The Turkish agent and the Belgian principal had expressly agreed that their commercial agency agreement was subject to Belgian law and that disputes were to be settled in the Belgian courts.
After the agency relationship was terminated, the agent claimed compensation in lieu of notice and a goodwill indemnity from the principal under the Belgian Agency Act, which implements Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents. In the alternative order, the agent claimed goodwill compensation in accordance with (Section 122 of) the Turkish Commercial Code. Under Turkish law, no compensation in lieu of notice was due.
The Belgian Agency Act is ‘autolimitative’
On 3 September 2015, the Commercial Court held that, according to the parliamentary preparations of the Belgian Agency Act, the Act does not apply when an agent has its principal place of business outside Belgium. Therefore, the Commercial Court initially established that the choice of law clause between the parties did not entail the application of the Belgian Agency Act. However, the Commercial Court did refer the matter to the Court of Justice of the EU for a preliminary ruling.
In its ruling of 16 February 2017, the CJEU decided that the the Belgian Agency Act, interpreted in the sense that it does not apply to an agent that has its principal place of business in Turkey, is not contrary to the EU Agency Directive or the Association Agreement between Turkey and the EU. The Act’s so-called ‘autolimitative’ nature was thus confirmed.
The application of Turkish Agency Law
After the preliminary ruling, the case continued in the Belgian courts. The issue of whether the Belgian courts could apply Turkish law through the application of Article 7.1 of the 1980 Rome Convention was still an unanswered question. The agency agreement was entered into prior to the entry into force of the Rome I Regulation.
Article 7.1 allows a court to give effect to the mandatory rules of another country with which the situation has a close connection. In considering whether to give effect to these mandatory rules, the 1980 Rome Convention foresees that a court should have regard to their nature and purpose and to the consequences of their application or non-application.
In the case at hand, the Ghent Commercial Court gave effect to Section 122 of the Turkish Commercial Code.
- In light of the CJEU’s rulings in Arblade and Unamar, the Ghent Commercial Court held that this Section is mandatory in the sense of Article 7.1. The Commercial Court decided so after reviewing (i) the Section’s wording (ii) the context in which this Section came into being (i.e. Turkey copying the Acquis Communautaire following its Association Agreement with the EU and (iii) the preparatory works of the Turkish Commercial Code, which indicated that the relevant provisions implemented the EU Agency Directive.
- Furthermore, the Commercial Court held that the case was closely connected to Turkey as this was where the agent had its seat, was active and performed the contract.
- Finally, the Commercial Court held that it was appropriate to award Turkish agents a minimum protection similar to the one offered to EU agents and to Turkish agents acting on behalf of Turkish principals. Not applying the relevant Section of Turkish law would result in an unequal treatment of Turkish and EU service providers, which would be detrimental to the movement of services between Turkey and the EU. Even though the Association Agreement does not provide for the general principle of free movement of persons, the promotion of the free movement of services was one of its objectives. According to the Commercial Court, certainty and predictability also justified the application of the relevant Section of the Turkish Commercial Code.
The Commercial Court concluded that Belgian law applied but was to be supplemented by the mandatory provisions of the Turkish Commercial Code. The Commercial Court awarded goodwill compensation to the (former) agent in accordance with Section 122 of the Turkish Commercial Code.
ALTIUS' Dispute Resolution team represented the Turkish agent in the proceedings before the Belgian Court and the CJEU. For further information, please contact the authors. The information above is merely intended to comment on the relevant issues of Belgian law and is not intended to provide legal advice. Before taking action or relying on the comments and the information given, seek specific advice on the particular matters of concern.