French Supreme Court (Cour de cassation), First Civil Division, 17 June 2026, n° 23‑10.435
“When the law is clear, it must be followed; when it is obscure, its provisions must be examined in depth.” Portalis’s warning, in the Preliminary Address, marks the limit that the interpreter cannot cross: to interpret is not to rewrite. The judgment handed down by the First Civil Division on 17 June 2026 tests this limit with rare clarity, by asking whether a domestic rule as clear as the creditors’ general right of recourse against the debtor’s assets (gage général) can be bent, by virtue of interpretation alone, to the objectives of a European mechanism whose texts cannot be directly relied on.
A Greek company, Hellenic Shipyards (HSY), had obtained an arbitral award against the Greek State, declared enforceable in France by an exequatur order of 7 December 2017, ordering the State to pay it a sum of approximately one hundred and fifty-five million euros. The creditor, unable to find any assets of the debtor State to seize, turned to another company governed by Greek law, Hellenic Corporation of Assets and Participations (HCAP), arguing that it was merely an emanation of the Greek State whose assets were indistinguishable from the State’s own. This company, however, had a distinctive feature: it had been created by Greek Law No. 4389/2016 to enable Greece to benefit from the financial assistance of the European Stability Mechanism (ESM), which had required, as a condition of its support, the transfer of valuable Greek assets to an independent fund, managed under the supervision of the European institutions and intended to monetise those assets in order to contribute to repayment of the assistance. On the basis of Articles L. 111-1-1 et seq. of the French Code of Civil Enforcement Procedures, the creditor sought leave to carry out a garnishment (saisie‑attribution) of funds allegedly held by HCAP with HSBC.
The proceedings followed a winding course. The enforcement judge of the Paris Tribunal de grande instance first rejected the application by order of 13 February 2018. On appeal, the Paris Court of Appeal reversed that decision by an ex parte judgment of 27 June 2019, characterised HCAP as an emanation of the Greek State and authorised the garnishment; the garnishment proved unsuccessful, however, as the garnishee declared that it held no debt owed to HCAP. Seised of an application to set aside, the Court of Appeal, by a judgment of 15 September 2022, declared the application admissible but dismissed it on the merits, upholding the characterisation as an emanation on the grounds that HCAP did not enjoy genuine organic autonomy, that the Greek State exercised a permanent power of control and direction over it, and that it had no assets of its own separate from those of the State. HCAP appealed to the French Supreme Court.
The question raised was of great significance. Can the characterisation as a State emanation, which allows a creditor of a State to seize the assets of an entity that is formally separate but lacks genuine autonomy, be upheld where that entity’s independence was precisely required by the European institutions as a condition of financial support granted under the ESM? More fundamentally, can the national court, in the name of interpretation consistent with EU law, set aside a characterisation that is nonetheless established under its ordinary criteria, based on Article 2284 of the French Civil Code, even though the European rules relied on have no direct effect?
Citing Article 2284 of the French Civil Code, “interpreted in the light of European Union law”, the First Civil Division quashes the appeal judgment and, ruling on the merits without remand, holds that HCAP’s assets cannot be subject to any enforcement measure by creditors of the Greek State. It lays down the principle that, while a claim against a foreign State may give rise to enforcement measures against the assets of one of its emanations, “recourse to that characterisation must, however, be ruled out if it jeopardises the achievement of the objectives pursued by measures established by the European Union”.
The decision is striking first for the way it subordinates the theory of emanation, a judge-made construct of domestic law, to the purposes of a European mechanism (I). It then raises questions, and this is its crux, about the very process by which this subordination is achieved: a consistent interpretation called upon to produce the effect that direct effect, being unavailable, could not produce, at the risk of verging on the disapplication of a clear law (II).
I. The theory of State emanation neutralised by EU law
The judgment in no way disowns the criteria for emanation, in line with well-established positive law (A). It is downstream, at the stage of the consequences of the characterisation, that it introduces an unprecedented ground for neutralisation, drawn from the effectiveness of the European mechanism (B).
A. A characterisation as an emanation established under positive law
In French law, the concept of State emanation serves a dual purpose that recent scholarship has rightly highlighted (M. Audit, “De la théorie de l’émanation et de sa délicate cohérence en droit français”, RIDE 2023/1, p. 65). In its defensive function, it allows an entity to claim for itself the immunity of the State on which it depends. In its offensive function, the only one at issue here, it allows the State’s creditor to seize the assets of a legally separate entity, on the basis that the latter’s assets are in reality indistinguishable from those of the debtor. This second use does not derive from the law of immunities, but from the general law of obligations: it extends the general right of recourse that Article 2284 of the French Civil Code, successor to former Article 2092, grants every creditor over all of its debtor’s assets. The supplementary report of Judge Corneloup forcefully recalls that neither the Code of Civil Enforcement Procedures as amended by the “Sapin II” Law of 9 December 2016 nor the 2004 United Nations Convention deals with the case of enforcement of a claim against the State against the assets of a separate legal entity; the theory of emanation, in this use, rests entirely on Article 2284.
The conditions for this characterisation are well known and settled. The case law requires two cumulative criteria, strictly interpreted: the entity’s lack of functional independence from the State, and the commingling of its assets with those of the State. The canonical formula dates back to the judgments concerning the Cameroonian and Congolese national oil companies, according to which an entity that “[is] not, under its articles, sufficiently functionally independent to enjoy legal and factual autonomy from the State and [whose] assets [are] indistinguishable from those of the State” must be regarded as an emanation (Cass. 1re civ., 14 Nov. 2007, n° 04‑15.388; Cass. 1re civ., 6 Feb. 2007, n° 04‑13.108). Mere control exercised by the State, or a public service mission entrusted to the entity, is not enough to disqualify it where it has separate assets. This state of the law is described in unison by the two leading works on the subject, which should be cited precisely. The first teaches that characterisation as an emanation “depends, in the case law, on an assessment of the entity’s genuine independence from the State”, which does not disappear merely because of State supervision or control, “provided that it has assets separate from those of the State” (I. Prezas, “Immunités internationales”, JurisClasseur Droit international, LexisNexis, fasc. 409‑50, 2022, n° 29). The second, regarding the use of the concept in enforcement litigation, states that “a company that is a creditor of a State must show that the assets against which it intends to enforce belong to that State, that is, that the apparent owner does not have assets of its own separate from those of the debtor State” (C. Kessedjian, “Immunités”, Répertoire de droit international, Dalloz, 2017, n° 130).
The judgment under review does not depart from this framework in any way. In paragraph 9, it reproduces the 2007 formula word for word; in paragraph 13, it reports the findings of the Court of Appeal, which had noted HCAP’s lack of genuine organic autonomy, the Greek State’s permanent power of control and the absence of assets of its own. The French Supreme Court does not contradict these findings; nor does it criticise the Court of Appeal for misapplying the criteria. The characterisation as an emanation was therefore, under positive law, fully established. The break, accordingly, lies not in the definition of emanation, but in the fate reserved for a characterisation that had nonetheless been properly established.
B. A characterisation set aside in the name of the effectiveness of the European Stability Mechanism
This is where the judgment breaks new ground. The characterisation as an emanation, although established, must be set aside where its application would jeopardise “the achievement of the objectives pursued by measures established by the European Union”. The Court no longer reasons in terms of the links between the entity and the State, but in terms of the purpose of the mechanism of which the entity forms part. HCAP had been set up to meet a requirement of the European institutions; its independence and its supervision were conditions for the granting of assistance; its very purpose, to monetise assets in order to contribute to repayment of the assistance, was incompatible with the State’s creditors enforcing directly against its assets. From these premises, the Court infers that recourse to the characterisation as an emanation “had to be ruled out”. EU law thus indirectly restores the corporate veil that the application of domestic criteria had lifted.
Ruling on the merits without remand, the judgment declares, in general terms, that HCAP’s assets “cannot be subject to any enforcement measure in France by creditors of the Greek State”. The immunity from seizure thus established is neither an immunity from enforcement stricto sensu, whose regime is codified in Articles L. 111-1-1 et seq. of the Code of Civil Enforcement Procedures, nor an exception based on the sovereign allocation of the assets; it is an autonomous ground for neutralisation, of European origin, which operates upstream, at the characterisation stage, and thereby escapes the conditions and safeguards of the codified regime.
This construction has an obvious economic coherence: it would be paradoxical for European law to require the creation of a vehicle intended to pay off the State’s public creditors, only to tolerate that State’s private creditors stripping it of its substance. Yet the coherence of the result says nothing about the soundness of the process. For the means by which the Court achieves this end, interpreting Article 2284 “in the light of EU law”, was by no means self-evident; the preparatory documents show that it was fiercely debated, and that it was preferred over two other routes that the bench had expressly considered.
II. Consistent interpretation put to the test of the contra legem boundary
The legal basis chosen is not a drafting detail: it decides, among three competing techniques, in favour of the one that made it possible to obtain the desired result despite the lack of direct effect of the European texts (A). This choice nevertheless exposes the judgment to a major objection, foreshadowed by the Advocate General’s opinion and aggravated by the Court’s silence on the right to enforcement: consistent interpretation may here serve as a screen for the outright disapplication of a clear law (B).
A. Consistent interpretation substituted for unavailable direct effect
The preparatory documents reveal a debate on method of rare intensity. The reporting judge proposed quashing the decision on a ground raised by the court of its own motion, based squarely on Article 136(3) of the Treaty on the Functioning of the European Union, Article 12(1) of the Treaty establishing the ESM, and “the principle of the primacy of European Union law”. The logic was that of direct application: the higher-ranking European rule would paralyse the domestic rule. Advocate General Bonhomme rejected this route, and the rigour of her refusal deserves praise. Restating the cardinal condition of direct effect, she observed that the provisions relied on, in order to be invoked by individuals, had to be “sufficiently precise, clear and unconditional”; yet the requirement of “strict conditionality” says nothing about its own content, which is defined in a separate instrument, the memorandum of understanding negotiated case by case between the State and the Commission acting on behalf of the ESM. Lacking precision, these texts could not have direct effect. The Advocate General concluded that the ground raised by the court of its own motion should be set aside and the decision quashed solely on the basis of Article 2284, with the European context coming into play only as “factual elements” in the assessment of the criteria for emanation, in line with the opinion previously delivered by Advocate General Adida‑Canac.
The First Civil Division followed neither of these proposals. It did not apply the treaties directly, as the reporting judge had invited it to do; nor did it reduce EU law to a mere fact, as the Advocate General had proposed. It forged a third way: quashing on the basis of Article 2284 “interpreted in the light of European Union law”. The technique relied on is no longer direct effect but consistent interpretation, the duty of the national court to read its domestic law, as far as possible, in the light of the wording and purpose of EU law. The Court of Justice links this obligation to the requirement of effectiveness and the principle of sincere cooperation, as an extension of the primacy established by the judgment in Costa v ENEL (ECJ, 15 July 1964, Case 6/64); it developed it in relation to directives lacking direct effect, in the von Colson (ECJ, 10 Apr. 1984, Case 14/83) and Marleasing (ECJ, 13 Nov. 1990, Case C‑106/89) judgments.
The choice is not without logic, and honesty requires that this be acknowledged. Consistent interpretation was designed precisely to give effect to EU rules that lack direct effect: it was in relation to an untransposed directive, incapable of being relied on directly between individuals, that the Court of Justice developed the obligation of consistent interpretation. From this angle, relying on consistent interpretation where direct effect is lacking is not at all aberrant; the process is even in keeping with the very rationale of the technique. The fact remains that the shift made by the judgment is of a different nature. The Advocate General had shown that the European texts lacked the clarity required to apply directly; the Court responds not by applying them, but by interpreting in their light a rule of domestic law that is itself perfectly clear and unconditional. It thus obtains, by way of interpretation, the neutralising effect that direct application could not produce. The technique of consistent interpretation is put to the service of a result that the precision requirement, in the realm of direct effect, prohibited. It is this shift that calls for the most circumspect examination.
B. The risk of disapplying a clear law and the silence on the right to enforcement
Consistent interpretation has a limit that the Court of Justice has consistently drawn. While the national court must interpret its domestic law as a whole in the light of the wording and purpose of the EU rule (ECJ, Grand Chamber, 5 Oct. 2004, Pfeiffer, Joined Cases C‑397/01 to C‑403/01), this obligation “is limited by general principles of law” and “cannot serve as the basis for an interpretation of national law contra legem” (ECJ, Grand Chamber, 4 July 2006, Adeneler, Case C‑212/04, para. 110; CJEU, Grand Chamber, 24 Jan. 2012, Dominguez, Case C‑282/10). The domestic court must read the national rule in the light of EU law, not contradict it under the guise of reading it. The whole problem is to determine on which side of this boundary the judgment under review falls.
A benevolent reading can be defended. Article 2284 of the French Civil Code, taken literally, states only that the debtor is liable for its commitments “with all its assets”; it says nothing about the assets of a third party. The theory of emanation, which makes it possible to reach the assets of a separate entity, is not in the text: it is a judge-made construct grafted onto the general right of recourse. Accordingly, by refusing to extend that right to HCAP’s assets, the Court would not be contradicting the letter of Article 2284; it would merely be limiting an extension that it had itself created and that it is for it to circumscribe. This reasoning has its force; it preserves the appearance of interpretation.
It runs up, however, against the very logic of emanation, as the judgment accepts its factual premises. For the Court does not overturn the Court of Appeal’s finding that HCAP “has no assets of its own, separate from those of the Greek State” (§ 13); it nevertheless sets aside the characterisation by holding that “notwithstanding these findings, recourse to the characterisation as a State emanation had to be ruled out” (§ 14). Yet if the assets are commingled, HCAP’s assets are, for the purposes of enforcement law, the assets of the debtor State; they fall within the scope of the general right of recourse that Article 2284 attaches to the claim. Declaring these assets immune from seizure, without contradicting the finding that made them subject to it, amounts to depriving Article 2284 of the consequence required by its own conditions of application. The contra legem boundary is no longer merely brushed against: it is crossed, not with regard to the letter of the text, but with regard to the rule as constructed by the case law and as the judgment itself regards it as established. Consistent interpretation then ceases to interpret; it disapplies. And it disapplies in favour of rules that the Advocate General had shown to be too imprecise to be relied on directly, so that the imprecision that stood in the way of direct effect turns out, by a singular reversal, to have no bearing on consistent interpretation. The most binding technique was closed off; the Court took the most flexible one to reach the same point.
To this methodological fragility is added a silence that is no less weighty. The neutralisation of the theory of emanation deprives the creditor, holding an award of €155 million granted exequatur, of any recourse against the coveted assets, without the Court carrying out the slightest balancing exercise. The right to obtain enforcement of court decisions is, however, no negligible interest: it forms part of the right to a fair trial guaranteed by Article 6(1) of the European Convention on Human Rights (ECtHR, 19 March 1997, Hornsby v. Greece), and the Conseil constitutionnel links it to Article 16 of the 1789 Declaration, which it applied when upholding, subject to a carefully reviewed balancing exercise, the provisions of the “Sapin II” Law on immunity from enforcement (Cons. const., 8 Dec. 2016, n° 2016‑741 DC). The supplementary report reproduces this decision in extenso, and cites the judgment in Mamatas v. Greece, in which the Strasbourg Court upheld the restructuring of Greek debt only after a proportionality review (ECtHR, 21 July 2016, n° 63066/14). The balancing exercise was therefore present in the minds of the bench. Whereas the codified regime of immunity from enforcement makes immunity from seizure subject to strict conditions and to constitutionally tested review, neutralisation by EU law operates without any equivalent safeguard, and without the sacrifice imposed on the creditor’s right being weighed.
The judgment thus raises, more than it resolves, a problem that the Court of Justice has never decided: none of the decisions concerning Greek sovereign debt, whether on the liability of the Union and the European Central Bank (General Court, 9 Feb. 2022, QI and Others, Case T-868/16, upheld by CJEU, 28 Sept. 2023, Case C-262/22 P) or on the characterisation of civil and commercial matters (CJEU, 11 June 2015, Fahnenbrock, Case C-226/13; CJEU, 15 Nov. 2018, Kuhn, Case C-308/17), had addressed the enforcement of a claim against the State against the assets of one of its entities. The very nature of the ESM, an “international financial institution, separate from the European Union”, in the words of the Advocate General, whose intergovernmental character the Court of Justice has emphasised (CJEU, 27 Nov. 2012, Pringle, Case C-370/12), made the question all the more delicate as the boundaries of EU law are uncertain in this area. In the face of such uncertainty, the absence of any preliminary reference to the Court of Justice is surprising. The First Civil Division preferred to decide alone, and quickly, a question involving the interplay between enforcement law, private international law and EU law; in so doing, it has given asset ring-fencing vehicles arising from sovereign bailout programmes a protection whose legal certainty is assured, but whose doctrinal rigour remains, in our view, to be perfected. It will be for legal scholarship, and perhaps a future preliminary reference, to say whether consistent interpretation could legitimately achieve what direct effect refused.
