In a decision dated 7 May 2025, the French Supreme Court upheld a ruling by a court of appeal that had declared inadmissible a claim for the invalidation (caducité) of interdependent contracts against a party that was not a party to or represented in the proceedings for the annulment of an interdependent contract.
In the case at hand, a settlement agreement had been concluded between an employee and company A, providing for, on the one hand, compensation following the termination of his employment contract and, on the other hand, the simultaneous transfer of the employee’s shares in company A to company B.
The employee sued company A for the nullity of this agreement, which he obtained. He then sued companies A and B for the invalidity (caducité) of the transfer of shares, given the interdependence of the agreement and the deed of transfer. The Court of Appeal dismissed his claim because Company B had not been joined in the proceedings to annul the agreement. The employee appealed to the French Supreme Court, arguing that the decision declaring the first contract null and void was enforceable against all parties and should result in the invalidity (caducité) of the related contract.
The Court rejected this argument on the grounds of former Article 1351 of the Civil Code (now Article 1355), according to which a judgment cannot create rights or obligations in favor of or against those who were not parties to or represented in the case. As a result, “when contracts are interdependent, the annulment of one of these contracts by a court decision only results in the consequential invalidation of the others if all the parties to the annulled contract were involved in the annulment proceedings.”
