The goodwill indemnity in some of the new EU member states.

Silvia BORTOLOTTI | EU | 2005-07-19


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One of the major issues of this legislation is the agent’s right to be indemnified when the contract is terminated. The directive gives the States the possibility to choose between two solutions, based on the systems in force respectively in Germany and in France: the ‘German’ indemnity which is only due if the agent has developed a customer base and is limited to a maximum amount corresponding to one year of commission; the ‘French’ compensation for damages, which is due whenever the agent would have continued earning a commission if the contract had not been terminated and which has no maximum limit.

Most member States have chosen one of the two alternatives, as required by the directive. An interesting exception is Great Britain, which has implemented both systems, leaving the choice between them to the parties: as a general rule the ‘French’ compensation applies, but the parties may choose in their contract to have the ‘German’ indemnity.

As regards the ‘new’ member States three of them (Estonia, Malta and Cyprus) have introduced both types of goodwill compensation (the ‘German’ indemnity and the ‘French’ compensation) without specifying if they must be applied cumulatively or alternatively.

Actually, the laws of these countries first implement the indemnity foreseen in Article 17/1 of the directive; thereafter they implement the sentence according to which ‘ … the grant of such an indemnity shall not prevent the commercial agent from seeking damages’; and finally they implement the ‘French’ indemnity, indicated as ‘compensation for damages’.

These rules apparently mean that the agent can obtain both types of compensation. If this is the right interpretation, the agents of these countries would be able to obtain (under their domestic law) a much higher termination compensation that their colleagues of other member States of the EU.

This will be one of the main topics of the inaugural conference of the IDI Project, that will take place in Paris on May 13, 2005.

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