4.7.1 Recoverable losses

In French civil law, all losses can be recovered including pure financial loss (préjudice économique).1 Recoverable losses have the following characteristics, they are:

The losses must be directly related to the tort committed. The defendant cannot be held liable for losses that are only indirectly related to the factual basis of the tort (fait générateur de la responsabilité). This aspect is so intertwined with the requirement that there has to exist a causal relationship (lien de causalité) between the losses (dommage) and the tortious behaviour that I will discuss it in paragraph 4.7.3 on causation.3

Only losses that are certain can be recovered by the claimant. Certainty in this sense means that there are no doubts about the existence of the loss. The loss is either already incurred by the claimant or it is certain that it will be incurred by him. Hypothetical losses are excluded. The notion of loss of a chance as will be discussed in the next subsection is not a hypothetical loss if it is established that the opportunity to have invested more favourably is indeed lost.4

By requiring that the losses must be personal, French courts ensure that only the person that incurred the losses can claim damages from the tortfeasor. Section 31 of the French Code of Civil Procedure restricts the right to bring an action before the court to those who have a legitimate interest in the success or dismissal of the claim. In a similar sense, section 2 of the French Code of Criminal Procedure restricts the right to bring a civil action before the criminal court to those who have personally suffered damage directly caused by the offence.

The requirement that losses have to be personal to the claimant may cause some problems if the shareholder of a company claims that a company is liable for torts committed by its director(s). If the shareholder claims individually (action individuelle), i.e. he makes a claim for personal losses,5 he needs to prove that he incurred losses distinct from losses incurred by the company itself as a result of a tort committed by its director(s). This aspect has already been dealt with in section 4.5.2.

The fact that claimant's loss must actually exist, does not prevent the award of damages for losses already repaired by the claimant. The claimant's right to claim recovery of losses incurred comes into existence at the moment that the losses materialise; from that moment on the tortfeasor is liable to repair those losses.6 Furthermore, it is noteworthy that French private law, unlike English law, does not restrict the award of damages to foreseeable losses.7

Due to a lack of strict methodology in evaluating the losses, French courts are relatively reluctant to determine in detail the losses incurred by the investor who claims damages.8 In general, French courts rely on their discretionary power9 to determine the amount of damages. Even though French law adheres to the civil law principle of restitution in integrum, the courts award lump sums to claimants without any further explanation as to their reasoning. The courts also established without a proper reasoning the percentage of losses incurred as a result of a loss of a chance of making a more profitable investment decision (Sidel case), as will be observed in section 4.7.2 below. It is noteworthy in regard to the lack of collective action available onder French law that French scholars regard this method of awarding lump sums without any calculation of the losses actually sustained, as a manner to deal with corporate misinformation cases with (potentially) a vast number of claimants.10

Even though French courts may not have been consistent in their method of calculating damages, in its recent ruling in the Gaudriot case, the French Supreme Court seems to have adopted the notion of loss of chance as the proper method to calculate damages in misinformation cases. The French Supreme Court ruled that:

By this ruling, the French Supreme Court has affirmed the previous application of the loss of chance method by the Paris Court of Appeal in its recent Flammarion judgment, Regina Rubens judgment and Sidel judgment and most recently the Vivendi11 judgment on corporate misinformation in a press release. I will analyse this evaluation method in more detail in the paragraph on causation and the notion of loss of chance.