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SPAIN: a recent case law on goodwill indemnity in agency agreement.

Clientele remaining with the Principal; advertising by the Principal and prestigious brand: reduction on the maximum compensation.

Ignacio ALONSO - 19.11.18
Country expert - IDARB Arbitrator

The Provincial Court of Appeal of Tarragona has issued a judgment (September 13, 2018 EDJ 2018/568117) in which the goodwill (clientele) compensation to an agent of Vodafone Spain (Principal) has been recognized.

Clientele compensation was granted because it was assessed not only because the agent had contributed to create it, but also because such clients would remain with the Principal.

The First Instance Court took into account the following to specify the amount of compensation:

- the agent's activity was essential for the recruitment and maintenance of the clientele, also confirmed by the behaviour of Vodafone who preferred to appoint external collaborators instead of using its own structure;

- while Vodafone could continue to benefit from the clientele, the agent would not be able to carry out its activity in favour of other operators because she was affected by a post-contractual non-competition clause;

- and the importance of the advertising activity and the prestige of the Vodafone trademark, which has permitted an important share in the market.

For these reasons, First Instance court did not assign the maximum compensation but limited to the 65% of that limit.

 

The Court of Appeal confirmed the previous statements and that there are no mathematical formulae that lead to an exact result for the goodwill compensation. According to this Court of Appeal, it is possible for the lower court to weigh, within the law, all the elements of to reach its decision. This decision must be reasonable within acceptable limits. Only when those limits are clearly exceeded can the decision be considered as arbitrary or illogical, and must be corrected.

Therefore, the criteria followed by the First Instance Court have been seen as reasonable by the Court of Appeal and they do not depart in excess of what has been considered appropriate in other similar cases in which the goodwill granted was of the 75% on the maximum allowed.

As a conclusion, we can therefore confirm that the contribution to the advertising by the Principal and the importance of the trademark can justify a reduction of the goodwill compensation up to 65% of the maximum foreseen by law.

 

Ignacio Alonso, IDI agency & distribution country expert for Spain

 

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