The choice of a religious law to govern a contract does not bind the state court. Before a French court, the choice of law made by the parties may relate only to a state law, under the Rome I Regulation. A court which settles a contractual dispute by applying a religious rule disregards its judicial function and the conflict-of-laws rules.
Key points
- Before a state court, the choice of the law applicable to a contract may designate only a state law: a religious rule cannot play that role.
- The Rome I Regulation does not govern arbitration agreements, but it controls the determination of the applicable law by the state court seised after the parties have waived arbitration.
- The court rules according to the applicable rules of law and gives the disputed facts and acts their correct characterisation, without being bound by the description put forward by the parties.
- Where all the elements of the situation are located in a single country at the time of the choice, designating the law of another country cannot set aside the mandatory provisions of the country of connection.
- A non-state rule accepted by the parties is not enough to set aside the state rules on undivided co-ownership before the French court.
Undivided co-ownership of a building settled by a rabbinical rule
The first civil chamber quashes the decision which had settled the end of an undivided co-ownership (indivision) by a rabbinical rule, that rule not belonging to any state law (Civ. 1re, 11 February 2026, No. 24-18.329). Two individuals acquired a building in undivided co-ownership in 2000, intended to house a holiday centre, and took out a loan for that purpose. A financial dispute then arose between them.
A rabbinical court issued an arbitral award in 2010 setting their rights and obligations according to whether they separated or maintained their association. In the event of separation, the award referred to a rabbinical rule allowing one partner to compel the other either to buy out their share or to sell their own. In 2020, one of the co-owners refused the draft compromise submitted by the rabbinical court and brought the arbitration to an end. An arbitrator then informed the co-owner spouses that they could bring proceedings before the civil courts.
In 2021, the co-owner residing abroad offered to buy out the share of the co-owner spouses, then brought proceedings before a tribunal judiciaire (first-instance civil court) seeking payment of property taxes (taxes foncières) and rent. In 2023, the co-owner spouses asked the court for authorisation to sell the jointly owned building on their own, on the basis of Article 815-5 of the French Civil Code. The court of appeal (CA Rouen, 29 May 2024, No. 23/03079) dismissed that application and held that the sale of their share had become perfect on the date of the buy-out offer.
The Cour de cassation (France's highest civil court) raises of its own motion the infringement of Article 12 of the French Code of Civil Procedure and of Article 3, § 1 and § 3, of the Rome I Regulation. The court rules on the dispute in accordance with the applicable rules of law and, in the words of the decision, "It must give or restore the disputed facts and acts their correct characterisation, without regard to the description that the parties may have proposed." (free translation) The quashing is partial: it leaves standing the dismissal of the reciprocal claims based on abuse of process, and the case is remitted to the Paris court of appeal.
What are the consequences for a contract referring to a religious law?
A stipulation subjecting a contract to a religious rule does not, before the French court, produce the effect of a choice of law. The court seised must determine which state law governs the contract, then apply that law. Designating a non-state body of rules does not relieve it of that task. The decision states that "this choice may relate only to a state law".
The finding that the parties had not waived the religious rule does not alter that solution. The court of appeal had held, in its unfettered assessment, that there had been no such waiver, and the Cour de cassation does not call that finding into question. The quashing rests on a different point: a rule which belongs to no state law cannot serve as the law of the contract before a state court.
For the parties, the consequence is a practical one. An exit agreement negotiated under religious or customary rules works as long as it is performed voluntarily. As soon as one party brings the dispute before the French court, the resolution of the dispute rests on a state law and on the legislation belonging to it. The decision does not rule on the fate that such rules may retain as mere contractual stipulations.
The scope of a choice of non-state law
The decision holds that party autonomy, in matters of conflict of laws, operates within the limits of a choice between state laws. It also clarifies the relationship between arbitration and the state court. The exclusion of arbitration agreements from the scope of the Rome I Regulation does not deprive the state court of its conflict-of-laws rules where the parties abandon the arbitral route.
Although, under Article 1, § 2, e), the Rome I Regulation does not apply to arbitration agreements, it does govern the determination of the applicable law by a state court before which the parties bring their dispute after waiving arbitration.
The decision also recalls the limit laid down by Article 3, § 3, of the Regulation: where all the elements of the situation are located in a single country at the time of the choice, designating the law of another country cannot prejudice the provisions from which the law of the country of connection does not allow derogation by agreement. The determination of the applicable state law and the fate of the application for authorisation to sell remain open before the court to which the case has been remitted.
What to keep in mind when drafting a governing law clause
A governing law clause secures the contract only if it designates an identifiable state law. Parties attached to professional, customary or religious rules must appreciate that a state court will not treat them as the law of the contract. The drafting gains from naming the chosen law, without indirect reference to a body of rules lacking any state connection.
The move from arbitration to the state court deserves to be documented. In the case decided, the refusal of the compromise, the end of the arbitration and then the bringing of proceedings before a tribunal judiciaire fed a lengthy debate on the value of the 2010 award. Keeping the written records establishing the abandonment of the arbitral route, and in particular the authorisation given to bring proceedings before the civil courts, makes it possible to establish the chronology before the court.
Consistency between the governing law clause and the dispute resolution clause should be checked before signature. A contract may refer to arbitration before a non-state body while designating, should that route fail, a specific state law. This precaution prevents the court seised from having to reconstruct the connecting factor of the contract itself.
Points to check before bringing proceedings before the French court
- Check that the governing law clause designates a state law, named unambiguously.
- Identify the mandatory provisions of the country to which the situation is entirely connected, which a choice of foreign law cannot set aside.
- Gather the written records establishing the end of an arbitration, in particular the refusal of a compromise and the authorisation to bring proceedings before the civil courts.
- Base the claim on state legislation, including where an earlier agreement referred to non-state rules.
Frequently Asked Questions
Can a contract provide that religious law will apply?
No, not as a choice of the law governing the contract before a state court. Under the decision of 11 February 2026, the choice open to the parties under the Rome I Regulation may relate only to a state law. A religious rule therefore cannot be applied by the French court as the law of the contract. The court must identify the applicable state law and then rule accordingly.
Is an agreement reached before a religious body binding on the French court?
The French court remains bound to determine the applicable state law, even where the parties accepted a religious rule and never waived it. In the case decided on 11 February 2026, the court of appeal had found that no waiver had occurred, which was not enough: it could not settle the end of the undivided co-ownership by a rule falling outside any state law. The case was remitted to another court of appeal.
What happens to the dispute when a party ends an ongoing arbitration?
The dispute returns to the state court, which applies its own conflict-of-laws rules. The decision of 11 February 2026 states that, although the Rome I Regulation does not apply to arbitration agreements, it governs the determination of the applicable law by the state court before which the parties bring their dispute after waiving arbitration. The court then designates a state law and applies it to the contract.
How should a governing law clause be drafted with a foreign counterparty?
It is better to designate a specific state law, named without any ambiguous reference to a body of private or religious rules. In principle, parties to an international contract may choose the law governing it, but that choice does not displace mandatory provisions where all elements of the situation are connected to a single country. Consistency with the dispute resolution clause should be checked before signature.
What should be checked before agreeing to an arbitration clause?
Three points deserve attention: the scope of the disputes covered, the designation of the body responsible for ruling, and the consequences of abandoning the proceedings. An imprecise clause invites lengthy arguments about jurisdiction before the merits are even examined. It is also useful to anticipate how the clause interacts with the state court, in particular for urgent measures and where the arbitral route fails.