Deadlock and abuse of majority in a family SCI

Deadlock and abuse of majority in a family SCI

A family SCI (société civile immobilière) works smoothly while everyone agrees. When they stop agreeing, two distinct problems appear, and they call for different answers. The first is abuse: a majority using its votes to serve itself at the company's expense, or a minority blocking a decision the company needs to survive. The second is deadlock: a company so divided - often fifty-fifty - that it can no longer take any decision at all. French law addresses both, but not by handing one side a simple victory. Abuse of majority makes the offending decision voidable and can sound in damages; abuse of minority exposes the blocker to damages and to a court-appointed representative; and a genuine paralysis can, in the last resort, justify a provisional administrator or even the judicial dissolution of the company. This guide sets out the two-part test the courts apply to abuse, what they have struck down and what they have upheld, how abuse of minority and of equality work, and the remedies available when a family SCI seizes up.

The subject matters because these disputes are common, expensive, and easy to mishandle. A minority member who cries "abuse" at every decision they dislike will lose; a majority that treats its control as unlimited will be surprised when a decision is annulled years later. And a deadlocked company drifts - its property neglected, its charges unpaid - until someone forces the issue through the courts. For an international family whose members are spread across countries and whose relationships have frayed, understanding exactly what the law treats as abuse, and what it offers a paralysed company, is what turns a standoff into a resolution.

Abuse of majority: the two-part test

The definition of abuse of majority has been settled for decades and is applied strictly. A decision is voidable where it is taken contrary to the general interest of the company and in the sole aim of favouring the majority members (Cass. com., 18 April 1961, no. 59-11394). Two conditions must both be met, and the emphasis falls on both words. The decision must be contrary to the company's interest - not merely disadvantageous to a particular member, but harmful to the company itself. And it must be taken in the sole aim of favouring the majority to the detriment of the minority - a decision that genuinely serves the company is not abusive merely because it also happens to suit the majority. It is the combination of harm to the company and a purpose confined to majority self-interest that the law condemns; either element alone does not suffice.

The consequence of a proven abuse is usually the nullity of the decision taken abusively. Where the action is brought against the company, the abusive resolution is annulled; where it is directed at the majority members personally rather than at the company, it can instead give rise to damages payable by them. Both routes exist, and the choice of defendant shapes the remedy. It is worth adding that a gérant has standing to act in the name of the company to have abusive decisions that harm the company's interest declared void (Cass. com., 21 January 1997, no. 94-18883), so a newly appointed gérant can seek the annulment of abusive decisions taken under a previous management. So abuse of majority is not a vague grievance but a precise cause of action, with a defined test and defined remedies - and precisely because the test is exacting, it is the framing of the claim that decides it.

What the courts have struck down - and what they haven't

The case law is factual, and the surest way to understand the line is to see it drawn. On the side of abuse, the courts have annulled the systematic refusal of the majority of a holding civil company to distribute perfectly distributable dividends, where the majority acted with the intention of harming the minority rather than in the interest of sound management (Cass. civ., 13 April 1983, no. 82-11026); the grant to the gérant of a bonus representing several times the profits put to reserve over several years, with no effect on investment policy (Cass. com., 1 July 2003, no. 99-19328); a 270% increase in the managing members' remuneration accompanied by a fall in the accounting result and the halting of dividends, with no matching investment (Cass. com., 15 January 2020, no. 18-11580); and the authorisation by an extraordinary general meeting of a mortgage guarantee to secure a loan made to the majority member (Cass. civ., 25 March 1998, no. 96-17307). The common thread is a decision that drains the company or diverts its value to the majority while returning nothing to the company itself.

On the other side, decisions that genuinely serve the company are upheld even where a minority member feels the effects. Placing profits in reserve over several years to allow the company to make substantial investments is not abusive: absent proof that the allocation was contrary to the company's interest and decided in the sole aim of favouring the majority, no abuse is made out (Cass. com., 3 June 2003, no. 00-14386). An important increase in a majority gérant's remuneration is not abusive where it follows an increase in turnover. The sale of a commercial premises is not abusive where the price is not below the market and was fixed by reference to a value suggested by a notary, and a capital increase is not abusive where it does not aim to dilute the minority - in particular where the minority member had the opportunity to subscribe to it (Cass. com., 18 March 2020, no. 17-27150). The lesson for both sides is the same: the question is never whether the minority is unhappy, but whether the decision harms the company and serves only the majority. A well-documented business rationale defeats a claim of abuse; its absence invites one.

Is the majority's decision an abuse?

Abuse turns on harm to the company plus a purpose to favour the majority. Pick the decision that concerns you - the check explains how the test applies.

Abuse of minority and abuse of equality

Abuse is not the preserve of the majority. A minority member can be condemned to damages on the ground of abuse of minority, and to define it the courts use criteria that mirror, in the negative, those of abuse of majority. There is an abuse of minority where the member's attitude is contrary to the general interest of the company - which is the case where the member prevents the realisation of an operation essential to the company's survival - and is dictated by the sole aim of favouring their own interests to the detriment of all the other members (Cass. com., 15 July 1992, no. 90-17216). Both limbs are required: a minority member is entitled to vote against a proposal, and does not abuse their right merely by blocking it; the abuse lies in blocking something vital to the company purely to serve themselves. In practice the question arises above all on a capital increase, where a minority who will not or cannot subscribe refuses to vote it so as not to see their stake diluted - an abuse only where the increase was essential to the company and the refusal purely self-interested.

The abuse of equality is a variant of the abuse of minority, and it is the characteristic disease of the fifty-fifty SCI. Where members holding half the shares refuse to vote in favour of a rent in return for one member's occupation of the company's building - an operation essential to the company's survival - they commit an abuse of equality (Cass. civ., 16 December 2009, no. 09-10209). The same analysis reaches a refusal to sell the company's only asset when the SCI can no longer meet the charges on it, provided the refusal has the sole object of favouring the refusing member against the others. The reparation of an abuse of minority or of equality is an award of damages; but the courts have a further tool, because the judges cannot substitute themselves for the competent company organs and hand down a judgment worth the adoption of the contested resolution (Cass. com., 31 March 2009, no. 08-11860) - instead, they may appoint a representative (mandataire ad hoc) to represent the defaulting minority members and cast their vote at a fresh meeting. So the blocking member is not simply overruled by the court; they are made to pay for the damage and are replaced, for the vote, by a neutral appointee.

Deadlock: when the SCI can no longer decide

Beyond abuse lies pure paralysis - the company that cannot act because its members are evenly and immovably divided. French law does not leave such a company to rot, but it treats dissolution as a last resort and prefers, where it can, to unblock the company rather than end it. The mildest tool is the appointment of a provisional administrator (administrateur provisoire): where the ordinary organs can no longer function, a court may, at the request of an interested party, appoint an administrator to manage the company temporarily, in its interest, until the crisis is resolved. Where the blockage is confined to a particular vote rather than the whole management, the narrower remedy of a mandataire ad hoc - a representative appointed to cast the vote of a defaulting or abusive member - may be enough to carry the single decision the company needs. These appointments keep the company alive and running while the members' conflict is worked out or litigated.

Dissolution comes only at the end of the road. A member may ask the court to pronounce the early dissolution of the company for just cause, in particular in the case of discord between the members paralysing the functioning of the company (C. civ. Art. 1844-7, 5°). The key word is paralysing: in the absence of a paralysis of the functioning of a family SCI, there is no ground to pronounce the dissolution of the company for serious discord between the members. Discord alone - even bitter, even following a divorce - will not dissolve a family SCI that can still take its decisions and manage its property; what the court requires is that the discord actually prevent the company from functioning. This is a deliberately high bar, because dissolution destroys the structure and forces the sale or division of the property, which is rarely what any member truly wants. So a member who is merely unhappy, or locked in a personal quarrel, will not obtain a dissolution; a member trapped in a company that genuinely can no longer decide anything may. Between the two lie the withdrawal right and the removal of the gérant, which often resolve the conflict without reaching either abuse litigation or dissolution.

What can you do about an SCI deadlock?

The remedy depends on the shape of the blockage. Pick your situation - the check points to the route that fits.

The remedies, and their limits

The remedies for abuse and deadlock are real but bounded, and the boundaries matter as much as the reliefs. An abuse of majority leads to the nullity of the offending decision, or to damages where the claim is brought against the majority members personally. An abuse of minority or of equality leads to damages against the blocker and, where a single vote is at stake, to the appointment of a representative to cast it. But the courts will not go further than the law allows them. In particular, the judge cannot substitute themselves for the competent company organs and pronounce a judgment worth the adoption of the contested resolution (Cass. com., 31 March 2009, no. 08-11860): the court can neutralise the abuse and put a neutral representative in the blocker's place, but it cannot itself decide the company's business. The company's decisions remain the company's to take, through its own organs, even under judicial supervision.

Two further limits are worth knowing. The judge cannot validate a decision taken in breach of the reinforced majority the articles require merely because a member has committed an abuse of minority - the answer to the abuse is damages and a representative, not the endorsement of an under-majority vote. And a meeting cannot afterwards contradict a decision that has already begun to be executed: once the members have resolved on a course and its performance has started, a later meeting cannot simply reverse it, so a decision partly carried out has a stability the members cannot undo at will. These limits protect the integrity of the company's own decision-making: the courts will strike at abuse and unblock paralysis, but they will not rewrite the company's choices or unwind steps already taken. The practical consequence is that timing and framing decide these cases - a claim brought before a decision is executed, and pleaded in the precise language of abuse, has options that a late or loosely framed one does not.

When the conflict is a reason to leave or to remove

Litigating abuse is not the only response to a broken family SCI, and often it is not the best one. Two structural remedies address the source of many disputes rather than a single decision. The first is the withdrawal right: a member ground down by the majority - kept out of the company's life, denied their dividends, or trapped in a serious discord from which they draw no benefit - can seek to leave and be paid the value of their shares, whether under the articles, by unanimous agreement, or by a court decision on a just cause (C. civ. Art. 1869). The very conduct that would found an abuse claim can equally found a withdrawal, and for a member who simply wants out, withdrawal is frequently the cleaner path than a fight over each decision.

The second is the removal of the gérant. Where the conflict is driven by a manager who runs the company against the members' interests - presenting no accounts, taking abusive remuneration, or refusing to convene the members - the members can remove the gérant, and a gérant may be removed by the court for a legitimate cause at the request of any member. Removing the manager can dissolve a deadlock at its root, restoring a functioning management without ending the company or forcing anyone out. So the full toolkit for a family SCI in conflict runs from the targeted - annulling an abusive decision, damages against an abusive blocker, a representative to carry a vote - through the structural - withdrawal, removal of the gérant - to the terminal - a provisional administrator or, in genuine paralysis, dissolution. Choosing among them is a strategic decision, and the right choice depends on whether the goal is to correct a decision, to escape the company, or to save it.

SCI disputes and their remedies - at a glance

Frequently Asked Questions

This article is for general information only and states French law as published in the sources available at the date shown above. It does not constitute legal advice. Whether a decision is abusive, or a company deadlocked, depends closely on the facts. Always seek qualified legal advice before acting on an SCI dispute.