Regulations apply to activities of commercial agents in Great Britain irrespective of choice of governing law of the contract of agency unless perhaps the governing law selected by the parties is that of another member state of the European Economic Area and the chosen law does not deprive the commercial agent of rights that would have been available under the Regulations Regulation 1(3)(a) Ingmar GB Ltd v Leonard Technologies Ltd C-381/98 [2000] ECRI-9305; [2001] 1 All ER (Comm) 329 Accentuate Ltd v Asigra Inc [2009] EWHC 2655 United Antwerp Maritime Agencies (Unamar) NV Navigation Maritime Bulgare (Case C-184/12) Cf Lawlor v Sandvik [2013] EWCA Civ 365 The existence of a clause requiring disputes to be referred to arbitration outside of Great Britain and for the arbitration to be conducted under other governing law will not oust jurisdiction of courts of England and Wales to apply the Regulations Accentuate Ltd v Asigra Inc [2009] EWHC 2655 Laws of other member states may apply in place of the Regulations if parties so agree Regulation 1(3)(a) Laws of England, Wales or Scotland may apply to activities of commercial agents outside of Great Britain if laws of member state in which activities take place so permit and parties so agree Regulation 1(3)(b) The member state with jurisdiction to to determine a dispute between a commercial agent and his principal is the member state in which the commercial agency is performed Article 5(1)(b) of the Brussels Regulation (Council Regulation (EC) No 44/2001) Wood Floor Solutions GmbH v Silva Trade SA EU Directive does not apply to protect commercial agents operating outside of EU even if principal is based in a member state and even if the law of a member state is expressed to govern relations between them Agro Foreign Trade & Agency [2017] EUECJ C-507/15 Definition of a commercial agent Statutory definition Regulation 2(1)
Unlikely that entitlement to 'compensation' could be avoided by inclusion of contractual provisions that entitle principal to immediately terminate upon the occurrence of specified events (e.g. failure to meet sales targets) Laboratoires Arkopharma SA v Gravier [2003] ECC 33 Crane v Sky in Home Ltd [2007] EWHC 66 Agent may not be entitled to 'indemnity' or 'compensation' in circumstances where his principal reduces the extent of the agent's territory but does not 'terminate' agency Scottish Power Energy Retail Ltd v Taskforce Contracts Ltd [2008] ScotCS CSOH 110 Tony Vick v Ltd [2006] EWHC 1579 Agent not entitled to 'indemnity' or 'compensation' if he terminates the agency unless circumstances amount to a constructive dismissal or agent reasonably terminates because of age, infirmity or illness Regulation 18(b) Page v Combined Shipping and Trading Co Ltd [1997] 3 All ER 656 Alan Ramsay Sales & Marketing Ltd v Typhoon Tea Ltd [2016] EWHC 486 Agent not entitled to 'indemnity' or 'compensation' where his agency is terminated by reason of his assignment of his agency Regulation 18(c) King v Tunnock [2000] IRLR 569 Rossetti Marketing Ltd v Diamond Sofa Company Ltd [2002] EWCA Civ 1021 Unless agency contract specifically provides for an 'indemnity' the entitlement is to 'compensation' Regulation 17(2) Hardie Polymers Ltd v Polymetland [2002] SCLR 64 Brand Studio Ltd v St John Knits Inc [2015] EWHC 3143 Agency contract may specify different entitlements to 'indemnity' or 'compensation' in different situations or on happening of different events Charles Shearman v Hunter Boot Ltd [2014] EWHC 47 Brand Studio Ltd v St John Knits Inc [2015] EWHC 3143 Right to 'indemnity' or 'compensation' lost unless notice given within one year of termination of intention to pursue Regulation 17(9) The relevant 'termination' date may extend beyond the date the agent ceases to sell the principal's goods Claramoda Ltd v Zoomphase Ltd [2009] EWHC 2857
Where the commercial agent has conducted multiple agencies it will be necessary to identify the future variable costs associated with the running of the terminated commercial agency in order to ascertain its future likely profitability. Those costs may, where appropriate, be broadly identified by comparing the variable costs incurred prior to and after the termination of the commercial agency Alan Ramsay Sales and Marketing Limited v Typhoo Tea Limited [2016] EWHC 486 (Comm) Account also have to be taken of the overheads/fixed costs incurred in connection with the running of the commercial agency. In doing so the court should not necessarily assume that the notional purchaser will be a start up operation but may assume that the notional purchaser will be an already established business incurring overheads/fixed costs already. However, even in such a case the court should still deduct an appropriate element of overheads/fixed costs in identifying likely future profitability of the commercial agency Alan Ramsay Sales and Marketing Limited v Typhoo Tea Limited [2016] EWHC 486 (Comm) Whether a claim under Regulation 8 will affect the extent of any “compensation” payable under Regulation 17 will depend on whether the existence of that claim would influence what a hypothetical purchaser might pay for the agency will depend on the facts Software Incubator Ltd v Computer Associates Ltd [2016] EWHC 1587 Monk v Largo Foods Ltd [2016] EWHC 1837 Extent of 'compensation' and, possibly, 'indemnity' likely to be determined in accordance with expert evidence Lonsdale v Howard & Hallam Ltd [2007] UKHL 32 McQuillan v McCormick [2010] EWHC 1112 Risk that commercial agency might be terminated as a result of the principal's loss of its distributorship of the products the subject of the agency is to be taken into account McQuillan v McCormick [2010] EWHC 1112 A commercial agency may actually not have any value in a particular case Warren v Drukkerij B.V. [2014] EWCA Civ 993 Unclear whether principles of mitigation have any place when assessing 'compensation’ payable Tigana Ltd v Decoro Ltd [2003] EWHC 23 Lonsdale v Howard & Hallam Ltd [2007] UKHL 32