Fraud and Transfer Abroad: French Law May Apply to the Receiving Bank (Cass. 1re civ., 6 May 2026, No. 24-22.192)

French Supreme Court (Cour de cassation), First Civil Chamber, 6 May 2026, appeal No. 24-22.192, judgment No. 295 F-D (quashing CA Paris, Pôle 5, ch. 6, 9 October 2024)

What happened in the case decided on 6 May 2026?

The facts, as they emerge from the judgment, are sadly familiar to anyone dealing with financial fraud.

An individual, holder of a bank account opened in France with BNP Paribas, made six successive transfers between 26 September and 23 November 2017. The destination was always the same: an account opened in Portugal with the company Banco BPI.

Believing herself to be the victim of a fraud, she decided to take action. But she did not act immediately: it was only by a writ of 2 November 2022, nearly five years after the last transfer, that she sued two banking institutions for compensation: BNP Paribas, her own bank, which executed the transfer orders, and the company Banco BPI, the bank that received the funds in Portugal.

It is this second action, the one directed against the foreign bank that hosted the beneficiary account, that raised the problem. The Paris Court of Appeal, in a judgment of 9 October 2024, declares the action against Banco BPI inadmissible as time-barred. To reach that conclusion, it first had to settle a preliminary question: which law applies to a tort claim brought by a French victim against a Portuguese bank?

The Court of Appeal applies Portuguese law. Its reasoning has two stages: first, the damage supposedly occurred directly at the place where the funds were misappropriated, that is, in Portugal; second, the fact that the funds were transferred from an account opened in France, the victim’s country of domicile, was said not to constitute a connecting factor capable of contributing to the designation of French law to assess the tort liability of a Portuguese bank.

The victim lodges an appeal on points of law. The French Supreme Court agrees with her and quashes the judgment in its entirety.

Why did the applicable law decide the outcome of the case?

At first sight, the question of the applicable law seems technical, almost academic. It is in fact decisive, and the case under review provides the starkest demonstration: the victim did not lose her case on the merits, she lost it on admissibility. Her action was held to be time-barred.

Yet limitation is governed by the law designated as applicable to the substance of the dispute. The Rome II Regulation says so expressly: the law applicable to the non-contractual obligation governs, in particular, limitation and prescription, including the rules relating to the starting point, interruption and suspension of the periods.

Under French law, a tort claim becomes time-barred after five years from the day on which the right holder knew or should have known the facts enabling them to bring it (Article 2224 of the Civil Code (code civil)). Issuing proceedings in November 2022 for transfers made between September and November 2017 was borderline, but remained arguable, particularly if the starting point were fixed at the discovery of the fraud rather than at the date of the transfers.

Under Portuguese law, the limitation period for tort liability is notably shorter. The judgment does not specify the exact basis relied on by the Court of Appeal, but the mere switch from one law to the other was enough to make the action inadmissible. In other words: the choice of applicable law simply wiped out the victim’s right to sue.

That is why the seemingly abstract question of where the damage is located deserves attention. It does not merely determine the legal “backdrop” of the case: it decides its very existence.

How does the Rome II Regulation designate the applicable law?

The legal basis cited in the judgment is clear: Article 4(1) and (3) of Regulation (EC) No. 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations, known as the “Rome II” Regulation.

What does the “country in which the damage occurs” rule mean?

The French Supreme Court reproduces the text word for word in paragraph 4 of its judgment: the law applicable to a non-contractual obligation arising out of a tort is that of the country in which the damage occurs, irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occur.

Three notions must therefore be carefully distinguished:

The difficulty, in cases of financial fraud, is that these three layers overlap in time and space. The manipulation takes place in France; the order is given in France; the debit occurs on a French account; the funds land abroad; they are immediately dispersed there. Where is the direct damage?

When does the escape clause of a manifestly closer connection apply?

Paragraph 3 of Article 4, also cited by the Court, provides a corrective: where it is clear from all the circumstances of the case that the tort is manifestly more closely connected with a country other than that indicated in paragraph 1, the law of that other country applies.

This escape clause is crucial in cross-border fraud litigation. It makes it possible to rely on a bundle of factors: the victim’s domicile, the place of solicitation, the language and accessibility of the fraudulent website, the commercial targeting of the French public, the purely transitory nature of the foreign account, the existence of a criminal complaint in France, and the location of the other participants.

By citing paragraphs 1 and 3 together, the French Supreme Court clearly indicates that the Court of Appeal was required to examine both stages of the reasoning, and not to settle for a mechanical connection to the place where the funds disappeared.

Where does the damage occur when the money has vanished into a foreign account?

This is the heart of the judgment. And this is where the French Supreme Court builds a remarkable construction, drawing its inspiration from another body of rules.

What does the CJEU say about the location of purely financial loss?

The Court first recalls, in paragraph 5 of its judgment, that according to recital 7 of the Rome II Regulation, the substantive scope and the provisions of that regulation must be consistent with Regulation (EC) No. 44/2001 of 22 December 2000, known as “Brussels I”, on judicial jurisdiction.

In other words: what the Court of Justice of the European Union has said about the place “where the harmful event occurred” in order to determine the competent court also applies, for the sake of consistency, to determine the applicable law.

The French Supreme Court then specifies, in paragraph 6, that the CJEU has held that the interpretation given to the provisions of the Brussels I Regulation also applies to Regulation (EU) No. 1215/2012 (“Brussels I bis”), which replaced it, where the provisions of the two instruments can be regarded as equivalent (judgment of 15 November 2018, Kuhn, C-308/17, paragraph 31). This is notably the case of Article 5(3) of the Brussels I Regulation and Article 7(2) of the Brussels I bis Regulation.

Finally, in paragraph 7, comes the summary of European case law on purely financial loss. For the application of Article 5(3), now Article 7(2), a provision which allows a person domiciled in a Member State to be sued before the court of the place where the harmful event occurred, the CJEU has held that the courts of the claimant’s domicile may have jurisdiction, on the basis of the materialisation of the alleged damage, where the latter results from an unlawful act committed in another Member State and consists of a financial loss occurring directly in a bank account of the claimant with a bank established within the jurisdiction of those courts (judgments in Kolassa, C-375/13, of 28 January 2015, and Löber, C-304/17, of 12 September 2018).

But, and the French Supreme Court takes care to recall this, that is on condition that other connecting factors exist which contribute to conferring jurisdiction on those courts (judgment in Universal Music International Holding, C-12/15, of 16 June 2016).

Is the foreign account merely a “transit account”?

The ground of appeal, as reproduced in the judgment, articulated precisely this idea. It criticised the Court of Appeal for applying Portuguese law without examining, as it had been invited to do, whether the victim had been solicited and manipulated in France, whether the fraud had been assisted by a website accessible in France, and whether the Portuguese account was a mere transit account, so that the funds had in reality been lost the moment they left the French account.

This last proposition is legally powerful. If the destination account is merely a transit point, immediately emptied in favour of other accounts, then the victim’s definitive impoverishment did not occur in Portugal: it occurred in France, at the exact moment of the debit, since from that instant the funds were irretrievably lost.

Why does the French Supreme Court quash the Paris Court of Appeal’s judgment?

The reasoning for the quashing comes down to a single sentence, in paragraph 9 of the judgment:

Three lessons emerge from this concise formula.

First, the French Supreme Court rejects the equation “place where the funds were misappropriated = place of the damage”. The Court of Appeal had considered that the damage had occurred directly where the misappropriation took place. This confuses the event giving rise to the damage, the act of misappropriation, carried out in Portugal, with the direct damage suffered by the victim. Yet Article 4(1) of Rome II expressly sets aside the place of the event giving rise to the damage.

Second, the Court censures the outright rejection of a French connection. The Court of Appeal had asserted that the fact that the funds were transferred from an account opened in France, at the victim’s domicile, did not constitute a connecting factor capable of contributing to the designation of French law. That was precisely to set aside, without examination, the element which the Kolassa and Löber case law places at the centre of the reasoning: the claimant’s bank account.

Third, the quashing is pronounced for infringement of the law, and not for lack of legal basis. The appeal alleged a lack of legal basis; the Court finds an infringement of the provision. The nuance is not trivial: it reflects a clearer disapproval of the reasoning followed than the mere finding of an omitted inquiry.

The sanction is commensurate: quashing in its entirety, remittal to the Paris Court of Appeal, differently composed, and an order that the Portuguese bank pay the costs and €3,000 under Article 700 of the Code of Civil Procedure.

What does this judgment change for fraud victims?

The judgment is not published in the Bulletin: it is classified F-D. It therefore does not formally lay down a new principle. Its practical significance is nonetheless considerable, for three reasons.

It neutralises a standard defence of foreign banks. In almost all investment fraud cases (fake savings books, fake term deposits, fictitious trading platforms, fake advisers), the funds are directed to accounts opened outside France, often in another Member State of the Union. The receiving bank then systematically argues that its liability must be assessed under its own law, generally more favourable: a shorter limitation period, a narrower duty of vigilance, a more restrictive notion of fault. This judgment reminds us that such a connection is not self-evident.

It requires detailed reasoning from the lower courts. It is no longer enough to assert that the funds disappeared abroad. The court must establish where the purely financial loss materialised, distinguishing that place from that of the event giving rise to the damage, and examining the connecting factors relied on.

It consolidates the bridge between jurisdiction and applicable law. By explicitly importing the Kolassa / Löber / Universal Music case law, handed down in matters of jurisdiction, into the reasoning on the applicable law, the First Civil Chamber offers litigants a coherent arsenal of arguments: the same elements that justify bringing proceedings before the French court may justify applying French law.

Can the bank that received the funds be held liable?

The question of the applicable law is only a preliminary one. It says nothing about the merits of the action. But it conditions its examination, and that examination is worth conducting, because the action against the receiving bank is often the only genuinely solvent remedy available to the victim.

The bank holding the beneficiary account is not a mere pipe. It opened the account, it verified (or did not verify) the identity of its holder, it defined (or did not define) an expected operating profile, and it allowed (or did not allow) manifestly abnormal movements to pass: massive and closely spaced inflows from third parties unconnected with the holder, immediate withdrawals or transfers to other jurisdictions, a glaring inconsistency between the sums received and the declared situation.

It is these apparent anomalies that traditionally ground the liability of the receiving banker, on the basis of the general duty of vigilance, an exception to the principle of non-interference.

How to build a case against a foreign receiving bank?

What evidence should be gathered from the outset?

The judgment of 6 May 2026 outlines, by implication, the list of elements that must be documented even before issuing proceedings, since these are what will make it possible to establish the French location of the damage and the existence of connecting factors:

• Proof of solicitation in France: incoming calls, text messages, emails, screenshots of conversations, French phone numbers used, commercial documents in French.
• Accessibility in France of the website or platform: a bailiff’s report (constat de commissaire de justice) on the fraudulent page, domain name extension, legal notices, advertising targeting, any impersonation of an authorised institution.
• The victim’s French bank domiciliation: statements of the debited account, transfer orders, supporting documents from the institution holding the account.
• The transitory nature of the beneficiary account: this is the hardest element to obtain, but the most decisive. It most often comes from the documents of the criminal proceedings or from a measure of inquiry ordered by the court.
• The precise chronology: date of each transfer, date the fraud was discovered, date of the complaint, date of the first claim to the bank. This chronology determines the starting point of the limitation period.

On how to word the claim and the complaint without weakening one’s own case, a trap into which many victims fall in all good faith, we have devoted a detailed article: Bank Fraud: What to Say and Not to Say to Your Bank and in Your Complaint.

How to avoid the limitation trap?

The case under review is a warning. Five years elapsed between the transfers and the writ. Under French law, the starting point of the five-year period is the day on which the victim knew or should have known the facts enabling her to act, which, in fraud cases, rarely corresponds to the date of the transfer, since the victim still believes, at that moment, that she is making an investment.

But this flexibility depends entirely on the applicable law. If a stricter foreign law is applied, the calculation changes, and it may change irreparably. Three reflexes are essential:

• Do not wait. The hope of recovering the funds through the criminal route often leads to delaying the civil action. This is a poor calculation: the two routes run in parallel.
• Interrupt the limitation period. A writ, even a limited one, interrupts limitation; a simple out-of-court claim, in principle, does not.
• Anticipate the applicable law debate. From the formal notice onwards, it is useful to set out the French connecting factors, so that the discussion does not open at the appeal stage in a file that has already been built against you.

What are the limits of this judgment?

Intellectual honesty requires us not to over-interpret an F-D decision.

The Court does not say that French law applies. It says that the grounds relied on by the Court of Appeal were unfit to establish the location of the damage. This is a censure of method, not a designation of outcome. The court of remittal may perfectly well, after reinforced reasoning, apply Portuguese law again.

The condition laid down in the Universal Music judgment remains. Connection to the claimant’s bank account never suffices on its own: other connecting factors are required. A victim who merely relied on the French location of her account would risk the same fate as one who relied solely on the disappearance of the funds abroad.

The question of the merits remains entirely open. Obtaining the application of French law opens no automatic right to compensation. It will then be necessary to demonstrate a fault on the part of the receiving bank, damage and a causal link, a demanding exercise in which proof of the apparent anomalies is almost always the sticking point.

Finally, the action against the issuing bank follows its own logic. The sole ground of appeal concerned only the part directed against the Portuguese bank. The liability of the French bank is assessed under French payment services law and the duty of vigilance, a distinct terrain, often more workable, and one that must never be neglected in favour of international litigation alone.

Key Takeaways

The location of a purely financial loss is not a geographical given: it is a legal construction, which must be reasoned. By quashing the Paris Court of Appeal for equating the place where the funds disappeared with the place of the damage, the First Civil Chamber reminds us that Article 4 of the Rome II Regulation requires a distinction between the event giving rise to the damage and the direct damage, and an examination of all the circumstances likely to reveal manifestly closer connections with another country.

For victims of investment fraud whose funds were transferred abroad, the lesson is twofold. First, the law of the receiving bank is not inevitable: the French connection can be argued, provided it is documented. Second, time works against them: the later the action, the higher the risk that a foreign limitation period will close the debate before it has even opened.

If you have transferred funds to a foreign account as part of an investment that turned out to be fraudulent, the question of the applicable law must be raised from the very first day of the case, and not discovered in the course of an inadmissibility judgment.

FAQ: Fraud, Transfers Abroad and Applicable Law