REALWorld Law

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

In general, the French legal system is based on constitutional laws, legislative codes and statutes. In particular, construction law is contained in the French Civil Code and the French Housing and Construction Code.

Other types of law, such as employment law or environmental law, may apply depending on the use of the building to be erected.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

The erection of a building requires a building permit. The building permit is usually applied for by the owner or by the developer. It is very rare for a building permit to be issued to a contractor.

Under French law, it is a criminal offence to erect a building without a building permit. When the works are completed, the owner has the obligation to file a declaration of completion and compliance of the works with the administrative authorities. Upon receiving this declaration, the administrative authorities have three to five months (depending on the project or its location) to verify if the works are compliant with the building permit. After this time period, the owner can request a certificate from the authorities of non-opposition to the compliance of the works. A modification to a building permit may be applied for if discrepancies arise between the actual building and the building permit. 

A building permit can be challenged by third parties. From 1 October 2007, any such challenge must be lodged within two months from the first day the building permit is displayed on the site (the building permit must be posted on the site continuously during the relevant challenge period). Usually, the works start only when the beneficiary is certain that the building permit is final (ie the challenge period has passed).

Other planning or administrative authorizations may be required depending on the use of the building to be erected. For example, the erection of a building for retail use requires a specific retail authorization and the erection of a warehouse or facility may require an authorization for a classified installation for environmental protection (installations classées pour la protection de l'environnement).

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

In France, health and safety is governed by the French Labour Code and the French Housing and Construction Code.

Health and safety during the construction works

French law requires a health and safety plan to be prepared and maintained until completion of construction works. This plan needs to set out the arrangements for the project, taking into account the risks to health and safety, and must include arrangements for monitoring compliance by all persons involved. In addition, a health and safety file must be maintained for use at any subsequent time. This must contain information which relates to the structure ‘as built’, and must be available to all future occupiers and contractors carrying out work on the structure.

Duties are imposed on the owner (maître d’ouvrage) to appoint a ‘coordinator’ (who performs a statutory health and safety role) and a ‘principal contractor’ (who will usually be the main building contractor) for any project. The coordinator’s role is to coordinate the health and safety aspects of the early stages of the project, including the health and safety plan and the health and safety file. The principal contractor must develop and update the health and safety file, ensure that rules are created regarding the site and provide guidance and directions to any other contractor.

Health and safety regulations

The applicable health and safety regulations vary in accordance with the use of the building and its main characteristics. As regards the use of the building, some regulations will be applicable if the building is open to the general public (établissement recevant du public) (such as retail stores). As for the characteristics of the building, some regulations will be applicable if the building is a high rise structure (immeuble de grande hauteur) or a middle-rise structure (immeubles de moyenne hauteur).

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Under French law, in principle, environmental issues are governed by the French Environmental Code (Code de l’environnement). However, some environmental issues are dealt in specific regulations, such as those dealing with the management of hazardous waste and waste electrical and electronic equipment (WEEE).

Other issues of interest may include the French Forest Code and the Constitutional Environmental Charter.

Sustainable development

In recognition of the need for sustainable development, the Grenelle de l’Environnement law, which was passed on 3 August 2009 (Grenelle 1), is aimed, in particular to enable standards for lower energy emission to be applied generally in new housing and public buildings, as well as setting up incentives for the renovation of various facilities.

The Grenelle 2 law, passed on 12 July 2010, also known as the national commitment to the environment, gives effect to the principles and directions laid down by the Grenelle Environmental Forum (Grenelle de l’environnement).

The Grenelle 2 law consists of six ‘pillars’, one of them being ‘improving the energy performance of buildings’. The aim is to reduce the energy consumption of existing buildings by 38% by 2020.

The Elan Law passed on 23 November 2018 modified the schedule for the implementation of the energy efficiency works in the tertiary sector by setting the first deadline at 2030 while maintaining the overall ambition of a 40% reduction in energy expenses (50% in 2040 and 60% in 2050) compared to 2010. It also planned to modulate the performance objective according to the size of the building.

This ambition was reaffirmed by the Energy-Climate Law passed on 8 November 2019, which aims for carbon neutrality in 2050, and then by the Climate-Resilience Law passed on 22 August 2021, which plans to reduce greenhouse gas emissions by 40% by year 2030.

More recently, the Law accelerating the production of renewable energies adopted on 10 March 2023, aims to develop solar energy by requiring the installation of solar panels on half the surface area of parking lots larger than 1500 sqm as from 1st January 2023 and on certain buildings with a minimum coverage gradually increasing from 30% in 2023 to 50% in 2027. Should the car park not be managed under a concession or public service delegation agreement, the obligation must be met:

• 1 July 2026 for car parks of more than 10,000 sq. m.;
• 1 July 2028 for car parks of less than 10,000 sq. m. (and more than 1,500 sq. m.).

Please note that article 40 of the above-mentioned law provides for a number of exceptions - which have yet to be specified by decree in the Conseil d'Etat –- so that the operator may be exempted from the obligation to install photovoltaic shading:

• if they install another process enabling equivalent production of renewable energy;,
• if there are technical, safety, architectural, heritage, environmental or site and landscape constraints;,
• when the economic cost of meeting the obligation is difficult to bear;,
• if at least half of the car park is shaded by trees; or,
• in the case of a car park whose total or partial elimination or transformation is planned as part of a development project or operation mentioned in article L. 300-1 of the French Planning Code, or by a planning permission.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Under the French Planning Code (Code de l'urbanisme), the owner (maître d'ouvrage) must make a financial contribution in relation to infrastructure in order to support new development. The owner may be released from this liability by carrying out the infrastructure related works itself.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

In construction contracts governed by private law (ie private sector projects), the following provisions amongst others are mandatory:

• The owner (maître d’ouvrage) must deliver to the contractor (entrepreneur) a joint bank guarantee equal to the entire price of the contract in order to secure the payment vis-à-vis the contractor.
• The owner is entitled to retain an amount that does not exceed 5% of the entire price of the project in order to guarantee the remediation of any defects arising on the date of handover of the works or within one year from the handover.

Contracts for certain residential buildings are subject to mandatory requirements to include certain information and provisions in order to avoid the contract being deemed null and void.

It should also be noted that what is known in French law as the ‘10 year liability rule with respect to buildings’ cannot be contractually excluded by architects or contractors.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

The parties are free to provide for any method of payment (lump sum, measurement, a schedule of payment, etc). Payment against measurement is most common.

The owner (maître d’ouvrage) shall either provide for a direct payment by the bank to the contractor in the event a loan was secured by the owner to finance the construction works or deliver a joint bank guarantee equal to the entire price of the contract to the contractor (entrepreneur) in order to secure the payment obligation owed to the contractor.

The owner is entitled to retain an amount not exceeding 5% of the entire price of the project in order to guarantee the remediation of any defects arising on the date of acceptance of the works. The contractor has the right to replace this retainer by a bank suretyship (cautionnement bancaire).

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

It is common to impose a time frame for completion of the works. Where a date for completion of the works is agreed between the parties but completion does not occur on that agreed date, this will automatically imply a contractual default by the contractor.

In general, a penalty mechanism in the event of delay is provided for contractually. Delay penalties are calculated by multiplying the contract price by the rate of delay damages, and are payable unless the delay was due to force majeure/unforeseen event, or was the fault of the owner. Delay penalties are often capped at a percentage of the price of the contractor agreement but may be revised by the court.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

The contractual mechanisms used to deal with variations to the works differ depending on why the variation is requested:

• Owner-led changes: Under most standard-form contracts, the owner has the right to request variations to the works, and the building contractor is entitled to additional time and money accordingly. The building contractor is also entitled to raise reasonable objections to material changes.
• Contractor-driven changes: Where variations are necessary due to an error, delay or default by the building contractor, the contractor is not usually entitled to additional time or money under the contract. He is also liable for any delays caused to the project by these variations, and for any consequential non-compliance with the contract.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

A building is deemed to be completed once the works and associated essential equipment can be operated in compliance with the agreed use.

The parties are free to derogate from this provision and to provide for any other definition of completion, except for residential buildings subject to mandatory requirements.

The parties are free to agree on the mechanism and proceedings pursuant to which the completion of the building will be ascertained.

Contracts often provide that completion shall be as mutually agreed by the parties and that, should the parties fail to reach an agreement, an expert (either designated in the contract or to be appointed by the court) will decide whether the building is completed or not.

From a town planning perspective, the owner has the obligation to file a declaration of completion and compliance of the works. Upon receiving this declaration, the administrative authorities have from three to five months to verify if the works are compliant with the administrative authorisation obtained. Then, the owner can request a certificate of non-opposition to the compliance of the works.

Specific administrative authorisations may be necessary in order to be able to use/operate the building in some limited cases (eg high-rise buildings and premises to be open to the public).

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Subject to the application of specific liabilities (see below), a claim for breach of a contract by one party can be brought during 5 years from the day on which this party knew or should have known the facts enabling the exercise of its right.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Under French Construction law, the period of time during which a party is entitled to bring a claim depends on the nature of the defect affecting the building:

• For a 10-year period as from the date of acceptance of the works (date de réception des travaux): claims can be brought in respect of any structural damage caused to the building or where the ability to use the building is jeopardized (garantie décennale)
• For a two-year period as from the date of acceptance of the works: claims can be brought in respect of damage to plant, equipment and machinery (garantie biennale)
• Within one year from the date of acceptance of the works (garantie de parfait achèvement): claims can be brought in respect of defects or non-conformity which were apparent at the acceptance of the works or that appeared during this period

These liabilities are mandatory and cannot be excluded by contract.

Construction risks are also covered through insurance. The insurance coverage for construction projects, decennial civil liability policies (responsabilité civile décennale) and damage to property policy (dommage-ouvrage) are mandatory.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Due to lack of a direct contractual relationship between the end user and the architect, designer, contractor and/or sub-contractor, no direct claims can be made by the end user against these parties, except in the circumstances where the conditions for extra-contractual liability are fulfilled. Parties are extra-contractually liable for any damage suffered by an end user to the extent the damage is of an extra-contractual character and has been caused by their default or negligence, other than the non performance of their contractual obligations. This liability cannot be excluded before the damage occurs.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Due to the lack of a contractual relationship between third parties (such as purchasers, tenants and lending banks) and the contractor, the rules of extra-contractual liability generally apply. These rules mean that no direct claims can be made by these parties against contracting parties, except where the conditions for extra-contractual liability are fulfilled (in accordance with the rules of tort). Parties are extra-contractually liable for any damage suffered by a third party, to the extent that (1) there is damage and (2) it has been caused by their default or negligence.

Under French law, the 10-year liability period which applies to structural damage caused to the building benefits successive owners of the building.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

There are no specific construction courts or tribunals operating in the private sector. Claims will start before a Tribunal Judiciaire. All decisions can be appealed to the Court of Appeal (Cour d’Appel). The ultimate court of appeal in France is the Cour de Cassation.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Construction disputes are predominantly brought before the courts. Although some qualities such as speed, confidentiality, expertise and flexibility are often highlighted as advantages of arbitration in construction disputes, in practice, these advantages are often not seen as deciding factors in favour of arbitration due to the cost of the arbitration process in France. Furthermore, French construction contracts commonly contain a jurisdiction clause naming the competent (French) court. Arbitration clauses are more often used in construction contracts where the contracting parties reside in different countries.

Last modified 22 Mar 2024

Typically, who are the parties to an engineering or construction contract or package of contracts and who is responsible to whom?

Alternative Dispute Resolution is not mandatory by law (for disputes over 5,000 euros) and is therefore not commonly used in construction disputes, except for matters where determination by an expert is sought, whether appointed by the parties to an agreement or in accordance with a contractual clause or appointed by the court in the context of dispute resolution.

Last modified 22 Mar 2024