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European Court Gives Commercial Agent Indemnity Benefit Despite Customer not Being New

on Friday, 20 May 2016.

Marchon Germany GmbH v Yvonne Karaszkiewicz

In Marchon Germany GmbH v Yvonne Karaszkiewicz, the European Court of Justice has interpreted 'new customers' widely to give a commercial agent wide rights to the indemnity under the EU's commercial agency law, despite those customers having been new for those particular goods and not new generally.

The Facts

This was a case under the EU's Commercial Agents Directive, which gives commercial agents the right to be paid indemnity or compensation on termination of their agency. The indemnity right applies where there are 'new customers'.

The question here was whether 'new customers' meant brand new customers who had no previous relationship with the principal at all, or customers who had a relationship but not for those specific goods?

The European Court of Justice Decision

The European Court of Justice decided that the agent should receive the indemnity even though the principal already dealt with the customers in respect of other goods. The highest court in the EU said it was necessary to take a non-restrictive interpretation of the Directive to protect agents.

Comment

This decision comes as bad news for principals, who already feel that agents receive a windfall on termination of their agency agreement based on this EU law. For agents, on the other hand, this will be a further welcome windfall where they upsell to existing customers of the principal.


For more information, please contact Paul Gershlick on 01923 919 320.

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