Monthly Archives: April 2016

Non-EU Commercial Agency Contracts

Where a commercial agent in the United Kingdom enters into an agency agreement with a principal from another EU Member State, questions of jurisdiction, choice of law and enforcement are relatively straightforward, thanks to the unified EU regime for determining jurisdiction and choice of law and allowing for enforcement of judgments. However, problems can arise where a UK-based agent contracts with a principal based outside the EU (for example, in the USA), and it is particularly important for the agent to pay attention to any jurisdiction and choice of law clauses in the agency agreement.

The problem arises in situations where the agency agreement itself is governed by a law other than English law, and the UK-based agent seeks to bring a claim under the Commercial Agents (Council Directive) Regulations 1993, for example for compensation on termination of the agency agreement.

The Regulations are mandatory, and do not allow parties to contract out of their terms. However, in order to permit a non-EU based principal to be served with a claim under the Regulations, the contract in respect of which the claim is brought must be governed by English law. This produces the result seen in the case of Fern Computer Consultancy Ltd v Intergraph Cadworx & Analysis Solutions Inc. In that case, the judge did not see how he could give permission to Fern, the UK-based agent, to serve Intergraph, the principal, based in Texas, with a claim under the Regulations in respect of an agency agreement governed by Texan law. The judge noted that this result appeared to allow a principal based outside the EU to contract out of the Regulations, notwithstanding the mandatory nature of the Regulations. The judge described this as “an odd state of affairs”.

The answer may lie in how the claim is pleaded. Given that the Regulations are a statute, a breach of the Regulations (for example, failure to pay compensation on the termination of an agency agreement) appears to be a breach of statutory duty. A breach of statutory duty is usually capable of founding a claim in tort, and it is likely that the damage for such a tort would be sustained in the UK, as the UK-based agent is complaining of a failure to pay monies due to him in the UK. This would allow a tort claim based on breach of statutory duty to be served on the principal outside the EU.

However, this question has not been resolved by the courts, although it was alluded to in the Fern Computer Consultancy case. In these circumstances, UK-based agents contracting with principals based outside the EU should pay particularly careful attention to any jurisdiction and choice of law clauses. If no such clauses are included in the draft agency agreement, it would be wise to ask for their inclusion before finalising the agreement. Otherwise, it may not be possible to invoke the Regulations and the agent may miss out on compensation to which he would otherwise be entitled.