The insurance company concluded a contract with the agent under which she received a commission, comprising a percentage of the insurance contracts she concluded. The agent was only entitled to the commission if the contract was not terminated before three or five years. The contracts stipulated that the non-payment of premiums by the customers would result in the ceasing of the entitlement to commission, if it occurred during the first few months of the contract, or a proportional reduction of the amount of the commission, if it occurred after the first three months. Some clients ceased to pay the premiums in relation to some contracts, three to six months after they had been signed. Following the cancellation of the contracts, the insurance company asked the agent to pay back the commissions received. The agent refused to do so claiming that the cancellations were the fault of the company. The insurance company brought an application before the Slovakian court, which was unsure whether national provisions transposing article 11 of Council Directive 86/653/EEC precluded the clauses of the contract pursuant to which non-payment of the premiums terminated entitlement to commission or gave rise to a reduction of the commission in proportion to the period of execution of the contract. Article 11 of Directive 86/653 provided: “1. The right to commission can be extinguished only if and to the extent that: —it is established that the contract between the third party and the principal will not be executed, and —that fact is due to a reason for which the principal is not to blame. 2. Any commission which the commercial agent has already received shall be refunded if the right to it is extinguished. 3. Agreements to derogate from paragraph 1 to the detriment of the commercial agent shall not be permitted.” Accordingly, the court stayed the proceedings and referred to the Court of Justice of the European Union for a preliminary ruling, questions, in essence, whether: (1) the first indent of article 11(1) of Directive 86/653 covered cases of partial non-execution of the contract; (2) article 11(2) and (3) meant that the clause of a contract for commercial agency, pursuant to which the agent was required to refund, on a pro-rata basis, a part of his commission in the event of partial non-execution of the contract constituted a “derogation to the detriment of the commercial agent”, for the purposes of article 11(3); and (3) the second indent of article 11(1) meant that the concept of “a reason for which the principal is to blame” related only to the legal reasons which led directly to the termination of the contract.
On the reference—
Held, (1) that an interpretation of the first indent of article 11(1) of Council Directive 86/653/EEC relating solely to cases of complete non-execution of the contract, would run counter to the purpose of the Directive if, for long-term contracts, the agent were to be guaranteed all his commission from the beginning of the execution of those contracts, without any account being taken of a possible partial non-execution. Thus, the first indent of article 11(1) covered, not only cases of complete non-execution of the contract concluded between the principal and the third party, but also cases of partial non-execution of that contract. It followed that the first indent of article 11(1) meant that the right to commission could be extinguished where the contract concluded between the principal and the third party had been partially executed (judgment, paras 43–44, operative part, para 1).
(2) Pursuant to article 11(2), commissions which the commercial agent had already received were to be refunded if the right to them was extinguished. It followed that the agent could be required to refund commissions already paid, to the extent that the contract concluded between the principal and the client had not been executed. Thus, article 11(2) and (3) meant that the clause of a contract for commercial agency pursuant to which the agent was required to refund, on a pro-rata basis, a part of his commission in the event of partial non-execution of the contract concluded between the principal and the third party did not constitute a “derogation to the detriment of the commercial agent”, for the purposes of article 11(3), if the part of the commission subject to the refund obligation was proportionate to the extent to which that contract had not been executed and on condition that that non-execution was not due to a reason for which the principal was to blame (judgment, paras 48, 51, operative part, para 2).
(3) The Directive sought, inter alia, to protect the commercial agent and referred to the relations, based on fairness and good faith, between the commercial agent and the principal. The condition that non-execution must not be due to reasons for which the principal was to blame contributed to the achievement of those objectives, by ensuring that the principal was not released from his obligation to pay the commission to the agent, when the principal was the cause of the non-execution of the transaction. Thus, the second indent of article 11(1) of Directive 86/653 meant that the concept of “a reason for which the principal is to blame” did not relate only to the legal reasons which led directly to the termination of the contract concluded between the principal and the third party, but covered all the legal and factual circumstances for which the principal was to blame, which were the cause of the non-execution of that contract (judgment, paras 56, 61, operative part, para 3).
B Ricziová, agent, for the Slovak Government.
T Henze and M Hellmann, agents, for the German Government.
K-P Wojcik, A Tokár and L Malferrari, agents, for the European Commission.