Supreme Court Rules on Commercial Agency Agreements

On 3 November 2011, the Supreme Court ruled in case Air Transat A.T. Inc. v. Air Agencies Belgium NV on the interpretation of Article 4, third indent of the Law of 13 April 1995 regarding Commercial Agency Agreements (Wet van 13 april 1995 betreffende de handelsagentuurovereenkomst/Loi du 13 avril 1995 relative au contrat d’agence commerciale – the “Law”). Pursuant to this provision, an agency agreement of definite duration that the parties continue to perform after the expiry of the agreed term is considered to have been initially concluded for an indefinite term.

In the case at hand, at the expiry of their fixed-term agency agreement, the parties had expressly agreed to enter into a new, separate agency agreement of definite duration. Air Transat A.T. Inc. rejected the application of Article 4, third indent of the Law arguing that this provision would only apply where the performance of a given agency agreement of definite duration was tacitly continued after the expiry of the agreement. The Supreme Court dismissed this argument, emphasising that a continuation as referred to in Article 4, third indent of the Law also covers the situation in which the parties enter into subsequent agreements of definite duration.

The Supreme Court’s ruling is important in that, in case of termination of an agency agreement that falls within the scope of Article 4, third indent of the Law, the notice period is to be calculated having regard to the full duration of the agreement. It follows from the Supreme Court’s ruling that, in case of subsequent agency agreements of definite duration, the starting point for purposes of calculating the notice period is the date of entry into force of the very first agency agreement between the parties.