In a previous article we presented the ongoing Norep-case, wherein the Norwegian Appeal Court ruled that Norep AS (Norep) was not entitled to indemnity in accordance with the Agency Act as it found that Norep did not qualify as an agent based on the definition of “agent” in the act.
The conclusion of the Appeal Court, albeit somewhat unclear, was based on the understanding that Norep, in order to qualify as agent in accordance with the definition in the Agency Act, had to receive/obtain the orders from the customer and transmit those to the principal.
The case has been brought before the Supreme Court.
See the article here for further information about the facts of the case.
In said article it was assumed that the Supreme Court would rule in the matter sometime during 2021, but it was also mentioned that the Supreme Court might decide to ask the EFTA Court (EFTA’s equivalent of the ECJ) on its interpretation of the definition of commercial agent in the Directive, as the Norwegian definition cannot deviate from that of the Directive.
And this was exactly what happened. The Supreme Court has asked the EFTA Court to answer the following questions:
1. Shall the term “negotiate” in Article 1(2) of Directive 86/653 be interpreted as presupposing involvement with orders from customers to the principal, with the result that the orders may not go directly from customers to the principal, as the facts in the present case is described in Chapter 3 above?
2. If question 1 is answered in the negative, which factors are relevant in the assessment of whether sales-related activity is to be deemed to be “negotiation” for the purposes of Article 1(2) of Directive 86/653?
In addition to the written observation from Norep (the principal did not submit a written observation), the European Commission, the EFTA Surveillance Authority and the Federal Republic of Germany have submitted their written observations with regard to the two questions brought before the EFTA Court. All of the above are of the opinion that question 1 should be answered in the negative. For instance, the European Commission concludes as follows:
23. Thus, various provisions of Directive 86/653 suggest that the commercial agents’ task of “negotiating” on behalf of the principal does not necessarily, at least in all cases, require that they conclude transactions or take orders. The case law of the CJEU further clarifies that “negotiating the sale or purchase of goods” means, more broadly, acting as an intermediary, whose main task is to bring new customers or improve sales to existing customers. This task can be achieved not just by setting the terms of individual orders, such as prices or quantities, but more broadly by facilitating the placing of such orders through information, advice or similar.
24. For these reasons, in the Commission’s view, the answer to the first question should be that Article 1(2) of Directive 86/653, and in particular the term “negotiate”, should be interpreted as not necessarily presupposing the agent’s direct involvement with the placing of orders by customers with the principal, or excluding a scenario in which orders go directly from customers to the principal.
Not surprisingly, the parties having submitted their written observations find it more difficult to provide a clear answer to the somewhat unclear second question put before the EFTA Court. For this reason, no attempt is made at summarizing the conclusions in the written observations in this article. Interested readers will find the observations here: https://eftacourt.int/cases/e-221/
The oral hearing of the case before the EFTA Court takes place on October 27, 2021 and the ruling of the EFTA Court is yet to come. We will of course get back to the court’s decision in a third article on the Norep case (and also a fourth one when the Supreme Court has made its final ruling based on the interpretation received by the EFTA Court).
Henrik Renner Fredriksen, IDI Member