Commercial agents are entitled to an indemnity or compensation in the event of breach of their relations with the undertaking which they represent in the Community, irrespective of the law by which the two parties intended the contract to be governed.
Since 1989, Ingmar had been the commercial agent in the United Kingdom of Eaton Leonard Technologies Inc., a company established in California.
In 1996, the contract between those two undertakings, which stipulated that it was governed by Californian law, was terminated by Eaton without commission being paid to Ingmar.
Ingmar brought legal proceedings seeking compensation for damage suffered as a result of the termination of its relations with Eaton.
The High Court held that the contract was governed by Californian law and, as a consequence, did not apply provisions of Community law relating to compensation for that type of damage for commercial agents. Ingmar appealed against that judgment.
The Court of Appeal (Civil Division) asked the Court of Justice for a preliminary ruling on the compatibility with Community law of the English legislation which generally allows contracting parties to choose to be governed by the law of another country.
A Community directive coordinating the laws of the Member States relating to self-employed commercial agents guarantees certain rights to commercial agents established in the Community after termination of the agency contract.
The Court observed that Community law is designed to protect commercial agents, in particular after termination of the contract.
The mandatory nature of the provisions in question obliges the Member States to put in place mechanisms for providing reparation. They have a measure of discretion solely as to the methods for calculating an indemnity in the event of breach.
Where a commercial agent carries on his activity in the Community, he is therefore eligible, irrespective of the law by which the parties intended their contract to be governed, for the measures of reparation after termination of the contract which are provided for by Community law.
Unofficial document for media use, which is not binding on the Court of Justice. Languages available: English, French.
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