3 Eur. L. Rep. 1 (1999)

handle is hein.journals/eurlawreo3 and id is 1 raw text is: [1999] EuLR

Court of Appeal (Civil Division)
Staughton, Millett, Otton LJJ
24 May 1997
B   Commercial agency - Termination - Compensation - Injunction - Whether arguable
case that agent entitled to compensation after termination of agency agreement -
Whether principal entitled to calculate compensation by reference to least
onerous manner in which contract could be performed - Council
Directive 86/653/EEC, Art. 17 - Commercial Agents
(Council Directive) Regulations 1993, regs 3, 4, 17 and 18
Regulation 17 of the Commercial Agents (Council Directive) Regulations 1993, which
implements Council Directive 86/653/EEC provides that a commercial agent shall be
entitled to compensation for the damage he suffers as a result of the termination
D   of his relations with his principal. It provides that such damage shall be deemed to
occur particularly where, inter alia, the termination takes place in circumstances
which deprive the agent of the commission which proper performance of the agency
contract would have procured for him while providing his principal with substantial
benefits linked to the activities of the agent.
The plaintiff was a sole trader in essential oils. For six years he acted as agent for the
E   defendant company. Under an agency agreement concluded in January 1995 which
was to last for four years, the plaintiff bought and sold commodities, the defendant
provided finance and the net profit was divided in equal shares between them.
In June 1995 the defendant informed the plaintiff that its parent company had
decided to disinvest in the defendant company, bringing the defendant's activities to
an end. The plaintiff considered that this constituted a repudiation of the agreement
and wrote to the defendant accepting its conduct as a wrongful repudiation.
F     The defendant removed some of the stock held with the plaintiff but the plaintiff
retained some E300,000 worth of goods in his custody and maintained that he was
owed money. The plaintiff issued proceedings claiming damages or compensation for
wrongful repudiation of the agreement. He applied for a Mareva injunction on the
basis that there was a real risk that if he had to wait until the action came to trial there
would be no assets of the defendant left in the country. The High Court held that the
G   plaintiff did not have a good arguable case to recover any significant sum as com-
pensation, and refused the injunction.
The plaintiff appealed to the Court of Appeal, arguing that he had a right to recover
substantial compensation under the Regulations. He argued that as the termination
was justified by circumstances attributable to the defendant, he was entitled to
compensation for the damage he had suffered under reg. 17 of the Regulations.
The defendant argued that as it could have operated the contract for the remaining
H   three-and-a-half years so that the plaintiff would have made no money out of it at all,
the plaintiff had lost nothing by the premature termination and should recover no
compensation. It argued that the plaintiff accordingly had no good arguable case to
0 1999 Hart Publishing Ltd
CCC 1091-3297/99/010001-07

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