta puede generar retrasos o imponer restricciones innecesarias.
• Actividades permitidas: Determinados sectores están sujetos a requisitos regulatorios específicos; una clasificación adecuada evita limitaciones indebidas.
• Incentivos a la inversión: Determinados beneficios fiscales dependen de la correcta identificación del sector de actividad.
• Capital mínimo exigido: La categoría seleccionada puede influir directamente en los requisitos de capitalización. Por ejemplo, una licencia industrial vinculada a actividades productivas exige un capital mínimo de 1.000.000 SAR.
• Licencias comerciales o de distribución: Las actividades de comercialización pueden requerir licencias específicas con elevados requisitos de capital (al menos 26.667.000 SAR con participación saudí y 30 millones de SAR para titularidad extranjera al 100%). Por ello, la clasificación debe analizarse estratégicamente.
• Categorías de servicios: Las actividades encuadradas en el sector servicios suelen implicar menores exigencias de capital.

Consideraciones estratégicas

Comprender la cultura empresarial local y las normas de comportamiento profesional es un factor determinante para el éxito de una joint venture en Arabia Saudí. Las relaciones personales y la generación de confianza desempeñan un papel central en las dinámicas comerciales.

Es aconsejable realizar un proceso exhaustivo de due diligence sobre el potencial socio local, incluyendo análisis financiero y reputacional. La alineación de objetivos empresariales reduce significativamente el riesgo de conflictos futuros. Asimismo, una adecuada comprensión del entorno económico, social y religioso permite evitar malentendidos y contingencias indeseadas.

Recomendaciones prácticas

• Los acuerdos entre las partes deben formalizarse mediante un contrato de joint venture exhaustivo y un plan de negocio detallado, que permita una adaptación flexible a la evolución del proyecto.
• Resulta conveniente establecer una matriz de delegación de facultades (Matrix of Authority) que delimite con claridad funciones, responsabilidades y competencias decisorias. Las decisiones de especial relevancia deberían configurarse como materias reservadas (Reserved Matters), sujetas a la aprobación de todos los socios.
• En caso de aportación de tecnología o know-how, es imprescindible articular acuerdos de licencia sólidos que protejan los derechos de propiedad intelectual. Acuerdos de confidencialidad y auditorías periódicas refuerzan dicha protección.

Cumplimiento normativo

• Prevención del blanqueo de capitales y anticorrupción: Es indispensable garantizar el cumplimiento de la normativa saudí en estas materias mediante procedimientos adecuados de due diligence y la implantación de programas internos de cumplimiento normativo.
• Legislación laboral y requisitos de “Saudización”: Las empresas extranjeras deben cumplir el sistema Nitaqat, que establece cuotas mínimas de contratación de ciudadanos saudíes. El incumplimiento puede dar lugar a sanciones y restricciones administrativas, incluyendo limitaciones en la obtención o renovación de permisos de trabajo.
• Resolución de controversias: La inclusión de una cláusula de resolución de disputas resulta esencial en los contratos de joint venture. La ley saudí de arbitraje, inspirada en el modelo UNCITRAL, proporciona un marco eficaz. Entre las instituciones arbitrales de referencia se encuentran el Riyadh Commercial Arbitration Center y la International Chamber of Commerce (ICC).

Conclusión

La constitución de una joint venture en Arabia Saudí constituye una oportunidad significativa de expansión empresarial, pero exige una planificación cuidadosa desde el punto de vista financiero, jurídico y estratégico. El conocimiento del marco normativo y del entorno cultural local permite al inversor actuar con mayor seguridad y aprovechar plenamente el potencial del proyecto.

El asesoramiento de profesionales con experiencia acreditada en el ordenamiento jurídico saudí resulta clave para gestionar adecuadamente la complejidad del proceso y sentar las bases de una colaboración sólida y sostenible en el tiempo.

Article 442-1.II of the French Commercial Code (former Article L. 442-6.I.5 °) sanctions the termination by a trader of a written contract or an informal business relationship without giving sufficient written prior notice. Over the last twenty years, this article became the recurring legal basis for all compensation actions (up to 18 months of gross margin, plus other damages) when a commercial relationship or a contract ends (totally or even partially).

Therefore, a foreign trader who contracts with a French company should try not to fall under the aegis of this rule (part I) and, if it cannot, should understand and control its implementation (part II).

In a nutshell:

How can a foreign company avoid or control the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• enter, as soon as possible, into a written (frame) agreement with their French suppliers or customers, even for a very simple relation and;
• stipulate a clause in favour of foreign court or arbitration and foreign applicable law while, failing to choose it, they would rather be subject to French courts and laws;

How can a foreign company master the risk linked to the «sudden termination of commercial relations» set by French law? Foreign companies doing business with a French counterpart should:

• know that this article applies to almost all type of commercial relationship or contracts, whether written or not, fixed-term or not;
• check whether its relation/contract is sufficiently long, regular and significant and whether the other party has a legitimate belief in the continuation of this relation/contract;
• give a written notice of termination or non-renewal (or even of a major modification), which length takes mainly into account the duration of the relation, irrespectively of the length of the contractual notice;
• invoke, with cautiousness, force majeure and gross negligence of the party, to set aside “sudden termination”;
• anticipate, in case of insufficient notice, a compensation which amount is the product of the average monthly gross margin per the length of non-granted prior notice.

How to avoid the application of the French “Sudden Termination” rule?

In international matters, a foreign company must anticipate whether its relationship will be subject or not to French law before terminating a contract or a business relationship and, in case of dispute, whether it will be brought before a French court or not.

What will be the law applicable to “Sudden Termination”?

It is quite difficult for a foreign company to correctly grasp the French legal framework of conflict of laws rules applicable to “sudden termination”. In a ruling of September 19, 2018 (RG 16/05579, DES/ Clarins), the Court of appeal of Paris made, by an implicit reference to the Granarolo EU ruling (07 14 16, N°C196/15) an extension of the contractual qualification to most of the business relationships which will improve foreseeability in order for a foreign company to try to exclude French law and its “sudden termination” rule.

Sudden termination of a written contract or of a «tacit contractual relationship”

According to Rome I Regulation (EC No 593/2008, June 17 2008) on the law applicable to contracts:

– In case of choice of a foreign law by the parties: The clause selecting a foreign applicable law will be valid and respected by French judges (subject to OMR, see below), provided that the choice of law by the parties is express or certain.

– In case of no choice by the parties: French law will likely to be declared applicable as it might be either the law of the country where is based the distributor/franchisee, etc. or the law of the country where the party who is to provide the service features of the contract has its domicile.

Sudden termination of a “non-tacit contractual relationship”

In case of informal relationship (i.e. orders placed from time to time), French judges would retain the tort qualification and will refer to the Rome II Regulation (No 864/2007, July 11 2007) on the law applicable to non-contractual obligations..

– In case of choice of a foreign law by the parties: a properly drafted choice of foreign law clause should be implemented by a French judge, provided that it expressly includes tort cases.

– In case of no choice of law by the parties: French law will likely to be declared applicable as it might be the law of the country where the damage occurs (regardless of the place of the causing event or that of the indirect consequences), which is the place of the head office where the French victim suffers the consequences of the termination.

“Sudden Termination” rule, a French Overriding Mandatory Rule?

The position of French courts is quite vague and unsatisfactory, and this has been the case for a long time. To make it short: the Commercial Court of Paris judges that “sudden termination” is not an OMR, the Court of appeal of Paris (sole French appellate court in charge of “sudden termination” cases) is also not in favour of the OMR qualification on the grounds that the text «protects purely private economic interests» (CA Paris, pôle 5, ch. 5, Feb 28. 2019, n° 17/16475 / CA Paris, pôle 5, ch. 5, Oct 8. 2020, n°17/19893). Recently, the Paris Court of Appeal reaffirmed that the rules on sudden termination of established commercial relations are not an OMR (Court of appeal Paris, March 11, 2021, n° 18/03112).

The French Supreme Court has never explicitly addressed the issue (OMR or not OMR). Indeed, the French Supreme Court ruled in the Expedia case (Cass. com., July 8, 2020, n°17-31.536) that the provisions of the former article L. 442-6, I, 2º and II, d), about “significant imbalance” (which is in the same set of rules than “Sudden termination”) are OMR. However, this qualification should be limited to the specific action brought by the Ministry of Finance and not be applicable to an action by a private party. Moreover, some courts may be tempted to invoke the provisions of French law n°2023-221 (March 30, 2023, aka Egalim III) to qualify Sudden termination rule as an OMR, however this text (article L 444-1.A Commercial code) does not quote expressly OMR and set no justification whatsoever to set such a qualification.

Consequently, if a claim for “sudden termination” is brought to a French court, there is still a  risk that the latter would exclude the applicable foreign law and replace it with the regime resulting from the «sudden termination» of Article L 442-1. II. However, to avoid this risk, a foreign company would better not only choose a foreign governing law but also stipulate that the dispute will be brought before a foreign judge or an arbitral tribunal.

How to avoid jurisdiction of French court over a “Sudden Termination” claim?

“Sudden Termination” claim and intra EU co-contractor

The ECJ ruling (Granarolo, July 14, 2016, N°C196/15) created a distinction between claims occurring from:

– written framework contract or tacit contractual relationship (existing only if the body of evidences listed by the ECJ are identified by national judges, i.e. length of relation and commitments recognized to each other, such as exclusivity, special price or terms of delivery or payment, non-competition, etc.): such claim has a contractual nature according to conflict of jurisdiction rules under Brussels I recast Regulation;

– informal relationship which is a non–tacit contractual relationship (i.e. orders placed from time to time): such a request has a tort nature under Brussels I recast ;

To be noted: the so-called Egalim III law has no impact on the EU rules on jurisdiction clauses.

(a) Who is the Judge of the “sudden termination” of a written contract or of a «tacit contractual relationship”?

– Jurisdiction clause for the benefit of a foreign court will be enforced by French courts, even though it is an asymmetrical clause (Court of cassation, October 7, 2015, Ebizcuss.com / Apple Sales International).

– In case of lack of choice of court clause, French courts are likely to have jurisdiction if the French claimant bringing a case based on “sudden termination» is the service provider, such as distributor, agent, etc. (see ECJ Corman Collins case, 19 12 13, C-9/12, and article 7.1.b.2 of Brussels I recast°).

(b) Who is the Judge of the “sudden termination” of a «non- tacit contractual relationship”?

– We believe that French courts may continue to give effect to a jurisdiction clause in tort case, especially when it expressly encompasses tort litigation (Court of cassation, 1° Ch. Civ., January 18, 2017, n° 15-26105, Riviera Motors / Aston Martin Lagonda Ltd).

– In case of lack of choice of court clause, French courts will have jurisdiction over a “sudden termination” claim as the judge of the place where the harmful event occurred (art. 7.3 of Brussels I recast), which is the place where the sudden termination has effect…i.e. in France if the French company is the victim.

“Sudden Termination” claim and Non-EU co-contractor

The Granarolo solution will not ipso facto apply if a French victim brings a claim to French courts, based on a «sudden termination» made by a non-EU company. In non-EU relations, French judges could continue to retain only the tort qualification. In such a case, French courts may keep their jurisdiction based on the place where the harmful event occurs.

Jurisdiction clause to a foreign court may be recognized in France (even for tort-based claims), provided that this jurisdiction clause is valid according to either a bilateral international convention or to the Hague Convention of 30 June 2005 on choice of court agreements. Otherwise, according to Egalim III law, imperative jurisdiction might be attributable to French courts.

“Sudden Termination” claim and arbitration

Stipulating an ad hoc or institutional arbitration clause is probably the safest solution to avoid the jurisdiction of French courts. Ideally, the clause will fix the seat of the arbitral tribunal outside France. According to the principle of competence-competence of the arbitrators, French courts declare themselves incompetent, unless the arbitration clause is manifestly void or manifestly inapplicable, regardless of contract or tort ground (see, in particular, Paris Court of Appeal, 5 September 2019, n°17/03703). The so-called “Egalim III” law has no impact on arbitration clauses.

Conclusion: Foreign companies should not leave open the Jurisdiction and governing Law issues. They must negotiate a safe harbour, otherwise a French victim of a termination will likely to be entitled to bring a “sudden termination” claim in front of French judges (see what happen below in Part 2)

How to master the “Sudden Termination” French rules?

When French law is applicable, the foreign company will face the legal regime of article L442 -1.II of the French Commercial Code sanctioning “sudden termination”. As a preliminary remark, it is important to know, above all, that the implementation of the liability for «sudden termination» is the consequence of the lack of a notice or a too short notice. Thus, this scheme does not lay down an automatic compensation rule. In other words, as soon as reasonable notice is given by the author of the termination, liability on that basis can be dismissed.

The prerequisite for “Sudden Termination”: an established commercial relationship

All contracts are covered by this legal regime, except for contracts whose regulations provide for a specific notice of termination, like commercial agency contracts and transport of goods by road subcontracts.

First, there must be a relationship that can be proven by a written contract or de facto, by behaviour of the parties. Article L.442-1 II of the French Commercial Code covers all “commercial” relationships and not only “contractual ones so that such relationship may be based on a succession of tacitly renewed contracts or a regular flow of business, materialized by multiple orders. This was recently recalled by the Supreme Court (Supreme Court, February 16, 2022, n° 20-18.844)

Second, this relationship must have an established character. There is no legal definition, but this notion has been defined year after year by case law which has established an objective criterion and a more subjective one.

(a) The objective criterion implies a sufficiently long, regular and significant relationship between the two parties. The duration of the relationship is the most important criterion. The relationship must also be regular, that is, it must not have been interrupted (too often or too long). The relationship must ultimately be meaningful and represent a serious flow of business between the parties, in volume or value.

(b) The subjective test focuses primarily on the legitimate belief of the victim of the rupture in the continuation of the contract / the relationship that is based on factual elements, such as investment requests, budgets over several years, etc. Conversely, it is on the basis of the finding of a lack of legitimate belief in a common future that the terminating party can prove the absence of a stable character when he has resorted, on several occasions, a call for tenders (unless it is a trick).

Anticipating a “Sudden Termination” claim

(a) The termination may be total or partial

The total rupture is materialized by a complete stop of the relations, for example ending the contract, stopping the sending of orders by the purchaser or the recording of orders by the supplier.

The Supreme Court recently recalled that a significant drop in sales with a partner must be considered as a partial rupture of the relationship (February 16, 2022, n° 20-18.844, cited above). But the most complicated situation to deal with is the so-called partial rupture that will be deduced from a modification of elements that partly impacts the relationship but does not reduce it to nothing (ex.: a price increase or decrease, a change in the terms of payment or delivery).

(b) The termination must be subject to a reasonable written prior notice

The notice must be notified in writing. The absence of written notice is already a breach in itself. The notification must clearly reflect the willingness of a party to sever the relationship in whole or in part, which must be clearly identified. The notification must also clearly identify the date on which the relationship will end.

Thus, an ambiguity on the notice period (e.g if the termination of an agreement is notified, whilst offering to maintain certain prices and payment terms, in the meantime) is considered as an insufficient termination notice (French Supreme Court, January 29, 2013, n° 11-23.676).

Parties must distinguish between the letter of formal notice for default and the subsequent notification of the breach, giving notice (if applicable). During the period of notice, parties must fully comply with all contractual conditions.

This principle also applies to distribution contracts subject to specific French rules imposing annual or multi-year negotiation obligations. In fact, the Court of cassation has ruled that «when the conditions of the commercial relationship established between the parties are subject to annual negotiation, modifications made during the notice period which are not so substantial as to undermine its effectiveness do not constitute a brutal breach of that relationship» (Cass. com., Dec. 7, 2022, n° 19-22.538).

However, it’s not necessary to mention the reasons why the commercial relationship is terminated is not a fault or breach of the relationship. In fact, French courts consider that “the fact that the given reason to terminate was false does not in any way present the terminating party from terminating the commercial relationship” (Versailles Court of Appeal, June 10, 1999).

The duration of the prior notice to be respected is not defined by French law which did not pose precise rule until the reform 2019. If several criteria are stated by case law, it should be noted that the most important criterion is the duration of the relationship. Judges also take into account the share of turnover achieved by the victim, the existence or not of a territorial exclusivity, the nature of the products and the sector of activity, the importance of the investments made by the victim especially to the relationship in question, and finally the state of economic dependence. Economic dependence is defined as the impossibility for a company to have a solution that is technically and economically equivalent to the contractual relations it has established with another company. Case law considers this to be an aggravating factor justifying a longer termination notice.

The minimum notice period must be notified at the time of notification of termination. As a consequence, events that affect the victim after the notification, both positively (conclusion of a new contract) and negatively (loss of another custome), will not be taken into account by the judge, at the time of ruling, when assessing the “brutality” of the termination.

The length of the notice given by the judges is very variable. The appreciation of notice is made on a case-by-case basis. It is very difficult to give a golden rule, even though roughly for each year of relationship, a month’s notice might be due (to modulate up or down depending on the other criteria in the relationship). But way of illustration, however, the following case law may be cited:

• Paris Court of Appeal , Feb.9, 2022: 16-year relationship with 15 months’ notice;
• Paris Court of Appeal, Jan.20, 2022: 12-year relationship with 8 months’ notice;
• Paris Court of Appeal, Oct. 25, 2022: 16-year relationship with 18 months’ notice;
• Paris Court of Appeal , Feb. 23, 2022: 17-year relationship with 11 months’ notice;
• Paris Court of Appeal, Sept. 21, 2022: 5-year relationship with 14 months’ notice.

Since the Order of April 24, 2019, which limits the length of reasonable notice to a maximum of 18 months, if the notice period granted by a party is 18 months, it cannot be held liable for a sudden termination. However, much of the litigation remains uncertain, as only exceptionally long or particularly sensitive relationships led, prior to 019, to the award of more than 18 months’ notice. Ordinance of April 24, 2019, limits to 18 months the maximum period of notice reasonably due under Article L 442-1.II. But much of the litigation will remain uncertain since only relations of exceptional longevity or particularly sensitive, could have led to the allocation of a notice higher than 18 months.

Judges are not bound by the contractual notices stipulated in the contract. But if the author of the breach also violated the terms and conditions of termination provided for by contract, the victim may seek the responsibility of the author both on the tort basis of the sudden rupture and also on the basis of the breach of a contractual obligation.

Cases in which “Sudden Termination” is ruled out

The legal regime provides for two cases, and the case-law seems to have imposed others.

(a) The two legal exceptions are Force majeure (very rarely consecrated by the courts) and the fault of the victim of the termination, case-law having added that it must be a serious violation (“faute grave”) of a contractual commitment or a legal provision (such as non-respect of an exclusivity, a non-compete, a confidentiality or a change of control duty, or non-payment of amounts due contractually).

The judges consider themselves, of course, not bound by a termination clause defining what constitutes serious misconduct. In any case the party who terminates for serious misconduct must clearly notify it in its letter of termination. Above all, serious misconduct leads to a lack of notice, therefore, if the terminating party alleges serious misconduct but grants notice, whichever it may be, judges may conclude that the fault was not serious enough.

Thus, the seriousness of the misconduct must be motivated by judges in their rulings. Noting that the contract was breached after two formal notices is not sufficient (Cass. com., Feb 16. 2022, n° 20-18.844).

However, the Court of Cassation considers that «even in the case of serious misconduct justifying the immediate termination of the commercial relationship, the other party remains free to give the other party a notice» (Cass. Com., Oct. 14 2020, n°18-22.119).

(b) In recent years, case-law has added other cases of liability waiver. This is the case when the rupture is the consequence of a cause external to the author of the rupture, such as the economic crisis, the loss of its own customers or suppliers, upstream or downstream.

For example, in 2021 the Court of cassation has ruled that “the business partner is not entitled to an unchanged relationship and cannot refuse any adaptation required by economic changes” (Com, Dec 01, 2021, n°20-19.113). In fact, to be attributable to an economic player, a termination must be free and deliberate. This is not the case if termination is imposed by the economic situation.

However, adding a liability exemption clause in a contract, aimed at waiving destinated to escape the penalties of article L. 442-1, is without consequences on the judge’s appreciation.

Judges have also excluded “sudden termination” in the hypothesis of the end of the first period of a fixed-term contract, whatever its duration is: the first renewal of a contract, constitutes a foreseeable event for the victim of the rupture, which excludes the very notion of brutality; but once the contract has been renewed at least once, judges can subsequently characterize the victim’s legitimate belief in a new tacit renewal.

Compensation for “Sudden Termination”

Judges only compensate for the detrimental consequences of the brutality itself of the breach but do not compensate, at least in the context of article L442 -1.II, for the consequences of the breach itself.

The basic rule is very simple: it is necessary to determine the length of the notice which should have been granted, from which the notice actually granted is deducted. This net notice is multiplied by the average monthly gross margin of the victim, or more often the so called margin on variable costs (i.e. the turnover minus costs disappearing with non-performance of the contract/relation). Defendant should not hesitate to ask for the full accountancy evidences, especially to identify (lower) margin rates, or even for a judicial expertise on those accounting elements. In general, the base of the average monthly margin consists of the last 24 or 36 months.

The compensation calculated on the average margin is, in general, exclusive of any other compensation. However, the victim can prove that it has suffered other losses as a consequence of the brutality of the rupture. Such as dismissals directly caused by this brutality or the depreciation of investments made recently by the victim.

Some practical tips when considering to anticipate “Sudden Termination”

Even though the legal regime is still ambiguous and the case-law terribly casuistic which prevents to release strong guidelines, here are some practical tips when a company plans to terminate a relationship / contract:

• in the case of a fixed-term contract renewable tacitly, the notification of non-renewal must be anticipated well in advance of the beginning of the contractual notice in order to avoid being in a situation where it is necessary to choose between not renewing the contract with a notice that is not sufficient or agree to see the contract renewed itself for a new term;
• commercial teams must be made aware of the risk of partial sudden termination when they change the conditions of execution of a commercial relationship / contract too radically;
• in some cases, it may be useful to send a pre-notice of termination with a “notice proposal” in order to try to validate this notice with the other party;
• it may also be useful, in certain relationships, to notify the end of the relationship with different lengths of notice depending on the nature of the product lines;
• Finally, the best way is to conclude an end-of-relation protocol, fixing the duration of the notice as well as, if necessary, the progressive decline of the orders, the whole within the framework of a settlement agreement which definitively waives any claim, including “sudden termination”.

Sudden termination regime shall be taken into consideration when entering into the final phase of a duration relationship: the way in which the contract (or de facto relationship) is terminated must be carefully planned, in order to manage the risk of causing damages to the counterparty and being sued for compensation.

Given the significance of the influencer market (over €21 billion in 2023), which now encompasses all sectors, and with a view for transparency and consumer protection, France, with the law of June 9, 2023, proposed the world’s first regulation governing the activities of influencers, with the objective of defining and regulating influencer activities on social media platforms.

However, influencers are subject to multiple obligations stemming from various sources, necessitating the utmost vigilance, both in drafting influence agreements (between influencers and agencies or between influencers and advertisers) and in the behaviour they must adopt on social media or online platforms. This vigilance is particularly heightened as existing regulations do not cover the core of influencers’ activities, especially their status and remuneration, which remain subject to legal ambiguity, posing risks to advertisers as regulatory authorities’ scrutiny intensifies.

Key points to remember 

• Influencers’ activity is subject to numerous regulations, including the law of June 9, 2023.
• This law not only regulates the drafting of influence contracts but also the influencer’s behaviour to ensure greater transparency for consumers.
• Every influencer whose audience includes French users is affected by the provisions of the law of June 9, 2023, even if they are not physically present in French territory.
• Both the law of June 9, 2023, and the «Digital Services Act,» as well as the proposed law on «fast fashion,» foresee increasing accountability for various actors in the commercial influence sector, particularly influencers and online platforms.
• Despite a plethora of regulations, the status and remuneration of influencers remain unaddressed issues that require special attention from advertisers engaging with influencers.

The law of June 9, 2023, regulating influencer activity  

The definition of influencer professions

The law of June 9, 2023, provides two essential definitions for influencer activities:

• Influencers are defined as ‘natural or legal persons who, for consideration, mobilize their notoriety with their audience to communicate to the public, electronically, content aimed at promoting, directly or indirectly, goods, services, or any cause, engaging in commercial influence activities electronically.’
• The activity of an influencer agent is defined as ‘that which consists of representing, for consideration,’ the influencer or a possible agent ‘with the aim of promoting, for consideration, goods, services, or any cause‘ (article 7) The influencer agent must take ‘necessary measures to ensure the defense of the interests of the persons they represent, to avoid situations of conflict of interest, and to ensure the compliance of their activity‘ with the law of June 9, 2023.

The obligations imposed on commercial messages created by the influencer

The law sets forth obligations that influencers must adhere to regarding their publications: 

• Mandatory particulars: When creating content, this law imposes an obligation on influencers to provide information to consumers, aiming for transparency towards their audience. Thus, influencers are required to clearly, legibly, and identifiably indicate on the influencer’s image or video, regardless of its format and throughout the entire viewing duration (according to modalities to be defined by decree):

  – The mention «advertisement» or «commercial collaboration.» Violating this obligation constitutes deceptive commercial practice punishable by two years’ imprisonment and a fine of €300,000 (Article 5 of the law of June 9, 2023).
  – The mention of «altered images» (modification by image processing methods aimed at refining or thickening the silhouette or modifying the appearance of the face) or «virtual images» (images created by artificial intelligence). Failure to do so may result in a one-year prison sentence and a fine of €4,500 (Article 5 of the law of June 9, 2023).