Litigation 2019 Second Edition

Last Updated December 05, 2019

Monaco

Law and Practice

Authors



Zabaldano Law Office has always had litigation as a core practice. Thanks to the team’s international background and network, the firm expertly represents private clients and ultra high-net-worth individuals in multi-jurisdictional disputes. It creates a synergy between its practices and draws from the diverse know-how of each of its lawyers to serve its clients on cutting-edge matters, regularly collaborating with magic circle firms on cross-border issues. The law office consists of a multidisciplinary team that has considerable experience in numerous different practice areas. Arnaud Zabaldano, the founding partner, has built an accomplished team and is able to offer high-quality dispute resolution services serving international clients. The key areas of practice in relation to litigation are business law; banking and financial law; corporate law; civil procedure and enforcement; criminal cases; human rights; real estate and construction; private international law, family and inheritance.

The Monegasque legal system is based on civil law, inspired by the French Napoleonic Code. It follows an adversarial model. The legal process is conducted primarily through written submissions.

The court system is organised into three levels of national courts: First Instance and Appeal Courts, both of which judge the case both on the merits and in law, and a Revision Court, the first role of which is to verify that the law has properly been implemented by the appeal court.

Courts are organised by subject matter jurisdiction (civil court, criminal court, family/guardianship court, small claims court, emergency court, etc).

Court hearings are generally open to the public except for sensitive matters (such as those involving minors). However, court filings are not available to the public.

Legal representatives who are entitled to file submissions on behalf of the parties must be admitted before the Monaco courts (having passed the Monaco bar exam). In front of the higher courts (First Instance, Appeal and Revision Court), only Monegasque lawyers having obtained the title of “Avocat-Défenseur” (after more than eight years of experience), are allowed to file submissions and appear on behalf of the parties.

Monegasque lawyers with less experience or foreign lawyers must appoint an “Avocat-défenseur” to appear beside them in front of the said courts and sign and file submissions. They may, however, present the oral arguments personally in front of the court.

There are no restrictions on litigation funding in Monaco and third-party funding is not framed by any specific law.

There are no restrictions on the types of lawsuits available for third-party funding.

Third-party funding is available to both plaintiffs and defendants.

There are no restrictions on the amount a third-party funder will fund.

There are no restrictions on the types of costs borne by third-party funders.

Exclusive contingency fees – those that are entirely based on a successful result – are not permitted. However specific agreements by which an additional fee (based on a percentage of the result obtained for instance) is provided in case of success, are permitted.

There are no time limits imposed on parties to litigation obtaining third-party funding.

There are no specific rules in terms of pre-action conduct. In some cases, however, courts may consider that advance formal notice is a logical step prior to legal action and, in the absence of such notice, may be reluctant to award damages.

Furthermore, legal interest only starts accruing from the day that a formal notice is issued.

The general statute of limitation is five years from the day when the beneficiary of a right knew, or should have known, of the facts enabling him or her to exercise it.

Jurisdictional requirements do not differ between courts in Monaco; they may, however, differ depending on the subject matter, that of divorce for instance.

Primarily, the courts of the Principality have jurisdiction where the defendant is domiciled in Monaco when the claim is initiated. In the absence of a known domicile, residency in the Principality shall be presumed.

In the case of multiple defendants, the Monegasque courts shall have jurisdiction if any one of the defendants is domiciled in the Principality, unless the claim has been made solely for the purpose of removing a defendant outside the jurisdiction of his or her domicile or of his or her habitual residence abroad. 

The courts of the Principality also have jurisdiction, irrespective of the domicile of the defendant, in the following cases:

  • in the case of real rights in immovable property, tenancies of immovable property and rights in companies holding immovable property, where the immovable property is located in the Principality;
  • in contractual matters:
    1. where the goods have been, or are to be, delivered or if the provision of services was performed in the Principality;
    2. for consumer contracts, where the claimant is the consumer and is domiciled in the Principality; or
    3. in the case of individual employment contracts:
      1. where the claimant is the employee and is domiciled in the Principality,
      2. where the employee habitually carries out his or her working activities in the Principality, or
      3. where he or she is a teleworker, as per the conditions set out by the legislative provisions regarding teleworking; or
      4. where the employment contract was executed in the Principality;
  • in matters relating to tort, where the tortious act occurred in the Principality or if the damage was suffered there;
  • in succession matters, where the succession has been opened in the Principality or where an immovable asset belonging to the estate is also located in the Principality, as well as claims by third parties against an heir or executor and claims between heirs until the final division of the assets;
  • in corporate matters, until the final liquidation of the company if it still has its registered office in the Principality;
  • with regard to collective proceedings for settlement of assets and liabilities arising from the application of Articles 408 to 609 of the Code of Commerce, where the commercial activity is carried out in the Principality;
  • with regard to the enforcement, validity or release of seizure orders or arrestments granted in the Principality and generally all claims for interim or provisional relief, even where the Monegasque courts are not competent to hear motions regarding the substance;
  • in cases regarding the enforcement of judgments and foreign deeds in Monaco; and
  • in maintenance obligation matters, when the person claiming maintenance or from whom maintenance is being claimed, is domiciled in the Principality or is a Monegasque national. 

The Monegasque courts which are competent to hear one such claim are also competent to hear: 

  • claims on a warranty or guarantee, unless it was made solely to remove a defendant outside the jurisdiction of his or her domicile or of his or her habitual residence abroad;
  • a counterclaim; and
  • a related claim.

The document filed to initiate a lawsuit (except in certain specific cases, such as labour disputes or divorces) is a summons served on the defendant through the service of a bailiff.

The summons must define the merits of the claim with an explanation of the supporting argumentation.

After it is served, the document may not be amended as such. However, additional writings may be filed at a later stage (to reply to the opponent’s submissions) and may include additional information or claims, or amend the initial claim as set out in the summons.

Service takes place through a bailiff. The bailiff will deliver the summons to the defendant or to the General Prosecutor in Monaco to allow for service through diplomatic channels if the defendant is domiciled outside the jurisdiction.

If the defendant does not respond the court may order that service take place again. Such a step is mandatory when there are several defendants.

If, after the second service, the defendant still does not respond/appear in court, the court will rule on the merits of the claim and issue a judgment by default.

The judgment could, however, be considered as contradictory – one given after both parties have been heard – if the claimant is able to prove that the defendant has officially been made aware of the service of the summons, even if they do not appear in court and/or fail to respond.

Monegasque law does not provide for representative or collective actions.

There is no requirement to provide clients with a cost estimate before litigation starts.

Interim ex parte applications are permitted in order to request freezing orders ( to secure a claim), or to gather evidence, prior to trial –ie prior to the summons being issued.

Early judgment may be requested on purely procedural issues such as jurisdiction or validity of the summons, or also to rule on a claim for a prior security deposit requested by a Monegasque defendant when the claimant is a foreigner.

These requests must be presented before arguing on the merits of the claim. There is, however, no specific timing necessary. Several written exchanges may take place between the parties on the subject, before a date is set by the court for oral arguments. Both the written exchanges and the oral arguments are limited to the procedural issues raised.

Common arguments which may be raised to prevent a case from being heard on its merits are lack of jurisdiction and invalidity of the summons.

There are three possible situations where interested parties may join, or be joined to, the pending lawsuit.

Voluntary Intervention by a Third Party

Any interested party may join a pending lawsuit. This may be done by appearing in front of the court and filing submissions. Interested third parties may support the position of one or another of the main parties but may not make any claim for themselves, nor substitute for a defaulting party.

Third-Party Guarantee

The defendant may ask the court to be allowed to summon a third party to be sentenced to guarantee him or her against the claim made by the initial claimant. 

The final judgment may, in such cases, sentence the main defendant but also rule that the second defendant must guarantee him or her.

Summons to Have an Opposable Judgment

One of the parties may also summon a third party in order for the rendered judgment to become opposable to the said third party.

Such a security can only be requested in a specific case –ie, when the claimant is a foreigner and the defendant a Monegasque national. This security may not be requested in commercial matters. It may also be dismissed, based on reciprocity, when the procedural rules of the country of the claimant would not require the payment of such a security from a Monaco national.

Although there is, at this stage, no published case law on the subject, this rule could be considered as contrary to the European Convention on Human Rights, to which Monaco is a party. Since it could be considered both as discriminatory and as hindering access to the courts.

The court costs (limited) of an ex-parte application (for a freezing order or an order for disclosure of targeted documents by a third party) must be borne by the applicant.

An ex-parte application is usually dealt with by the President of the First Instance Court within a few weeks.

Discovery in the American or English sense does not exist in Monaco.

The burden of proof lies with each party to support his or her claim or argument. As mentioned in 4.1 Interim Applications/Motions, however, the claimant may, prior to initiating the lawsuit, launch ex parte application(s) to request order(s) to be allowed to obtain evidence from third parties.

More recently, the courts have tended to consider that parties must both contribute to the discovery of truth, so that one of the parties may, within the course of the proceedings, be ordered to file specific documents designated by the other party.

If he or she fails to do so, the court may order a periodic penalty payment to force the disclosure or, alternatively, may render its final decision based on the assumption that the non-co-operative party is concealing information and that the other party’s claim is well founded. 

At the request of one of the parties, the court may also order an enquiry. This possibility is, however, very seldom implemented. The requesting party must specify which facts he or she intends to demonstrate through such an enquiry.

If the court does order an enquiry, the judgment will specify which facts are to be proven and sets a timeframe for both parties to file a list of the witnesses to be heard. A date is then set for the witness hearings.

Prior to the hearings, once it has obtained the list of witnesses, the court will assess the costs for the enquiry which will have to be advanced by the parties.

Discovery from third parties is possible through a pre-trial ex parte application to the President of the First Instance Court.

See 5.1 Discovery and Civil Cases. There are no specific documents that the parties must disclose by virtue of law.

See 5.1 Discovery and Civil Cases.

Legal privilege is recognised in Monaco for communications between lawyers as well as between lawyers and their clients.

There is no distinction made between external and in-house counsel as long as the lawyer is admitted to the bar.

In some cases, professional secrecy may be claimed by a party in order to avoid disclosing a document. For instance, banks may claim banking secrecy, or doctors claim medical confidentiality.

As mentioned in 4.1 Interim Applications/Motions, one party may file an ex parte application to the President of the First Instance Court to freeze assets.

To obtain such a freezing order the applicant must demonstrate the existence of a principle of claim. In some cases (depending on the nature of the assets to be seized), the applicant must also demonstrate the existence of a risk to the recovery of the claim, either due to the possible flight of the debtor or due to the possible diversion of his or her assets.

Injunctions to prevent parallel proceedings in other jurisdictions do not exist.

The President of the Court usually renders an order within a few weeks after the application is filed. However, it is possible to secure an immediate freezing of bank accounts, or other assets held for the debtor by a third party, from the moment the application is filed. This provisory freezing will remain in force until the judge renders his or her decision confirming or lifting the freezing.

Injunctive relief can be obtained on an ex parte basis, see 6.1 Circumstances of Injunctive Relief.

Applicants for injunctive relief can be held liable for damages suffered by the respondent, further to the freezing of its assets.

The applicant may in some cases be required to provide security, but that security is almost never ordered by the President of the Court.

Injunctive relief cannot be granted against a respondent's worldwide assets.

Injunctive relief can be obtained against third parties, but only on the assets they hold on behalf of the debtor.

In some case the court may order a periodic penalty payment to compel the respondent to comply with a court decision.

However, contempt of court does not exist in Monaco.

The process is primarily conducted in writing. The parties exchange written submissions and supporting evidence in turn at successive hearings. Written witness statements are filed by the parties, if necessary, to support their arguments. Once the parties decide not to file writings anymore, the court sets a hearing date for oral arguments. The court is only bound by the parties’ writings and previously filed submissions, not by the oral explanations. It renders its judgment after several weeks or months through the issuance of a final judgment.

Apart from ex parte applications for asset freezing orders, as described in 6 Injunctive Relief, there is also a possibility to file a case in front of an emergency judge (juge des référés). However, this judge only has jurisdiction:

  • in cases of urgency; or
  • in cases where the decision he or she will render will not prejudice the merits of the case, such as, for instance, the appointment of a court expert.

The case is initiated by the service of summons by a bailiff. Just as for a case on the merits in front of the First Instance Court, there may be several adjournments for case management hearings, to allow each party in turn to file their writings and supporting evidence, but such adjournments are generally much shorter (one or two weeks instead of one month). In average summary proceedings last between three months to a year.

Jury trials are not available in civil cases.

The burden of proof generally lies with the party who alleges facts in support of his or her argument.

Written evidence must be provided for any civil claim above EUR1,140.

Witness statements are not admissible in civil cases to contradict the contents of a notarial deed or a contract. In commercial cases, however, evidence is freely admitted.

Written expert testimony is permitted.

The parties may file expert reports to support their arguments.

The court may also appoint an expert, although it seldom does so without being requested to by one of the parties.

Case management hearings are usually not public. Hearings during which oral arguments take place are, however, usually open to the public.

Transcripts of hearings are not available to the public. They may be obtained only by the lawyers of the parties involved in the case and upon their request.

In civil cases, judges do not usually intervene. They exceptionally do so to ask a question.

Decisions are never given at the hearing where the oral arguments took place. They are always reserved for a later date, one which the court usually announces to the lawyers of the parties after the oral arguments are over.

Whether for commercial or civil disputes, the timeframe of a First Instance Court is usually two to three years. An appeal usually lasts one to two years and a Revision Court appeal usually one to one and a half years.

No court approval is required to settle a law suit.

Settlement agreements and their provisions can remain confidential.

Settlement agreements are considered as fully binding. However, in case of a breach of contract, a new court case would have to be initiated to obtain an enforceable decision.

A Settlement agreement may be set aside if there is a mistake in relation to the party involved or in the subject of the claim, or if it is the result of violence or deceit.

Any breach of an obligation to do, or not to do, something can be resolved by the payment of damages.

However, a successful claimant may also obtain the destruction or reversal of anything that was done contrary to the debtor’s undertakings. Alternatively, the claimant may also be allowed to execute the debtor’s obligations at the latter’s cost.

Any other breach of obligations is resolved by damages.

Punitive damages are not available. Damages are assessed by the courts based on the prejudice effectively suffered and evidenced.

When an action is based on breach of contract, interest accrues only from the date of the delivery of a formal notice, either by registered mail or by bailiff. Summons to appear in court may be assimilated into such a formal notice.

In all other cases, or if no specific claim has been made by the successful party in relation to interest, interest will start accruing from the day of the judgment.

The interest is based on the legal interest rate set out each year by ministerial order.

Two months after the judgment has become enforceable, the legal interest rate is increased by five percentage points.

Judgments may be enforced by implementing freezing orders and forced auctions of movable assets or real estate.

Where they are enforceable in the state in which they have been given, judgments rendered by foreign courts, which have the status of res judicata, are enforceable in the Principality; though only once they have been declared enforceable by the Court of First Instance, unless stipulated otherwise in treaties.

A judgment rendered by a foreign court is neither recognised nor declared enforceable in the Principality if:

  • it has been rendered by a court which did not have jurisdiction within the meaning of Article 17 of the Code of Private International Law;
  • the rights of the defendant have not been respected, especially where the parties have not been duly summoned and been given the opportunity to defend themselves;
  • the recognition or enforcement is clearly contrary to Monegasque public policy;
  • it is contrary to a decision rendered between the same parties in the Principality or to a decision previously rendered in another state and recognised in the Principality; or
  • a litigation is pending before a court of the Principality which was petitioned first, between the same parties and regarding the same subject-matter.

The claimant for execution or recognition must produce the following:

  • an authenticated original copy of the judgment;
  • the original of the deed of service or of any other deed serving as such in the state where the judgment was rendered; and
  • a certificate issued, either by the foreign court from which the judgment was delivered, or by the registrar of that court, acknowledging that the decision is neither appealed nor liable to opposition or appeal, and that it is enforceable in the territory of the state in which it occurred.

Such documents shall be legalised or apostilled by a diplomatic or consular agent of the Principality accredited to the foreign state or, failing which, by the competent authorities of that state.

In addition, where the above-named documents are not drafted in French, they must be submitted with a translation into French by a sworn or official translator and duly legalised or apostilled.

There is one appellate court in Monaco. The Appeal Court will review the First Instance Court decision.

The decision of the Appeal Court may be appealed in front of the Revision Court.

The Revision Court’s initial extent of review will solely concern the implementation of the law by the Appeal Court.

If it deems, without reviewing the facts, that the Appeal Court has appropriately implemented the law, it will reject the appeal. If not, it will then review the facts and judge the case again, on its merits.

There are no restrictions on the filing of appeals. No permission is needed.

Appeals in front of the Appeal Court

Appeals must usually be filed within 30 days of the service of the First Instance Court judgment. Exceptions are made in certain specific cases.

The filing is in the form of summons delivered to the other party, specifying the grounds for the appeal.

Counter-appeal by the respondent may be filed by later writings in reply to the other party’s appeal summons.

Appeals in front of the Revision Court

Appeals must also (except for on certain specific subject matters), be filed within 30 days of the service of the Appeal Court decision.

The appeal is lodged by a declaration made by the lawyer to the court clerk.

Within 30 days of that declaration, the said declaration and the appeal submission specifying the grounds for the appeal will be served to the defendant.

Counter-appeal by the respondent may be filed by later writings in reply to the other party’s appeal summons.

The Appeal Court will review the First Instance Court decision. There will be another final hearing where oral arguments will take place.

New arguments may be brought to support claims that were already made in front of the First Instance Court, but new claims are not admissible in appeal.

The Revision Court’s initial extent of review will solely concern the implementation of the law by the Appeal Court.

If it deems, without reviewing the facts, that the Appeal Court has appropriately implemented the law, it will reject the appeal. If not, it will then review the facts and judge the case again, on its merits.

No conditions may be imposed on the granting of an appeal.

Subject to the extent of the parties’ appeal, the Appeal Court may review the First Instance Court in its entirety.

There are different types of costs:

  • the lawyers’ fees paid by the parties throughout the proceedings; and
  • the final legal costs (état de frais et dépens) including court costs, bailiff’s costs, and specific legal duties owed to the lawyers.

There are no legal provisions which would allow the court to sentence the losing party to reimburse the fees incurred by the prevailing party.

The court may, in some cases, award damages based on the prejudice suffered by the prevailing party due to the abusive nature of either the resistance or of the claim filed by the losing party. However, the prejudice, as well as the wrongful nature of the losing party’s procedural behaviour, have to be demonstrated and are not often admitted by the court. Furthermore, when the court does award damages, they never cover the total amount of the fees paid (often they are far less). 

The court rules systematically on the burden of the final legal costs, which may be either ascribed to the losing party, or sometimes shared between the parties according to a ratio set by the court. This decision is usually based on the assessment of the level of success of each party’s claim.

Please see 11.1 Responsibility for Paying the Costs of Litigation.

No interest is awarded on costs.

ADR is not very developed in the Monegasque legal system.

There are only two governmental structures which offer mediation services: family mediation and the High Commissioner.

Family mediation may be either conducted willingly by the parties outside the frame of any legal proceeding or ordered by a family judge, if the parties consent.

The High Commissioner intervenes to resolve cases in which a natural or legal person has a grievance with an administrative decision concerning their rights or freedoms or with the functioning of a Monegasque administrative department.

It can also intervene at the request of administrative authorities for mediation purposes in the context of prior administrative appeals referred to them.

The High Commissioner examines cases from a legal perspective, including verifying the legality of administrative decisions taken against a citizen. It also examines the fairness of administrative decisions and practices in cases referred to it, with a view to ensuring that a person receives an appropriate response in each specific situation.

ADR does not form part of Monegasque court procedures.

Both institutions (family mediation and the High Commissioner), although comprised of a limited number of mediators (one in each service) have been in existence for several years (2000 for family mediation and 2013 for the High Commissioner) and are well organised services.

Monaco is a signatory of the 1958 New York Convention on the Recognition and Enforcement of Arbitral Awards (New York Convention).

Hence it applies the same rules for the enforcement of foreign arbitration awards as those applicable for domestic arbitration awards, as set out in Article 956, and those following, of the Civil Procedure Code (see 13.4 Procedure for Enforcing Domestic and Foreign Arbitration).

Monaco has made the declarations provided for by Article I-3 of the New York Convention, that:

  • it will apply the Convention only to the recognition and enforcement of awards made in the territory of another contracting State; and
  • it will apply the Convention only to differences arising out of legal relationships, whether contractual or not, that are considered commercial under Monegasque law.

Arbitration is only permitted in commercial matters.

The President of the First Instance Court’s order, by which the arbitral award will be recognised and enforced, may be opposed in cases where:

  • the arbitral award has been rendered without an arbitration agreement or outside the scope of such an agreement;
  • the arbitration agreement was invalid or expired;
  • the arbitration award has been rendered by legal or natural persons who could not be appointed as arbitrators or by a few arbitrators in the absence of the others;
  • the formal requirements for national court judgment have not been complied with (save if the parties had exempted the arbitrators from following those rules); or
  • the arbitrators have ruled ultra petita.

The enforcement of a foreign arbitration award is obtained by filing an ex parte application, supported by the appropriate documentation as described by Article IV of the New York Convention (originals or duly certified copies of the award and of the arbitration agreement), with the President of the First Instance Court.

The judge usually renders the order within a few weeks.

Zabaldano Law Office

L’Estoril
31 avenue Princesse Grace
MC 98000 Monaco

+377 97 98 06 80

+377 97 98 06 81

contact@zabaldano.com www.zabaldano.com
Author Business Card

Law and Practice

Authors



Zabaldano Law Office has always had litigation as a core practice. Thanks to the team’s international background and network, the firm expertly represents private clients and ultra high-net-worth individuals in multi-jurisdictional disputes. It creates a synergy between its practices and draws from the diverse know-how of each of its lawyers to serve its clients on cutting-edge matters, regularly collaborating with magic circle firms on cross-border issues. The law office consists of a multidisciplinary team that has considerable experience in numerous different practice areas. Arnaud Zabaldano, the founding partner, has built an accomplished team and is able to offer high-quality dispute resolution services serving international clients. The key areas of practice in relation to litigation are business law; banking and financial law; corporate law; civil procedure and enforcement; criminal cases; human rights; real estate and construction; private international law, family and inheritance.

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