Preliminary ruling of the European Court of Justice (ECJ) of 3 December 2015

In its judgement of 3 December 2015 the ECJ gave a preliminary ruling (C-338/14) regarding the interpretation of article 17(2) of Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws relating to self employed commercial agents (“the Directive”) and more specifically on the entitlement of the commercial agent after the termination of the agency agreement to both a goodwill indemnity and additional damages.

Article 17 of the Directive requires that the commercial agent is, after termination of the agency agreement, indemnified or compensated.

Under the indemnity system, the commercial agent is entitled after termination of the agency agreement, to payment of an indemnity if and to the extent that he has brought new customers to the principal or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the transactions with such customers after the termination of the agency agreement.

Under the compensation system, the commercial agent is entitled to compensation for the damage he suffers as a result of the termination of the agency agreement.

In 1989 the Netherlands have implemented the indemnity option into their national law (article 7: 442 of the Dutch Civil Code).

Article 17 (2) (c)  of the Directive also provides that the grant of a goodwill indemnity shall not prevent the commercial agent from seeking damages. This provision has similarly been incorporated in articel 7: 442 of the Dutch Civil Code.

In its judgement the ECJ has ruled that the possible entitlement both to a goodwill indemnity and additional damages may not result in the commercial agent being compensated twice for the loss of commission following the termination of the agency agreement. The award of additional damages therefore relates to damages which are not covered by the goodwill indemnity.

As to the additional damages under article 17 (2) (c) of the Directive, the ECJ has also ruled that the award of damages is not made conditional on demonstration of the existence of a fault attributable to the principal which caused the alleged damages.