The most typical commercialization agreements in Spain are the agency agreement and the distribution agreement. In the case of wine or food products, due to the complexity of the market and the logistics, it is usual to allow sub-distributors and sub agents, or agents who appoint local distributors. Nowadays, in both types of agreements it is quite usual to define precisely the business sector before which the agent or the distributor should act: big hypermarkets chains, supermarkets, specialized shops, the hospitality sector, which could be divided in several sub-sectors (hotels, restaurants, bars, catering), etc.
The negotiation power of some hypermarket or supermarket chains (named “big supermarkets” in this document) should not be disregarded. They usually offer their standard form of agreement, where the freedom to negotiate is reduced, but in any case it is worth to try to reach a balanced agreement. In the next point we outline the Spanish Act on the improvement of the Food Chain, which contains many provisions aimed to balance the negotiation power between growers or small and medium companies and the big distribution players.
As regards territorial exclusivity, it is usual to divide the Spanish territory between several distributors or agents. This is because the characteristics of the market could vary a lot depending of each Spanish region: for example, in the Balearic and the Canary Islands, the hospitality sector plays a relevant role, as there are millions of foreign consumers every year, and also the preferences of Spanish consumers could also vary from each region.
When drafting the legal agreements, it is necessary to include the relevant clauses regarding payment terms (please see next point regarding the Act on the Food Chain), exclusivity, causes to terminate the agreement, compensation at the end of the legal relationship and non-competition. Regarding the exclusivity clauses and considering that probably the best sales agents or distributors are those specialized in this business sector, which means that they are already commercializing other wines or alcoholic beverages, it is necessary to draft them very carefully in order to distinguish what other types of wine are competitive: for example, the exclusivity clause could be referred to wines from the same country of the principal.
Regarding compensation at the end of the commercial relationship, it should be taken into account that, according to Directive 86/653/CEE, implemented in Spain through Law 12/1992, it is mandatory to pay such compensation to sales agents, provided certain circumstances are met: mostly, if the agent has increased the principal’s turnover and if the principal could continue taking advantage of such goodwill at the end of the agency agreement, provided of course that the agreement has not been terminated due to a breach by the agent.
Even though sales through on-line platforms usually are formalised under the form and principles of an agency agreement, the author’s opinion is that some of the rules contained in Directive 86/653/CEE, and the correspondent domestic laws, are not applicable, because this Directive was drafted considering the agent as the weak party, while in big on-line platforms, the supplier is the with no doubt the weaker party.
As regards compensation to be paid to distributors, there has been a legal dispute with a lot of court cases during many years. According to the most recent case law, distribution agreements could exclude the right to such compensation (but should be properly drafted, not as a general waiver to the distributor’s rights). In case the distribution agreement does not include such waiver, the rules on the agency agreement would be applicable, and the compensation would be calculated on the distributor’s net margin. This case law has been developed based on disputes where usually both parties have a similar power or the distributor is the weak party, however, when dealing with big supermarkets, the purveyor is almost always the weak party, therefore, this makes even more necessary to draft carefully the distribution agreements.
Concerning applicable law and jurisdiction, if the principal or supplier is an extra-EU company, we suggest to opt for Spanish laws and courts. If the principal is an EU company, we suggest to opt either for the Spanish courts or the Courts corresponding to the principal’s place of business, as EU Regulation 1215/2015 made enforcement of EU-judgement very fast and easy. In case the judgement is issued by a court in a country outside the EU, Spanish Law 29/2015 regarding international legal cooperation in civil matters shall apply. Arbitration is a good alternative, especially if there are many documents in a language which is not Spanish, as it could avoid the translation of such documents. Spain, indeed, is a member of the 1958 New York Convention, hence foreign arbitral awards are normally enforced without legal hurdles or unnecessary delay.