🚧The Contract, a Compliance tool: the Obligation for a platform to control content (French Supreme Judicial Court, 15 January 2025) :

In its ruling of 15 January 2025, the Commercial, Economic and Financial Chamber of the French Supreme Judicial Court (Cour de cassation), a section ruling delivered under the chairmanship of the First President of the Court of Cassation himself, raised the question of the effectiveness of the control of content published in the digital space.

This is a major political issue, because if we do not manage to control the content that is disseminated in this space in which we now live - and libertarians can rejoice in this - it is likely that the most basic subjective rights, such as the right to privacy or intellectual property rights, will no longer exist, and that the democratic system itself will be in great danger, now and in the future.

But even if we accept that the Principle of Regulation can be articulated with the Principle of Freedom, which is accepted in European Union legal System, but less so in American legal System, an aporia seems to hinder the legislative will to control content because of the technological impossibility of doing so.

Indeed, a platform makes available content freely posted by Internet users and made available to other Internet users, with the platform enabling them to meet each other: in effect, pirated content, with the providers of such content coming under distant legal systems. Everyone is familiar with the Economics of peer-to-peer, which is based on the violation of intellectual property rights. Without the violation of the rights of authors, publishers and producers, this platform activity would not exist. Appeals by regulators to respect the "legal offer" are often in vain. Sanctions are relatively ineffective, because the people concerned are often located in regulatory havens and, by their very nature, Ex Post sanctions are so slow in coming.

 But the Achilles heel of this technology is the great importance in these platforms' business model of using a credit card payment system, enabling them to offer paid access services or services corresponding to additional services after the initial free access. Because platforms do not offer this service out of love for Art. Banks must therefore offer an "electronic payment service" enabling consumers to pay. Not least because consumers are concerned about their bank details, they favour online payment techniques offered by establishments that are themselves solid.

Like the bank Société Générale. In this case, this bank had included a clause in the service contract requiring the platform to check the  lawfulness of the content exchanged. When the producers of the content provided evidence of the firms' infringement, the bank terminated the contract.

The platform has taken the case to court, alleging wrongful termination and seeking restoration of the online payment service, as well as damages. The platform criticised the Paris Court of Appeal's rejection of its claim, arguing that it could only be accused of a fault justifying termination "lorsqu'il s'abstient de mettre en oeuvre des mesures techniques appropriées qu'il est permis d'attendre d'un opérateur normalement diligent dans sa situation pour contrer de manière crédible et efficace les utilisations illicites de ce service -  when it fails to implement appropriate technical measures that may be expected of a normally diligent operator in its situation to credibly and effectively counter illicit use of this service". However, the trial judges would have required the platform to prove that it had put in place technical measures to protect copyright, even though they had noted that the termination had occurred despite the fact that the only curative measure legally expected of the platform in order not to be at fault was to block access and not yet to put in place technical measures, in accordance with the terms of the applicable French Law.

But the French Cour de cassation responded with what should be considered a statement of principle: "L'article 6,I, de la loi ... du 21 juin 2004 pour la confiance dans l'économie numérique..., n'a ni pour objet ni pour effet de priver les signataires d'un contrat monétique auquel est partie un hébergeur de la faculté de stipuler que celui-ci est tenu à une obligation de surveillance des informations qu'il stocke ou publie, et de sanctionner la méconnaissance de cette obligation par la résiliation du contrat". ("Article 6,I, of the ... of 21 June 2004 on Confidence in the Digital Economy..., has neither the object nor the effect of depriving the parties of a one-to-one contract to which a hosting provider is a party of the option of stipulating that the latter is bound by an obligation to monitor the information it stores or publishes, and of penalising breach of that obligation by termination of the contract").

In this reasoning, the Court rules out the effect of the law on the behaviour expected of the platform: it is necessary but sufficient that a contractual stipulation has obliged the platform to ensure the legality of the content circulating on it. The scope of this stipulation, expressly described as a "surveillance stipulation" on all the information that the platform "stores or publishes" and the violence of its consequence, namely the termination of the contract, are sufficient.

This is a perfect illustration of the "Compliance Obligation" in its "Obligation upon Obligation" mechanism. In effect, where the law imposes obligations, the contract can take over the rule, transforming the company, in this case the platform, into a debtor. The liability to which the company is exposed is no longer extra-contractual but contractual.