As part of its Regulatory Fitness and Performance Programme the European Commission has announced that it intends to evaluate the Commercial Agent’s Directive (86/653/EC) during 2014. The results of this evaluation could have implications for technology companies doing business in the EU.
This well-established but relatively unknown Directive grants commercial agents in the European Union significant protections which cannot be contracted out of including the right to be paid compensation in almost all circumstances when an agent’s appointment is terminated, even if the agent in question has not generated significant business. The Directive applies regardless of whether an agent is a self-employed individual or a large company.
Any businesses which generates sales of goods in the European Union via agents (as opposed to via its own employees) is exposed to risk under this Directive and a particular problem which many businesses face is that in most circumstances claims for compensation under this Directive will not be calculated in accordance with a set formula or be subject to a known financial limit meaning it can be difficult to quantify potential exposure and thus decide how to deal with claims.
At this stage the European Commission has not published any further details of its review although as part of that interested stakeholders will be invited to comment. We envisage that many businesses who make use of agents will lobby to tighten the criteria which must be met before an agent will be afforded protection under this Directive and for more certainty as to the maximum amount of compensation which agents may claim.
As further details of this review and the procedure for making submissions are published we will post further updates. Paul Jinks in our Leeds office can be contacted for further information.