The eviction compensation is compliant with the French Constitution
With the transmission, by the French Cour de cassation, of question of constitutionality (Civ 3rd, 10 December 2020, n°20-40.059, cf. our Newsletter of 1 February 2021), the French Conseil constitutionnel ruled on the compliance with the French Constitution of the eviction compensation provided by the article L. 145-14 of the French Commercial code (5 March 2021, n°2020-887).
In the framework of a legal action for the fixing of the eviction compensation, the landlord raised the unconstitutionality of article L. 145-14 of the French Commercial code. On one hand, he invoked that there is an infringement of his property right because the market value of the business, included in the eviction compensation, could result in the payment of a disproportionate amount of money regardless of the real damage suffered by the tenant. One the other hand, he invoked the violation of the principle of equal treatment between commercial leases and other types of leases.
Although the Conseil constitutionnel recognized a breach of the landlord’s property right, it considered that it’s justified by a general interest objective consisting in ensuring businesses’ viability by allowing the tenant to continue his activity. Therein, the Conseil constitutionnel recalls that the eviction compensation only includes the part of the business’ market value lost by the tenant, that it’s only due if the tenant has exploited his business during the last three years preceding the lease expiration and that the landlord always has the option of selling his property or collecting the rents.
Finally, the Conseil constitutionnel ruled out the violation of the principle of equal treatment because the difference in situation between the parties to a commercial lease and non-commercial lease, justifies the different treatment of the payment of the eviction compensationin case of non-renewal of a commercial lease.
By this decision, the French Conseil constitutionnel puts an end to the idea of setting up a legal ceiling for eviction compensation.