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Is the regulation protecting the commercial agent status a public order law at the international level?

03/08/2016

On January 5th 2016, the Commercial Division of the Court of Cassation issued, with respect to commercial agency, an important decision on the qualification of public order law at the international level.

In the case in question, a commercial agency contract had been concluded between an agent who was a natural person and a French company principal (ArcelorMittal Revigny). The agent benefited from an exclusive representation and sales mandate in Germany. The principal terminated the agency contract and the agent sued for payment of various sums, including the termination indemnity provided for by article L. 134-12 of the French Commercial Code.

The Court of Appeal followed the argumentation of the principal and judged that German law, the law chosen by the parties, was the law applicable to the dispute. The agent challenged this decision before the Court of Cassation contending that the law of 25 June 1991 (transposing directive 86/653 of 18 December 1986 relating to commercial agency) was a law protecting public order which should apply.

The Court of Cassation rejected this argumentation stating that "the law of 25 June 1995, codified in articles L. 134-1 et seq of the French Commercial Code, is a law protecting domestic public order and [is] not a public order law applicable at the international level" (Cass. com., 5 January 2016, No. 14-10.628).

Accordingly, the Supreme Court returns to its previous position (Cass. com., 28 November 2000, No. 98-11.335) and seems, at first sight, to show a certain reluctance to comply with the case-law of the European Union Court of Justice (EUCJ). Indeed, in its decisions Ingmar (CJEU, 9 November 2000, C-381/98) and Unamar (CJEU, 17 October 2013, C-184/12), the EUCJ characterises the regime applicable to the termination indemnity due to a commercial agent as an "European Community public order law" and allows the national judge hearing the case to exclude the lex contractus in favour of his own national law if the comparative test prescribed by the Court authorizes him to do so.

However, a deeper analysis of these solutions reveals a certain consistency between the French and European decisions. In the case in question, the French judges faced an intra-community dispute and two laws that implement the same directive. It is therefore legitimate to think that they applied the comparative test prescribed by the Unamar decision and considered that the protection offered by articles L.134-1 et seq of the French Commercial Code did not embody the necessary characteristics to justify the exclusion of German law in a dispute where the agent performed all his activities in Germany.

Moreover, the Unamar judgement, while acknowledging the public order law status of the law implementing the directive, adds that the exclusion of the lex contractus (German law here) in favour of the lex fori (French law here) also supposes that the member state where the case is judged decides so and declares such a law to be necessary to the safeguard of its public interests.

Nevertheless, the Court of Cassation's position may seem debatable as the termination indemnity granted under French law (which is usually of two years of commissions) is more advantageous for the commercial agent than the indemnity awarded by German law (which is set at one year of commissions). In this respect, the absence of any official publication of this decision shows that the Court of Cassation does not intend to make a landmark case of this decision.

The questions surrounding the public order law status of articles L. 134-1 et seq of the French Commercial Code will therefore not be resolved by this unpublished decision and we will have to wait for a new decision of our Supreme Court to determine its firm and final position on this issue. Is this a resistance of our courts to European doctrine or a thorough and implicit application of the Unamar case-law?

Unifying European and French regimes towards the acknowledgement of the public order law status of the law of 25 June 1991 would offer clarity and predictability. It would also avoid introducing a dichotomy in the handling of intra-community and extra-community disputes. For the time being, the Court of Cassation does not seem to be taking this path…

Authors

Picture of Aliénor Fèvre
Aliénor Fevre
Associate
Paris
Stéphanie de Giovanni