France: Changes Urged to French Blocking Statute

Published 05 December 2013 by Pech de Laclause, Bathmanabane & Partners

French Anti-corruption Agency Recommends Amendment to the French Blocking Statute    

To counteract the breadth of United States discovery rules, France enacted a blocking statute that criminalizes the very act of exporting information requested in the course of non-French legal proceedings. The result is a tension on foreign litigants in US courts, who face sanctions when they object to discovery on the basis of the French blocking statute. Now there is a new attempt by the French government to mediate this tension, in particular where potential corruption issues are alleged.  

In its 2012 annual report, published in July 2013, the French anti-corruption agency, the Service Central de Prévention de la Corruption (Central Office for the Prevention of Corruption, or "SCPC"), recommends amending the French blocking statute. The SCPC is an inter-ministerial agency, part of the French Government and is formally attached to the French Ministry of Justice.

The report states that a significant and growing number of French companies are involved in foreign judicial or administrative proceedings, during the course of which they are obliged to cooperate with foreign authorities and directly provide them with business documents regarding their internal structure and business model. The US courts are clearly the forum intended by this report.  

In such circumstances, the French blocking statute (the restriction on disclosure of information within France for use in a non-French judicial proceeding relating to the communication of economic, commercial, industrial, financial or technical documents and information to foreign individuals or legal entities, as codified at French Penal Code Law no. 80-538 dated 16 July 1980) is only occasionally invoked by French companies, even though this text prohibits, subject to criminal sanctions, the communication of information or documents for use within foreign proceedings, unless obtained within the scope of The Hague Convention of 18 March 1970 on the Taking of Evidence Abroad in Civil or Commercial Matters.  

SCPC believes that French companies may be hesitant to use the blocking statute out of fear of possible sanctions from US courts if they do not disclose the requested information and that non-cooperation with these authorities might damage their business reputation. SCPC reports that in 2011, an innovative procedure was put in place between French and US authorities, with SCPC serving as an intermediary to ensure that documents requested by the US authorities demonstrated a useful purpose for use in the US proceedings and did not affect the interests protected by the French blocking statute. SCPC consulted the relevant French Ministries to know which restrictions to apply to the disclosure of information.  

Building on this experience, SCPC now advocates the adoption of an amendment of the French blocking statute in order for the SCPC to be the statutory intermediary between US authorities (such as the Department of Justice and the Security Exchange Commission) and the French companies in all cases in which corruption is alleged.  

December 2013