Which law applies to compensation for

post-contractual clientele in the

international agency contract?
By means of an international agency contract, one
party (the principal) empowers another party (the
agent) – the latter as an independent intermediary –
to enter into foreign trade transactions on behalf of
the principal and on a continuous basis.

The termination of agency agreements may give

rise, among other consequences, to the emergence
of a right in favour of the agent to compensation
for damages or “goodwill”.

This indemnity arises from the fact that the

principal may continue to obtain economic gains
from the customers provided by the agent, even
after the contract has terminated.

The law applicable to the agency relationship

determines the scope of the compensation as well
as its quantification.

In general, the law applicable to agency

agreements is based on the “freedom of
choice” principle.

In this regard, Article 3 of the Rome I Regulation

on the law applicable to contractual
obligations provides that the contract shall be
governed by the law chosen by the parties, even if
it is not the law of a member state of the European
Union.
Notwithstanding the above, there are cases where
the law chosen by the parties could be rejected by
a court, as we will see now.

It is important to note that, when the agent is

domiciled in an EU member state, the mandatory
provisions of the Directive on self-employed
commercial agents and consequently the
corresponding national rules of transposition
relating to the post-contractual right of agents to
goodwill, come into play.

This means that, provided that the agent is

domiciled in an EU member state, the agent’s right
to compensation will be recognized (if the legal
requirements are met), even if the principal is
located outside the EU and the applicable law
chosen by the parties is that of the principal’s
domicile.

In any case, one should not forget that

the European mandatory provisions on the agent’s
right to compensation does not prevent the parties
to subject the remaining contractual provisions to
foreign law, whether EU law or not.

All EU member states have incorporated into their

national legislation the corresponding protection
for commercial agents in accordance with the
provisions of the Directive.

According to the Directive, the amount of the

indemnity may not exceed a figure equivalent to
an indemnity for one year calculated from the
commercial agent’s average annual remuneration
over the preceding five years.
If the contract goes back less than five years, the
indemnity shall be calculated on the average for
the period in question. Spain, like many other
member states, has opted for a literal transposition
of this provision.

However, some EU states have limited themselves

to transposing the minimum level of protection
required by the Directive (e.g. Bulgaria), while
others have transposed national rules with a higher
level of protection (e.g. Belgium).

In relation to the above, it is important to

mention the Judgment of the EU Court of Justice
of 17 October 2013 (Unamar case) which
established that the law chosen by the parties to
an international agency contract may be rejected
by a European court that is hearing the case,
provided that said law only guarantees the
minimum protection prescribed in the Directive.