My memory is hazy now but I recall in the mid-90s Gap (the clothing company) suing Genesis Access Point (an ISP) over gap.com and winning. First come first served is the only fair way to run domain names.
That relied on USA trademark law. Applied to the case mentioned in the above article, the government of France can seize France.com. The principle behind trademark disputes is, would a similar name cause confusion in the market place? The French government can make the case that it would be confusing if a private citizen was allowed to possess France.com. As a principle, "First come first served" has never won a case against trademark law. Or rather, the "first come first served" applies to whoever filed for the trademark, not the domain name. Put another way, trademark beats domain name.