Groupe Danone appointed an agent to represent its subsidiaries (the “Defendants”) in their dealings with importers, wholesalers and retailers of their goods in a specific geographical area, including Mayotte and La Reunion (a French overseas collectivity and a French overseas department, respectively).
Following termination, the agent claimed commission relating to purchases made by two companies established in his geographical area. However, the purchases had been made from central buying offices or dealers in metropolitan France, outside the control of the Defendants and without any action on the part of the agent.
The French court referred the following question to the European Court of Justice for a preliminary ruling:
“Is article 7(2) of the European Directive relating to Self Employed Commercial Agents (the “Directive”) to be interpreted as meaning that a commercial agent entrusted with a specific geographical area is entitled to commission where the commercial transaction between a third party and a customer belonging to that area has been concluded without any action, either direct or indirect, on the principal’s part?”
The Relevant Legislation
Article 7(2) provides:
A commercial agent shall also be entitled to commission on transactions concluded during the period covered by the agency contract – either where he is entrusted with a specific geographical area or group of customers – or where he has exclusive right to a specific geographic area or group of customers, and where the transaction has been entered into with a customer belonging to that area or group.
Article 10 provides:
(1) Commission shall become due as soon as, and to the extent that, one of the following circumstances occurs: (a) the principal has executed the transaction; or (b) the principal should, according to his agreement with the third party, have executed the transaction; or (c) the third party has executed the transaction.
(2) Commission shall become due at the latest when the third party has executed his part of the transaction or should have done so if the principal had executed his part of the transaction, as he should have.
Article 11(1) provides:
The right to commission can be extinguished only if and to the extent that (a) it is established that the contract between the third party and the principal will not be executed; and (b) that fact is due to a reason for which the principal is not to blame.
Whilst article 7(2) does not contain an express requirement for action on the part of the principal,
should be read in conjunction with articles 10 and 11 of the Directive.
Articles 10(1) and 10(2) are drafted in a manner whereby the presence of a principal in the transaction for which the commercial agent can claim commission is indispensable.
Furthermore, under article 11(1) the importance of the principal’s role for the existence of the right to commission is emphasised because the sole ground for extinguishment which requires the combination of two sets of circumstances in which express reference is made to the principal.
Accordingly, the European Court of Justice interpreted article 7(2) to mean 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.
Written by Marsha Aldridge