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 Agency Directive) which is also part of the EEA Agreement (Norway, Iceland and Lichtenstein). The Agency Directive is addressed to the Member States and is intended to harmonize different national laws and grant some minimum standards on the legal 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 Agency 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 Agency 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 a commercial agent is considered “secondary” to another main activity. Some Member States have extended the application of the Agency 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 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;
- 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. 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 the different Member States, according to the law applicable to the contract.
The interpretation of the Agency Directive by the EU Court of Justice
The Court of Justice has issued several judgments interpreting the Directive or reviewing the implementation measures of Member States. Some concern 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 Agency 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 Agency Directive and the parties can derogate from it, for example excluding termination indemnity or compensation. (SEE POST BY BENEDIKT ROHRSSEN ON LEGALMONDO)