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Annual Meeting of the International Distribution Institute

Critical Issues In International Distribution

Cook Islands

Past event
12 June 2009, 09:00 - 13 June 2009, 13:00

The conference is divided into a main session (on Friday 12 June) and three parallel workshops on specific issues chosen by IDI in collaboration with its members (on Saturday 13 June, morning).

THE MAIN SESSION: INDEMNITY TO DISTRIBUTORS AND «ILLICIT COMMISSIONS»

This year the main session (Friday, 12 June) is devoted to two different themes of general interest for those involved in distribution:

  • recent developments of case law in some national jurisdictions which extend to distributors, acting as resellers, a termination indemnity similar to that of commercial agents (morning session);
  • the problem of dealing with situations where commissions paid to agents may contravene rules aiming at combating bribery (afternoon session).

Morning session: the distributors' termination indemnity

Distributors who act as buyer-resellers and not as mere intermediaries play a role which is, in some cases, very similar to that of commercial agents. By introducing the supplier's products in a new market they often develop a customer base of which the supplier may benefit after contract termination. It is therefore not surprising that distributors wish to be indemnified for their efforts at the end of the contract. In some countries the distributors are protected through specific laws (e.g. Belgium) or by applying the same rules to agents and distributors (e.g. some Arab countries and some countries of Central America). In most countries no right to indemnity is foreseen, but in some cases the courts have recognized such a right, mainly by extending the rules on agency to distributors.

The session will first give an overview of national laws which recognize the distributor's right to a termination indemnity and thereafter deal with national case law on this issue. The speakers will in particular consider:

  • The judgment of the Swiss federal Court of 22 May 2008, which affirms the right of the distributor to obtain the indemnity foreseen for commercial agents
  • Several judgments by Portuguese courts which extend the indemnity due to commercial agents to distributors
  • New trends in Spain towards recognizing a goodwill indemnity to distributors

Finally, possible strategies for suppliers and distributors for avoiding (or warranting) an indemnity will be discussed.

Afternoon session: Illicit commissions

In the last years there has been an increasing trend towards combating bribery, which also reflects on the drafting and negotiating of agency agreements, to the extent that in certain cases apparently innocent deals may entail unforeseen responsibilities for the principal. On the other hand, principals may in some cases invoke the violation of rules against bribery as an excuse for not paying intermediaries who have performed a fully lawful deal.

The session will first deal with the legal framework (OECD Convention on combating bribery, the Foreign Corrupt Practices Act of the US and other domestic laws) and with private initiatives (like the ICC Recommendations on combating extortion and bribery) and with the issue regarding payment of commissions to intermediaries who use them for corruption purposes.

Thereafter the speakers will deal with arbitral case law on illicit commissions, in order to see where arbitrators put the borderline between lawful and unlawful commissions.

The session will be concluded with a discussion about possible guidelines that a responsible principal should follow when dealing with situations which may give rise to conflict with anti-bribery rules.

THE THREE SPECIALIZED WORKSHOPS

The second session (Saturday June 13, morning) will deal with three parallel workshops on the following themes: Critical issues in EC antitrust law in view of the revision of Regulation 2790/1999

This workshop intends to analyze two critical issues which could be resolved within the context of the revision of regulation 2790/1999 which should be replaced in 2009.

These issues are:

  • The application of the antitrust rules to agency agreements, where recent developments in a very special industry (oil distribution) tend to establish principles which are not appropriate for «normal» agency agreements, and thus risk to create great uncertainty for principals and agents when negotiating their contracts.
  • The treatment reserved to franchising agreements in the vertical restraints regulation, which do not at present sufficiently take into account the specific needs of such contracts, particularly as regards the need of a strict control over the network (e.g. as regards possible internet sales by franchisees).

IDI will establish in the framework of this session a recommendation to be sent to the European Commission, explaining the point of view of our association.

Dealing with distribution contracts in the Arab countries

For many foreign exporters negotiating contracts with agents and distributors in the Arab countries is a complicated business, particularly because of the difficulty of understanding the local laws and the way they are implemented in practice. The workshop will give the possibility to meet a number of experts of these countries who will give valuable information about law and practice of distribution in the Arab world.

Developing franchising internationally: Drafting and negotiating master franchising and area development (multi-unit) agreements Franchising networks are expanding across the borders and franchisors must choose the most appropriate strategies for approaching foreign markets. The speakers will discuss the two main alternatives, master franchising and area development agreements and a number of connected issues, such as the choice of applicable law and the selection of the most appropriate means for dispute resolution.

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