Supreme Court Rules that Belgian Commercial Agency Law is “Mandatory” under Rome Convention
16/12/2014

On 12 September 2014, the Supreme Court (Hof van Cassatie/Cour de Cassation) ruled that the Belgian Law of 13 April 1995 on commercial agency agreements (Wet van 13 april 1995 betreffende de handelsagentuurovereenkomst/Loi du 13 avril 1995 relative au contrat d'agence commercial - the "Law on Commercial Agency Agreements") is mandatory and, as a result, overrides the choice for Bulgarian law (Supreme Court, 12 September 2014, United Antwerp Maritime Agencies (UNAMAR) NV v. Navigation Maritime Bulgare).

The facts of the case are as follows. In 2005, NMB (principal) and UNAMAR (commercial agent) entered into a commercial agency agreement for the operation of NMB's container liner shipping service (the "Agreement"). The Agreement contained an arbitration clause, referring all disputes regarding the agreement to the Chamber of Commerce and Industry in Sofia, and stipulated that Bulgarian law is to apply. Even though the Agreement had been concluded for a renewable 1-year period, NMB decided on 19 December 2008 to extend the Agreement only until 31 March 2009. UNAMAR considered this to be a case of unlawful termination, and claimed compensation before the Antwerp commercial court pursuant to the Law on Commercial Agency Agreements.

The Law on Commercial Agency Agreements implements into Belgian law EU Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents (the "Commercial Agency Directive"). While the Commercial Agency Directive provides for a minimum set of rules governing the commercial agency relationship, the Law on Commercial Agency Agreements in some respects goes beyond the requirements of the Commercial Agency Directive. Amongst other things, it gives the commercial agent broader rights to compensation in case the principal terminates the commercial agency agreement unlawfully.

At issue was Article 27 of the Law on Commercial Agency Agreements which provides that "[w]ithout prejudice to the application of international conventions to which Belgium is a party, any activity of a commercial agent whose principal place of business is in Belgium shall be governed by Belgian law and shall be subject to the jurisdiction of the Belgian courts." This gave rise to the question whether: (i) the arbitration clause in the Agreement is enforceable; and (ii) the broader compensation rules set forth by the Law on Commercial Agency Agreements are mandatory provisions which override the parties' opting to choose Bulgarian law in the Agreement.

When the case was eventually brought before the Supreme Court, the court decided to stay the proceedings and refer a question for a preliminary ruling to the Court of Justice of the European Union ("ECJ") on whether the Law on Commercial Agency Agreements could override the parties' contractual choice of Bulgarian law. In a preliminary ruling of 17 October 2013, the ECJ held that, under specific conditions, a national law implementing an EU Directive can override the laws of another EU Member State, and as such can be of a "mandatory" nature under Article 7 of the Convention on the law applicable to contractual obligations (the "Rome Convention"), which was later replaced within the EU by Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations (the "Rome I Regulation") (See, VBB on Belgian Business Law, Volume 2013, No. 11, p. 2, available at www.vbb.com).

In its latest judgment, the Supreme Court has now confirmed that the Law on Commercial Agency Agreements satisfies the conditions that were set out by the ECJ, and is a mandatory provision of Belgian law. The Supreme Court thus quashed the judgment of the Antwerp Court of Appeal, which had held that the arbitration clause under Bulgarian law is valid and had declined jurisdiction. In its ruling, the Supreme Court simply copied the operative part of the preliminary ruling of the ECJ, and provided no additional explanation as to why it considers the Law on Commercial Agency Agreements to meet the conditions set out by the ECJ.

The Supreme Court has referred the case for judgment to the Brussels Court of Appeal.

Related : Van Bael & Bellis ( Mr. Martin Favart ,  Mr. Koen T’Syen )

Mr. Martin Favart Mr. Martin Favart
Partner
mfavart@vbb.com
Mr. Koen T’Syen Mr. Koen T’Syen
Associate
ktsyen@vbb.com

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