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SPAIN: Distribution Contracts. Goodwill compensation: not enough to be “fair”: it is necessary an objective module for its calculation.

In a judgment of the Supreme Court (Judgment 712/2018 of December 19), it has been stated that the goodwill compensation (clientele) in distribution agreements cannot be granted only based in a generic “justice” or “fairness” criteria without any objective module for its calculation.

Ignacio ALONSO - 15.07.19
Country expert - IDARB Arbitrator

The facts involved a Distributor (Cervigal SL) and Warsteiner Brauerei Haus Kramer KG (Manufacturer) who signed a distribution agreement for some beers.

Once the agreement was terminated, the Distributor asked for a goodwill compensation of around 80.000 euros. First Instance Court n. 2 of Redondela, refused the claim because it considered that the Distributor did not prove enough the basis on which the compensation had to be calculated. That Court reasoned that the figures showed were only statistics offered by the Distributor itself, but without any independent technical support.

The Court of Appeal (Audiencia Provincial) of Pontevedra, in a Decision of July 31, 2015 revoked partially that judgment and accepted part of the goodwill compensation. That Court of Appeal recognized that, although the benefits obtained during the last five years were unknown and that the statistics shown by the Distributor were not acceptable as objective evidence, the clientele created could continue (at least part of it) and it would be unfair not to recognize at least an estimated compensation of 30.000 euro.

The Supreme Court confirmed that when a distribution agreement did not include the criteria to calculate the goodwill compensation, it requires the analogy with Agency Act in the frame of the maximum foreseen (annual average of the remuneration perceived in the last five years). Therefore, in order to calculate such compensation the potential future benefit for the Manufacturer needs an objective module of reference. Therefore, goodwill compensation cannot be fixed only on equity or fairness motivations. The decision of the Court of Appeal to base the compensation only in a criterion of justice was not accepted and, therefore, its judgment revoked.

 

Text of the judgement: Supreme Court Judgment 712/2018

 

Ignacio Alonso, IDI Country Expert for agency & distribution in Spain

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