The Rules Protecting Commercial Agents in the European Directive and in the Laws of the Member States A General Overview

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1 The Rules Protecting Commercial Agents in the European Directive and in the Laws of the Member States A General Overview Horst Becker Rechtsanwalt Munich, Germany

2 The Rules Protecting Commercial Agents in the European Directive and in the Laws of the Member States A General Overview Council directive of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents (86/653/EEC)

3 What is a directive Article 23: The Directive is addressed to the Member States Not an uniform European code Member states still have operating margins Direct applicability of the directive? Interpretation in conformity

4 Scope of the directive Article 1 2. For the purpose of this Directive, commercial agent` shall mean a selfemployed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the principal`, or to negotiate and conclude such transactions on behalf of and the name of the principal. 3. A commercial agents shall be understood within the meaning of this Directive as not including in particular: - a person who, in this capacity as an officer, is empowered to enter into commitments binding on a company or association. - a partner who is lawfully authorized to enter into commitments binding on his partners, - A receiver, a receiver and manager, a liquidator or a trustee in bankrupcy.

5 Content of the directive Rights and Obligations Remuneration Conclusion and termination of the agency contract

6 Hot issue: Financial consequences of termination Art Indemnity or damages Conditions Amount

7 Impact of the directive Not an uniform code on commercial agents National laws and Private International Law (Rules on Conflict of Law) still apply Parties to an agency contract might tend to improve their situation by choosing a law (and jurisdiction /arbitration) considered favourable

8 Possibility of choice of law and/or jurisdiction/arbitration Choice of law General principle: Party autonomy, Art. 3 Regulation EC 593/2008 (Rome I) In general, choice of law is possible in cases of agency contracts Exceptions: Normes d application immédiate, Public policy, (Internationally) mandatory rules, Art. 9 Regulation EC 593/2008 (Rome I)

9 Possibility of choice of jurisdiction or arbitration General principle Jurisdiction: Art. 25 Council Regulation 1215/2012 Arbitration: Art. I para 1 and 3 New York Convention (1958) Exceptions Jurisdiction: Art. 25 para 5 in conjunction with Art. 15, 19, 23, 24 Council Regulation 1215/2012 Arbitration: Art. 5 para 2 (a) and (b) New York Convention (1958)

10 Choice of law and jurisdiction/arbitration Choice of a (non EU) law, which does not comply with the minimum requirements of the directive (eventually combined with an according choice of jurisdiction/ arbitration) Choice of a (EU) law, which complies with the requirements of the directive but which is less favourable than the law of the home country of the agent (eventually combined with an according choice of jurisdiction/ arbitration)

11 Choice of a (non) EU law, which does not comply with minimum requirements of the directive Limits to the liberty to choose the applicable law Art. 19 of the directive internationally mandatory Ingmar Case of the European Court of Justice 9 November 2000 Possibility of choice is limited by art. 19 of the directive

12 Choice of law and jurisdiction/arbitration combined with a choice of a non EU law May a choice of jurisdiction / arbitration have the effect to circumvent an EU rule declared internationally mandatory? Court of appeals of Munich and Stuttgart and the German supreme court limit this choice by art. 19 of the directive as well OLG Munich, judgement of 17 Mai 2006 (7 U 1781/06) OLG Stuttgart, order of 29 December 2011 (5 U 126/11 BGH, order of 5 December 2012 (VII ZR 25/ ) If the chosen state or arbitral tribunal is likely not to apply the provision, which the directive declares internationally mandatory, the choice of laws is considered void

13 Choice of a (EU) law, which complies with the requirements of the directive, but which is less favourable for the agent than the law of his (EU) home country Is the law, favourable for the agent, internationally mandatory? Balance of the liberty of the member state to declare its rules internationally mandatory with the requirements of the EU directive and general EU law Unamar case (17 October 2013) of the European Court of Justice: Under certain (quite strict) conditions the EU directive and general EU law accepts a member state s declaration of a rule as internationally mandatory A choice of a EU law, less favourable than in the home country of the agent, may be void, if the rules of the home country of the agent are (validly) declared internationally mandatory

14 Choice of Jurisdiction/Arbitration combined with a law, less favourable for the agent Unamar Case The Belgian Supreme Court applied a reasoning based on a provision of Belgian statute according Belgian agents the right to plead its case before a Belgian state The European Court of Justice did not want to control the decision of the Belgian Supreme Court on its competence Even in cases between EU states, a choice of jurisdiction and of arbitration may be considered void, if it is likely that this choice has the aim or the effect to circumvent a law of a member state, which is declared internationally mandatory.

15 Thank you

16 For all further questions please contact: Rechtsanwalt Horst Becker ARIATHES Rechtsanwälte Prinzregentenplatz Munich - Germany Phone: Telefax: Becker@ariathes.eu