„   EDITO    In this issue you will find a general survey of French and EU legal provisions coming into force at the beginning of 2006.

Our international activities develops from year to year in particular in the fields of distribution, corporate acquisitions and transfers, technical litigations, in Europe as well as, lately, in Thailand, Australia, India and the USA, while the ambit of our Eurojuris grouping expands to Eastern Europe countries.

      As always, we hope you will find this edition interesting as well as informative and we welcome any comments or suggestions you may have.

Thierry CLERC                    Valérie CRÈVECŒUR                    Christophe SOLIN

„ inpatriates ImproveD tax regime

Assignment-related compensation items, received in the year of arrival in France or in the five following years by employees or high-level executives on temporary assignment to France, are exempt from income tax in France under certain conditions.

The French government has recently made this regime (Article 81B of the French Tax Code) more favourable. Previously, individuals could not benefit from the regime if they had been resident in France in the 10-year period prior to their assignment. The new law reduces the duration of non-residency in France, for assignments to France beginning after January 1, 2005, from 10 to 5 years.

In addition, the tax exemption currently provided for assignment-related allowances has been extended. Going forward, it will be possible to exempt from tax the portion of remuneration relating to overseas workdays. This exemption cannot however exceed 20% of taxable remuneration.

„ DATA PROTECTION

Since 22 October 2005, the data controllers of undertakings may appoint a personal data officer.

This appointment, to be notified to the French National Committee for Data Protection and the Liberties (CNIL), will lighten compulsory formalities.

The officer, duly qualified to perform his/her duties, is charged with ensuring, in an independent manner, compliance with the obligations provided for in the Data Protection Act.

„ DISABLED EMPLOYEES

The Act of 11 February 2005 came into force on 1^st January 2006. It amended the provisions of the French Labour Code in relation to disabled persons and, in particular:

• the principle of equal opportunities for disabled employees in all undertakings is laid down;

• alls undertakings must address specifically the issues of employment and training of disabled persons, within the framework of their yearly negotiations with the staff representatives;

• the minimum number of disabled employees is increased for undertakings with more than 20 employees;

• non-compliance with the above is sanctioned more heavily.

„ EU DOCUMENT SERVICE

If you want to serve official documents relating to civil or commercial matters within the EU, you must refer to the EU Regulation dated 29 May 2000.

The main means of transmission is between one country's “transmitting agency” and another country's “receiving agency”. It is secure but usually takes a lot of time (up to several months) and delays proceedings.

There are alternative means of transmission: direct service, for instance by a local process-server, or even service by post. The latter is quick and cheap but should be avoided when the addressee is an individual.

The European Court of Justice decided on 9 February 2006 that the Regulation does not establish any hierarchy between service through agencies and service by post and, consequently, it is possible to serve a document by one or other or both of those methods.

„ DNS AND TRADEMARKS

When DNS and trademark rights clash, the solution given by French law is different from that of the new ICANN regime.

French law prohibits:

- on the one hand, the identical reproduction of a trademark for goods and services identical or similar to those designated in the registration;

- on the other hand, the imitation of a trademark for goods and services identical or similar to those designated in the registration.

The principle of speciality prevails in French trademark law: a trademark owner is only protected against infringements relating to identical or similar goods or services designated in the registration.

Trademark owners have tried to oppose the use of a DNS by third parties on the basis that they first registered a trademark used in the disputed DNS.

However, courts have rejected this argument on the grounds of the principle of speciality. Case by case, courts compare the contents of the website and the goods or services designated by the trademark owner.

It they are not similar, the DNS can continue to be used; the fact that a prior trademark was registered first is irrelevant.

„ THE EUROPEAN ENFORCEMENT ORDER

The aim of this new tool is to make it easier and cheaper for SMEs to collect debts within the EU.

The ultimate objective is to achieve recognition of judicial decisions rendered by the courts of any member state within the whole EU, without having to carry out any prior formalities in the state where enforcement of the foreign decision is sought.

The European enforcement order applies to the decisions rendered after 21 January 2005 but the orders could only be issued after 21 October 2005.

A number of quite complex requirements have to be met before the order can be issued.

The main restriction is that it is limited to uncontested claims.

Standard forms translated in all the EU languages are attached to the Regulation to facilitate the filing of applications for the European enforcement order.

However, once issued by the court that rendered the decision, the order acts as a passport. It is valid and enforceable anywhere in the 25 members states (except Denmark).

„ NEW INSOLVENCY PROCEEDINGS

The new Insolvency Act applicable as from 1^st January 2006 allows debtors to rescue their company sooner:

- either before default on payments: through the safeguard procedure setting up two committees gathering creditors, banks and suppliers to whom the debtor makes proposals in order to agree on a reorganisation plan;

- or after default on payments: through the conciliation procedure.

In the event of failure of the above,  two other procedures remain, i.e. « redressement judiciaire » (judicial settlement proceedings) if the business is likely to continue or to be transferred and « liquidation judiciaire » (winding-up) if the business has to stop.

Bankers can no more be held liable for support given to companies becoming insolvent, except in the event of fraud, interference with the client’s business and over-securing debts.

Advance payments made by creditors within the framework of the business continuation are secured by a specific charge.

Creditors may ask to hold the position of « controllers » allowing them to require actions to be taken if the administrator is deficient in carrying out his duties.

Preventive attachment before the default on payments remains enforceable after insolvency proceedings have started.

These are just a few examples of the headway that has been made in the interest of the creditors and of the debtors who are now protected at an earlier stage.