When two people do not agree on the value of a shareholding, they often agree to call in an expert to set the price. The word expert is used in its general sense and not in its legal sense, since the decision of the third-party valuer chosen by the parties is binding on them, which goes beyond the status of an expert who, before the courts, helps to inform the judge, who nevertheless remains free to make his own decision.

Two legal provisions are applicable in this area:

  • Article 1592 of the Civil Code, a general provision relating to contracts of sale, allowing the parties to rely on the arbitration of a third party to fix the price of the object transferred;
  • Article 1843-4 of the Civil Code, applicable “in all cases where the transfer of a partner’s corporate rights or the repurchase of such rights by the company is provided for” and entrusting an expert with the task of determining the value of such rights.

Widely used in practice, these two articles had generated relatively little case law until the early 2000s. Things have changed since then and have gradually created a complex, shifting and, to put it bluntly, unsatisfactory situation, especially with regard to transnational transactions, notably because it reduces the predictability of the procedure.


The answer is no; as soon as the dispute arises between two shareholders, it is Article 1843-4 that applies. This is a provision of public order. Only transactions involving a third party or those that do not directly concern a purchase/sale (options, promises, etc.) may be eligible for Article 1592. In particular, this means that the process of appointing the expert, which is left to the free will of the parties in Article 1592, is imperatively fixed in Article 1843-4. In the latter case, in the event of disagreement between the parties, the expert is appointed by “an order of the President of the Court ruling in the form of summary proceedings and without possible appeal”. The case law of the Cour de Cassation requires the courts and the parties to scrupulously respect this procedure. For example, it is not permissible for the parties to refer to an arbitration institution to choose the expert.

The choice of the expert will therefore be left to the knowledge of the President of the Tribunal concerned; it is to be hoped that the parties can at least agree on a list of possible names, if they wish to avoid the consequences of an unfortunate choice.


This is the most recently debated issue. The Court of Cassation has twice indicated to reluctant Courts of Appeal that the expert appointed under Article 1843-4 must be completely free to make his own assessment and cannot be bound by the valuation formulas contained in the articles of association or shareholders’ agreements. There is therefore no need to agree in advance on precise provisions regarding the future valuation of the shares: the expert is sovereign[1]!


The expert is not bound by the adversarial principle. Based on the principle that the third party is not a judge, the Court of Cassation logically deduced that nothing obliges him to set his price in an adversarial manner. Without the slightest exchange, the parties can see a decision concocted by the third party all alone in his corner…

Again, the parties will be advised to agree on a procedure:

  • ensuring adversarial reporting;
  • allowing the parties to be informed of the expert’s position on the basis of a preliminary report[2].


In principle, none, unless there is a gross error; this rule applies regardless of the article of the code in question. If the words have a meaning, the error is only gross if it is obvious to a non-specialist, which is the case of the judge. But the window thus opened leaves room for the litigant in bad faith. However, we must admit that the case law does not give him much hope for the moment.

The Court of Cassation has opened up a new, albeit indirect but effective, avenue of appeal. Gross error allows the procedure to be annulled and to start again from scratch; satisfactory in principle, but long and expensive. But the unsatisfied party can also seek the professional liability of the expert; in the event of fault, he or his insurer will have to repair the damage caused. This is an easier way to obtain compensation for the alleged error in pricing.

This case law does not call into question the price fixed but opens another front, this time against the expert. The latter would be well advised to have a waiver of action clause signed in advance, except in the case of gross negligence; most of these missions are indeed litigious in nature, even if the third party is not legally an arbitrator deciding a dispute. It is therefore tempting for the loser to allege the fault, however slight, of the expert.


It is time for the Court of Cassation to realise that these procedures, far from being anecdotal, are not the only ones:

  • often involve large sums of money and regularly involve foreign parties;
  • organise divestments in large groups or franchise networks[3].

The scenario is by no means fictitious in which two foreign companies, arguing over the price of a French company of significant size which is subject to a Commercial Court making a few decisions per year[4] :

  • are required to have an expert who is familiar with local business transfers;
  • discover the report of the said expert fixing the price without ever having discussed it with him;
  • have no choice but to accept this price, as the expert is not adequately insured.

Nor is the situation where, in wanting to protect franchisees, the Court has stopped the fluidity of the market for sales outlets in networks organised as franchises; in the absence of a rapidly determinable price, there is no credit for the purchaser and no exit for the transferor.

French law has a reputation for being unpredictable. It is certainly not with case law of this kind that things will change. Let us try to be positive: Professor Paillusseau proposes an elegant solution to limit the harmful effects of article 1843-4.  The prohibition of ineffective clauses has long affected the validity of shareholders’ agreements or portage contracts; the issue is now behind us: only statutory clauses may be subject to this prohibition and not extra-statutory provisions. Similarly, it could be decided that Article 1843-4 applies only to transfers referred to in the articles of association, while those included in extra-statutory agreements are subject to freedom of contract and therefore to Article 1592.

Professor Couret[5] advocates recourse to the SAS, where the application of Article 1843-4 is only subsidiary, “if the articles of association do not specify the terms and conditions of the share transfer price[6]”. It remains to convince the Cour de Cassation that the freedom of the SAS resists the public policy of Article 1843-4…

The legal profession is gradually realising the extent of the damage and is seeking ways of getting the Court to return to a wiser position. It is in its role.

Dominique LEDOUBLE

[1] Cf. le dernier arrêt de principe : Cass.Com. 5 mai 2009 JCP E 2009.1632 note Mortier.
[2] Solution adoptée par le Code de Procédure Civile en matière d’expertise au sens habituel du terme.
[3] On ne s’étonnera pas que l’arrêt de cassation cité ci-dessus concernait Intermarché.
[4] Il en subsiste, même après le récent nettoyage de la carte judiciaire !
[5] Cass.Com. 5 mai 2009 note Couret Joly Sociétés 2009 N° 147.
[6] Art. L227-189 c. com.

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