Edited By: William Johnston, Thomas Werlen, Frederick Link
- Banks and cross-border issues — Guarantees and security — Collateral securities — Monetary obligations — Contractual set-off — Insolvency set-off — Judicial set-off
This chapter examines the law of set-off in France and how the country's bankruptcy law may affect the effectiveness of set-off. In France, set-off has been reaffirmed by specific rules regarding the netting of derivative products or by the EU Directive on Financial Collateral Arrangements (Collateral Directive). Other laws with relevant provisions for set-off include the French Civil Code and the French Monetary and Financial Code. The chapter first provides an overview of set-off between solvent parties, focusing on legal set-off, contractual set-off, enhanced set-off of financial obligations, cash-pooling arrangements, and security interests. It then considers set-off against insolvent parties, taking into account issues relating to automatic stay, fraudulent transfers/suspect period, and set-off of financial obligations after opening of an insolvency procedure. It also discusses the key set-off provisions of the Collateral Directive before concluding with an analysis of the law applicable to set-off in a cross-border context.