The legal framework for commercial agents in the EU is set by the Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents (here: the Directive) which is also part of the EEA Agreement (Norway, Iceland and Lichtenstein). The Directive is addressed to Member States and is intended to harmonize different national laws and grant some minimum standards in the status of commercial agents. The Court of Justice can be addressed on matters of interpretation of the Directive and its implementation by the Member States.
Therefore, commercial agency contracts are regulated by the national laws of the Member States, which have to comply with the Directive. Notwithstanding the harmonization, there are still significant differences among the regulations of commercial agents of the Member States, and sometimes similar rules are applied differently in the courts of different countries. For these reasons, it is always important to consider national peculiarities when stipulating a commercial agency contract in the EU.
Field of application
The Directive applies to the relations between commercial agents and their principals. Commercial agents are meant to be self-employed intermediaries who have continuous authority to negotiate the sale or the purchase of goods on behalf of the principal, and are remunerated for their activity. The Directive does not apply to other intermediaries like employees, individual partners, liquidators, occasional dealers, brokers or unpaid agents. It also does not apply when the activity as commercial agent is considered “secondary” to another main activity. Some Member States have extended the application of the Directive to agents who negotiate contracts for the supply of services.
The Directive is intended to set minimum standards and therefore does not regulate all details of commercial agency contracts. The main areas which are addressed are the following:
- mandatory rights and obligations of the parties (communication duties, obligation to provide documentation, etc.);
- the remuneration of the agent, which may vary with the number or value of business transactions (commission) - fixed remuneration is also possible;
- mandatory rules on the right to commission during and after the contract and deadlines for payment;
- right of the parties to obtain a written signed document setting out the terms of the agreement;
- mandatory rules on minimum termination notice;
- the rights of the agent after termination of the contract: the States may choose between granting the agent an indemnity (so called “German system”) or a compensation (so called “French system”);
- rules on restraint of trade (non-compete) clauses following termination of the contract.
The major differences in the implementation among the Member States concern the rights of the agent in case of termination of the contract. In fact, even among States which have chosen the same system there are differences in the actual implementation of the measure!
The result is that the same activity may be regulated differently in different Member States, according to the law applicable to the contract.
CJEU interpreting the Directive
The Court of Justice of the EU has issued several judgments interpreting the Directive or reviewing the implementation measures of Member States.
The notion of commercial agent
According to the Court, the Directive lays down three necessary and sufficient conditions for a person (or entity) to be classified as a “commercial agent”: (i) that person must be a self-employed and independent intermediary; (ii) the contractual relation must be of a continuing character, (iii) the person must exercise an activity which consist in the negotiation or conclusion of transactions for the sale or purchase of goods. Member States cannot introduce additional conditions, as this would jeopardize the achievement of the objectives of the Directive.
Applying such principles, in the case Zako (C-452/17 of 21 November 2018) the Court has ruled that even if the agents perform their activity from the principal’s business premises, this does not prevent them from being classified as commercial agents. Also, the fact that an agent performs further activities of a different kind (like managing staff of the principal, selecting products and suppliers etc.) must not affect the agent’s status as independent intermediary, providing that the three conditions mentioned above are met.
In the recent case Trendsetteuse (C-828/18 of 4 June 2020) the Court has further ruled that “negotiating transactions” does not mean that the agent needs to have the power to change the prices of the goods which are sold on behalf of the principal: according to the Directive, the main tasks of the commercial agent include to acquire new customers and develop business for the principal and this can be done even without the power to change the prices.
The application of the Directive outside the EU
In the landmark case Ingmar (C-381/98 of 9 November 2000) the Court ruled that the right of the agent to termination indemnity or compensation set by the Directive is mandatory in nature; therefore, an agent who acted in a Member State cannot be deprived of such right even though the principal is established in a non-member country and the contract is governed by the law of that country.
On the other hand, if the commercial agent carries out activities in a non-Member State and the principal is established in a Member State, the Court ruled in the case Agro Foreign Trade (C-507/15 of 16 February 2017) that the commercial agent cannot rely on mandatory rights contained in the Directive and the parties can derogate from it, for example excluding termination indemnity or compensation.