Rural law/ Prescription of the nullity claim for lack of operating authorization and the author of the authorization request in case of enlargement 

On October 26, 2023, the Court of Cassation rendered a judgment regarding both the prescription of the nullity claim for lack of operating authorization and the author of the request in case of enlargement (Cass. civ 3rd of October 26, 2023, No. 21-24.231). 

In this case, an operator (an EARL that became an SCEA) entered into two rural leases as a tenant with a natural person in 2011 and with an SCI that became a GFA in 2012. 

In 2016, a natural person who was already an operator and an associate of another agricultural company became an operating associate of the SCEA. 

In April 2019, the landlords filed a claim with the rural leases joint tribunal seeking nullification of the leases granted to the tenant for lack of operating authorization under Article L.331-6 of the Rural and Maritime Fishing Code (CRPM), arguing that the arrival of the new operating associate in the SCEA constituted an enlargement of the operation. 

This provision indeed makes obtaining an operating authorization, if required, a condition for the validity of the lease or its assignment. 

In December 2019, the administrative authority ordered the new operating associate of the SCEA and the SCEA itself to submit an authorization request within one month under Article L.331-7 of the CRPM. 

In order to reject the nullity claim, the SCEA argued that the five-year prescription period begins to run from the day the disputed act was concluded and that in the event of the tenant’s failure to obtain the operating authorization, the starting point of the prescription period is the date of the initial lease agreement and not the date when the new associate of the tenant took over the operation, as decided by the Court of Appeal. 

The Court of Cassation considers that, in accordance with Article 2224 of the Civil Code, which provides that personal or movable actions are subject to a five-year statute of limitations from the day the holder of a right knew or should have known the facts allowing them to exercise it, the action for nullity of the rural lease under Article L.331-6 of the CRPM is also subject to a five-year statute of limitations from the day the holder of the action knew or should have known that the deadline specified in the aforementioned notice to remedy had expired. 

Since the notice was dated 2019, the nullity action is not time-barred, and the landlord’s claim was dismissed. 

However, the Court of Cassation upheld the SCEA’s second argument, which challenged the Court of Appeal’s decision to nullify the lease for failure to obtain the operating authorization by the SCEA. 

The Court of Cassation, citing the provisions related to the control of structures under Articles L.331-1 et seq. and Article R.331-1 of the CRPM, reiterated that installations, enlargements, or mergers of agricultural operations benefiting one or more natural or legal persons are subject to prior authorization when the total surface area to be put into operation exceeds the threshold set by the regional master plan for agricultural operations. 

The Court of Cassation then recalled the Council of State’s (Conseil d’Etat) case law, according to which the purchase of shares in an agricultural company by a natural person, if they effectively participate in the work within the company, constitutes an enlargement of their operation subject to prior authorization under the aforementioned conditions. 

The Court of Cassation thus clarified that in this scenario, the authorization request must be submitted by the new associate, who is enlarging their operation, and not by the company.