Invicta UK v International Brands Limited

This is the first and thus the leading domestic authority determining the point in time at which the court assesses whether an agent falls within the scope of the Commercial Agents (Council Directive) Regulations 1993 ("the Regulations").

Summary

Following article 1.2 of the Directive, a commercial agent is defined in regulation 2(1) as a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person (the "principal"), or to negotiate and conclude the sale or purchase of goods on behalf of and in the name of that principal.

The claimant submitted that whether an agent has continuing authority to negotiate is to be determined, in the first instance, at the time when the agency agreement was made. The Defendant argued that  the court must look at all the relevant factors including the manner in which the relationship between the parties actually operated.

Held: one should at least start by considering the agreement at its inception. However, as one is applying European Regulations and striving for consistency it may be legitimate to investigate to what happened.

Judgment for the claimant.

Key facts

The Claimant (“Invicta”) brings this action against the Defendant (“IBL”) under the Commercial Agents (Council Directive) Regulations 1993 ("the Regulations") and pursuant to common law. In summary, Invicta assert that it was IBL’s commercial agent and that it is entitled to compensation for the value of the agency lost by termination of the agency pursuant to R17 of the Regulations. Additionally Invicta claims that the agency was terminated on short notice and it is thus entitled to payment in respect of notice (or damages in lieu of) either pursuant to the Regulations or, if the Regulations do not apply, at common law.

IBL deny that Invicta is a commercial agent. In particular they deny that Invicta had any continuing authority as alleged to negotiate or negotiate and conclude the sale of goods on behalf of the Defendant, as required by R2(1) of the Regulations.

The question arose as to what point in time does one assess whether a party is a commercial agent. Despite the Regulations being in force since 1994 this question had not been addressed by a domestic authority.

The Claimant submitted that whether an agent falls within the scope of the Regulations, and whether an agent has continuing authority to negotiate is to be determined, in the first instance, at inception of the agency agreement. The defendant submitted that the terms of contracts made with third parties are relevant to the determination as to whether an entity falls within the scope of the Regulations; and these contracts must logically be made after the agency agreement between the parties. In other words, in order for the court to determine the application of the Regulations, it must look at all the relevant factors including the manner in which the relationship between the parties actually operated.

The judge held that to some extent he agreed with the Defendant but overall he preferred the Claimant’s submissions, that one should at least start by considering the agreement at its inception. However, as one is applying European Regulations and striving for consistency it may be legitimate to investigate to what happened.

Judgment for the Claimant.

Permission to appeal is being sought.

For further details, please refer to the judgment in Invicta UK (a partnership) v International Brands Limited [2013] EWHC 1564 (QB)

HHJ Peter Ralls QC (sitting as a High Court Judge)

Hand down on 14 June 2013