By Michael Green

With the Biodiversity Law n°2016-1087 of August 8, 2016, the French Civil code now formally recognises “ecological prejudice” (préjudice écologique) as a category of indemnifiable damage. The move is symbolically significant and builds on the recognition of this category of damages by the Court of Appeals of Paris on March 30, 2010 in the 1999 Erika shipwreck matter (which resulted in pollution of over 400km of the French Brittany coastline).

The legal recognition of ecological prejudice can be traced to the Court’s landmark ruling, in which it was decided that “the ecological prejudice resulting from damage to non-mercantile environmental assets shall be compensated by monetary equivalent”. It further defined the matter as an “… objective prejudice … [which] is to apply to any non-negligible harm to the natural environment, that is, to the air, the atmosphere, water, soils, earths, landscapes, natural sites, biodiversity and the interactions between these elements, which may carry no repercussion for any specific human interest but affects a legitimate collective interest”.

By Benedicte Bremond and Gaetan GianassoFrench Civil Code image

Since the era of Napoleon Bonaparte, French contract law has largely been governed by the same Civil Code. This year has seen a quiet revolution in the French legal system, bringing about modernisations that will improve the investment environment for buyout firms, particularly as relates to management equity. In our view, these changes will help drive further growth in private equity investment in France, building on what has already been a strong year for deal activity.

The French government is addressing perceptions that France is not business friendly, earlier this year approving sweeping reforms to the Civil Code to make the country’s legal system more attractive. The changes came into effect last month, providing private equity firms with a simpler legal framework for deals, enhancing France’s appeal as a place for buyouts.