Commercial agents agents entitled to indemnity or compensation even where termination occurs during a contractual trial period

In the European case of  Conseils et mise en relations (CMR) SARL v Demeures terre et tradition SARL (Case C-645/16) EU:C:2018:262 (19 April 2018) the European Court of Justice (“ECJ”) was required to consider whether a commercial agent was entitled to indemnity or compensation when termination occurred during a contractual trial period. An agent in France had claimed compensation for termination under Article 17 of the Commercial Agents Directive (86/653/EEC) during the trial period stipulated in the contract.

The ECJ held in the commercial agent’s favour. Although the Commercial Agents Directive does not refer to trial periods, the ECJ considered that this did not prevent parties from agreeing to the same. Moreover, it was determined that the intention of Article 17 was to compensate a commercial agent, rather than penalise a principal for terminating the agency contract. Subject to the appropriate conditions being met under the provisions of the Commercial Agents Directive, a commercial agent cannot be denied compensation or indemnity under Article 17 on the basis that termination of the agency contract occurred during a trial period.

The ECJ paid heed to the application of Article 18 of the Commercial Agents Directive and the specific circumstances set out when indemnity or compensation for damage is not payable. The Court noted that termination during the trial period is not mentioned within Article 18. It was determined that any other interpretation would be a derogation from Article 17 to the detriment of the commercial agent, which is prohibited by Article 19.

For advice relating to this case, you can contact Torion Bowles on 023 80717 7455 or email torionbowles@warnergoodman.co.uk.