by: Prof. Dr. F. Christian Genzow

Transcription

1 The legal basis for the Council Directive 86/653/EEC of 18 December 1986 relating to self-employed commercial agents and for its extension to authorized distributors according to the EDL proposal by: Prof. Dr. F. Christian Genzow

2 2 Preamble: The nature of the distribution of products within the EU underwent significant changes within the last decades: Whereas in the seventies the distribution of products was in many cases still carried out by commercial agents, manufacturing companies transferred the distribution afterwards more and more often to authorized distributors and franchisee, not least of all in order to make use of their finance function for the products manufactured. This is especially true for the distribution of products of well-known brands and best of all for the automobile distribution. According to a survey carried out in 2004, distribution systems are today mainly organised on the basis of authorized distributor agreements (approximately 68 %), whereas the number of distribution systems in which commercial agents are responsible for the distribution of products is significantly declining (meanwhile under 20 %). However, only very few countries have a law for authorized distribution systems: Consequently, the association of European Distribution Lawyers (EDL) proposed to extend the Council Directive of 1986 related to self-employed commercial agents (attachment 1: English version, attachment 2: German version) to authorized distributors (attachment 3: proposal EDL). Various members of the European Parliament addressed the request to the EU commission (especially to the DG IV) to put the EDL proposal to practice; the EU commission reacted positively. A third party however came with the question in how far there is the necessary legal basis for the directive makers to extend the council directive related to self-employed commercial agents. The following report aims to examine the legal basis for the council directive related to self-employed commercial agents and for its extension to authorized distributors.

3 3 I. Legal basis for the Council Directive related to self-employed commercial agents In the preamble of the Agent Directive (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) reference is explicitly made to Article 57 (2) and Article 100 of the Treaty establishing the European Economic Community (EEC Treaty). Article 57 (1) and (2) EEC Treaty 1957 reads: (1) In order to facilitate the engagement in and exercise of non-wage-earning activities, the Council, on a proposal of the Commission and after the Assembly has been consulted, shall, in the course of the first stage by means of a unanimous vote and subsequently by means of a qualified majority vote, act by issuing directives regarding mutual recognition of diplomas, certificates and other qualifications. (2) For the same purpose, the Council, acting on a proposal of the Commission and after the Assembly has been consulted, shall, before the expiry of the transitional period, issue directives regarding the co-ordination of legislative and administrative provisions of Member States concerning the engagement in and exercise of non-wage-earning activities. A unanimous vote shall be required on matters which, in at least one Member State, are subject to legislative provisions, and on measures concerning the protection of savings, in particular the allotment of credit and the banking profession, and concerning the conditions governing the exercise in the various Member States of the medical, paramedical and pharmaceutical professions. In all other cases, the Council shall act in the course of the first stage by means of a unanimous vote and subsequently by means of a qualified majority vote. Article 100 EEC Treaty 1957 reads: The Council, acting by means of a unanimous vote on a proposal of the Commission, shall issue directives for the approximation of such legislative and administrative provisions of the Member States as have a direct incidence on the establishment or functioning of the Common Market. The Assembly and the Economic and Social Committee shall be consulted concerning any directives whose implementation in one or more of the Member States would involve amendment of legislative provisions. Due to amendments of the Treaty establishing the European Economic Community in 1997, the numbering of the directives quoted was amended and some contents were slightly altered:

4 4 Ex Article 57 EEC Treaty à Article 47 of the Treaty establishing the European Community (EC Treaty): (1) In order to make it easier for persons to take up and pursue activities as selfemployed persons, the Council shall, acting in accordance with the procedure referred to in Article 251, issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications. (2) For the same purpose, the Council shall, acting in accordance with the procedure referred to in Article 251, issue directives for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons. The Council, acting unanimously throughout the procedure referred to in Article 251, shall decide on directives the implementation of which involves in at least one Member State amendment of the existing principles laid down by law governing the professions with respect to training and conditions of access for natural persons. In other cases the Council shall act by qualified majority. Moreover the Council determined with a qualified majority: (3) In the case of the medical and allied and pharmaceutical professions, the progressive abolition of restrictions shall be dependent upon coordination of the conditions for their exercise in the various Member States. Ex Article 100 of the Treaty establishing the European Economic Community à Article 95 of the Treaty establishing the European Community: The Council shall, acting unanimously on a proposal from the Commission and after consulting the European Parliament and the Economic and Social Committee, issue directives for the approximation of such laws, regulations or administrative provisions of the Member States as directly affect the establishment or functioning of the common market. In 2008 this law was anew amended and modified: Ex Article 47 of the EC Treaty à Article 53 of the Treaty on the Functioning of the European Union (TFEU): (1) In order to make it easier for persons to take up and pursue activities as selfemployed persons, the European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure, issue directives for the mutual recognition of diplomas, certificates and other evidence of formal qualifications and for the coordination of the provisions laid down by law, regulation or administrative action in Member States concerning the taking-up and pursuit of activities as self-employed persons.

5 5 (2) In the case of the medical and allied and pharmaceutical professions, the progressive abolition of restrictions shall be dependent upon coordination of the conditions for their exercise in the various Member States. Ex Article 95 of the EC Treaty à Article 114 of the TFEU: (1) Save where otherwise provided in the Treaties, the following provisions shall apply for the achievement of the objectives set out in Article 26. The European Parliament and the Council shall, acting in accordance with the ordinary legislative procedure and after consulting the Economic and Social Committee, adopt the measures for the approximation of the provisions laid down by law, regulation or administrative action in Member States which have as their object the establishment and functioning of the internal market. (2) ( ) II. Line of purpose of the directive makers Following on the wording of law in chapter I, the regulations in the Article 57/47/53 refer to take up and pursue activities as self-employed persons. The activities of an authorized distributor are just as the activities of a commercial agent activities as self-employed persons (in the English version of the provision, the wording is activities as self-employed persons, in the French version faciliter l accès aux activités non salariées et leur exercise ) whereas it is legally irrelevant for both, the commercial agent as well as the authorized distributor, whether he acts as a registered merchant or as a legal entity: In all countries the wording was understood in a way that the criterion of self-employment is the only decisive one and not whether he acts as a registered merchant or as a legal entity. No wording emphasizes that a legal entity is required but only the criterion of self-employment. This corresponds as well to the practice: in all European countries, commercial agents act either as a natural person or as a legal entity (e.g. Ltd). Especially the wording of the (currently valid) Article 53 TFEU proves that the purpose of the directive makers regarding the taking up and pursuing of activities as self-employed persons is mainly the coordination of the provisions laid down by law, regulation or administrative action in Member States. The provisions in the Article 100/94/114 cope with the approximation of the provisions laid down by law, regulation or administrative action in Member States

6 6 Especially Article 114 (1) TFEU proves that this approximation shall have as its object the establishment and functioning of the internal market. III. Justification of the directive makers for the directive relating to self-employed commercial agents Article 53 TFEU (ex Article 57 (2) EEC respectively Article 47 (2) EC) allows the coordination of provisions of the Member States by the help of regulations, if this makes it easier for persons to take up and pursue activities as self-employed persons. The preamble of the directive relating to self-employed commercial agents makes reference to this matter of fact by stating that the differences between the rights of commercial agents in the Member States significantly influence the exercise of the profession of a commercial agent within the community. [to this see also Fock, Die europäische Handelvertreterrechtlinie, 2001, page 26] In accordance with Article 114 (1) TFEU (ex Article 95 of the Treaty establishing the European Community respectively Article 100 of the Treaty establishing the European Economic Community) an approximation of the provisions laid down by law, regulation or administrative action in the Member States which directly influence the establishment and functioning of the common market, is possible. The preamble of the directive relating to self-employed commercial agents does not explicitly refer to the assurance of the basic freedoms, as stipulated in the Treaty establishing the European Economic Community, as the objective of the approximation of the rights of commercial agents, in contrast to the obstruction caused by different national provisions. But indirect reference is made, since standardized rules concerning conflict of laws do not remove the inconsistencies referred to. The assurance of the basic freedoms was consequently of initial importance for the adjustment of the rights of commercial agents. Article 3 lit. g EEC Treaty already provided for the establishment of a system of not distorted competition as a part of the common market. A competition distortion cannot only be caused by activities of private persons. According to the European Court of Justice, governmental measures can as well distort the competition. [European Court of Justice 18 March 1980, Rs.91/79 (Commission./. Italian Republic), Slg. 1980, 1099 (1106), consideration 8]. The international orientation of the economy supported by the discontinuation of internal borders within the community shall not be predetermined by an incline of legal burdens.

7 7 According to the investigations of the directive makers, there was such an incline of legal burdens in the field of the European commercial agent law: Certain legal provisions contained compelling regulations regarding the protection of the commercial agent such as postcontractual claims for compensation respectively adjustment. In other Member States the freedom of contract of the parties and especially of the entrepreneur regarding the contracts of the commercial agents was however not restricted. This burden caused a corresponding difference of costs for the entrepreneurs, depending on which law their commercial agent agreements were subject to. [instead of all: Basedow, Rabels Z 45 (1981, 196, 201)] The directive makers therefore referred concerning the establishment of the directive relating to self-employed commercial agents for appropriate reasons not only to the assurance of the establishment and pursuit of self-employed activities (ex Article 57 (2) of the Treaty establishing the European Economic Community) but also to the announcement of competitive restrictions (ex Article 100 EEC Treaty). IV. Similarity of the legal situation for authorized distributor agreements As mentioned above in chapter I, the legal provisions did not change with regard to the content for the directive makers. The authorized distributor law is completely different throughout Europe. In some countries for example in Belgium legal provisions exist, in other countries, the authorized distributor law is either based on law (e.g. Greece) or due to national dispensation of justice applied accordingly (e.g. Germany and Austria). In still other countries there is not even a legal basis, here the parties are responsible for which rights and duties are in case applied. As a result, the differences among the authorized distributor laws in the Member States significantly affect the exercise of the activities of an authorized distributor within the community, especially since each provision of the private law at least indirectly influences the exercise of a self-employed activity at the place of establishment. Consequently there is indirectly a legal basis for the coordination and the exercise of the self-employed activity of an authorized distributor according to Article 53 TFEU, since the activities of an authorized distributor are also self-employed activities. This is especially true when considering Article 114 (1) TFEU: In the European authorized distributor law there is an incline of different legal burdens. Here as well some legal provision provide for example for post-contractual claims for compensation respectively adjustment, others, however, do not. In addition, the freedom of contract of the parties is generally restricted and especially the freedom of the entrepreneur regarding the use of the freedom of contract (for example in Belgium, Greece, Germany and Austria). This incline causes just as then for the commercial agent a correspondent difference of costs for the entrepreneur, depending on which law his authorized distributor contracts were subject to. Competitive restrictions in the field of the authorized distributor law can therefore throughout Europe just as then for the commercial agent - not be ruled out. The objective and the target of Article 114 TFEU is to take measures in order to approximate the provisions laid down by law, regulation or administrative action in Member States, for the establishment and the functioning of the internal market.

8 8 This objective can be achieved most easily and most purpose oriented by completing the directive relating to self-employed commercial agents from 1986 by authorized distributors and by extending it by specific characteristics which distinguish the authorized distributor and the commercial agent. This objective is covered as mentioned above by both Article 53 (1) as well as by Article 114 (1) TFEU. V. Result Just as in 1986 for commercial agents, there is a sufficient legal basis for establishing a provision which coordinates the legal basis for the authorized distributor law throughout Europe. Due to the fact that distribution is today in all sectors mainly organized by authorized distributors and no longer by commercial agents, the establishment of a new standardized European legal basis is even urgently necessary. Cologne, 31 August 2010 Prof. Dr. F. Christian Genzow