On this page you will find an excellent article by the team at Myerson Solicitors about the Commercial agent directive and Brexit as well as an interview we did with the European Commission about this issue before Brexit was completed. So if you have questions about the commercial agents directive you are on the right page.
Commercial Agents Regulations After Brexit
Myerson Solicitors is one of the leading Commercial Agency law firm outside of London. The team of both contentious and non-contentious experts is experienced in advising both agents and principals on the full spectrum of commercial agency law. Myerson has three experienced solicitors who deal with all commercial agent issues for salesagents.uk:
Commercial Agents Regulations
The Commercial Agents (Council Directive) Regulations 1993 (SI 1993/3053) (‘the Regulations’) implement the Commercial Agents Directive (86/653/EC) (‘the Directive’). The Regulations came into force in England and Wales on 1 January 1994. The Directive itself is applicable to member states of the European Economic Area (that is, the 28 EU member states, as well as three of the four member states of EFTA (Norway, Iceland, and Liechtenstein)) and has been implemented in each jurisdiction by virtue of national law.
The Regulations give commercial agents significant rights that go beyond those implied under the common law of England and Wales. They include rights to minimum periods of notice and a right to receive payment on compensation or an indemnity basis on termination of the agency. A considerable amount of EU and UK case law has evolved since the implementation of the Directive under English law.
Given the unprecedented disruption to almost every facet of daily life in 2020, you could perhaps be forgiven for forgetting that the UK left the European Union on 31 January 2020 and is now in a transition period that ends on 31 December this year. During that period the UK continues to be subject to EU Law.
In these troubling times, with the ‘perfect storm’ of a global pandemic and the inevitable commercial uncertainty as a result of Brexit, the long-term future of the Commercial Agents Regulations is uncertain.
Will the Regulations apply after Brexit?
Under the European Union (Withdrawal Agreement) Act 2020 (‘EUWA’), the Regulations are one part of EU legislation that will continue to apply as UK law after Brexit, but on a different constitutional basis. They will remain in force as “retained EU Law”.
Once the dust has settled and the post-Brexit legislative landscape takes shape, the long-term future of the Regulations will be determined by the Government’s approach to retained EU law. The Regulations will almost certainly be subject to scrutiny at some point in time in the future and may undergo modification, although they are unlikely to be singled out as controversial or a politically charged facet of EU law (such as immigration or human rights legislation), and given the long list of issues posed by the impact of Brexit and COVID-19, it is unlikely they will take priority.
The Regulations could be regarded by some as offering agents too great a degree of protection, and it is possible we may see Parliament taking steps to curb that protection in due course. However, if a trade deal is agreed on which sees an agreement whereby businesses in the UK and the EU are subject to a set of common rules or standards, the Regulations are more likely to continue in their current form.
If the UK opts for a ‘hard Brexit’ and severs all legislative ties with the EU, there may be increased pressure to repeal or modify the Regulations.
What does this mean for Commercial Agents?
Commercial agents are unlikely to be directly affected by Brexit, as the Regulations will continue to apply as retained EU law.
However, whilst the protections afforded to commercial agents after 31 December 2020 are unlikely to alter for some time to come (if at all), agents may be subject to indirect economic consequences of any deal with the EU, which are likely to impact a wide range of commercial practitioners. For example, any agreement in relation to the import and export of goods or the territorial considerations of manufacturing are bound to affect both principals and customers, thus influencing the role of commercial agents as a result.
It is still too early to gauge whether such consequences will have an adverse impact on commercial agents. However, agents can take solace from the fact that no substantial change to the protections they are currently afforded is to be imminent. With the global pandemic and the multitude of other issues posed by Brexit, it is safe to say that the Regulations will not be high on the Government’s list of priorities in the short term, and it will take some time for any future substantive changes to take place.
If you need any further information, please do not hesitate to contact Myerson Solicitors on 0161 941 4000 or via email. You can also learn more about the Myerson Commercial Agents team here.
Commercial agents directive – Q&A with the European Commission
A few years ago Salesagents.uk contacted the European Commission and asked for a live video interview. They turned down our proposal for a live interview about the commercial agents directive. Instead, they kindly took the time to answer our questions (and some that were sent to us from sales agents in our database) in writing.
According to Article 288 of the Treaty on the Functioning of the European Union (TFEU), “A directive shall be binding, as to the result to be achieved, upon each Member State to which it is addressed, but shall leave to the national authorities the choice of form and methods”. Accordingly, the Council Directive 86/653/EEC on commercial agents is binding upon each Member State of the EU which must transpose the directive into its national legislation. All EU Member States already implemented correctly the directive.
According to Article 22 of the directive, Member States shall bring into force the provisions necessary to comply with the Directive. However, the States of the European Economic Area (Norway, Iceland and Lichtenstein), as well as Switzerland, may align their legislation to the directive.
As regards Switzerland, the Agreement between the European Community and its Member States, of the one part, and the Swiss Confederation, of the other, on the free movement of persons – Final Act – Joint Declarations – Information relating to the entry into force of the seven Agreements with the Swiss Confederation in the sectors free movement of persons, air and land transport, public procurement, scientific and technological cooperation, mutual recognition in relation to conformity assessment, and trade in agricultural products, Official Journal L 114 , 30/04/2002 P. 0006 – 0072 (see: https://eur-lex.europa.eu/legal-content/EN/TXT/HTML/?uri=CELEX:22002A0430(01)&rid=1) provides for:
MUTUAL RECOGNITION OF PROFESSIONAL QUALIFICATIONS
(Diplomas, certificates and other evidence of formal qualifications)
1. The contracting parties agree to apply amongst themselves, in the field of the mutual recognition of professional qualifications, the Community acts to which reference is made, as in force at the date of the signature of the Agreement and as amended by Section A of this present Annex, or rules equivalent to such acts.
2. For the purposes of applying the present Annex, the contracting parties take note of the Community acts to which reference is made in Section B of this Annex.
3. The term “Member State(s)” in the acts to which reference is made in Section A of this Annex is considered to apply to Switzerland in addition to the states covered by the Community acts in question”.
The Agreement makes reference to
“Self-employed commercial agents
28. 386 L 0653: 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 (OJ L 382, 31.12.1986, p. 17)”.
Moreover, the Decision No 2/2011 of 30 September 2011 of the EU-Swiss Joint Committee established by Article 14 of the abovementioned Agreement (see: http://webservices.edcc.eu/attachments/index/0958954/313_20111229_123022_EU_Schweiz_277_20_22.10_.2011_ing_.pdf) states:
“6a. 386 L 0653: 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 (OJ L 382, 31.12.1986, p. 17).
b. For the purposes of this Agreement, Directive 86/653/EEC shall be adapted as follows:
Article 22 shall not apply. However, the Swiss coordinator designated by Switzerland in conformity with Article 56 of Directive 2005/36/EC informs the Commission with copy to the Joint Committee of the legislation adopted on the basis of Directive 86/653/EEC”.
It follows from the abovementioned Agreement and Decision that Switzerland agreed to apply in its relations with the EU the Directive 86/653 or to adopt rules equivalent to the Directive.
There are 12 preliminary Judgments of the Court of Justice of the EU replying to questions from national jurisdictions regarding the interpretation of the directive in cases between commercial agents and principals. Two other cases (C-315/14 and C-338/14) are pending before the Court. You can find detailed information on each case on EUR-Lex (https://eur-lex.europa.eu/homepage.html?locale=en) using the year and the number of the case.
(They also sent Salesagents.uk a word document with a list of the judgments. We have published that information below on this page)
The European Commission does not consider a new or updated directive for commercial agents. The work program of the Commission does not provide anything on a new or updated directive. The Commission decided in the framework of its program for better regulation to evaluate whether the directive is still fit-for-purpose, as this directive was never evaluated since its adoption in 1986. The evaluation report, following the public consultation, is to be adopted in the coming months.
In view of the previous reply, the reply to this question is impossible.
In view of the previous reply, the reply to this question is not necessary. For your general information, a directive is normally adopted by the European Parliament and the Council (where Member States are represented). Member States approve EU legislation by voting according to the rules (Articles 237-243 of the TFEU) in the framework of the Council. The time for the adoption of a directive may vary depending on the issue, the agreement (or disagreements) of Member States, the urgency, etc.
EU court cases on Commercial Agents Directive
There are 12 preliminary Judgments of the Court of Justice of the EU replying to questions from national jurisdictions regarding the interpretation of the Council Directive 86/653/EEC on commercial agents in cases between commercial agents and principals. Two other cases (C-315/14 and C-338/14) are pending before the Court (April – 2015).
Below you will find an overview of the judgements of the cases.
Case C-104/95, Kontogeorgas
- The first indent of Article 7(2) of 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 must be interpreted as meaning that, where a commercial agent is responsible for a geographical area, he is entitled to commission on transactions concluded with customers belonging to that area, even if they were concluded without any action on his part.
- Article 7(2) of Directive 86/653 must be interpreted to the effect that the meaning of the term `customer belonging to that area’ must be determined, where the customer is a legal person, by the place where the latter actually carries on its commercial activities. Where a company carries on its commercial activity in various places, or where the agent operates in several areas, other factors may be taken into account to determine the centre of gravity of the transaction effected, in particular the place where negotiations with the agent took place or should, in the normal course of events, have taken place, the place where the goods were delivered and the place where the establishment which placed the order is located.
Case C-215/97, Bellone
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 precludes a national rule which makes the validity of an agency contract conditional upon the commercial agent being entered in the appropriate register.
Case C-381/98, Ingmar
Articles 17 and 18 of 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, which guarantee certain rights to commercial agents after termination of agency contracts, must be applied where the commercial agent carried on his activity in a Member State although the principal is established in a non-member country and a clause of the contract stipulates that the contract is to be governed by the law of that country.
Case C-456/98, Centrosteel
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 precludes national legislation which makes the validity of an agency contract conditional upon the commercial agent being entered in the appropriate register. The national court is bound, when applying provisions of domestic law predating or postdating the said Directive, to interpret those provisions, so far as possible, in the light of the wording and purpose of the Directive, so that those provisions are applied in a manner consistent with the result pursued by the Directive.
Case C-485/01, Caprini
The answer to the question submitted must therefore be that, on a proper reading, the Directive does not preclude national legislation from making registration of a commercial agent in the register of undertakings subject to that agent’s enrolment in a register provided for that purpose, on condition that non-registration in the register of undertakings does not affect the validity of an agency contract which that agent has concluded with his principal or that the consequences of such non-registration do not adversely affect in any other way the protection which that directive confers on commercial agents in their relations with their principals.
Case C-85/03, Mavrona
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 must be interpreted as meaning that persons who act on behalf of a principal, but in their own name, do not come within the scope of that directive.
Case C-3/04, Poseidon
Article 1(2) of 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 is to be interpreted as meaning that, where a self-employed intermediary had authority to conclude a single contract, subsequently extended over several years, the condition laid down by that provision that the authority be continuing requires that the principal should have conferred continuing authority on that intermediary to negotiate successive extensions to that contract.
Case C-465/04, Honyvem
- Article 19 of 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 must be interpreted as meaning that the indemnity for termination of contract which results from the application of Article 17(2) of the Directive cannot be replaced, pursuant to a collective agreement, by an indemnity determined in accordance with criteria other than those prescribed by Article 17, unless it is established that the application of such an agreement guarantees the commercial agent, in every case, an indemnity equal to or greater than that which results from the application of Article 17.
- Within the framework prescribed by Article 17(2) of Directive 86/653, the Member States enjoy a margin of discretion which they may exercise, in particular, in relation to the criterion of equity.
Case C-19/07, Chevassus
The first indent of Article 7(2) of Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents must be interpreted as meaning that a commercial agent entrusted with a specific geographical area does not have the right to a commission for transactions concluded by customers belonging to that area with a third party without any action, direct or indirect, on the part of the principal.
Case C-348/07 Turgay Semen
- Article 17(2)(a) of 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 is to be interpreted to the effect that it is not possible automatically to limit the indemnity to which a commercial agent is entitled by the amount of commission lost as a result of the termination of the agency contract, even though the benefits which the principal continues to derive have to be given a higher monetary value.
- Article 17(2)(a) of Directive 86/653 is to be interpreted to the effect that, where the principal belongs to a group of companies, benefits accruing to other companies of that group are not, in principle, deemed to be benefits accruing to the principal and, consequently, do not necessarily have to be taken into account for the purposes of calculating the amount of indemnity to which a commercial agent is entitled.
Case C-203/09, Volvo
Article 18(a) of 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 precludes a self-employed commercial agent from being deprived of his goodwill indemnity where the principal establishes a default by that agent which occurred after notice of termination of the contract was given but before the contract expired and which was such as to justify immediate termination of the contract in question.
C-184/12, Unamar – Judgment of 17 October 2013
Articles 3 and 7(2) of the Convention on the law applicable to contractual obligations opened for signature in Rome on 19 June 1980 must be interpreted as meaning that the law of a Member State of the European Union which meets the minimum protection requirements laid down by 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 and which has been chosen by the parties to a commercial agency contract may be rejected by the court of another Member State before which the case has been brought in favour of the law of the forum, owing to the mandatory nature, in the legal order of that Member State, of the rules governing the situation of self-employed commercial agents, only if the court before which the case has been brought finds, on the basis of a detailed assessment, that, in the course of that transposition, the legislature of the State of the forum held it to be crucial, in the legal order concerned, to grant the commercial agent protection going beyond that provided for by that directive, taking account in that regard of the nature and of the objective of such mandatory provisions.