Can a third-party funder that has taken, as security, a pledge over the claim in dispute itself attach the debtor’s assets once the award has been rendered and declared enforceable?
Yes, answers the enforcement judge of the Paris Judicial Court: the enforcement of the pledge entailed the attribution of the pledged claim and, with it, the right to pursue the forced execution of the title rendered in favour of the pledgor1.
The facts
By an award rendered on 22 September 2021 under the aegis of the International Chamber of Commerce, the Republic of Cameroon was ordered to pay the Belgian company Projet pilote Garoubé the sum of EUR 17,880,000, with interest at 3.25% from 20 October 2016, together with the costs of the arbitration. The award was declared enforceable on 13 October 2021 and the action to set it aside was dismissed by the Paris Court of Appeal on 3 October 20232.
To finance the proceedings, Garoubé had turned to a third-party funder. On 11 September 2020, it had entered into an agreement with CFS 37 Funding LP, a Cayman Islands company, for the funding of the costs of the arbitration and of related actions. The next day, as security for its obligations towards the funder, it granted the funder a pledge over its claim against Cameroon.
Garoubé subsequently defaulted on its obligations towards the funder. The funder notified the enforcement of the pledge to Garoubé on 13 January 2023, then to Cameroon by a writ of 3 May 2023, received on 11 May.
On 29 November 2023, Cameroon and Garoubé entered into a settlement agreement reducing the claim to EUR 16,000,000. Out of that sum, the State made a part payment of EUR 1,200,000 to Garoubé.
Garoubé and its director also sought to have the funding agreement and the pledge annulled before the Paris Economic Activities Court, which dismissed their claims on 13 February 2025 and ordered « the transfer to CFS 37 of all rights, titles and interests » held by Garoubé in the actions relating to the arbitration. That judgment is under appeal.
Authorised by an order of the enforcement judge of 6 February 2026, the funder, « standing in the shoes » of Garoubé, levied on 16 February 2026 an attachment in the hands of a third party, the company NYS, for EUR 17,800,000 in principal, on the basis of the award, the judgment of 3 October 2023 and the judgment of 13 February 2025. Cameroon, the debtor, challenged it and raised a whole litany of arguments: the funder’s lack of capacity and legitimate interest, as it allegedly carried on a credit business without a licence; the nullity of the pledge; the absence of an enforceable title and of standing; the lapse of the attachment; the nullity of the writ; a stay of proceedings; and, in the last alternative, the capping of the attachment at the sums owed by Garoubé to the funder, namely EUR 6,542,237, or at the settlement amount less the part payment.
The judgment
The enforcement judge dismisses all of the debtor’s challenges.
Nothing will be said here of the banking monopoly, which is disposed of in two lines.
More interesting was the question of the forced execution of the award by the pledgee (the third-party funder). As the judge observes, « no one contends that a contractual pledge would constitute an enforceable title ».
The point is a different one: it is whether « the enforcement of the contractual pledge of 12 September 2020 entitles [the pledgee], upon the pledgor’s default, to pursue the forced execution of a title rendered in favour of the latter and against the debtor of the pledged claim ».
This is where arbitration law meets the law of security interests.
The answer to that question flows from Articles 2363 and 2365 of the French Civil Code. Under the former, as rewritten by the reform of 15 September 2021, the pledgee holds an exclusive right to payment of the pledged claim from the moment the pledge is notified to the debtor. Under the latter, upon default of its debtor, the pledgee may have the pledged claim and all rights attached to it attributed to itself, by the court or in the manner provided for by the agreement.
In the present case, since Garoubé’s default and the enforcement of the pledge provided for by the agreement, the pledgee (the third-party funder) had been granted « the attribution of the pledged claim and of all rights attached to it ».
To reach that conclusion, the judge relies on three clauses of the pledge agreement: after the pledgor’s default, the pledgee may notify enforcement to the debtor and « collect any amount in principal, interest or other sums relating to the claims » from the debtor (clause 2.4); the pledgor is no longer entitled to collect those claims (clause 2.6); the pledgee may « apply the amounts received to the performance of the Secured Obligations » (clause 6.1). From this the judge infers « the automatic attribution of the claim to CFS 37, alone entitled to pursue its recovery ». For good measure, the judgment of the Economic Activities Court, served on Cameroon, would in any event have transferred Garoubé’s rights.
The enforcement judge also holds that the settlement agreement of 29 November 2023 and the subsequent payment of EUR 1,200,000 cannot be set up against the pledgee. That seems logical: the settlement post-dates « the enforcement of the pledge and its notification to the Republic of Cameroon on 11 May 2023 », and the payment was made when Cameroon knew that it had to pay into the funder’s hands. They have no effect as against the pledgee, which enjoyed, from the date of notification of the pledge, an exclusive right to payment. The judge adds that, in any event, the settlement has lapsed, Cameroon having failed to comply with its terms.
Although the judge refers in the same breath to the enforcement of the pledge and to its notification, the tipping point is not the enforcement of the security but the notification of the pledge to the debtor of the pledged claim, which makes the pledge binding on the debtor and reserves to the pledgee the exclusive right to payment (Articles 2362 and 2363)3.
Pledge and assignment
The enforcement judge notes that the funder equates the effects of the transfer on which it relies « with those of an assignment of claim or of a subrogation receipt ». That equation is inaccurate. The funding agreement, in itself, « does not entail a transfer of the action » to the funder, absent an assignment of the action or of the rights at stake4.
A pledge of claims is a security interest, not a transfer. Its whole point is to allow an asset to be charged as security « without displacing its ownership »5. The pledgor remains the creditor of the debtor of the pledged claim6, and the claim remains part of its estate until it is, as the case may be, attributed7. The Cour de cassation itself used to recharacterise as a pledge an assignment of claim granted by way of security8, and it took the Ordinance of 15 September 2021 for the ordinary-law assignment of claims by way of security to find its place in the Code9.
The pledgee thus has two routes to the claim. The first is the exclusive right to payment conferred by notification (Article 2363): the debtor is validly discharged only by paying the pledgee, but the claim is not thereby transferred to it. The second is the attribution of the claim, by the court or « in the manner provided for by the agreement » (Article 2365). In that last limb one recognises the pacte commissoire, which transfers ownership of the pledged claim and makes the pledgee a true successor in title of the pledgor.
The judgment takes the second route. It reads clauses 2.4, 2.6 and 6.1 as a contractual « automatic attribution » of the claim, a kind of pacte commissoire. Yet, while those clauses do authorise the pledgee to collect, prohibit the pledgor from doing so, and allow the pledgee to « apply the amounts received to the performance of the Secured Obligations », they do not say that the claim is attributed to the funder in full ownership.
Whatever reading one may make of the contract, the fact remains that the judgment expressly rests on the contractual attribution of the claim within the meaning of Article 2365.
Article 2363: a sufficient basis
It seems to us that this detour through the notion of attribution of the claim was not needed. Article 2363 alone explains the outcome. The funder indeed relied on it itself: according to the judgment, it claimed, « at the very least, an exclusive right to receive payment of the pledged claim and to pursue the forced recovery of the arbitral award ».
After notification, the pledgee « alone is entitled » to payment of the pledged claim and « may pursue its enforcement », just as the pledgor may, « the other being duly informed ». The text thus vests the pledgee with the power to pursue the enforcement of the pledged claim; and to pursue the enforcement of a claim established by an enforceable title is indeed to make use of that title. The Second Civil Chamber recognised, even before the reform, that the pledgee holds « an exclusive right to payment » excluding « any competition with the other creditors of the policyholder, even preferred ones »10; it would be odd if a right that can be set up against preferred creditors, the Treasury among them, did not allow the pledgee to attach the assets of the debtor of the pledged claim.
The enforcement judge therefore did not need to turn the funder into an assignee. It was enough to take it for what it is under Article 2363 of the Civil Code: a pledgee vested with an exclusive right to payment.
Takeaways
- According to the Paris enforcement judge, the pledgee of a claim established by an arbitral award declared enforceable may, once the pledge has been notified to the debtor, levy an attachment against the debtor of the pledged claim on the basis of that title.
- The judgment grounds the solution on a contractual attribution of the claim (Article 2365) inferred from collection and appropriation clauses; Article 2363, which gives the pledgee the exclusive right to payment and the power to pursue the enforcement of the claim, would have sufficed.
- A settlement and a payment made between the debtor and the pledgor after notification cannot be set up against the pledgee.
Notes
- TJ Paris, JEX, 5 October 2026, no. RG 26/80898, courdecassation.fr. ↩
- CA Paris, pôle 5, ch. 16, 3 October 2023, no. 22/06903. ↩
- Civil Code, Art. 2362, Légifrance: « Pour être opposable au débiteur de la créance nantie, le nantissement de créance doit lui être notifié ou ce dernier doit intervenir à l’acte. » ↩
- C. Dupeyron and M. Valentini, « Maîtriser les conséquences de la présence du tiers financeur sur la procédure à travers le contrat de financement », Rev. arb. 2014, p. 909, no. 12: the funding agreement « n’emporte pas transmission de l’action » to the third-party funder, absent an assignment of the action or of the rights at stake. ↩
- Ch. Gijsbers, « Le triomphe du nantissement de créance », RTD civ. 2020, p. 666, note on Cass. civ. 2e, 2 July 2020, no. 19-11.417. ↩
- M. Julienne, « Réforme des sûretés : le nantissement de créance après l’ordonnance du 15 septembre 2021 », JCP N 2021, no. 47, 1333, nos. 16 and 17. ↩
- M. Mignot, « La transmutation du nantissement de créance en fiducie », Gaz. Pal. 1 September 2020, no. 386h0, p. 22, inferring from Article 2365 that enforcement by attribution « presupposes the pledgor’s default ». ↩
- Cass. com., 19 December 2006, no. 05-16.395, Bull. civ. IV, no. 250, Légifrance. ↩
- Civil Code, Art. 2373, Légifrance. ↩
- Cass. civ. 2e, 2 July 2020, nos. 19-11.417 and 19-13.636, F-P+B+I, Légifrance; D. 2020, p. 1940, note J.-D. Pellier; RTD civ. 2020, p. 666, note Ch. Gijsbers; Gaz. Pal. 1 September 2020, p. 22, note M. Mignot. See already Cass. com., 26 May 2010, no. 09-13.388, Bull. civ. IV, no. 94, Légifrance. ↩
