A company had signed a securities account agreement with a bank, allocating a certain sum to its investment, and by two agreements of the same day, the bank granted the investor two credits under so-called Lombard Credit agreements, which were to be used for stock market investments.
However, the execution of the agreements has been impacted by the financial crisis of 2009, and the investor suffered heavy financial losses.
The credit agreements contained two clauses which the bank took advantage of.
- The first one said that the borrower "declares that he approves without reservation the operations recorded by the Bank on the account statements, since the opening of this account, which he acknowledges having personally instructed, and he expressly waives any claim in this regard, whatever the nature or purpose";
- and another clause provided that the investor waived "the right to seek the Bank's liability for the indebtedness resulting (for the client) from the loan granted to him, to seek such liability as a result of the Crédit Lombard mechanism, in particular as a result of a duty to warn, an obligation to provide information or advice, and in general, on any grounds whatsoever".
After winning the case before the first judges of the Tribunal de première instance, the bank lost the appeal and lodged a « pourvoi » (i.e an appeal) with the Cour de révision.
The decision to dismiss the pourvoi is interesting in several respects. In particular, the Court confirms the reasoning of the judges of the Cour d'appel de Monaco who had invalidated the two clauses referred to above. It is "exactly" that the Cour d'appel noted that "if freedom of contract authorizes the parties to agree on a clause limiting or exonerating liability, this clause cannot empty of its substance an essential obligation weighing on the one to whose benefit it is stipulated, without seeing its validity affected and retains that by expressly targeting the principal obligation which fell to it in its role of financial intermediary, to inform, advise and warn its customer, the bank had attempted to evade its obligations without compensation". And it is " rightly that the Court considered that such unfair term should be deemed unwritten".
It is not uncommon for a limitation or exemption clause to be invalidated by Monegasque judges. However, this is the first time that the Cour de révision has confirmed the invalidation of a clause of this nature on the basis of the qualification of an "unfair term", a clause which should be "deemed unwritten".
It is well known that these formulas are taken from French consumer law, in particular from Article L. 212-1 of the Consumer Code. The Civil Code provides for a similar provision in Article 1171 of the Civil Code, as well as in Article L. 442-1 of the Commercial Code, as regards relations between professionals.
Monegasque law contains no comparable provision and it is therefore innovative to refer to this concept. Furthermore, the Cour de révision considers that the analysis of the Cour d'appel de Monaco is correct in that it considered that a clause exempting the contractor from liability could not target the principal obligation of the contractor, especially since no counterpart was given to the client. This is similar to the reasoning of the French suprême court (Cour of Cassation) in the 1996 « Chronopost » case (Cour de Cassation, Commercial Chamber, October 22, 1996, 93-18.632), where the Court held that a limitation of liability clause relating to an essential obligation of the contract was « unwritten » (« réputée non écrite »).
It remains to be seen whether the Cour de révision intends, in this judgment, like the French Cour de cassation, to generalize the fight against unbalanced clauses to all contractual matters.
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