ARGENTINA: New important case on commercial distribution from the Chamber D of the Commercial Court of Appeals sitting in Buenos Aires.

Osvaldo Jorge MARZORATI | ARGENTINA | 2016-11-16

Osvaldo Jorge MARZORATI

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The new CCU provided that the new law was to be applied to the consequences of any contract still in operation or renewed, despite that it has been executed under the old Commercial Code, according to which distribution agreements were not legislated and were considered not-nominated contracts.


The Court limited the expression consequences of existing contracts by not including lawsuits started as result of rescissions which took place while the old Commercial Code was into effect. Hence it is excluded the case where the contract was still discussed at court if the claim had been filed before the new CCU came into effect, even if the decision was still pending. It is the first case where the court, as far as a distribution contract is involved, has made such a distinction interpreting the new CCU.


The holding then make non applicable the CCU under two main subjects discussed as legal issues under the case open analysis, and particularly:


Issue N° 1 was the length of the prior notice to be served upon the other party in case of an unilateral rescission of a distribution agreement. The first instance Court resolved Issue N°1 deciding that the prior notice was to be of 12 months for a 12 years agreement, such as the CCU provides for valid prior notices. However the Court of Appeals revoked that part of the judgement based on the prior precedents established by the Commercial Courts in Buenos Aires, for prior notices under the Commercial Code, currently derogated by the CCU.


Such precedents only considered that a prior notice was to be given in a reasonable and timely way. In order to give enough time to the distributor to reshuffle his business quoting that one year notice for a 30 years agreement was enough and 6 months for a 25 year agreement was also reasonable. And even quoted a 18 months prior notice  for a 48 years agreement as reasonable.


In this case the principal served a prior notice of 9 months for a 12 years agreement. The court of Appeals, D Chamber, considered 9 months a sufficient notice to that effect and quoting precedents that considered that 6 months or one year for a 25 years agreements were also reasonable according to the circumstances. Moreover, it stated that a mechanical application of one month for each year that the distributions contract was into effect as unreasonable, because it obliged to continue a long term agreement in existence when there was not longer trust and confidence  between the two parties.

Issue N°2 was that the distributor did not have goodwill value in a dsitribution agreement based on the trademark of the principal, but the right of an indemnity for clients that have significantly increased the sale of the supplier of the product to the extent that the distributor was able to prove that the new clients were the result of this efforts .

A final interesting point is that the Court reversed its prior position of not giving an indemnity for clientele for distributors, quoting European cases where distributor was entitled to a clientele indemnity not to exceed of one year of net sales of the product. Furthermore, in both Germany and Italy,  the decision is very relevant because the CCU is silent in this regard, despite that it does provide for agents a clientele indemnity and on the other hand expressly forbids such clientele indemnity in the case of franchising. This creates a precedent and an interpretation that could be used to fill a vacuum in the CCU for distribution and concession agreements.


Osvaldo Marzorati, IDI country expert for Argentina


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