LEBANON: The Court of First Instance of Beirut issued an important decision on commercial agency agreements.

Carlotta Mazzetti | LEBANON | 2006-12-15

Carlotta Mazzetti

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«Article 5 of decree-law n°34 dated 11/7/1967 providing: “In spite of any contrary clause, the court of the representative’s activity deals with agency agreement’s disputes”, is related to public order that protects the representation’s rights, especially regarding the cancellation or termination or non renewal of the contract. Therefore, the competence and the arbitration’s clauses inserted in the agency agreement are non effective.

The 1958 New York Convention related to the recognition and implementation of arbitration award, regarding the validity of an arbitration clause, requires the “arbitrability” of the object of the dispute and that means that the dispute should be subject to arbitration under the application of the laws of the court before which the arbitration clause is raised. That is not the case since the Lebanese decree-law n° 34/67 is related to public order and therefore prohibits the arbitrability of the commercial agency matter.»

Moreover, as far as the goodwill indemnity is concerned, the Court stated that:«The agent has no right to a goodwill compensation when he refuses to renew the contract.Even if the agent proves that he participated in the promotion of the principal’s trademark or increased the number of his customers, he still has to prove that he didn’t get the benefits of such success (promotion), in order to have right to goodwill indemnity.»


Fady Nammour, IDI Country Expert for Lebanon.


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