The entitlement of an agent under the Commercial Agents Regulations to indemnity or compensation on termination is well known. Also well known is that under the Regulations indemnity is capped.
But less well known is that the Regulations also give a statutory entitlement to an agent who is claiming indemnity to claim additional damages. But what loss do these additional damages cover?
Until last month there were no reported cases addressing this issue. But with the European Court’s recent judgment in an action against what were previously Citibank and CitiLife in Belgium, the mist has partially cleared.
One of the issues before the European Court was whether the additional damages could be claimed if it could be said that the indemnity did not fully recompense the agent for the loss actually suffered on termination of the agency. This could be the situation where the agent considered that the loss of the customers on termination was only partially covered by the indemnity.
With reference to this the European Court accepted that the European Agents Directive does not give any guidance as to the circumstances in which additional damages can be claimed by the terminated agent. Instead it is for individual EU member states to determine when such additional damages can be claimed.
But the European Court was clear that any additional damages awarded must be for a loss other than the loss of the customers – as is the purpose of the indemnity.
As such, a terminated agent has the right to claim additional damages. But such additional damages cannot be simply because he regards the indemnity as not sufficiently compensating him for the loss of his customers.