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ITALY: The consideration of the post-contractual non-competition obligation can be excluded in agency contracts.

In recent years, the Italian Supreme Court issued two important judgments (Cass. No. 12127/2015 and No. 13796/2017), excluding the onerousness of the post-contractual non-competition agreement of the agent.

Silvia BORTOLOTTI - 15.10.18
Country expert

Namely, Article 1751-bis, second paragraph, of the Italian Civil Code (introduced by Article 23.2 of Law No. 422 of 29/12/2000) provides as follows:

"Acceptance of the non-competition agreement entails, on termination of the relationship, payment to the commercial agent of an indemnity not having the nature of commission ("indennità di natura non provvigionale"). The indemnity shall be commensurate with the duration, which may not exceed two years after the termination of the contract, the nature of the agency contract and the severance indemnity. The determination of the indemnity on the basis of the parameters referred to in the previous period shall be entrusted to the negotiation between the parties taking into account the national economic agreements of the category. In the absence of an agreement, the compensation shall be determined by the judge on an equitable basis, also with reference to:

1.         the average of the fees collected by the agent during the term of his contract and their effect on the overall turnover in the same period;

2.         the grounds for termination of the agency contract;

3.         the size of the area allocated to the agent;

4.         whether or not there is an exclusive obligation for one principal.

It should first be clarified that the issue only concerns agents acting individually, as partnerships or as corporations with only one shareholder, since the principle of onerousness of the agreement does not apply to limited liability companies and to other corporations with more than one shareholder.

 

Moreover, this principle does not apply to contracts concluded before the entry into force of this rule, which took place on 1 June 2001: this interpretation, confirmed also by other judgments, derives from the general principle tempus regit actum, according to which the validity of the contract must be assessed on the basis of the rules in force at the time it was concluded (art. 11 of the introductory provisions of the Civil Code – “preleggi”).

However, in addition to reaffirming the above principle of non-retroactivity of the rule (applicable in both cases, since they concerned contracts concluded before the year 2001), the two above-mentioned judgments also add that, also with reference to contracts concluded after 2001, the principle of onerousness must be considered in fact non-mandatory, i.e. the compensation may be excluded by the parties in the contract.

 

In particular, the reasoning followed by the Court of Cassation in the two above-mentioned judgments is based on two arguments:

-          The onerousness is provided for as an obligation of the principal by Art. 1751-bis, but not under penalty of nullity; therefore, the parties can agree on a different provision "since the non-specific economic evaluation of the commitment can be justified as convenient in the context of the entire agency relationship".

-          The onerousness is not aimed at the protection of a general public interest.

 

In addition, it can be argued that the Directive does not provide for any compensation as a consideration for post-contractual non-compete obligations.

In the opposite sense, however, it could be said that this principle was expressed by the Supreme Court in both judgments commented here as obiter dictum, given that in both cases the new provision did not apply, for temporal reasons.

Moreover, it could be added that - at least for domestic Italian contracts - the Collective Economic Agreements reaffirm the onerousness of the agreement (indicating the criteria for the quantification of the consideration) and seem to leave room only for derogations in a sense more favorable to the agents.

In the light of these judgments, however, it might be useful for companies to evaluate whether and in what terms to proceed with a modification of the existing contracts with their agents, in this respect.

 

Text of the judgements: Cass. No. 12127/2015 and Cass. No. 13796/2017

 

Silvia Bortolotti, Secretary General IDI and IDI country expert for Italy

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