It is often the case \u2013 in practice \u2013 that an ongoing commercial relationship builds slowly over time through a series of sales agreements, without the parties ever signing an actual distribution agreement to set down their respective rights and responsibilities.<\/p>\n
At first blush this might appear to be a good thing: one can sidestep being bound, especially long-term, to the other party. But on closer scrutiny the solution becomes problematic, especially for anyone operating internationally.<\/p>\n
One of the key issues that arises when an international contractual arrangement is not in writing, is identifying the court with jurisdiction over any dispute<\/strong> arising therefrom. In the European Union, the issue is resolved by the provisions of Regulation 1215\/2012 (\u201cBrussels I recast<\/em>\u201d). Pursuant to Article 7 of the Regulation, as an alternative to the defendant\u2019s courts, jurisdiction in a contractual dispute may lie with the court in the place of performance of the obligation in question<\/strong>. Next to this general rule are two criteria to identify the \u201cplace of performance\u201d, differentiated according to the type of contract at issue. For a contract for goods, it is the place of delivery for the goods<\/strong>; in a contract for services, it is the place where the services are provided. \u00a0\u00a0<\/strong><\/p>\n Thus, to identify the court with jurisdiction, it is crucial that a contract fall under one of these categories: goods or services.<\/p>\n No doubt this distinction is quite simple in many circumstances. In the case of a distribution agreement, or of a commercial concession agreement, the issue may become thorny.<\/p>\n The European Court of Justice has analysed this issue on a number of occasions, most recently in their judgement of 8 March 2018 (Case no. C-64\/17)<\/strong> following the request for a preliminary ruling from a Portuguese Court of Appeal. The parties to the action were a Portuguese distributor, a company called Lusavouga, and a Belgian company called Saey Home & Garden, that produced articles for the home and garden, including a line of products branded \u201cBarbecook\u201d.<\/p>\n Following Saey\u2019s decision to break off the commercial relationship \u2013 notice of which was sent in an email dated 17 July 2014 \u2013 Lusavouga brought action in Portugal seeking compensation for the unexpected termination of the agreement, and goodwill indemnity. Saey raised a plea of lack of jurisdiction of the Portuguese court, citing their general conditions of sale (mentioned in their invoices) which required that a Court in Belgium be competent for dispute resolution.<\/p>\n The facts thus presented two issues<\/strong> to be resolved in light of the Brussels I recast<\/em> Regulation: deciding whether a jurisdiction clause in a vendor\u2019s general terms and conditions pursuant to Art. 25 of the Regulation shall apply, and, if not, choosing the court with jurisdiction under Art. 7 of the Regulation.<\/p>\n The supplier company apparently considered their course of dealing with the Portuguese retailer nothing more than a concatenation of individual sales of goods<\/strong>, governed by their general terms and conditions. Consequently, they argued that any dispute arising from the relationship should be subject to the jurisdiction clause identifying Belgium<\/strong> as the court with jurisdiction under those terms and conditions.<\/p>\n Thus, a determination was needed on whether, under these facts, there was a valid prorogation of jurisdiction under Article 25, paragraph 1 of Regulation 1215\/2012.<\/p>\n The Court of Justice has long opined that if the jurisdiction clause is included in the general contract conditions drafted by one of the parties, the contract signed by the other party must contain an express reference<\/strong> to those general conditions in order to ensure the real<\/strong> consent thereto by the parties<\/strong> (judgement of 14 December 1976, Estasis Salotti di Colzani<\/em>, case no. 24\/76; judgement of 16 March 1999, Castelletti<\/em>, case no. C-159\/97; judgement of 7 July 2016, H\u00f6szig<\/em>, case no. C-225\/15). Moreover, to be valid, the clause must involve a particular legal<\/strong> relationship<\/strong> (judgement of 20 April 2016, Profit Investment SIM<\/em>, case no. C-366\/13).<\/p>\n In the instant case, the referring court found it self-evident<\/strong> that the legal relationship at bar was a commercial concession agreement<\/strong> entered into for the purpose of distributing Saey products in Spain, a contract that was not evidenced in writing.<\/p>\n From this perspective, it is clear that the general conditions contained in the Saey invoices could have no bearing on the commercial concession agreement<\/strong>: assuming Lusavouga\u2019s consent had been proven, the selection of Belgium as the forum would have applied if anything to the individual sales agreements, but not to those duties arising from the separate distribution agreement<\/strong>.<\/p>\n Absent any jurisdiction clause, the issue would be decided under Art. 7, point 1 of Regulation 1215\/2012, under which it becomes imperative to establish whether a contract is for goods or for services.<\/p>\n The \u201cprovision of services\u201d has been defined by the Court of Justice as an activity<\/strong>, not mere omissions, undertaken in return for remuneration <\/strong>(judgement of 23 April 2009, Falco<\/em>, case no. C-533\/07).<\/p>\n With the judgements in Corman Collins<\/em><\/strong> of 19 December 2013 (case no. C-9\/12), and Granarolo<\/em><\/strong> of 14 July 2016 (case no. C-196\/15), the Court held that in a typical distribution agreement, the dealer renders a service<\/strong>, in that they are involved in increasing the distribution of supplier\u2019s product, and receives in consideration therefor a competitive advantage, access to advertising platforms, know-how, or payment facilities. <\/strong>In light of such elements, the contract relationship should be deemed one for services. If on the other hand the commercial relationship is limited to a concatenation of agreements, each for the purpose of a delivery and pickup of merchandise<\/strong>, then what we have is not a typical distribution agreement, and the contractual relationship shall be construed as one for the sale of goods.<\/p>\n Once the contract has been categorised as one for services, one must then determine \u201cthe place where, under the contract, the services are provided\u201d. The Court specifies that such location shall be understood as the member state of the place of the main provision of services,<\/strong> as it follows from the provisions of the contract \u00a0or \u2013 as in the case at issue \u2013 the actual performance<\/strong> of the same. Only where it is impossible to identify such location shall the domicile of the party rendering the service<\/strong> be used.<\/p>\n From the referring court\u2019s description of the contractual relationship, and from the Court of Justice\u2019s understanding of the distributor\u2019s performance of services, it would be logical to find that the principal location for performance of services was Spain, where Lusavouga \u201cwas involved in increasing the distribution of products\u201d of Saey.<\/p>\n It is clear that neither the manufacturer nor the distributor would ever have intended such a result, and they might have avoided it being chosen for them by reducing their agreement in writing, including a jurisdiction clause therein.<\/p>\n By the same token, viewed from the outside, the Portuguese judges\u2019 apparent conviction that the situation was one of an actual dealership contract would leave ample room for debate. After all, a number of elements would lead to the opposite conclusion. However, even in terms of that aspect, the absence of a written contract left room for interpretation that might lead to unforeseen \u2013 and perhaps rather risky \u2013 consequences.<\/p>\n In conclusion, the wisdom of setting down the terms and conditions of a sales distribution agreement in writing appears clear. This is not only because one can avoid those ambiguities we have described above, but also because it specifies other important clauses stipulated by the parties that should not be left to chance: exclusivity of area, if any, or with respect to specific sales channels, the contract period and termination notice, any duties to promote the product, control over end-user personal data, and the possibility of, and methods for, any online sales of products.<\/p>\n","protected":false},"excerpt":{"rendered":" It is often the case \u2013 in practice \u2013 that an ongoing commercial relationship builds slowly over time through a series of sales agreements, without the parties ever signing an actual distribution agreement to set down their respective rights and responsibilities. At first blush this might appear to be a good thing: one can sidestep […]<\/p>\n","protected":false},"author":120,"featured_media":8173,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[202,252],"tags":[222],"class_list":["post-8172","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-distribution-agreements","category-litigation","tag-italy"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/posts\/8172","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/users\/120"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/comments?post=8172"}],"version-history":[{"count":3,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/posts\/8172\/revisions"}],"predecessor-version":[{"id":8179,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/posts\/8172\/revisions\/8179"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/media\/8173"}],"wp:attachment":[{"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/media?parent=8172"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/categories?post=8172"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalmondo.com\/pt-pt\/wp-json\/wp\/v2\/tags?post=8172"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}Shall a jurisdiction clause contained within a vendor\u2019s general terms and conditions apply to a distribution relationship?<\/h2>\n
What, then, would be the court with jurisdiction for the duties arising from the commercial concession agreement?<\/h2>\n