France: French Supreme Court Limits The Scope Of SOX Whistleblowing Procedures

The Sarbanes Oxley Act requires covered companies to implement procedures for "the confidential, anonymous submission by employees of . . . concerns regarding questionable accounting or auditing controls" and mandates protection of whistleblowers from retaliation. Driven, at least in part, by this legal obligation, many companies have adopted broad codes of conduct, specifying a host of legitimate corporate concerns (for example, compliance with antibribery, antitrust, environmental, employment and other laws and regulations) and setting up hotlines to field anonymous complaints and tips that might lead to the discovery of wrongdoing within the company.

The implementation of these codes of conduct and whistleblower hotlines is expanding at the international level, but global companies must pay attention to local law requirements when rolling out these codes in foreign countries, where strict data protection laws, largely absent in the United States, may bar the company from inviting or processing anonymous allegations and charges.

A recent decision by the French Supreme Court provides a good illustration of issues that may be raised by local laws in the implementation of whistleblowing procedures abroad. For the first time, the French Supreme Court addressed the issue of the validity of a code of conduct that had been implemented by a listed company (Dassault Systèmes, a French software company) in order to comply with the Sarbanes Oxley Act.

In its December 8, 2009 decision, the French Supreme Court overruled the decision of the Court of Appeal, which had declared the whistleblowing system implemented in the code of conduct of Dassault Systèmes compliant with the requirements imposed by the French data protection authority (CNIL) and therefore legal.

This was not the first time that a multinational company's whistleblower policy had run afoul of French data protection law. In a landmark decision rendered in 2005, the CNIL declared that the broad and anonymous whistleblowing procedures of several companies, including McDonald's Corporation, that had been adopted in order to implement the requirements of the Sarbanes Oxley Act, were contrary to French law and in particular to the French data protection law of January 6, 1978. The CNIL held that it had no fundamental objection to that kind of system, but it expressed the opinion that whistleblowing processes should not be transformed into an organized system of professional denouncement that could jeopardize the rights of the accused employees.

In order to reach a compromise between SOX requirements and French law, the CNIL issued a formal Délibération on December 8, 2005. The Délibération states that companies are authorized to roll out their whistleblowing systems provided they formally disclose the existence of the system and they comply with the requirements of the Délibération. In particular, Article 1 of the Délibération authorizes companies to adopt whistleblowing systems implemented in response to French legislative or regulatory internal control requirements (for example, regulations governing banking institutions) or the whistleblowing requirements of the Sarbanes Oxley Act. Article 3 of the Délibération provides that alleged wrongdoing that is not encompassed within these core areas may be covered by the whistleblowing system only if vital interests of the company or the physical or mental integrity of its employees is threatened.

If the scope of the whistleblowing process exceeds that authorized by the CNIL's Délibération, the company is under the obligation to enter into a burdensome approval process with the CNIL, which requires the company to provide detailed disclosure concerning the information to be collected, the recipients of the information, and the endpurpose for which the data will be used. So far, the CNIL has never given its authorization when the scope of the whistleblowing system exceeds its Délibération.

In the case at hand, Dassault had implemented a whistleblowing system, and a trade union challenged the validity of the system on the grounds that the company should have sought a formal authorization from the CNIL, because its scope exceeded auditing and financial matters.

The Supreme Court ruled that the scope of Dassault's code of conduct was too broad, in that it invited employees to report violations relating to more than just finance, accounting and anticorruption matters, including intellectual property rights, confidentiality, conflict of interest, discrimination, and sexual or psychological harassment.

It ruled that the Dassault code of conduct's whistleblowing scheme was invalid because it permitted whistleblowers to report on alleged violations of company policies other than those enumerated under Article 1 of the CNIL Délibération. According to the Court, a whistleblowing system that would allow complaints concerning other breaches of the code of conduct besides those listed must be authorized specifically by the CNIL on a case-by-case basis. Even though these breaches are material and might threaten the vital interest of the company or the physical or mental integrity of its members, the Court determined that case-by-case review was required.

The Supreme Court also found that Dassault's Code of Business Conduct was defective because it did not expressly state that the individuals accused of wrongdoing had the right to access the information reported, and a right of correction where the information was not correct.

From a practical point of view, there is a strong likelihood that the CNIL will refuse to grant an authorization for a whistleblowing system exceeding the scope of the CNIL's Délibération, so multinational companies may end up restricting their whistleblowing systems to the core areas specified in the CNIL's Délibération of December 8, 2005 to avoid their procedures being invalidated.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.