AIRBNB fined for failing to collect and remit tourist tax

The GOLDWIN law firm obtained an order for the AIRBNB platform to pay a fine of €30,000 for failing to collect and pay back the tourist tax for the year 2021, on the basis of article L2333-34-1 of the General Local Authorities Code, which provides:

« I.-Failure to file the declaration provided for in III of article L. 2333-34 within the prescribed timeframe will result in the application of a fine of up to €12,500, but not less than €750. Omissions or inaccuracies in the same declaration will result in a fine of €150 per omission or inaccuracy, with the total fine per declaration not to exceed €12,500.

II -Lodgers, hoteliers, owners, intermediaries and professionals mentioned in article L. 2333-34 who fail to collect tourist tax from a taxable person are liable to a fine of up to €2,500, but not less than €750.

III -Lodgers, hoteliers, owners, intermediaries and professionals mentioned in article L. 2333-34 who fail to pay the amount of tourist tax due in accordance with the conditions and deadlines stipulated in the same article L. 2333-34 are liable to a fine of up to €2,500, but not less than €750.

IV-The fines provided for in I, II and III of the present article are imposed by the president of the judicial court, ruling in summary proceedings, at the request of the municipality that has instituted the tourist tax. The proceeds of the fines are paid to the municipality. The competent judicial court is the one in whose jurisdiction the commune is located ».

Initially, the President of the Judicial Court of La Rochelle ruled that there was no need to transmit the priority question of constitutionality requested by AIRBNB and aimed at calling into question the constitutionality of these sanctions, judging that the question was devoid of any serious character.

Secondly, it noted that: « It is clear from the debates that AIRBNB did not collect or pay back, by December 31, 2021 at the latest, the tourist tax on the 5066 stays included in the collection period running from June 26 to September 11, 2021, and did not pay the additional departmental tax for 2021 ».

With regard to the tourist tax for 2020, it has decided to stay the proceedings pending the outcome of parallel proceedings brought before the La Rochelle Court of Justice concerning the validity of the tourist tax due for 2020.

This decision represents a historic legal victory for the Oleron community, which, after having obtained the communication of the tourist tax statements and the payment of the tourist tax by means of an ex officio taxation measure, was able to obtain that these repeated breaches of its obligations be remedied.

With regard to the tourist tax for 2020, it has decided to suspend the ruling pending the outcome of parallel proceedings brought before the La Rochelle Court of Justice, concerning the validity of the tourist tax due for 2020.

This decision represents a historic legal victory for the Oléron community, which, after having obtained the communication of the tourist tax statements and the payment of the tourist tax by means of an ex officio taxation measure, was able to obtain that these repeated failures be sanctioned by the imposition of fines.

To our knowledge, this is the first time that a platform has been sanctioned on the basis of this article of the law.

Jonathan BELLAICHE and Adèle AZZI were the lawyers in charge of this case.

Record conviction of a tenant subletting on Airbnb

The Protection Litigation Judge of the Paris Judicial Court has, by decision rendered on March 22, 2022 notified today, rendered an important condemnation for income derived from illicit subletting via the AIRBNB platform.

The sentence amounts to the total sum of 221,891.55 euros and breaks down as follows:

– 198,034.80 euros for the civil fruits collected with interest at the legal rate ;
– 11,370 euros for the rental arrears;
– 11,486.75 euros for rental repairs;
– 1,000 euros for article 700.

The tenant sublet the above-mentioned apartment on numerous occasions for more than two years, over a period extending from December 29, 2016 (i.e., one week after the effective date of the lease) until December 21, 2020 (i.e., the day before the tenant handed over the keys.

Indeed:

– In 2016, the tenant sublet the apartment subject to the lease on two occasions. The apartment was thus occupied by a passing clientele for 15 days, for a total amount of €2,263.

– In 2017, the tenant sublet the apartment subject to the lease 103 times. The apartment was thus occupied by a passing clientele for 273 days, for a total amount of €51,797.17.

– In 2018, the tenant sublet the apartment subject to the lease on 80 occasions. The apartment was thus occupied by a passing clientele for 259 days, for a total amount of 54,027.17€.

– In 2019, the tenant sublet the apartment on 97 occasions. The apartment was thus occupied by a passing clientele for 311 days, for a total amount of €66,089.80.

– In 2020, the tenant sublet the apartment subject to the lease 47 times. The apartment was thus occupied by a clientele of passage during 256 days, for a total amount of 23.857,66€.

The main tenant of the apartment will have finally sublet, without the authorization of the owners, the apartment that he occupied 329 times in the space of four years, thus accumulating 1,114 days of subletting.

BOOKING: the collection of the tourist tax on the nights sold by the non-professional hosts of the platform

The firm represented the community of communes of the island of Oleron, which is a public establishment of inter-communal cooperation, in a dispute with the BOOKING company.

The BOOKING company being the intermediary of payment between professional and non-professional accommodation providers and tourists, it must transfer, each semester, the collection of the tourist tax on the nights marketed by the non-professional accommodation providers to the EPCI of the island of Oleron as stated in article L.2333-34 of the General Code of Territorial Communities.

The Community of Municipalities of the Island of Oleron reproached the BOOKING company for having failed to collect the tourist tax for the years 2020 and 2021 and, as a result, for not having made the resulting semi-annual payments.

The latter indicated that it had paid the tourist tax but did not communicate the files listing the stays made during the period of collection of the tax for the years 2020 and 2021 to the Community of Municipalities of the Island of Oleron.

The judge recognized that the CDC of Oleron Island had a legitimate reason to order BOOKING to provide it with the files listing the stays marketed through its platform by non-professional renters for whom it is the payment intermediary during the period of collection of the tourist tax for the years 2020 and 2021.

For this reason, the judge ordered BOOKING to provide the CDC of Oleron Island with the files listing the stays marketed through its platform by non-professional renters for whom it is the payment intermediary during the period of collection of the tourist tax for the years 2020 and 2021.

The Paris Court of Appeal confirms that the AIRBNB platform is a content publisher

In a decision dated January 3, 2023, the Paris Court of Appeals confirmed that AIRBNB was a content publisher, on the grounds that it played an active role in the drafting of the advertisements posted on its platform, due to the numerous constraints imposed on its “hosts” regarding the use of its platform.

The Court referred in particular to the precise instructions to be respected before posting an ad, the obligation to respect certain standards and a certain behavior towards travelers under penalty of sanctions, or the discretionary right that AIRBNB reserves to remove any content that does not respect its rules.

In order to qualify the platform as a publisher, the Court also took into account the rewards attributed to certain “hosts” who best respect the platform’s guidelines, who are given the title of “superhost” and thus benefit from greater visibility.

All of these criteria allowed the Court to conclude that AIRBNB was acting as a content publisher and that it was therefore its responsibility to ensure that the ads published on its site were legal.

In this case, the Court deduced that the AIRBNB platform could therefore be held liable for the economic damage suffered by the owner of the property that had been illegally sublet via the platform.

The AIRBNB platform was ordered to pay the owner the sum of 32,399.61 euros, with interest and legal rate from the date of the judgment, as well as 12,000 euros under Article 700 of the Code of Civil Procedure, jointly and severally with the tenant.

Parking Authorization

GOLDWIN, represented by the partner of the firm’s public law department, Olivia ZAHEDI, obtained the cancellation of two parking permits that had been falsified by the mayor of a municipality in order to benefit an individual who was no longer able to obtain them.

In this case, the mayor had backdated the parking permits in order to circumvent Law No. 2014-1104 of October 1, 2014, which had come to prohibit the granting of several parking permits to the same operator.

The purpose of the appeal filed with the Marseille Administrative Court was thus:

1/ to declare the disputed parking authorizations null and void ;

2/ to annul the implicit decision by which the Mayor had rejected the request for their withdrawal.

As the operation of a cab as a craftsman is conditional on obtaining a parking permit, Ms. X had sent the Mayor of the municipality on January 22, 2012 a request for the allocation of a second parking permit.

Given the particularly long waiting times, this request had been examined by the departmental commission for cabs and small delivery vehicles on September 25, 2014, which had also issued an unfavorable opinion on the granting of a second authorization.

A few weeks later, Law No. 2014-1104 of October 1, 2014 on cabs and chauffeur-driven cars and codified in Article L. 3121-1-2 of the Transportation Code had come to prohibit the allocation of several parking authorizations to the same operator.

However, ignoring this new law, which was nevertheless applicable, and the unfavorable opinion of the departmental commission, the mayor of the municipality had granted a second parking permit to Mrs. X.

In order to circumvent the regulations in force, the Mayor had made two forgeries in public writings by backdating to September 25, 2014:

the municipal by-law establishing a fourth cab stand ;
the municipal ordinance authorizing the parking of a second cab equipped vehicle.

By a homologation order issued on June 18, 2019 by the President of the Tribunal de Grande Instance of Digne-les-Bains and which has become final, the Mayor had been sentenced for these facts to a tortious fine of 700 euros including 400 euros suspended.

Informed of the fact that Mrs. X was still operating this falsified parking permit, a professional cab union had sent, by letter dated August 6, 2019, an ex gratia appeal to the Mayor in order to ask him to withdraw the litigious decrees.

In the absence of a response from the Mayor within two months of the notification of this appeal, an implicit decision of rejection was issued on October 8, 2019.

It is under these conditions that the union called upon the GOLDWIN firm.

Proceedings have been initiated by the Firm to request the Marseille Administrative Court:

primarily, to declare null and void the disputed municipal orders of September 25, 2014 and the implicit decision to reject its request to withdraw the two orders;
in the alternative, to annul this decision and to enjoin the Mayor to proceed with the withdrawal of the litigious decrees.

This case called for the development of several points of law, to which it is appropriate to return here.

Firstly, the firm endeavored to demonstrate the admissibility of the request

To do so, it was first necessary to demonstrate the interest of the professional cab union to act, which did not pose any particular difficulty insofar as the union is responsible, by its statutes, for defending the professional interests of its members.

However, in this case, the actions of the Mayor and Ms. X unquestionably harmed the cab profession by issuing the latter a second parking permit in violation of the law of October 1, 2014.

The union of cab professionals therefore had a definite interest to act before the administrative judge.

It was then necessary to show that (i) the request for withdrawal as well as (ii) the request to declare the disputed orders null and void were in themselves admissible.

Concerning the request to withdraw the orders

Article L. 242-1 of the Code des relations entre le public et l’administration (CRPA) provides that the administration may only repeal or withdraw a decision that creates rights at the request of a third party if it is illegal and if the repeal or withdrawal occurs within four months of the decision being made.

In the present case, Cabinet Goldwin had sent an ex gratia appeal on behalf of the professional cab union to the Mayor of the commune on August 6, 2019, after learning that the latter had been found guilty of forgery in public writing by the homologation order of the enforcement judge of the TGI of Digne-les-Bains.

Since the disputed ordinances were issued by the Mayor in 2014, the request for withdrawal thus came 5 years after their adoption, which is much longer than the time limit provided for by Article L. 242-1 of the CRPA.

However, the Code of Relations between the Public and the Administration provides for a derogation from this article, set forth in Article L. 241-2, according to which a unilateral administrative act obtained by fraud may be repealed or withdrawn at any time. The Conseil d’Etat has moreover had occasion to recall these provisions on numerous occasions (CE, August 16, 2018, No. 412663; CE, April 26, 2018, No. 410019; CE, February 5, 2018, No. 407149 and 407198).

Concerning the request to declare the decrees null and void

Moreover, it is a constant jurisprudence that when an administrative act is vitiated by a defect of such gravity that it affects not only its legality but its very existence, the petitioner is well-founded to ask the judge to declare it null and void (CE, February 28, 1986, no. 62206; CE, 9th and 10th sub-sections combined, March 18, 2015, no. 367491).

In addition, the union had sent the mayor an ex gratia appeal for the withdrawal of the disputed decrees.

An implicit decision of rejection had thus arisen, due to the silence kept by the Mayor, on October 8, 2019. The union therefore had a period of two months in which to file an appeal with the Marseille Administrative Court.

The union’s request was therefore admissible in every respect.

Second, the firm set out to demonstrate the fraudulent nature of the municipal decrees

The parking permits issued constituted forgeries of a public document.

Article 441-1 of the Penal Code provides that a forgery constitutes any fraudulent alteration of the truth likely to cause damage and accomplished by any means whatsoever, in a writing or any other medium of expression of the thought which has as its object or which can have as its effect to establish the proof of a right or a fact having legal consequences.

According to article 441-2 of the same Code, forgery can be committed in a document issued by a public administration for the purpose of granting an authorization, in particular.

In this case, in order to escape the provisions of the law of October 1, 2014 coming to prohibit the granting of several parking permits to the same cab operator, the Mayor voluntarily backdated the municipal orders, which he himself admitted.

The fraudulent nature of the decrees was therefore obvious.

In addition, following a complaint for forgery in public writing filed by the union in April 2018, the Mayor had been found guilty of falsifying the bylaws by a homologation order of the enforcement judge of the TGI of Digne-les-Bains on 18 June 2019.

That being the case, the contested decrees were in any case irregular since they had been issued on September 25, 2014, i.e. prior to the notification of the advisory opinion of the departmental commission of cabs and small delivery vehicles, which occurred on September 30, 2014.

Third, the firm sought to demonstrate the illegality of the implicit decision by which the Mayor had rejected their request to withdraw the disputed orders

Since the falsification of the ordinances was obvious, the Mayor was obligated to withdraw the fraudulent parking permits that he had granted.

Consequently, he could not refuse to use his power to withdraw the said permits.

His implicit decision to reject was therefore tainted by illegality.

Thus, by decision of October 11, 2022, the Administrative Court of Marseille, considering that the orders of September 25, 2014 were vitiated by a defect of such gravity as to affect their legality and their very existence.

Consequently, the Tribunal ruled that they constituted acts that were null and void and could not be considered to have created a vested right for the benefit of their beneficiary, even if she had been acting in good faith, nor of third parties.

It also held that, since the withdrawal of the two decrees could not be considered as having an excessive impact on the interests of the municipality, it was obliged to withdraw them and that the implicit refusal to withdraw the decrees that had been opposed to the syndicate should therefore be annulled.

Accordingly, the Tribunal annulled the implicit decision by which the Mayor rejected the request for withdrawal of the two orders dated September 25, 2014 submitted by the professional cab union.

In addition, the Tribunal ordered the commune to pay the union the sum of €2,000 for its legal fees.

Reclassification of a service contract as an open-ended employment contract

The GOLDWIN law firm, represented by Jonathan BELLAICHE, defended the interests of an employee working as a service provider who wanted to change his employment relationship to a permanent contract.

It is often possible to confuse salaried employment with self-employment when a self-employed person works under conditions similar to those of an employee. This dangerous situation, annihilates all guarantees for the self-employed worker, who is however subjected to a real subordination link without any protection. (In this situation, the self-employed worker has the possibility to request before the Conseil de Prud’hommes the requalification of his contract of provision of services as a contract of employment, in order to be restored in his rights.

The Conseil de Prud’hommes settles individual labor disputes arising from the execution or termination of an employment contract. Consequently, it is necessary for this court to retain the existence of an employment contract before examining the plaintiff’s salary and compensation claims. In order to do so, the Conseil de Prud’hommes will analyze the nature of the relationship between the self-employed contractor and the company.

Thus, in a decision dated April 01, 2021, the Versailles Court of Appeal :

Confirmed the judgment
Condemned the company to pay Mr. M the sum of 2,000 euros on the basis of Article 700 of the Code of Civil Procedure
Dismissed the company’s claim in this respect
Ordered the company to pay the costs

Disagreement on price fixing following a pre-emption decision

The GOLDWIN law firm, represented by Jonathan BELLAICHE, defended the interests of an owner during a pre-emption procedure.

When a property is put up for sale in a pre-emption zone, a public entity has the possibility of acquiring the said property in preference to any other person, for an often derisory price.

In this case, on November 22, 2019, through a notary, the owner of a T2 apartment and a cellar, made a Declaration of Intent to Alienate (DIA) for a price of 315,000 euros. This price includes an agency commission of 15,300 euros.

By a decision of February 18, 2020, a public land institution exercised its right of pre-emption, and proposed to buy the property for the sum of 182,000 euros, including agency commission. That is 58% of the property than the desired price. The owner refused the proposed price by registered letter dated March 23, 2020. Thus, the public land institution referred the matter to the Judicial Court of Nanterre on May 6, 2020, so that the expropriation judge could set the price of the pre-empted property.

Thus, the judge of the expropriation had to evaluate the surface of the property and to determine which criteria will be applied to define its price.

According to the public land institution, the property was worth 188,108 euros, i.e., 6,200 euros / m2, based on a surface area of 30.34 m2.

In order to retain such a price, the EPF based itself on two elements:

The state of the property: there are elements of loss of value which would lower the price (difficult access to the cellar and to the common parts, electrical installations not up to standard, deterioration of the facades)
Elements of comparison: the EPIF has retained that the property is not in line with the evolution of the real estate market over the period 2009-2020, and has been estimated at a much higher price than similar apartments.

Finally, the public land establishment, retained for only surface, 30.34m, invoking the Carrez law to exclude the surface of the attic from its calculation.

To these grievances, the owner denied any element of loss of value. Moreover, she estimated a surface of 62.04 m2, including the surface on the ground of the attic. Especially since she had carried out work in order to increase the living area. She was followed in her reasoning by the Government Commissioner.

Thus, her calculation is the following: 6500euros / m2 by retaining a surface of 30.34m2 + 3000 euros by retaining a surface of 31.70m2 (corresponding to the surface on the ground of attics in exclusive enjoyment), that is to say a total of 292.000 euros.

After considering all of the arguments developed by the parties, the judge dismissed the Etablissement Public Foncier’s claims.

The expropriation judge determined the surface area of the property to be 40.12 m2, taking into account only the living area of the attic of 10.16 m2. To evaluate the property, the judge compared it to similar properties in a geographically close area.

Thus, by judgment dated February 09, 2021, the Court of Nanterre has :

Set the purchase price of the property by the Etablissement Public Foncier at 263,250 euros.
Ordered the Etablissement Public Foncier to pay Mrs. L the sum of 15,300 euros (including tax) as an agency commission
Ordered the Etablissement Public Foncier to pay the sum of 5,000 euros on the basis of Article 700 of the Code of Civil Procedure

AIRBNB recognized in France as a content publisher

By a judgment of the Paris Court of Justice dated June 5, 2020, it was ruled that:

“AIRBNB IRELAND is a company whose purpose, through a digital platform taking the form of the website ww.airbnb.fr which it administers, is to put people wishing to offer their accommodation for rent, “the hosts”, in touch with other people seeking accommodation for a short period of time, “the travelers”.

Article 6-I.2 paragraph 1 and 7 of the law n°2004-575 of June 21, 2004 for the confidence in the digital economy (known as LCEN) stipulates that “the physical or moral persons who ensure, even free of charge, for provision of the public by services of communication to the online public, the storage of signals, writings, images, of signals, writings, images, sounds or messages of any kind provided by recipients of these services may not be held civilly liable for the activities or information stored at the request of a recipient of these services if they did not have actual knowledge of their illicit nature or of the facts and circumstances revealing this nature or if, as soon as they had such knowledge, they acted promptly to remove this data or to make access impossible. (…)7. “The persons mentioned in 1 and 2 are not subject to a general obligation to monitor the information they transmit or store, nor to a general obligation to search for facts or circumstances revealing illicit activities.

On the other hand, when they play an active role that gives them knowledge or control of the data, these persons, natural or legal, have the status of publisher.

In this case, the AIRBNB platform refers to general conditions that set the rules for using the site, but also the contractual relationship between members, in particular by requiring them to respect what AIRBNB refers to as its values and expectations, which are mostly reminders of principles, such as non-discrimination, or legislation such as the rules on dangerous animals or the presence of weapons. However, in addition to this reminder of rules of good behavior, it gives guidelines to these hosts: to be responsive, to accept reservation requests, to avoid cancellations, to maintain a good overall rating, and to provide basic amenities, and failure to comply with these guidelines may result in removal of content and/or penalties.

It is contractually intended that by posting content on AIRBNB, the host agrees to abide by these rules and that AIRBNB reserves the right to remove any content in part or in whole that does not comply with these rules, its terms and conditions, community values, and comment policy or for any other reason in its sole discretion. It is also provided that in the case of repeated or particularly serious breaches, AIRBNB may suspend or permanently deactivate the account or accounts concerned.

AIRBNB thus has a right of control and arrogates to itself the right to withdraw contents for failure to respect the contractual conditions, but also for any other reason at its sole discretion.

Conversely, those who best comply with these guidelines may be rewarded with the designation of “superhost”.

AIRBNB defends itself from making a selection of the best hosts by putting forward the automatic character of a software, which attributes this qualification as soon as the criteria are met. Nevertheless, automatic or not, the attribution of this qualification is the result of criteria defined by AIRBNB itself, regularly checked by AIRBNB, and results in a promotion of the advertisements of the “superhost” as soon as their advertisement is indicated by a visible logo and that it profits from a privileged place in the list of the similar advertisements, being specified that AIRBNB is remunerated by a percentage on the rents perceived by the host.

Besides the control of the contents of the hosts, AIRBNB envisaged penalties striking the members of the contract of lodging, in particular by imposing to the traveler who would leave after the deadline of occupation, the payment of a penalty in compensation of the inconvenience undergone by the host as well as the accessory expenses. In the same way, AIRBNB prohibits to ask, make or accept a reservation outside the platform.

All of these elements show the active nature of the AIRBNB company’s approach in putting hosts and travelers in touch with each other and its interference in the content posted by hosts on its platform.

It is therefore established that the AIRBNB company does not carry out a simple activity of accommodation with regard to the hosts who use its site, but an activity of editor.

As such, it is able to verify whether the host has the right to offer a property for rent or not. The article 2.4 of its conditions of service confirms it since it stipulates: (… ), for the purposes of transparency and fraud prevention, subject to applicable law, we may, but are not obligated to, ask Members to provide official identification or other information, or to undergo other checks to verify the identity and background of Members, search third party databases or other sources of information to verify whether Members are listed, and request reports from service providers and, if we have sufficient information to identify a Member, obtain criminal or sexual offence (or similar) records from local authorities.

As soon as the host carries out an illicit activity through its intermediary, taking into account its right of control over the content of the advertisements and the activities carried out through its intermediary in its capacity as editor, it commits a fault by abstaining from any verification, which contributes to the damage suffered by the owner.

Its responsibility being retained in this respect, it is not necessary to examine the other arguments developed by Mrs. KAUFFMANN in support of its request for condemnation of AIRBNB”.

It appears from this judgment that:

AIRBNB had to reimburse the owner for the commissions it received as a result of the unauthorized subletting of the property, applying the theory of accession according to which real estate ownership gives right to everything it produces. Indeed, insofar as “the commissions received by AIRBNB are a percentage of the rents paid by travelers for the subletting of the property,” then the owner is entitled to obtain reimbursement.
AIRBNB does not carry out a simple activity of Web hosting: “It is thus established that the AIRBNB Company does not carry out a simple activity of hosting with regard to the hosts who use its site, but an activity of editor”. The Court of First Instance drew the legal consequences of the fact that: “when they play an active role that gives them knowledge or control of the data, these persons, natural or legal, have the status of publisher”.
AIRBNB must therefore operate a priori and not a posteriori control of the advertisements on its site: “Since the host carries out an illicit activity through its intermediary, taking into account its right to control the content of the advertisements and the activities carried out through its intermediary in the capacity of publisher, it commits a fault by not abstaining from any verification, which contributes to the prejudice suffered by the owner”.
AIRBNB is responsible for the acts committed by its users and will have to answer for all the illicit acts committed on its platform.

Thus, it was ordered to pay with provisional execution (immediate execution of the judgment, notwithstanding appeal) :

51.936,61 € of sub-rent which were cashed due to an abusive subletting
1.558,20 € for commissions received
5.000 € for lawyer’s fees

That is to say a total condemnation of 58.494,81 €.

In this case, a landlord had seen his home sublet by his tenant without his permission on the AIRBNB platform for 534 days during the years 2016 and 2017, which had allowed him to collect 51,936.61 €.

This decision is fundamental in that it will definitively put an end to the illegal actions committed on the AIRBNB platform and which could harm owners, users of the platform, syndic, and hoteliers whose defense I have been providing for many years.

The game of illicit will no longer be profitable for the platform; if it does not control, it will have to assume the damaging consequences that amount to colossal amounts. This decision was expected, it had to happen.

This decision is the result of a judicial adventure of several years aimed at making the AIRBNB platform responsible by allowing owners to recover illegal rents and by allowing any victim to sue the platform in case of damages committed through it.

AIRBNB can no longer rely on the status of content host, which was not applicable to it and which allowed it to enrich itself thanks to illicit actions.

The legal basis existed to make the web giants accountable, and the justice system, guarantor of our rule of law, has enforced it.

Olivia Zahedi and Jonathan BELLAICHE

The civil liability of the developer of a mobile application

The developer of a mobile application is not responsible for the delay if it is attributable to the client.

The firm represented a company specializing in the computer programming sector in a dispute with its client. The latter had unilaterally breached the contract and wanted to be reimbursed for the deposit it had paid to the company.

Very quickly, after the signature of the contract, disagreements appeared between the parties.

According to the customer, the company was unable to follow the project, incompetent to carry it out:

– The mobile development company, would have failed in its contractual responsibility by not respecting the delivery deadlines. The company would have failed to respect the delivery deadlines, which were previously included in a schedule provided by the company.

– The company would not have respected the clauses of confidentiality registered in the contract, in that this one would have made establish, outside the French territory, the translation of a document defining the project.

– Finally, the client had also raised the issue of non-compliance with its requests.

To these grievances, the company had retorted that concerning the non-respect of deadlines, these were for information purposes in the estimate and had no contractual value. Moreover, there was no information concerning a deadline in the contract. Under French law, in order for a unilateral termination of a contract to be justified on the grounds of non-performance, it must be considered sufficiently serious, to the point that a relationship between the parties becomes impossible. This was not the case in this instance.

Also, it was judged that the client did not transmit clear information in order to allow the company to work under good conditions. The specifications established by the client did not contain all the elements necessary for the development since it was necessary to elaborate a more detailed one later. Moreover, since the specifications were the responsibility of the client, the latter could not justify a breach of contract by the incomplete aspect of the specifications.

After having considered all the arguments developed by the parties, the judge dismissed all of the adversary’s claims.

Thus, by judgment dated May 20, 2020, the Commercial Court of Paris has:

Judged that the conditions of the client’s breach of contract were wrongful
Held that the company shall retain the benefit of the deposit paid to it in order to make up for the loss suffered
Holds that the parties are ill-founded in their further and other claims and dismisses them
Remains in favour of the company by ordering the client to pay Article 700 of the Code of Civil Procedure
Condemns the supplier to pay all the costs of the proceedings, including the court fees
Orders provisional execution without the provision of a guarantee

This decision is final.

UBER recognized as a transport service provider in France

In a landmark decision dated December 12, 2019 in which GOLDWIN SOCIETE D’AVOCATS (Maître Jonathan BELLAICHE, Partner and Maître Olivia ZAHEDI, Counsel) represented a cab booking center, the Paris Court of Appeal ruled that:

– UBER operates a transport service and not a platform for putting people in touch with each other

The Court’s reasoning is as follows:

« However, the Court of Justice of the European Union, in its decision dated April 10, 2018, held that the « intermediation service at issue must be regarded as forming an integral part of an overall service, the main element of which is a transport service, and, therefore, as qualifying (…) as a « service in the field of transport », within the meaning of Article 2(2)(d) of Directive 2006/123″. It can be deduced from this that the transport service is the main service, so that the matching phase is only preparatory in nature, that the Uber companies are operators of passenger transport and that they are in competition with the activity carried out by the company […] ».

The Paris Court of Appeal then rigorously applied the case law issued by the Court of Justice of the European Union on April 10, 2018 recalling that the main service performed by UBER was indeed a transport service.

– The UBERPOP service is indeed unlawful and must give rise to compensation for damages for the professionals of the T3P (private public transport of persons)

The Court confirmed the jurisprudence already rendered by the Court of Cassation recognizing that the UBERPOP service was illegal.

The Court confirmed the right to compensation of the T3P professionals who suffered a prejudice because of the UBERPOP service.

This is neither more nor less than the application of jurisprudence already rendered in this matter.

– The provisions prohibiting electronic marauding are indeed applicable in France and their violation by UBER constitutes unfair competition.

The Paris Court of Appeal ruled that the platform violated the provisions of the Transport Code which prohibit all transporters other than cabs from marauding on the public highway and canvassing customers without prior reservation, including

– stopping, parking or driving on the public highway, unless they have a prior reservation and do not return to the place of establishment

– informing the customer, before any order or reservation, of both the location and availability of the vehicle.

In entering judgment, the Court noted that:

« Under the terms of its Partner Guide, the platform encourages its drivers to « spread themselves evenly across areas of high demand » in the hope of getting more rides (Exhibit 5f, page 34) and allows drivers to view on a map, in real time, the geographic areas in which booking requests are more or less high (Exhibit 5f, pages 17 and 34), thereby encouraging a driver who does not have a reservation to go to an area of high demand in order to be booked. These elements establish that Uber companies, through the recommendations they issue to VTC drivers, encourage non-compliance with the provisions of articles L. 3120-2, II and L. 3122-9 of the Transport Code. These acts constitute unfair competition.

« It appears from the bailiff’s report dated January 28, 2016 submitted to the debates by the Uber companies (Exhibit No. 34) that :

– the map appearing on the Uber application provides information on the location of vehicles with drivers ;

– the banner « order here », which appears on the screen of the smartphone, shows the waiting time for the customer to be picked up (Exhibit 34 – pages 9 to 35), information that allows to assess the availability of the nearest vehicle;

so that by informing the customer, prior to the reservation, of both the location and the availability of the vehicle, the application allows the practice of electronic marauding, a practice prohibited by Article L. 3120-2, III 1° of the Transport Code for this category of operators. This element constitutes unfair competition.

This decision confirms the monopoly of marauding for cabs, which are necessarily prejudiced by the practice of electronic marauding and the non-return to base by VTCs.

– The misuse of the LOTI status by UBER has finally been recognized and condemned.

The Court ruled that:

« It further results from the exhibits submitted to the debates that Uber encouraged the use of capacitaries by disseminating information according to which, in order to « become an UberX or Berline driver », it is necessary to have a « professional license (VTC professional card license and Atout France authorization or capacity to transport people < 9 seats and license from the regional equipment directorate) » (Exhibits […] n°17a, page 8 and 17b).Benefiting from simplified conditions of access to the status of driver compared to those applicable to cab or VTC drivers, « Loti » drivers necessarily provided a competitive advantage to Uber companies. This element constitutes unfair competition.

The misuse of the LOTI status was one of the most important competitive harms for T3P professionals, which has fortunately been sanctioned.

– UBER drivers are not employees for the Commercial Chamber of the Court of Appeal.

The Court ruled that:

« None of the elements invoked could characterize the existence of a subordination link between UBER and the drivers »

The criteria used by the Social Division of the Paris Court of Appeal to recognize the qualification of UBER drivers as employees were submitted to the Court’s appreciation.

With this decision, the Commercial Chamber of the Paris Court of Appeal has diverged from the Social Chamber and has opened the debate on the status of drivers with regard to the applicable rules.

The question of the legal status of UBER drivers is therefore subject to a double assessment between the social chamber and the commercial chamber, which fully reopens the debate on the matter.

Consequently, the Paris Court of Appeal, in its decision, has :

– Declared that the UBER companies committed acts of unfair competition for the operation of the UBERPOP service, through the practice of electronic marauding and the use of drivers operating under the LOTI status

– Ordered UBER FRANCE, UBER BV, and UBER INTERNATIONAL BV to cease inciting drivers to circulate on the public highway in search of customers and to incite drivers not to return to their base or to a place located off the road while waiting for a reservation unless they can prove that they have another reservation in advance

UBER FRANCE, UBER BV, and INTERNATIONAL BV were ordered to pay €106,000 in damages and €15,000 under Article 700 of the French Code of Civil Procedure in addition to costs.