Debts and obligations arising from divorce proceedings can be settled in a manner chosen by the debtors, the European Court of Human Rights has said, in a ruling that extends the provisions of the right to ownership in recovering debts.

The villa in Valbonne

Bernard Milhau and D.P. agreed upon a separation of marital property when they wed in 1970. D.P. filed for divorce from her husband in 2001, demanding property worth in excess of 1,000,000 euros. Mr. Milhau owned a lot of real estate, which was his primary source of income, and for this reason Mr. Milhau wished to settle all claims monetarily instead of through the forfeiture of property.

During the course of the divorce proceedings, Mr. Milhau acquired a villa in Valbonne, which he valuated at 228,000 euros. The French divorce court granted the divorce shortly after its acquisition, awarding this villa to D.P. as part of her compensation. Mr. Milhau appealed and won, with the appellate court ruling that D.P.’s compensation was too large and the inclusion of the Valbonne villa was unjust, as it had been acquired during the divorce proceedings. In lieu of the villa, D.P. was awarded 200,00 euros.

D.P. appealed to the French Court of Cassation, which ruled that the villa should still be considered shared property and awarded it to her. This ruling concluded the divorce proceedings, but Mr. Milhau attempted to reopen the procedures and urged the Constitutional Court to consider a legal inquiry to determine if the provisions of the French Civil Code preventing a debtor from deciding which part of their estate they want to dedicate for paying debts is constitutional. The Constitutional Court did not reopen the procedure.

Court of Human Rights Extends Rights to Debtors

Mr. Milhau filed a complaint to the European Court of Human Rights, pointing to a violation of his ownership rights, provided for under Article 1 of Protocol I of the Convention, when the French courts dispossessed him of the villa. In its July 10 verdict, the Court distinguished between establishing claims and paying claims, and argued that the former is well within the responsibilities of national courts, but determining the manner of the latter, when options exist, is a right of the debtor.

The judges faulted the French courts for not considering Mr. Milhau’s ability (and insistence) to compensate his ex-wife monetarily. Indeed, Mr. Milhau had offered to compensate D.P. the full value of her claim in cash, though the lower courts did not entertain the offer.

The Strasbourg court also noted that the French law under which divorce proceedings are tried – Article 275 of the French Civil Code – aimed at allowing debts to be paid using real estate in order to expedite cases and facilitate easier resolutions to financial claims. Therefore, Mr. Milhau’s offer to pay all compensation claims in euros was the swiftest option to fulfilling the aim of Article 275, and failing to allow it was against the objective of the law. The Court also noted that a 2011 decision by the French Constitutional Court indicated that property was to be used to settle claims only when monetary compensation was impossible for the debtor.

The Court of Human Rights ruled that France had improperly balanced the general interest of the state and the interests of the individuals in the case. Mr. Milhau was forced to bear an unjust burden in forfeiting his real estate to D.P. and the Court awarded him 10,000 euros in damages.

In this case, the Court has, in very interesting fashion, extended the provisions of the right to ownership to cover the issue of recovering and paying debts. It emphasized that the debtor, when possible, has the right to choose the form in which he or she wants to pay a debt.

Dominika Bychawska-Siniarska

Article originally published in "Lawyer" appendix to "Dziennik Gazeta Prawna"