Agency often contains international aspects. The very fact that a principal himself is not familiar with the language and commercial customs of a country in which he wants to distribute his products and/or services and in which he does not yet have a network, may be a reason to choose to work with one or more local agents.

Applicable law and competent court

Choice of law and choice of forum

If the principal and the agent are not established in the same country, it is advisable to make arrangements on the law applicable to the agency relationship (choice of law) and on the court that has jurisdiction to hear and determine a dispute relating to that agency relationship (choice of forum). Preferably, those arrangements should also be written down in an agency agreement.

In international agency relationships, it cannot be said in advance whether such a choice of law and choice of forum will be upheld. Meaning that it is not certain whether a non-designated court will declare itself incompetent and whether the court will also apply the chosen law. This uncertainty arises in particular when a court outside the European Union is petitioned. That court will rule on its jurisdiction and on the law to be applied on the basis of its own national law.

This uncertainty about the effect of a choice of law and/or choice of forum cannot be eliminated beforehand by contract. However, it may be advisable to consult a lawyer from the country in which the agent is established, to find out how the choice of forum clause and the choice of law clause are viewed under the law of that country.

Obviously, the choice of forum and the choice of law are particularly important if a dispute arises. If it turns out afterwards that the choice of Dutch law is either wholly or partly set aside, this will create uncertainty about the parties’ legal positions. To make matters even worse, if it should turn out afterwards that the Dutch court lacks jurisdiction, this might have far-reaching financial consequences. After all, a foreign lawyer will have to be engaged in addition to Dutch counsel(s) and there are countries where conducting legal proceedings is significantly more expensive than in the Netherlands, for example, the United Kingdom.

The Dutch court will assess the validity of a choice of law clause in the light of the Hague Agency Convention and its jurisdiction based on a choice of forum clause in the light of the Brussels I Regulation (recast

No choice of law

If no choice of law is made, a Dutch court will rule pursuant to the Hague Agency Convention that the agency agreement is governed by the law of the state where the agent is established at the time of entering into the agency agreement. If the agent mainly provides its services in the country where the principal is established, the agency contract will be governed by the law of the country where the principal is established. 

Generally speaking, how and on the basis of which regulations a foreign court will rule on the issue of applicable law cannot be said. That will depend on the national laws of the state in question.

Courts of countries that are a party to the Hague Agency Convention will determine the applicable law based on that convention. Apart from the Netherlands, the only other members are Argentina, Portugal, and France. 

Courts of EU Member States other than the Netherlands, France and Portugal will determine the applicable law on the basis of the Rome I Regulation. Pursuant to this convention, the law of the country where the agent is established will in principle apply.

So if no choice of law is made by a Dutch principal with an agent based in Europe, it is highly likely that the law of the country where the agent is established will apply to the agency agreement.

No choice of forum

If no choice of forum is made, a Dutch court and courts of other EU Member States will determine their jurisdiction on the basis of Brussels I (recast).   

Agency law in other EU Member States

Dutch agency law is an implementation of the European Agency Directive. This directive has also been implemented in the national laws of all other EU countries. However, this does not mean that agency law is therefore the same in all European countries. There are several reasons for this.

First, a directive only sets a certain goal that all European countries must achieve. Those countries are allowed to make their own laws to achieve that goal. Legislation may therefore be set up differently, as long as its goal is the same. In addition, the Agency Directive seeks to achieve minimum harmonisation, allowing a country to grant further protection to the agent than the minimum required by the directive. Moreover, in several respects, the Agency Directive allows countries to make choices with respect to setting up their local laws.

If a party is faced with the applicability of the laws of another EU Member State, it is therefore always advisable to seek the assistance of a legal expert or a lawyer who is familiar with the laws of that state.

Below, a number of specific provisions that differ from the Dutch Agency Law are mentioned for a number of EU countries. This list merely serves to clarify matters and is definitely not exhaustive.

Belgium

• Under Belgian law, a post-contractual non-compete clause may not be agreed for a period longer than 6 months after the expiry of the agency agreement. In the Netherlands, a longer period of a maximum of 2 years applies.
• The notice period is equal to 1 month during the first year of the contract. After the first year, the notice period is each time extended by 1 month for each additional year that has commenced, with a maximum of 6 months. The parties cannot agree on shorter notice periods.
• Belgian agency law stipulates that an agency agreement also exists if the agent only receives a fixed remuneration from the principal for the work. This is different under Dutch law. If only a fixed fee is paid to the agent, there is no agency agreement under Dutch law, but an ‘ordinary’ contract for the provision of services.

Germany

• A post-contractual non-compete clause is possible (for a maximum of 2 years), but if such has been agreed, the principal is obliged to pay the agent reasonable compensation for the duration of the prohibition. The law does not state how high that amount should be. It depends on the circumstances of the case. Historically, compensation for the prohibition to compete as a rule ranges between the annual amount in commission earned by the commercial agent during the last year of his activity and a full year’s commission. Possibly, post-contractual non-compete clauses are not often used in Germany in agency situations as a result hereof.
• The statutory notice periods to be observed are 1 month in the 1^st year, 2 months in the 2^nd year, 3 months in the 3^rd to 5^th year and 6 months after the 5^th year Shorter notice periods are not permitted.
• Under German law, the agency agreement does not end in case of unjustified early termination. The agency agreement continues until the date on which a lawful termination (taking into account the applicable notice period) would have been possible. The Dutch Agency Law, on the other hand, explicitly provides that the agency agreement does end by notice being given, without observance of a statutory or contractually agreed notice period. However, the terminating party will in that case be liable for the damage (except in the case of termination due to an urgent reason).

 France

• French courts usually set the goodwill compensation at twice the average annual gross commission. In the Netherlands, goodwill compensation is capped at the average annual commission.