CJEU, 9th chamber, June 4, 2020, No C-828/18

THE COURT (Ninth Chamber),

1 This request for a preliminary ruling concerns the interpretation of 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 (OJ 1986 L 382, p. 17).

2 The request has been made in proceedings between Trendsetteuse SARL and DCA SARL regarding a claim for compensation following the breach of an agreement between those two companies.

Legal context

European Union law

3 The second and third recitals of Directive 86/653 state:

‘Whereas the differences in national laws concerning commercial representation substantially affect the conditions of competition and the carrying-on of that activity within the Community and are detrimental both to the protection available to commercial agents vis-à-vis their principals and to the security of commercial transactions; whereas moreover those differences are such as to inhibit substantially the conclusion and operation of commercial representation contracts where principal and commercial agent are established in different Member States;

Whereas trade in goods between Member States should be carried on under conditions which are similar to those of a single market, and this necessitates approximation of the legal systems of the Member States to the extent required for the proper functioning of the common market; whereas in this regard the rules concerning conflict of laws do not, in the matter of commercial representation, remove the inconsistencies referred to above, nor would they even if they were made uniform, and accordingly the proposed harmonization is necessary notwithstanding the existence of those rules’.

4 Article 1 of that directive provides:

‘1. The harmonization measures prescribed by this Directive shall apply to the laws, regulations and administrative provisions of the Member States governing the relations between commercial agents and their principals.

2. For the purposes of this Directive, “commercial agent” shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the “principal”, or to negotiate and conclude such transactions on behalf of and in the name of that principal.

3. A commercial agent shall be understood within the meaning of that Directive as not including in particular:

– a person who, in his capacity as an officer, is empowered to enter into commitments binding on a company or association,

– a partner who is lawfully authorized to enter into commitments binding on his partners,

– a receiver, a receiver and manager, a liquidator or a trustee in bankruptcy.’

5 Under Article 3 of that directive:

‘1. In performing [his] activities a commercial agent must look after his principal's interests and act dutifully and in good faith.

2. In particular, a commercial agent must:

(a) make proper efforts to negotiate and, where appropriate, conclude the transactions he is instructed to take care of;

(b) communicate to his principal all the necessary information available to him;

(c) comply with reasonable instructions given by his principal.’

6 Article 4(3) of that directive provides:

‘A principal must, in addition, inform the commercial agent within a reasonable period of his acceptance, refusal, and of any non-execution of a commercial transaction which the commercial agent has procured for the principal.’

7 Article 17(2) of Directive 86/653, relating to the indemnity owed to a commercial agent after termination of the agency contract, provides, in subparagraph (a) thereof:

‘The commercial agent shall be entitled to an indemnity if and to the extent that:

– he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers,

and

– the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers. Member States may provide for such circumstances also to include the application or otherwise of a restraint of trade clause, within the meaning of Article 20.’

French law

8 Directive 86/653 was transposed into French law by Loi no 91-593, du 25 juin 1991, relative aux rapports entre les agents commerciaux et leurs mandants (Law No 91-593 of 25 June 1991 on the relationship between commercial agents and their clients) (JORF of 27 June 1991, p. 8271). Article 1 of that law, codified in Article L. 134-1 of the Code de commerce (Commercial Code) is worded as follows:

‘The commercial agent is a representative who, on a self-employed basis …, has continuing authority to negotiate and, where appropriate, conclude sales contracts …, on behalf of and in the name of producers, traders …’

The dispute in the main proceedings and the question referred for a preliminary ruling

9 DCA, a company whose object is the manufacture and distribution of products marketed under the brand IZI-MI and the operation of retail stores selling ready-made garments and jewellery, was bound since July 2003 by an unwritten agreement, to Trendsetteuse, pursuant to which the latter was to display DCA’s products in its showroom, in return for a commission on the sale price of those products.

10 That agreement stipulated in particular that Trendsetteuse was responsible for concluding, in the name of and on behalf of DCA, contracts for the sale of products of the brand IZI-MI in the so-called ‘Grand Nord’ sector, which corresponded to the whole of the north of France, as well as in the so-called ‘Grand Sud’ sector, which corresponded to the whole of the south of France, with the exception of Corsica. As such, Trendsetteuse put DCA in contact with clients, took orders for products and tracked their shipments and deliveries.

11 On 29 March 2016, DCA informed Trendsetteuse that it was terminating its contractual relationship for the so-called ‘Grand Sud’ sector, being of the view that sales of products marketed under the trade mark IZI-MI in that sector were insufficient. DCA also stated that, if Trendsetteuse failed to accept that termination of contract, it would cease all collaboration with the latter.

12 By letter of 12 April 2016, Trendsetteuse informed DCA that it was contesting that decision, being of the view that it was unjustified and that it had caused it to lose half of its turnover. Nevertheless, in spring 2016, DCA gave responsibility for that sector to another company.

13 Trendsetteuse put DCA on formal notice to pay it damages for breach of the commercial agency contract, a request which DCA rejected, invoking the fact that Trendsetteuse was not a commercial agent within the meaning of Article L. 134-1 of the Commercial Code.

14 Trendsetteuse then brought an action before the Tribunal de commerce de Paris (France), arguing that the agreement between it and DCA amounted to a commercial agency contract.

15 In defence, DCA has denied that that agreement was a commercial agency contract, on the ground that Trendsetteuse did not have, under that agreement, the power to amend the conditions of sale of the articles it sold on behalf of DCA, in particular to change the prices of those articles as set by the latter.

16 The referring court harbours doubts as to how the agreement at issue in the main proceedings should be classified. In that regard, that court states that Article L. 134-1 of the Commercial Code defines a commercial agent as being the representative who has continuing authority to negotiate and, where appropriate, conclude sales contracts.

17 Noting that that provision repeats the language of Article 1(2) of Directive 86/653, the referring court questions how the term ‘negotiate’ in that article should be interpreted. While the Cour de cassation (Court of Cassation, France) has interpreted that term as meaning that a person cannot have the status of commercial agent when he does not have the power to amend the conditions of sale and to set the price of the goods he sells on behalf of the principal, other French courts as well as courts of other Member States, using the common meaning of the term ‘negotiate’, have interpreted it in the opposite way.

18 In that context, the referring court questions whether a company such as Trendsetteuse, which does not have the power to amend the conditions of sale of the articles it sells on behalf of another company, in particular to change the prices of those articles, may be regarded as having the authority to ‘negotiate’ contracts, within the meaning of Article 1(2) of Directive 86/653.

19 In those circumstances, the Tribunal de commerce de Paris (Commercial Court, Paris) decided to stay the proceedings and to refer the following question to the Court for a preliminary ruling:

‘Should Article 1(2) of [Directive 86/653] be interpreted as meaning that a self-employed intermediary who is acting as an agent on behalf of and in the name of his principal, but does not have the power to change the prices and contractual conditions of his principal’s sales contracts, does not have the authority to negotiate those contracts for the purposes of that article, and consequently cannot be classified as a commercial agent and benefit from the status provided for in the Directive?’

Consideration of the question referred

20 By its question, the referring court asks, in essence, whether Article 1(2) of Directive 86/653 must be interpreted as meaning that a person must necessarily have the power to change the prices of the goods he sells on behalf of the principal in order to be classified as a ‘commercial agent’, within the meaning of that provision.

21 In that regard, Article 1(2) of Directive 86/653 defines a commercial agent for the purposes of that directive as a self-employed intermediary who has continuing authority either to negotiate the sale or the purchase of goods on behalf of another person, referred to as the ‘principal’, or to negotiate and conclude such transactions on behalf of and in the name of the principal.

22 That provision lays down the three necessary and sufficient conditions for a person to be classified as a commercial agent. First, that person must be a self-employed intermediary. Second, he must be bound to the principal by a contractual relationship of a continuing character. Third, he must exercise, on behalf of and in the name of the principal, an activity which may consist either simply in being an intermediary for the sale or purchase of goods or in both acting as intermediary and concluding sales or purchases of goods (judgment of 21 November 2018, Zako, C‑452/17, EU:C:2018:935, paragraph 23).

23 In the present case, it is necessary to define the meaning of the term ‘negotiate’ used in the third of those conditions, in order to establish whether it necessarily means that, in order for a person to have the status of commercial agent, he has the power to change the prices of the goods he sells on behalf of the principal.

24 In that regard, it should be noted that, while Directive 86/653 does not define the term ‘negotiate’, the fact that the act of negotiation referred to in Article 1(2) of that directive must relate to ‘the sale or purchase of goods for the principal’ highlights the intention of the EU legislature that that act have as its objective the conclusion of contracts of sale or of purchase on behalf of the principal.

25 In addition, it should be noted that, since Article 1(2) of Directive 86/653 does not make any reference to national laws concerning the meaning to be given to the concept of ‘negotiate’, that provision must be regarded, for the purposes of the application of that directive, as containing an autonomous concept of EU law which must be interpreted in a uniform manner throughout the territory of the European Union (see, to that effect, the judgment of 19 December 2019, Engie Cartagena, C‑523/18, EU:C:2019:1129, paragraph 34 and the case-law cited).

26 In that regard, it is settled case-law that the meaning and scope of terms, for which EU law gives no definition, must be determined by considering their usual meaning in everyday language, while also taking into account the context in which they occur and the purposes of the rules of which they are part (see, inter alia, judgment of 29 July 2019, Spiegel Online, C‑516/17, EU:C:2019:625, paragraph 77).

27 While the majority of the language versions of Article 1(2) of Directive 86/653 use terms which can be translated as ‘negotiate’, inter alia the German- and Polish-language versions contain broader terms, which can be translated as ‘act as intermediary’.

28 However, that disparity notwithstanding, the terms used in the various language versions of Article 1(2) of Directive 86/653 do not necessarily mean that the commercial agent himself can set the price of the goods he sells on behalf of the principal.

29 It is appropriate, therefore, to interpret the term ‘negotiate’, contained in Article 1(2) of Directive 86/653, taking into account the context in which that provision operates and the objectives pursued by that directive.

30 As regards, in the first place, the context in which that provision operates, first, it follows from Article 3(1) and (2) of Directive 86/653 that, under its contract, the commercial agent must safeguard the principal’s interests by, in particular, making proper efforts to negotiate and, where applicable, to conclude the transactions of which he has been instructed to take care by the principal. The purpose of a commercial agent’s activity thus depends on the terms of the contract which binds him to the principal and, in particular, on the agreement between the parties with regard to the goods which the principal intends to sell or purchase through the mediation of that commercial agent (judgment of 7 April 2016, Marchon Germany, C‑315/14, EU:C:2016:211, paragraphs 31 and 32).

31 Such a contract may prescribe the sale prices of the goods, without it being possible for the commercial agent to change them in the course of the negotiation. Indeed, contractually setting the sale prices of goods in such a manner may be justified by reasons of commercial policy, which requires the taking into account of factors such as the position of an undertaking on the market, the prices charged by competitors and the continuity of that undertaking.

32 Second, the circumstance that a commercial agent does not have the power to change the prices of the goods he sells on behalf of the principal does not prevent the commercial agent from carrying out his main tasks, as are described in Directive 86/653.

33 It is apparent from a combined reading of Articles 4(3) and 17(2)(a) of Directive 86/653 that the commercial agent’s main tasks are to bring the principle new customers and to increase the volume of business with existing customers.

34 However, as was highlighted, in essence, by the Austrian Government in its written observations, it is possible for the commercial agent to accomplish those tasks by providing information and advice as well as through discussions, aimed at facilitating the conclusion of the transaction for the sale of goods on behalf of the principal, without the commercial agent having the power to change the prices of those goods.

35 Second, interpreting Article 1(2) of Directive 86/653 as meaning that that provision excludes from the classification of ‘commercial agent’ those persons who do not have the power to change the prices of the goods they sell on behalf of the principal would run counter to the objectives of that directive.

36 Indeed, as is clear from the second and third recitals, that directive seeks to protect commercial agents in their relations with their principals, to promote the security of commercial transactions, and to facilitate trade in goods between Member States by harmonising their legal systems within the area of commercial representation (judgment of 21 November 2018, Zako, C‑452/17, EU:C:2018:935, paragraph 26 and the case-law cited).

37 However, interpreting Article 1(2) of Directive 86/653 restrictively, as meaning that, in order to enjoy the protection of that directive, a person must necessarily have the power to change the prices of the goods he sells on behalf of the principal, would limit the scope of that protection, excluding from it all persons who do not have that power.

38 Such an interpretation would allow the principal, as both the Austrian and German Governments as well as the Commission noted in their written observations, to avoid the mandatory provisions of Directive 86/653, in particular that concerning the indemnification of the commercial agent in the event of termination of the contract, by reserving in that contract any right to negotiate the prices of goods, which would undermine the attainment of the objective pursued by that directive.

39 In the light of the foregoing, the answer to the question referred is that Article 1(2) of Directive 86/653 must be interpreted as meaning that a person does not necessarily need to have the power to change the prices of the goods he sells on behalf of the principal in order to be classified as a ‘commercial agent’, within the meaning of that provision.

Costs

40 Since these proceedings are, for the parties to the main proceedings, a step in the action pending before the national court, the decision on costs is a matter for that court. Costs incurred in submitting observations to the Court, other than the costs of those parties, are not recoverable.

On those grounds, the Court (Ninth Chamber) hereby rules:

Article 1(2) of 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 must be interpreted as meaning that a person does not necessarily need to have the power to change the prices of the goods he sells on behalf of the principal in order to be classified as a ‘commercial agent’, within the meaning of that provision.