The defendant argued that the reason of termination with immediate effect was the violation of the non-competition clause provided for in the agreement by the distributor. The plaintiff was of the opinion that firstly: the non-competition clause was not provided for in the contract at all and secondly: that the defendant have terminated the distribution agreement with immediate effect immediately after sending the letter to the distributor and setting the deadline for ceasing the competitive activities, not even awaiting the reply. The contractual penalty in the amount of EUR 100,000 was provided for in the agreement between the parties and was due i.a. in case of unjustified termination of the contract by one of the parties thereto. The court of the first instance awarded the amount of EUR 100,000 to the plaintiff and the Appeal Court in Warsaw dismissed the appeal of the defendant.
It seems that the most important reason of the dispute between the parties was different understanding of the distribution agreement and in particular – one of its provisions, which was interpreted by the supplier as the non-competition clause and which – in the opinion of the distributor was only an exclusivity clause, providing for the distributor’s obligation of purchasing products from the supplier only. But the Appeal Court in Warsaw has raised in the verdict several noteworthy remarks.
Firstly: the agreement concluded as a result of the negotiations and signed by the parties separately is duly concluded at the moment when the second party signs it. Secondly: the distribution agreement is a framework agreement and therefore the Vienna Convention does not apply to the distribution agreements unless their parties explicitly provided for otherwise. Furthermore, the distributor may undertake not to sell the competitive products, but it is not an obligatory provision of the distribution agreement (the Appeal Court noted that this obligation of the distributor may be provided for in exchange for the exclusivity given by the supplier, but it is not clear, if – in the opinion of the Appeal Court in Warsaw – these two mutual obligation i.e. exclusivity of the distributor and the non-competition clause are always related to each other). Although Article 760 of the Polish Civil Code provides for the agent’s loyalty obligation towards the principal, the position of the distributor is different than the position of the agent in the intermediary contract and therefore the loyalty obligation arising out of the Polish Civil Code, regulating the agency contract, may not be applied automatically for the distributor.
Olga Sztejnert-Roszak, IDI country expert for agency & distribution in Poland
