Recent case law puts an end to "early settlements" during the notice period and forces companies to rethink their exit strategies.
The termination of a commercial agency agreement is often the point at which the greatest financial risks materialise. Until recently, it was common practice to opt for a swift amicable settlement during the notice period in order to avoid uncertainty and disputes.
However, a recent judgment of 23 April 2026 of the Court of Justice of the European Union (C-204/25) fundamentally overturns that practice. The Court makes it clear that such "early settlements" may be legally highly risky and in many cases even void.
In this article, we outline the core findings of the judgment and, above all, discuss its practical impact, with particular attention to the pitfalls associated with concluding termination agreements.
1. The facts in a nutshell
In 2016, Bank Nagelmackers terminated the commercial agency agreements with three banking agents. The agreements were terminated subject to notice periods which, in some cases, still ran for several months.
During those ongoing notice periods, the parties concluded a global amicable settlement. That agreement included, among other things, arrangements regarding the financial settlement of the cooperation, including the amount of the notice indemnity, goodwill indemnity and additional compensation due to the agents.
Subsequently, the agents challenged the validity of the settlement. They argued that it had been concluded under pressure from Bank Nagelmackers, that it was detrimental to them, and that it infringed the mandatory protection afforded to commercial agents under Article X.21 of the Belgian Code of Economic Law, since the settlement had been concluded before the effective end of the agreement.
The courts on the merits did not follow that reasoning. They held that, from the moment the notice of termination was given, the agents were free once again to negotiate and could therefore validly waive certain rights. In other words, under the prevailing Belgian case law at the time, an "early settlement" was considered perfectly permissible.
However, the Court of Cassation noted that this question was directly linked to the interpretation of the European Commercial Agents Directive and referred a preliminary question to the Court of Justice: when is an agency agreement considered to be "terminated"? Is it upon notification of termination or only after the expiry of the notice period?
2. The judgment: protection until the very end
The Court of Justice unequivocally adopts a protection-oriented interpretation of the Commercial Agents Directive. An agency agreement is only "terminated" once the cooperation has effectively ended, that is, after the expiry of the notice period.
This has an important consequence:
- The mandatory protection of the commercial agent remains applicable throughout the entire notice period;
- Derogations to the detriment of the agent are not valid before that point in time.
In doing so, the Court confirms that the ratio legis of the Directive — the protection of the economically weaker party — remains central.
3. Why does this judgment matter?
What may at first glance appear to be a technical discussion in fact goes to the heart of the power balance between principal and commercial agent. During the notice period, the agent often remains economically dependent on the principal. Think of ongoing commissions, customer relationships and commercial pressure.
By holding that protection only ends with the effective cessation of the cooperation, the Court acknowledges that this dependency only truly disappears at that stage.
4. What are the practical implications?
4.1. Early settlements under pressure
A practice that was frequently applied until recently — concluding a comprehensive termination agreement during the notice period — is now fundamentally called into question by this judgment. Agreements whereby the commercial agent waives his rights (such as the goodwill indemnity) cannot be valid if they are concluded before the end of the agreement.
4.2. Timing becomes a strategic factor
Companies will need to rethink their approach to terminations:
- Negotiations may still take place during the notice period;
- However, binding arrangements that are detrimental to the agent can only be safely formalised after the agency agreement has ended.
In practice, this often means a two-step approach: negotiating during the notice period and finalising afterwards.
4.3. Increased risk of disputes and invalidity
Existing termination agreements concluded during the notice period may suddenly be on shaky ground. This creates risks of:
- invalidity of contractual arrangements;
- additional compensation claims;
- lengthy legal proceedings.
4.4. Reduced relevance of "implicit waiver"
Discussions about implicit waiver of rights (e.g. by accepting payments without reservation) will become less decisive where it is established that the termination agreement was concluded too early.
5. What does this mean in practice for you?
Do you have questions about the impact of this judgment on your agency agreements or ongoing negotiations? Feel free to contact us for a tailored analysis of your situation. A short preliminary check may make the difference between a watertight settlement and a costly dispute.
Authors:
This article is written by Willem De Vos and Daan De Jaeger (Monard Law).
