## Facts

- A California manufacturer appointed a UK company as its exclusive sales agent for the United Kingdom under a 1989 agency agreement.
- The agreement selected California law as the governing law.
- The agent developed the principal’s market presence and customer base in the UK.
- The principal terminated the agency relationship in 1996.
- The agent sought post-termination indemnity/compensation and related protections under UK regulations implementing an EU directive on self-employed commercial agents.
- The principal argued the UK regulations were inapplicable because California law governed and provided no comparable post-termination entitlement.
- The English High Court initially accepted the choice-of-law clause and rejected application of the UK regulations.
- On appeal, the Court of Appeal referred questions to the Court of Justice concerning whether the directive’s post-termination protections apply notwithstanding a non-EU choice-of-law clause.

## Issues

1. Whether the directive’s mandatory post-termination protections for commercial agents apply when the agent carries out activities in a Member State, the principal is established outside the EU, and the contract chooses non-EU law.
2. Whether a choice-of-law clause selecting third-country law can exclude the agent’s right to indemnity/compensation mandated by the directive.

## Decision

- The Court of Justice held that the directive’s post-termination protections (including those in Articles 17 and 18) must be applied when the agent carries on activities in a Member State, even if the principal is established in a non-Member State and the contract selects that non-Member State’s law.
- The Court reasoned that these provisions are mandatory and linked to EU internal market objectives, including protection of agents, freedom of establishment, and undistorted competition.
- The Court rejected the use of party autonomy to circumvent these protections where the situation is closely connected to the EU because the agent performs in a Member State.
- Following the ruling, the appellate court applied the directive-based UK regime and remitted the matter for determination of the compensation/indemnity amount.

## Legal Principles

- Mandatory EU commercial-agent termination protections apply based on the agent’s place of activity within a Member State, not the principal’s place of establishment.
- A contractual choice of third-country law cannot deprive a commercial agent operating in a Member State of minimum post-termination rights guaranteed by the directive.
- Where an agency relationship is closely connected to the EU through performance in a Member State, directive-based protections operate as overriding mandatory rules to secure internal market objectives.
- Uniform application of the directive prevents competitive distortions that would result if non-EU principals could avoid harmonized termination protections through choice-of-law clauses.

## Conclusion

The Court of Justice required Member State courts to apply the directive’s mandatory post-termination protections for commercial agents when the agent operates within a Member State, notwithstanding a contract clause choosing non-EU law and a principal established outside the EU.


Ingmar GB Ltd. v. Eaton Leonard Techs. Inc., Case C-381/98, [2000] E.C.R. I-9305 (C.J. Nov. 9, 2000)