CA Aix-en-Provence, Chamber 1-9, 15 January 2026, No. 25/06548 (Affirmed)
🔑 Key Takeaways
- The court confirms that breach of the banking monopoly (Articles L. 511-5 and L. 511-9 of the Monetary and Financial Code (code monétaire et financier)) carries no civil sanction and cannot result in forfeiture of the right to interest.
- This outcome extends the case law of Ass. plén., 4 March 2005, No. 03-11.725 and Cass. com., 15 June 2022, No. 20-22.160.
- On the private international law front, the court holds that the information obligations of the French Consumer Code (FISE and mention of the APR) are not overriding mandatory provisions within the meaning of Article 9 of the Rome I Regulation, but fall within “protective public policy”.
- Consequence: since the parties chose Monegasque law as the law governing the contract (Article 3 Rome I), the borrowers cannot rely on the protections of the French Consumer Code.
- The court also refuses to apply Article 6 Rome I (consumer contracts), on the ground that the Monegasque bank neither carried on its activity in French territory nor directed its activity there.
- Result: the forced sale is upheld and the borrowers are ordered to pay €3,000 under Article 700 of the Code of Civil Procedure (code de procédure civile).
- The decision raises a question of coherence: consumers resident in France lose most of their protections as soon as they contract with a bank from a neighbouring State that is not a member of the European Union.
Table of Contents ▼
- Why does this decision call consumer protection into question?
- What happened in this case?
- Why does breach of the banking monopoly not penalise the bank?
- The provisions: L. 511-5 and L. 511-9 CMF
- Settled but open-to-criticism case law
- Why does Monegasque law apply to the loan?
- The parties’ choice of law (Article 3 Rome I)
- Why Article 6 Rome I did not apply
- Why is the Consumer Code not an overriding mandatory provision?
- The restrictive definition of overriding mandatory provisions
- The “protective public policy / directive public policy” distinction
- Why does this decision pose a real problem for consumers?
- An artificial boundary between protection and direction
- Information asymmetry ignored
- The grounds that remain open
- What strategy for the borrowers concerned?
- FAQ: Frequently Asked Questions
Why Does This Decision Call Consumer Protection into Question?
Many borrowers resident in France who take out a loan from a Swiss, Monegasque or Luxembourg bank, often through a “wealth management” broker, discover only at the litigation stage that the protections of the French Consumer Code they thought they had simply do not apply. The decision handed down by the Aix-en-Provence Court of Appeal on 15 January 2026 (No. 25/06548) illustrates this mechanism with perfect clarity: Monegasque law, chosen in the contract, governs the entire dispute. And the court refuses to bring French protections back in through the window on the basis of overriding mandatory provisions.
The result is immediate: a claim for forfeiture of interest that would have been extensively argued, and perhaps even upheld, before a French court applying domestic law is here rejected on the sole ground of conflict of laws. The borrowers, although established in France and owners of French property, find themselves without any of the levers that the Mortgage Credit Directive (transposed in Articles L. 313-1 et seq. of the Consumer Code) would have guaranteed them.
This decision is legally orthodox: it forms part of settled case law. But it is legally unsatisfactory, and it calls for a rethink of procedural strategy in every case involving a non-EU bank.
What Happened in This Case?
The borrowers, a couple resident in France, had acquired a villa in Èze in 2017, financed by a loan of €7,475,000 granted by Banque KBL Monaco Private Bankers (since renamed Banque Richelieu Monaco), a public limited company (société anonyme) governed by Monegasque law. The loan, with a term of 5 years renewable once, was secured by a contractual mortgage (hypothèque conventionnelle) over the acquired property.
Several steps marked the setting up of the financing:
- A visit to the property offered as security, in French territory, on 2 June 2017;
- Negotiation meetings in Monaco on 6 and 20 September 2017;
- Signature of the loan in Monaco, in three copies, on 2 October 2017;
- Restatement of the loan in authentic form before a French notary on 8 November 2017, required by the mortgage subrogation.
The contract expressly stipulated, on page 23, that “this loan agreement is governed by and shall be interpreted in accordance with Monegasque law”.
The loan not having been repaid, the bank initiated in 2023 the forced sale of the property. On the basis of a claim of €7,562,973.63 established as at 2 October 2023, the enforcement judge (juge de l’exécution) authorised, by judgment of 6 March 2025, a sale by private agreement of the property (starting price €7,500,000, floor price €9,000,000). The borrowers appealed in order to obtain forfeiture of the right to interest, relying on:
- Breach of the banking monopoly: the Monegasque bank, not being licensed in France, could not have carried out financing operations in France.
- Breach of the pre-contractual information rules of the French Consumer Code: failure to provide the European Standardised Information Sheet (fiche d’information standardisée européenne, FISE) and failure to state the APR (TAEG).
The Aix-en-Provence Court of Appeal rejects these grounds in their entirety and upholds the judgment under appeal.
Why Does Breach of the Banking Monopoly Not Penalise the Bank?
The Provisions: L. 511-5 and L. 511-9 CMF
The banking monopoly, laid down by Articles L. 511-5 and L. 511-9 of the Monetary and Financial Code, prohibits any person other than a licensed credit institution (bank, mutual bank, specialised credit institution or municipal credit fund) from carrying out banking operations on a regular basis in French territory. Breach of this prohibition is punishable by criminal penalties (Article L. 571-3 CMF). The question debated for twenty years is whether there is any civil sanction.
The court recalls that Monegasque banks have a particular status: they do not depend on the European Union and therefore cannot benefit from the provisions on the freedom to provide services between Member States. They are, however, treated as French banks for the purposes of the licences required for their activity in Monaco. Banque Richelieu Monaco holds, on that basis, a licence from the ACPR (Autorité de contrôle prudentiel et de résolution), it being understood that this licence covers only activity carried out in Monaco.
Settled but Open-to-Criticism Case Law
The court relies on two foundational decisions:
- Ass. plén., 4 March 2005, No. 03-11.725: “the mere fact that a credit transaction was concluded in breach of the banking monopoly prohibition is not such as to result in its annulment”.
- Cass. com., 15 June 2022, No. 20-22.160: confirms the outcome and specifies that no statutory provision provides for forfeiture of the right to contractual interest.
The court observes that French law contains, in the insurance sector, a specific provision (Article R. 511-3 of the Insurance Code (code des assurances)) which prohibits an insurer from passing back remuneration to a broker who is not registered. No such provision exists in banking law in respect of breach of the territorial monopoly. One may question the coherence of a system that imposes a civil sanction on the unregistered broker but leaves intact the contract concluded by an unlicensed bank. Commentators have long noted that this difference in treatment has no rational justification, other than the courts’ reluctance to disturb the financial balance of cross-border transactions. But this legislative silence is not inevitable: it could be remedied by a simple provision introduced into the CMF, along the lines of what exists in insurance.
The court applies this case law without reservation. The consequence is that the Monegasque bank, even if it had in fact carried on a lending activity in French territory without a licence, could not be sanctioned by forfeiture of the right to interest. At most it is exposed to a possible criminal penalty, which in practice would almost never be prosecuted.
Why Does Monegasque Law Apply to the Loan?
The Parties’ Choice of Law (Article 3 Rome I)
Article 3 of Regulation (EC) No. 593/2008 of 17 June 2008 on the law applicable to contractual obligations (“Rome I”) lays down the principle: “a contract shall be governed by the law chosen by the parties”. The contract at issue expressly stated, on page 23, that it was subject to Monegasque law. This choice binds the French court, subject to the derogations provided for by Articles 6 (consumer contracts) and 9 (overriding mandatory provisions) of the same Regulation.
Why Article 6 Rome I Did Not Apply
Article 6 of the Rome I Regulation provides specific protection for consumer contracts: if a consumer concludes a contract with a professional for personal use, the contract is governed by the law of the consumer’s country of residence, provided that the professional pursues their activity in that country or by any means directs such activity to that country.
The court examines this avenue and rejects it. It observes that:
- The Monegasque bank has no branch in France;
- The visit to the property in Èze on 2 June 2017 was solely for the purpose of examining the property security, not negotiating the terms of the loan;
- The negotiation meetings took place at the bank’s premises in Monaco;
- The private-signature instrument (acte sous seing privé) was signed in Monaco on 2 October 2017;
- The restatement in authentic form in France on 8 November 2017 met a mere legal requirement linked to the mortgage subrogation.
The court concludes that the bank neither pursued its activity in France nor directed its activity towards France within the meaning of Article 6 Rome I. The consumer-protection derogation therefore does not apply.
This analysis deserves some nuance. In several judgments (notably Pammer and Hotel Alpenhof, C-585/08 and C-144/09), the CJEU has interpreted the notion of “directing activity to a State” in a relatively flexible manner. A website in French, marketing materials targeting French customers, or intermediaries operating in France may suffice to establish such direction of activity. In the present case, the exact role of the borrowers’ French broker (who organised the meetings and facilitated the setting up of the loan) is not fully explored. The soundness of the court’s conclusion may be questioned, since it appears to adopt a purely geographical reading of the places of signature instead of examining the Monegasque bank’s overall commercial strategy.
Why Is the Consumer Code Not an Overriding Mandatory Provision?
The Restrictive Definition of Overriding Mandatory Provisions
Article 9 of the Rome I Regulation defines an overriding mandatory provision as “a provision the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such an extent that it is applicable to any situation falling within its scope, irrespective of the law otherwise applicable to the contract”. Classification as an overriding mandatory provision makes it possible to set aside the law chosen by the parties and to apply domestic law mandatorily on certain points.
This classification is restrictive: it presupposes that the provision serves a collective public interest and not an individual interest. The court, following a classic framework, refuses this classification for the provisions relied upon (Article L. 313-7 on the FISE, Article L. 314-1 on the mention of the APR), on the ground that their purpose is to protect the private interest of the borrowers and that they do not concern the safeguarding of the public interests of the French State.
The “Protective Public Policy / Directive Public Policy” Distinction
The reasoning rests on a classic distinction in contract law:
- Directive public policy (ordre public de direction): aims to structure economic and social organisation; it is mandatory and international in scope; it may be classified as an overriding mandatory provision.
- Protective public policy (ordre public de protection): aims to protect the weaker party (consumer, employee, tenant); it is mandatory in domestic law but, in principle, does not rise to the rank of an international overriding mandatory provision.
The court places the FISE and the mention of the APR within protective public policy, the purpose of which is to enable the borrower to compare different offers and assess the risks. This protection is individual; on the court’s reasoning, it does not contribute to safeguarding the economic organisation of the French State.
Why Does This Decision Pose a Real Problem for Consumers?
An Artificial Boundary Between Protection and Direction
The reasoning adopted by the court is legally orthodox, but it rests on a boundary that commentators increasingly contest. Distinguishing protection (individual) from direction (collective) for pre-contractual information obligations amounts to ignoring that a transparent and fair credit market is, in itself, a collective interest. Directive 2014/17/EU on mortgage credit, of which the FISE is one of the pillars, was precisely justified by the need to build an integrated and stable European market. Its scope is therefore not merely individual.
The CJEU has already accepted, in several judgments, that provisions protecting the consumer may simultaneously serve the collective interest and thereby attain the status of overriding mandatory provisions. The categorical refusal of this classification for the French Consumer Code is, in this respect, a restrictive option that could be reconsidered by the French Supreme Court (Cour de cassation), or even by the CJEU itself.
Information Asymmetry Ignored
The present decision leads to a striking practical asymmetry: two neighbouring consumers, buying two neighbouring villas in the south of France, may find themselves in radically different legal situations depending on whether their lender is a French bank or a Monegasque bank. The first will benefit from all the protections of the French Consumer Code: FISE, APR, duty to warn (devoir de mise en garde), forfeiture of interest in the event of breach. The second will have none of these protections, since the contract is governed by Monegasque law.
This difference in treatment is justified by no legitimate interest of private international law. It creates a practical incentive for nearby offshore banks (Monaco, Luxembourg, Switzerland) to target affluent French customers by offering them financing free of the constraints of French law, without the consumer, generally unaware of the subtleties of conflict of laws, appreciating the consequences of the governing-law clause buried in the contract.
The Grounds That Remain Open
Despite the blunt rejection on the grounds of the monopoly and consumer law, several residual levers remain available:
- Applying Article 6 Rome I on better-supported foundations: documenting precisely the bank’s commercial strategy towards French customers (presence of brokers in France, marketing materials in French, geographic targeting, etc.) in order to recharacterise the “direction of activity towards France”.
- Invoking Monegasque law itself: the court observes that the borrowers invoked no provision of Monegasque law that could have supported their claim. Yet Monegasque law also recognises information obligations on the lender and a liability regime for failure to warn. An alternative procedural strategy would be to argue on the basis of Monegasque law, relying on grounds drawn from that law.
- Examining the duty of advice of the French intermediary: in most cases, a French broker or wealth management adviser played a role in setting up the financing. This professional remains subject to French law; their liability may be sought for failure to inform about the consequences of choosing foreign law.
- Examining the French notarial deed of restatement: the restatement before a French notary may, in certain cases, trigger the notary’s own obligations (duty of advice on the scope of the deed, verification of the regularity of the underlying transaction).
What Strategy for the Borrowers Concerned?
For borrowers resident in France and committed to a loan with a non-EU bank, the decision requires a complete review of procedural strategy. Three lines of approach:
1. Anticipate the question of applicable law upstream
When taking out the loan, negotiate, as far as possible, that the contract be governed by French law. Failing that, check that the foreign law offers equivalent protections (which is not always the case) and consider legal expenses insurance to cover the costs of proceedings in that language / that jurisdiction.
2. In the event of litigation, broaden the scope of the argument
Do not confine yourself to overriding mandatory provisions, which, as this decision shows, is a locked avenue. Also rely on Article 6 Rome I (consumer contracts), solidly documenting the direction of activity towards France, and explore the grounds drawn from the designated foreign law.
3. Identify all co-responsible parties subject to French law
Broker, wealth management adviser, notary who received the deed of restatement: these professionals, who took part in setting up the financing, remain subject to French law. Their liability may be engaged for failure to advise on the consequences of choosing foreign law or for other professional breaches.
Conclusion
The decision of the Aix-en-Provence Court of Appeal of 15 January 2026 creates no new law, but it illustrates with perfect clarity the trap in which French consumers find themselves when they contract with banks from neighbouring States that are not members of the European Union. The lock is double: no civil sanction for breach of the banking monopoly, and no classification as overriding mandatory provisions for the information obligations of the Consumer Code. The borrower ends up, in practice, without French protection; and the designated foreign law does not always offer an equivalent.
For the firm, this decision calls for heightened vigilance in monitoring cross-border cases and a more systematic exploration of alternative grounds: an extensive reading of Article 6 Rome I, reliance on the foreign law itself, and pursuit of the liability of French intermediaries. Cross-border loan litigation is one of the most technical areas of banking law and calls for specific expertise. If you are committed to a loan with a Monegasque, Swiss or Luxembourg bank and fear enforcement proceedings or a call on a guarantee, do not underestimate the complexity of the case: room for manoeuvre exists, but it is built upstream, case by case.
