Agents outside European Union: protected by EU Law?

For some time there has been uncertainty as to whether or not agents outside the EU can be protected by the EU Agents Directive. The uncertainty dates back to a decision of the European Court of Justice in 2000 when it was decided that a principal established outside of the EU with an agent carrying on activities within the EU could not evade the Directive by the simple expedient of providing in the agency agreement that it was to be governed by, for example, the law of the State of California.

However, the opinion of the Advocate General (that is, the lawyer to the Court) in that case which preceded the judgment did not answer the reverse question namely where a principal in the EU had an agent outside the EU was it possible that the agent could be protected by the Directive? Indeed the Advocate General’s opinion suggested that protection might be available to such an agent.

Last month the European Court gave its judgment in a case involving a Belgian principal and a Turkish agent.

The European Court considered the purpose of the EU Agents Directive. In particular the European Court noted that this purpose requires that there be determined whether in any situation there is a particularly close link to the EU or the situation is closely connected with the EU.

However, it was the view of the European Court that the purpose of the Directive did not itself require that agents who:

1. are based outside the EU; and
2. who carry on their activities outside the EU,

be provided with protection comparable to agents who:

1. are based in the EU; or
2. carry out their activities within the EU.

The European Court also recognised that the law of an EU Member State could provide protection for an agent based outside of the EU going beyond the protection afforded to the agent by the Directive.

Take Home Points

Whilst this is a useful judgment of the European Court the following points must be born in mind:

1. The laws of some countries outside the European Union protect agents to the same and, in some situations, greater, extent than the EU Agents Directive. More information can be found by clicking here.
2. The laws of some EU Member States do extend protection to agents based outside the European Union. For example, it is understood that German Law does not distinguish between agents based outside the EU and those based in the EU in the protection afforded. Indeed this was acknowledged by the European Court in the Agro case.
3. Irrespective of whether or not the law of an EU Member State or the law of the country outside the EU expressly provides protection to agents based outside the EU, the possibility exists of there being an agreement between the EU and the relevant country in which the non-EU agent is based which does provide protection! Indeed in the Agro case it was necessary to consider whether an agreement establishing an association between the EEC (as then was) and the Republic of Turkey in 1963 meant that the provisions of the EU Agents Directive were to be applied to the Turkish agent in this case.
4. Irrespective of the extent of the Directive and the Commercial Agents Regulations, it remains open to, for example, a UK principal and a non-EU agent to include provisions in their agency agreement that provide contractual protection to the agent equivalent to that provided by the Regulations.
5. Where distributors are used in place of agents, the possibility exists that non-EU distributors may be able to take advantage of the laws of certain EU Member States which protect distributors in a way comparable to that of agents within the EU. Indeed some commentary on the Agro case has pointed to an apparent inconsistency between Belgian law which protects distributors and the Belgian law which protects agents on this issue!
6. The Regulations apply to the activities of commercial agents in Great Britain. However, what is meant by this phrase remains open in the absence of developed case law.