Overriding mandatory legal rules

Can national provisions of the law of a Member State of the European Union (Member State) exceeding the scope and level of protection of the Agency Directive[1] be applied as “overriding mandatory provisions” even if the law applicable to the agency contract is the law of a Member State in which the minimum protection provided by the Directive has been implemented?

 The Unamar case

In 2013 the European Court of Justice (ECJ) gave a preliminary ruling on this question in the Unamar / Navigation Maritime Bulgare – case[2].

Facts

In 2005 a commercial agency contract was concluded between the Belgian commercial agent Unamar and the Bulgarian principal NMB. The contract provided that Bulgarian law was applicable. The contract furthermore provided for arbitration by the Chamber of Commerce and Industry in Sofia, Bulgaria.

Following the termination of the contract by NMB, Unamar initiated proceedings before the Belgian Courts claiming payment of a goodwill indemnity and compensation of damages as provided for under Belgian law.

After the proceedings in the first and second instance, the case was brought before the Belgian Court of Cassation. The case was then referred to the ECJ for a preliminary ruling whether the Belgian rules on commercial agency contracts offering a wider protection than the minimum provided by the Agency Directive may be applied, even if it appears that the law applicable to the contract is the law of another Member State in which the minimum protection provided by that Directive has been implemented. In other words: can such rules offering a wider protection be qualified as “overriding mandatory rules” which apply regardless of the choice of law?

Preliminary ruling

The ECJ concluded that the fact that the Agency Directive was correctly implemented in Bulgarian law did not automatically preclude that the rules on commercial agency contracts of another Member State offering a wider protection qualify as overriding mandatory rules which apply regardless of the contractual choice of law. It is however up to the court before which the case is brought to establish, on the basis of a detailed assessment, whether the legislator of the Member State held it to be crucial, in the legal order concerned, to grant the commercial agent protection going beyond the Agency Directive, taking into account in that regard of the nature and the objective of such mandatory provisions.

Findings of the Belgian Court of Appeal

On 25 February 2020 the Brussels Court of Appeal gave as its decision that it cannot be established that, in the course of the implementation process of the Agency Directive, the Belgian legislator had held it fundamental for the maintaining of the Belgian political, social or economic order to grant a wider protection to the commercial agent than the protection provided by the Agency Directive[3].

If you are interested in reading the judgment, please contact Jaap van Till, Partner at Loyal

[1] Council Directive 86/653/EEC https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX%3A31986L0653

[2] ECLI:EU:C:2013:663 https://curia.europa.eu/juris/liste.jsf?num=C-184/12&language=NL

[3] Not published