Quenon K. (Judgment) [2015] EUECJ C-338/14 (03 December 2015)

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(Reference for a preliminary ruling — Self-employed commercial agents — Directive 86/653/EEC — Article 17(2) — Termination of the agency contract by the principal– Compensation of the agent– Prohibition of the simultaneous operation of the indemnity for customers scheme and compensation for damage scheme — Entitlement of the agent to damages additional to the indemnity for customers — Conditions)

REQUEST for a preliminary ruling under Article 267 TFEU from the Cour d’appel de Brussels (Court of Appeal, Brussels) (Belgium), made by decision of 27 June 2014, received at the Court on 14 July 2014, in the proceedings

composed of L. Bay Larsen, President of the Third Chamber, acting as President of the Fourth Chamber, J. Malenovský, M. Safjan, A. Prechal, and K. Jürimäe (Rapporteur), Judges,

– the Belgian Government, by M. Jacobs and L. Van den Broeck, acting as Agents,

after hearing the Opinion of the Advocate General at the sitting on 16 July 2015,

1 This request for a preliminary ruling concerns the interpretation of Article 17(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 (OJ 1986 L 382, p. 17) (‘the directive’).

2 The request has been made in proceedings between Quenon K. SPRL (‘Quenon’), on the one hand, and Beobank SA, formerly Citibank Belgium SA (‘Citibank’), and Metlife Insurance SA, formerly Citilife SA (‘Citilife’), on the other, regarding payment of the indemnity and damages claimed by Quenon because of the termination of its agency contract by those companies.

‘Whereas the differences in national laws concerning commercial representation substantially affect the conditions of competition and the carrying-on of that activity within the Community and are detrimental both to the protection available to commercial agents vis-à-vis their principals and to the security of commercial transactions; whereas moreover those differences are such as to inhibit substantially the conclusion and operation of commercial representation contracts where principal and commercial agents are established in different Member States;

Whereas trade in goods between Member States should be carried on under conditions which are similar to those of a single market, and this necessitates approximation of the legal systems of the Member States to the extent required for the proper functioning of the common market; whereas in this regard the rules concerning conflict of laws do not, in the matter of commercial representation, remove the inconsistencies referred to above, nor would they even if they were made uniform, and accordingly the proposed harmonisation is necessary notwithstanding the existence of those rules.’

‘1. The harmonisation measures prescribed by this Directive shall apply to the laws, regulations and administrative provisions of the Member States governing the relations between commercial agents and their principals.

2. For the purposes of this Directive, ‘commercial agent’ shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the ‘principal’, or to negotiate and conclude such transactions on behalf of and in the name of that principal.

‘1. Member States shall take the measures necessary to ensure that the commercial agent is, after termination of the agency contract, indemnified in accordance with paragraph 2 or compensated for damage in accordance with paragraph 3.

2. a) The commercial agent shall be entitled to an indemnity if and to the extent that:

– he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers, and

– the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers. ...

b) The amount of the indemnity may not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent’s average annual remuneration over the preceding five years and if the contract goes back less than five years the indemnity shall be calculated on the average for the period in question;

c) The grant of such an indemnity shall not prevent the commercial agent from seeking damages.

3. The commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with the principal.

Such damage shall be deemed to occur particularly when the termination takes place in circumstances:

– depriving the commercial agent of the commission which proper performance of the agency contract would have procured him whilst providing the principal with substantial benefits linked to the commercial agent’s activities,

– and/or which have not enabled the commercial agent to amortise the costs and expenses that he had incurred for the performance of the agency contract on the principal’s advice.’

6 The law of 13 April 1995 on commercial agency contracts (Moniteur belge of 2 June 1995, p. 15621, (‘the Law of 1995’)) transposes the directive into Belgian law. Article 20 of that law provides:

‘After termination of the contract, the commercial agent shall be entitled to a goodwill indemnity if he has brought the principal new customers or if he has significantly increased the volume of business with existing customers, in so far as the principal can continue to derive substantial benefits therefrom.

If the contract contains a no-competition clause, the principal shall be deemed, unless it is proved otherwise, to receive substantial benefits.

The amount of the indemnity shall be fixed taking into account both the extent to which the volume of business has been increased and the extent to which the customer base has been expanded.

The indemnity may not exceed the amount of one year’s remuneration, calculated on the basis of the average for the past five years or, if the term of the contract is less than five years, on the basis of the average for the preceding years. …’

‘In so far as the commercial agent is entitled to the goodwill indemnity referred to in Article 20 and the amount of such indemnity does not fully indemnify the agent for the loss actually incurred, the commercial agent may, subject to proof of the actual extent of the loss claimed, obtain damages, in addition to that indemnity, not exceeding the difference between the amount of the loss actually incurred and the amount of that indemnity.’

The dispute in the main proceedings and the questions referred for a preliminary ruling

8 Quenon, established to pursue the business activities of Mr K. Quenon, acted as the commercial agent for Citibank and the insurance agent for Citilife, with effect from 1 December 1997, under two different agency contracts. The banking and insurance businesses were grouped within one and the same agency and Quenon was remunerated exclusively by the commission paid by Citibank on the sale of banking products and by Citilife on the sale of insurance products, respectively.

9 On 9 January 2004, Citibank terminated its agency contract with Quenon without giving any reasons for doing so and paid Quenon a termination indemnity in the amount of EUR 95 268.30 and also a goodwill indemnity in the amount of EUR 203 326.80. Citibank prohibited Quenon from continuing to represent it and from using its name and its trade mark. From that date, Quenon no longer had access to the computer programme enabling it to manage the portfolio of Citilife insurance products. Quenon submits that this, therefore, made it in fact impossible for it to continue to perform the insurance agency contract.

10 On 20 December 2004, Quenon summoned Citibank and Citilife before the Tribunal de commerce de Bruxelles (Commercial Court, Brussels) and sought an order requiring them, jointly or severally, to pay compensation in lieu of notice and a goodwill indemnity for the termination of the insurance agency contract, supplementary damages and commission on the business transacted after the agency contract had been terminated.

11 Following the dismissal of its action by judgment of 8 July 2009, Quenon lodged an appeal before the referring court, amending the sums it had claimed at first instance.

12 It appears from the order for reference that Quenon’s submission in support of its appeal is that the goodwill indemnity paid to it by Citibank for the termination of the banking agency contract is insufficient. It takes the view that, in accordance with Article 21 of the Law of 1995, account should be taken both of the compensation in lieu of notice and goodwill indemnity due on account of the de facto termination of its insurance agency contract and of the full extent of the loss it has incurred.

13 The defendants in the main proceedings contend that that national provision, as interpreted by Quenon, is contrary to the directive, which does not allow Member States to apply both compensation schemes at the same time, that is to say, the indemnity scheme and the scheme providing compensation for damage.

14 In those circumstances, the Cour d’appel de Bruxelles (Court of Appeal, Brussels) decided to stay proceedings and refer the following questions to the Court for a preliminary ruling:

‘(1) Must Article 17 of the directive be interpreted as meaning that the national legislature is authorised to provide that, after the termination of the contract, the commercial agent has the right to an indemnity for customers of which the amount may not be greater than the amount of remuneration for one year, and that, if that amount does not cover the whole of the loss actually suffered, to damages in the sum of the difference between the amount of loss actually suffered and the amount of that indemnity?

(2) More specifically, must Article 17(2)(c) of the directive be interpreted as making the award of damages additional to the indemnity for customers conditional upon the existence of a breach of contract or a non-intentional tort on the part of the principal which was the cause of the losses claimed, and upon the existence of loss distinct from that compensated for by the lump sum of the indemnity for customers?

(3) If the answer to the latter question is affirmative, must the wrongful act or omission be something other than the unilateral termination of the contract, such as, for example, giving insufficient notice, the grant of insufficient compensation in respect of notice and customers, the existence of serious reasons on the part of the principal, a breach of the right to terminate the contract or any other types of breaches of, in particular, market practice?’

15 First of all, the German Government and the European Commission observe that the situation at issue in the main proceedings, which relates to a commercial agent whose business activities consist of the provision of banking and insurance services, does not come within the scope of the directive. The Commission considers, however, that in the interests of ensuring a uniform interpretation of the directive, the Court must reply to the questions of the national court.

16 In that regard, it should be noted that the directive was designed to apply only to self-employed commercial agents with authority to negotiate the sale or the purchase of goods, as is apparent from the definition of the term ‘commercial agent’ provided in Article 1(2) of the directive. A commercial agent responsible for negotiating the sale of banking services and insurance does not, therefore, come within the scope of the directive.

17 However, it follows from settled case-law that where domestic legislation adopts the same solutions as those adopted in EU law in order, in particular, to avoid discrimination against foreign nationals or any distortion of competition, it is clearly in the European Union’s interest that, in order to forestall future differences of interpretation, provisions or concepts taken from EU law should be interpreted uniformly, irrespective of the circumstances in which they are to apply (see, in particular, judgments in Poseidon Chartering, C‑3/04, EU:C:2006:176, paragraphs 15 and 16; Volvo Car Germany, C‑203/09, EU:C:2010:647, paragraphs 24 and 25, and in Unamar, C‑184/12, EU:C:2013:663, paragraphs 30 and 31).

18 With regard, in particular, to the Law of 1995 intended to transpose the directive into Belgian law, the Court has previously accepted jurisdiction in circumstances concerning an agency contract for services in the case giving rise to the judgment in Unamar (C‑184/12, EU:C:2013:663). In that regard, the Court noted at paragraph 30 of that judgment that although the directive does not directly govern the situation at issue in the main proceedings, the fact remains that, when transposing the provisions of the directive into national law, the Belgian legislature decided to apply the same treatment to agency contracts for goods and those relating to services.

19 Those same grounds also applying to the present case, it is necessary to answer the questions referred.

20 By its first question the national court asks, in essence, whether Article 17(2) must be interpreted as precluding national legislation providing that a commercial agent has the right on the termination of an agency contract both to an indemnity for customers limited to a maximum of one year’s remuneration and, if that indemnity does not cover the whole of the loss actually incurred, to the award of additional damages.

21 In that regard, it must be borne in mind that the interpretation of Article 17 of the directive is to be considered in the light of the aims pursued by the directive and the system it establishes (judgments in Honyvem Informazioni Commerciali, C‑465/04, EU:C:2006:199, paragraph 17, and Semen, C‑348/07, EU:C:2009:195, paragraph 13).

22 The directive aims to coordinate the laws of the Member States as regards the legal relationship between the parties to a commercial agency contract (judgments in Honyvem Informazioni Commerciali, C‑465/04, EU:C:2006:199, paragraph 18, and Unamar, C‑184/12, EU:C:2013:663, paragraph 36).

23 As is clear from the second and third recitals in the preamble, the directive seeks to protect commercial agents in their relations with their principals, to promote the security of commercial transactions, and to facilitate trade in goods between Member States by harmonising their legal systems within the area of commercial representation. To those ends, the Directive establishes, inter alia, rules governing the conclusion and termination of agency contracts, in Articles 13 to 20 (judgments in Honyvem Informazioni Commerciali, C‑465/04, EU:C:2006:199, paragraph 19, and Semen, C‑348/07, EU:C:2009:195, paragraph 14).

24 As regards, in particular, termination of contracts, Article 17(1) of the directive requires Member States to put in place a mechanism for providing compensation to the commercial agent allowing them to choose between two options, either an indemnity determined according to the criteria set out in Article 17(2) or compensation according to the criteria set out in Article 17(3), namely, the system of compensation for damage (see, to that effect, judgments in Honyvem Informazioni Commerciali, C‑465/04, EU:C:2006:199, paragraph 20; Semen, C‑348/07, EU:C:2009:195, paragraph 15, and Unamar, C‑184/12, EU:C:2013:663, paragraph 40).

25 It is common ground that the Kingdom of Belgium opted for the solution laid down in Article 17(2).

26 According to settled case-law, although the system established by Article 17 of the directive concerning, in particular, the protection of the commercial agent after termination of the contract is mandatory in nature, it does not, however, give detailed indications as regards the method of calculation of the indemnity for termination of contract. Therefore, the Court has held that, within this framework, Member States enjoy discretion as to the choice of methods for calculating the indemnity or the award of damages (see, to that effect, judgments in Ingmar, C‑381/98, EU:C:2000:605, paragraph 21; Honyvem Informazioni Commerciali, C‑465/04, EU:C:2006:199, paragraphs 34 and 35, and Semen, C‑348/07, EU:C:2009:195, paragraphs 17 and 18).

27 It is in the light of that case-law that it is appropriate to determine whether the award of additional damages, as provided for in the national legislation at issue in the main proceedings, where the indemnity for clients does not cover all of the loss actually incurred, remains within the limits of the discretion conferred on Member States by the directive.

28 In that regard, it should be noted that the indemnity for customers scheme laid down in Article 17(2) of the directive is broken down into three stages. The aim of the first stage is, first of all, to quantify the benefits accruing to the principal as a result of the volume of business with customers brought by the commercial agent, in accordance with the provisions of the first indent of Article 17(2)(a) of the directive. The aim of the second stage is to check, in accordance with the second indent of that provision, whether the amount established on the basis of the above-mentioned criteria is equitable, having regard to all the circumstances of the case and, in particular, to the commission lost by the commercial agent. Finally, at the third stage, the amount of the indemnity is subject to an upper limit provided for in Article 17(2)(b) of the directive, which comes into play only if the amount calculated during stages one and two exceeds it (judgment in Semen, C‑348/07, EU:C:2009:195, paragraph 19).

29 However, it is only after laying down the conditions in which a commercial agent has the right to an indemnity and setting a ceiling for that indemnity, that Article 17(2)(c) of the directive provides that ‘[The] grant of such an indemnity shall not prevent the commercial agent from seeking damages’.

30 It follows from the same wording in that provision and from its contextual interpretation that damages may be granted to commercial agents in addition to the indemnity and that they are not subject to the conditions laid down in Article 17(2)(a) of the directive or to the maximum limit laid down in Article 17(2)(b) of that directive.

31 As the Advocate General observed in point 32 of his Opinion, the harmonisation of conditions for compensation under Article 17(2) of the directive relates only to the indemnity for customers, laying down the conditions to which the award of that indemnity is subject. The harmonisation measures, therefore, are not intended to standardise all the possible means of reparation for loss which commercial agents may claim under the national law when that provides for the principal’s liability in contract or tort.

32 Therefore, given that the directive does not give any clear guidance as to the circumstances in which a commercial agent may claim damages, it is for the Member States, in the exercise of their discretion, to determine those circumstances and the procedural rules.

33 That conclusion is confirmed by the Court’s case-law in accordance with which Member States may offer greater protection to commercial agents by extending the scope of a directive or by choosing to make wider use of the discretion afforded by that directive (see, to that effect, judgment in Unamar, C‑184/12, EU:C:2013:663, paragraph 50).

34 However, as the Commission rightly points out and as the Advocate General noted in point 43 of his Opinion, the discretion which Member States may exercise when implementing Article 17(2)(c) of the directive is circumscribed by the requirement to choose one of the two compensation schemes laid down in paragraphs 2 and 3 of that article, respectively, without being able to aggregate them. Consequently, the award of damages may not result in double recovery by combining the indemnity for customers with the compensation for loss resulting, in particular, from the loss of commission following termination of the contract.

35 In the light of the foregoing, the answer to the first question must be that Article 17(2) of the directive must be interpreted as not precluding national legislation providing that a commercial agent is entitled, on termination of the agency contract, both to an indemnity for customers limited to a maximum of one year’s remuneration and, if that indemnity does not cover all of the loss actually incurred, to the award of additional damages, provided that such legislation does not result in the agent being compensated twice for the loss of commission following termination of that contract.

36 By its second and third questions, which must be examined together, the national court asks, in essence, whether Article 17(2)(c) of the directive must be interpreted as meaning that it makes the award of damages dependent on the demonstration, first, of the existence of a fault attributable to the principal which was the cause of the alleged harm and, second, on the existence of loss distinct from that compensated by the indemnity for customers. If so, that court seeks to ascertain what the nature and the extent of the fault attributable to the principal must be and, in particular, whether that fault must be different from the unilateral breach of the agency contract.

37 As regards, in the first place, the need of a fault attributable to the principal which causes the alleged harm in order that the commercial agent may claim damages, it should be noted, as follows from paragraph 32 of the present judgment, that the directive and, in particular, Article 17(2)(c) does not specify the circumstances in which damages are payable to the commercial agent. It is, therefore, for the Member States to determine in their national law whether the award of damages depends on the existence of a fault, be it contractual or non-contractual, attributable to the principal and which is caused by the alleged harm.

38 It follows that Article 17(2)(c) of the directive does not make the award of damages conditional upon the demonstration of the existence of a fault attributable to the principal which caused the alleged harm or, consequently, upon the nature or extent of such a fault.

39 In the second place, concerning whether the damages have to relate to a loss distinct from that compensated for by the indemnity for customers, it is apparent both from the terms of Article 17(2) of the directive and from its scheme that the answer to that question must be in the affirmative.

40 It follows from the use of different words to designate the two aspects of the scheme of indemnity for customers laid down in Article 17(2) of the directive, that is to say, ‘indemnity’ and ‘damages’, additional and optional in nature, and the distinct degree of harmonisation envisaged by the directive in relation to those two aspects, that the compensation of the commercial agent by damages may relate only to a loss separate from that compensated for by the indemnity for customers. Otherwise, the upper amount of the indemnity laid down in Article 17(2)(b) of the directive would be circumvented.

41 Consequently, it must be stated that the claim for damages under Article 17(2)(c) of the directive must concern a loss which is distinct from that covered by the indemnity for customers.

42 It follows from the foregoing considerations that the reply to the second and third questions is that Article 17(2)(c) must be interpreted as meaning that it does not make the award of damages conditional on demonstration of the existence of a fault attributable to the principal which caused the alleged harm, but does require the alleged harm to be distinct from that compensated for by the indemnity for clients.

43 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

1. Article 17(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 not precluding national legislation providing that a commercial agent is entitled, on termination of the agency contract, both to an indemnity for customers limited to a maximum of one year’s remuneration and, if that indemnity does not cover all of the loss actually incurred, to the award of additional damages, provided that such legislation does not result in the agent being compensated twice for the loss of commission following termination of the contract.

2. Article 17(2)(c) of Directive 86/653/EEC must be interpreted as meaning that it does not make the award of damages conditional on demonstration of the existence of a fault attributable to the principal which caused the alleged harm, but does require the alleged harm to be distinct from that compensated for by the indemnity for clients.

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You are here: BAILII >> Databases >> Court of Justice of the European Communities (including Court of First Instance Decisions) >> Quenon K. (Judgment) [2015] EUECJ C-338/14 (03 December 2015) URL: http://www.bailii.org/eu/cases/EUECJ/2015/C33814.html Cite as: [2016] Bus LR 264, [2015] EUECJ C-338/14, EU:C:2015:795, [2015] WLR(D) 504, ECLI:EU:C:2015:795

Court of Justice of the European Communities (including Court of First Instance Decisions)