1.

Can you have your cake and eat it? This question springs to mind in the present case in which the referring court would like to know whether existing customers of a principal can, for the purpose of a provision in EU secondary law, under certain circumstances be regarded as ‘new customers’.

2.

Pursuant to Article 17(2)(a), first indent, of Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents, ( 2 ) a commercial agent is entitled to an indemnity after the termination of his contract if ‘he has brought the principal new customers or has significantly increased the volume of business with existing customers’. The referring court seeks to ascertain whether the term ‘new customers’ can, under certain circumstances, also comprise existing customers of the principal, that is to say customers who have previously had a business relationship with the principal, but who had not previously acquired specific brands out of the overall product range of the principal.

3.

Is the term ‘new customers’ therefore in essence related to the identity of the customers or to the products they purchase?

4.

The present request for a preliminary ruling, which has been made by the Bundesgerichtshof (Federal Court of Justice) (Germany) in the course of proceedings where Ms Yvonne Karaszkiewicz, a commercial agent, sued Marchon Germany GmbH, a producer and wholesaler of various brands of spectacle frames, seeking payment of an indemnity for termination of an agency contract, provides the Court with the first opportunity to interpret the concept of ‘new customers’ in Article 17 of the Directive.

5.

I propose that the Court should reply that Article 17 of the Directive does not, under certain circumstances, preclude the application of a national provision under which ‘new customers’ can also be customers acquired by the commercial agent who have previously had a business relationship with the principal.

6.

Therefore, given that such an interpretation leads to the principal having to pay the indemnity, I understand Article 17 of the Directive to lead to the consequence that a principal cannot both have a cake and eat it.

7.

The second recital in the preamble to the Directive states:

‘… the differences in national laws concerning commercial representation substantially affect the conditions of competition and the carrying-on of that activity within the Community and are detrimental both to the protection available to commercial agents vis-à-vis their principals and to the security of commercial transactions; … moreover those differences are such as to inhibit substantially the conclusion and operation of commercial representation contracts where principal and commercial agents are established in different Member States’.

8.

Article 1(2) of the Directive provides:

‘For the purposes of this Directive, ‘commercial agent’ shall mean a self-employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called the ‘principal’, or to negotiate and conclude such transactions on behalf of and in the name of that principal.’

9.

Article 3(2) of the Directive reads as follows:

‘In particular, a commercial agent must:

…’

10.

According to Article 17 of the Directive:

‘1.   Member States shall take the measures necessary to ensure that the commercial agent is, after termination of the agency contract, indemnified in accordance with paragraph 2 or compensated for damage in accordance with paragraph 3.

3.   The commercial agent shall be entitled to compensation for the damage he suffers as a result of the termination of his relations with the principal.

Such damage shall be deemed to occur particularly when the termination takes place in circumstances:

4.   Entitlement to the indemnity as provided for in paragraph 2 or to compensation for damage as provided for under paragraph 3, shall also arise where the agency contract is terminated as a result of the commercial agent’s death.

5.   The commercial agent shall lose his entitlement to the indemnity in the instances provided for in paragraph 2 or to compensation for damage in the instances provided for in paragraph 3, if within one year following termination of the contract he has not notified the principal that he intends pursuing his entitlement.

6.   The Commission shall submit to the Council, within eight years following the date of notification of this Directive, a report on the implementation of this Article, and shall if necessary submit to it proposals for amendments.’

11.

Under Article 18 of the Directive:

‘The indemnity or compensation referred to in Article 17 shall not be payable:

12.

Paragraph 89b(1) of the Handelsgesetzbuch (Commercial Code) (‘the HGB’) provides:

‘The commercial agent may, after termination of the contractual 9relationship, demand from the principal a reasonable indemnity if and to the extent that:

1.   the principal continues to derive substantial benefits, even after termination of the agency contract, from the volume of business with new customers whom the commercial agent has brought and

2.   the payment of an indemnity is equitable having regard to all the circumstances, particularly the loss of the commission of the commercial agent from business with these customers.

It is equivalent to acquiring a new customer if the commercial agent has expanded the volume of business with an existing customer so significantly that, in commercial terms, it is equivalent to acquiring a new customer.’

13.

Ms Karaszkiewicz, the applicant in the main proceedings, worked from September 2008 till June 2009 as a commercial agent for Marchon Germany, a producer and wholesaler of various brands of spectacle frames and the defendant in the main proceedings. The parties are in dispute over the claim on Ms Karaszkiewcz’s part to an indemnity further to the termination of her contract.

14.

Marchon Germany works together with a number of commercial agents, to each of whom it merely assigns collections of spectacle frames of particular brands, rather than its entire range of products. Ms Karaszkiewicz was entrusted with the sale of collections of spectacle frames of the brands C.K. and F. She was therefore in competition with other area agents of Marchon Germany, who had been entrusted with the sale of other collections of spectacle frame brands.

15.

Marchon Germany provided Ms Karaszkiewicz with a list of customers comprising opticians who had already purchased collections of spectacle frames of other brands from Marchon Germany.

16.

After the termination of her contract, Ms Karaszkiewicz claimed a commercial agent’s indemnity pursuant to Paragraph 89b(1) of the HGB, which Marchon Germany declined to pay. Ms Karaszkiewicz claimed, inter alia, that opticians who, further to her efforts, had purchased spectacle frames of the brands C.K. or F. for the first time should to be regarded as ‘new customers’, even if they had previously been customers of Marchon Germany, but for other spectacle frame brands.

17.

The Landgericht München I (Regional Court) considered that the customers acquired by Ms Karaszkiewicz, who had previously bought other collections from Marchon Germany, were indeed to be regarded as ‘new customers’. However, it made a 50% equitable deduction because of the list of customers which Ms Karaszkiewicz had received from the Marchon Germany, as the sale of spectacles is easier for the commercial agent if a customer already knows its contractual partner.

18.

Marchon Germany appealed to the Oberlandesgericht München (Upper Regional court). The appellate court dismissed the appeal.

19.

Marchon Germany lodged a further appeal on points of law (‘Revision’) to the Bundesgerichtshof, maintaining that the claim in relation to the commercial agent’s indemnity should be dismissed.

20.

Taking the view that the outcome of the national proceedings for an indemnity depends on the interpretation of the first indent of Article 17(2)(a) of the Directive, in particular of the concept of ‘new customers’, the Bundesgerichtshof stayed the proceedings and referred the following question to the Court under Article 267(1)(b) TFEU:

‘Must the first indent of Article 17(2)(a) of the Directive be interpreted as precluding the application of a national provision under which “new customers” can also be customers acquired by the commercial agent who have already had business relations with the principal for products sold by him from a range of products but not for products sole representation for the sale of which the principal has entrusted to the agent?’

21.

Written observations were submitted by Marchon Germany, the German and Czech Governments and the European Commission. A hearing took place on 4 June 2015.

22.

The parties in the main proceedings are in dispute as to whether, after the termination of a contract, a commercial agent is entitled to an indemnity from the principal according to Paragraph 89b(1) of the HGB transposing Article 17(2) of the Directive.

23.

Article 17 of the Directive is to be interpreted in light of the aims pursued by the Directive and the system it establishes. ( 3 )

24.

It is common ground that this Directive aims to coordinate the laws of the Member States with regard to the legal relationship between the parties to a commercial agency contract ( 4 ) — irrespective of any cross-border elements. ( 5 ) It follows from the second recital to the Directive that its intention is, inter alia, to make the conditions of competition within the EU uniform, to eliminate restrictions on the carrying-on of the activities of the commercial agents and to increase the security of commercial transactions. ( 6 ) Moreover, the Court has, on many occasions, clarified that the Directive in particular seeks to protect commercial agents in their relations with their principals and, to that end, establishes, inter alia, rules governing the conclusion and termination of agency contracts (Articles 13 to 20 of the Directive). ( 7 ) The Directive establishes mandatory ( 8 ) rules which provide for minimum protection requirements for the commercial agent. ( 9 )

25.

Hence, the rules for the provision of compensation to commercial agents upon the termination of the contractual relationship with the principal, enshrined in Article 17 of the Directive, must be understood to serve the aim of protecting commercial agents. ( 10 )

26.

Article 17 of the Directive requires Member States to put in place a mechanism for providing compensation to a commercial agent after the termination of a contract. Member States can choose between two options: indemnification in accordance with the criteria set out in Article 17(2) of the Directive or compensation for damage in accordance with those in Article 17(3) of the Directive. ( 11 ) Germany chose to establish the indemnity mechanism set out in Article 17(2) of the Directive. ( 12 )

27.

Such an indemnity represents the continuing benefits to the principal due to the efforts of the commercial agent. ( 13 ) This regime of indemnification was deemed necessary by the Community legislature, since the agent will only have received commission during the duration of the contract, which will not typically reflect the value of the goodwill generated for the principal. ( 14 )

28.

The commercial agent is, therefore, to be provided with an indemnity for the value of the goodwill generated for the principal out of the business with the customers. As a consequence, no indemnity needs to be paid if no goodwill has been generated or there is a group of customers from whom the principal can derive no benefit. ( 15 ) According to Article 17(2) of the Directive the commercial agent is to be entitled to an indemnity if and to the extent that a number of conditions that follow are fulfilled. Thus, Article 17(2) of the Directive sets out both the conditions under which an indemnity is to be awarded and the method employed for the calculation of such an indemnity. ( 16 )

29.

Five conditions in Article 17(2) of the Directive govern this mechanism of indemnification.

30.

First, to enter the scope of Article 17 of the Directive, the contract between commercial agent and principal has to be terminated.

31.

Second, the commercial agent must have brought the principal ‘new customers’ or ‘significantly increased the volume of business with existing customers’ (first indent of Article 17(2)(a) of the Directive).

32.

Third, the principal must continue to derive substantial benefit from the business with such customers (first indent of Article 17(2)(a) of the Directive).

33.

Fourth, the amount established on the basis of the abovementioned criteria must be equitable, having regard to all the circumstances of the case and, in particular, to the commission lost by the commercial agent on the business transacted with such customers (second indent of Article 17(2)(a) of the Directive).

34.

Fifth, the amount of indemnity is subject to the upper limit of the figure equivalent to an indemnity for one year, calculated from the commercial agent’s average annual remuneration over the preceding years (up to five) (Article 17(2)(b) of the Directive). ( 17 )

35.

Moreover, an indemnity is not payable on termination of the contract if one of the circumstances in Article 18 of the Directive applies (termination of the contract by the principal because of default attributable to the commercial agent, termination of the contract by the commercial agent, unless justified by the circumstances enumerated in that article, assignment by the commercial agent of his rights and duties to another person, with the agreement of the principal), which, as an exception to the commercial agent’s entitlement to an indemnity, must be interpreted restrictively. ( 18 )

36.

The case at issue is solely concerned with the second condition described above and more specifically with the concept of ‘new customers’. It does not deal with the second alternative of the first indent of Article 17(2)(a) of the Directive (‘significantly increased the volume of business with existing customers’) or the methods for calculating the indemnity.

37.

Marchon Germany stresses that the fair balance of interests between the commercial agent and the principal would be undermined if the Directive required the principal to pay an indemnity even if the commercial agent’s work merely led to the expansion of its range of products. It further argues that this case concerns products of the same kind simply labelled with another brand. Hence, in the view of Marchon Germany, payment of the regular commission ( 19 ) was sufficient, as despite increased product sales no continuing benefits were generated for Marchon Germany.

38.

Ms Karaszkiewicz takes the view that Marchon Germany interprets the concept of ‘new customers’ too narrowly. She argues that existing customers can be regarded as ‘new customers’ if they are acquired in respect of ‘new products’ and thereby lead to a qualitative expansion of business relations between the principal and a customer.

39.

In a similar vein, the German Government is in favour of a broad interpretation of the concept of ‘new customers’ and holds that everything depends on the transactions the commercial agent is instructed to take care of. In circumstances where the principal exclusively entrusts its commercial agents only with parts of its overall product range, the commercial agent may also acquire ‘new customers’ by selling new products to existing customers of the principal, as new business relationships for the principal are established.

40.

In contrast, the Czech Republic is of the opinion that for a situation such as the one at issue in the main proceedings the second alternative of the first indent of Article 17(2)(a) of the Directive would be more pertinent because this alternative comprises both quantitative and qualitative aspects. It refers to the German ( 20 ) and French language versions, ( 21 ) which are, in its opinion, wider in scope than the English version. ( 22 )

41.

The Commission argues that the principal’s self-chosen sales structure has to be taken into account: the concept of ‘new customers’ may even encompass those customers acquired by the commercial agent who had previously had a business relationship with the principal but are now for the first time purchasing products the commercial agent is solely entrusted with.

42.

Obviously, in the case at issue, Ms Karaszkiewicz has not acquired ‘new customers’ pursuant to Article 17(2)(a) of the Directive if one understands that concept to mean only customers who had not previously had any dealings whatsoever with the principal, but carried out a transaction with the principal for the first time, through the intermediary of the agent.

43.

I do not, however, think that one should interpret the concept of ‘new customers’ in Article 17(2)(a) in such a narrow way.

44.

Starting with the wording of Article 17 of the Directive, although this provision differentiates between ‘new customers’ and ‘existing customers’ it nowhere further defines the concept of ‘new customers’. ( 23 )

45.

According to settled case-law, ( 24 ) the need for the uniform application of EU law requires that, to the extent that provisions of EU law make no express reference to the law of the Member States for the purpose of determining the meaning and scope of a concept, that concept must be given an autonomous and uniform interpretation throughout the European Union taking into account the wording of the provision and the objective pursued by the legislation in question. ( 25 )

46.

Given that the Court has held that ‘an interpretation of Article 17 of the Directive … is permissible only if it will not prove to be detrimental to the commercial agent’ ( 26 ) one should not give too narrow a reading to the wording of that provision.

47.

The Directive, in general, follows a transaction-based, rather than a person-based approach. Thus, according to Article 3(2)(a) of the Directive ‘a commercial agent must make proper efforts to negotiate and … conclude the transactions ( 27 ) he is instructed to take care of’.

48.

The concept of ‘new customers’ should be seen in this light and not be confined to the individual natural or legal person who may be a customer. Rather, it should be understood as including certain aspects of the business transaction (Geschäftsabschluss) itself between customer and principal. ( 28 )

49.

Moreover, as the German Government has stressed in its written observations the concept to be interpreted consists of two parts, namely ‘new’ and ‘customers’. The term ‘customer’ should be seen in the context of a specific business relationship (Geschäftsbeziehung), and consequently by purchasing a specific product a purchaser does not necessarily become a customer of the principal in general.

50.

The scope of the commercial agent’s work is determined by the contractual agreement between the commercial agent and the principal. This particular scope should be taken into account when deciding on whether customers are to be regarded as ‘new customers’. This contractual agreement and therefore the particular scope depend on the sales structure deliberately chosen by the principal, which, accordingly, has to be taken into consideration too.

51.

Marchon Germany took a deliberate decision to entrust Ms Karaszkiewicz exclusively with the sale of only two product collections out of its overall range; namely spectacle frames C.K and F. It thus limited Ms Karaszkiewicz’s ability to sell, according to categories created by itself. Ms Karaszkiewicz was deliberately precluded from selling other competing products.

52.

If a principal thus differentiates the overall range of its products according to the characteristic of a brand, it sends out the signal to its commercial agents that business must be established separately for each brand. Through such behaviour, the principal also indicates that the particular sales effort is to be directed to persuading a customer to purchase the particular brand the commercial agent is entrusted with. The principal resorts to the services of the commercial agent in order to benefit from his/her strategy, approach and skills in persuading customers to acquire the principal’s products. If he has chosen to divide business channels, these business channels must be considered separately.

53.

In other words: it follows from Marchon Germany’s sales strategy that a ‘new customer’ is any customer buying a particular brand from Marchon Germany who had not previously purchased that particular brand. ( 29 )

54.

I therefore plead for a functional approach in the determination of a ‘new customer’: what matters is whether a category of product has been sold for the first time by the commercial agent. Hence, the concept of ‘new customers’ has to be understood in relation to ‘new category of products’ — the customer is new if he for the first time purchases a new category of product.

55.

A final consideration: the difficulty in the case at issue appears to me to stem from the fact that the products Marchon Germany produces and sells — spectacle frames — are comparable. A spectacle frame of brand A can be compared to a spectacle frame of brand B. If, say, a firm sells cars and shoes, I do not think that one would have any hesitation in qualifying a customer who had previously only bought cars but now purchases shoes as ‘new’. In such a situation, a customer becomes ‘new’ because of the objective element that the products in question are not comparable. What is rewarded, however, is the strategy, approach and skill of the commercial agent which has created the goodwill for the principal as concerns the new category of products.

56.

I do not see any reason for treating a case such as the one at issue differently. After all, it is the commercial agent who, as a result of a decision of the principal, entrusted with the sale of two brands only, has by virtue of her strategy, approach and skills managed to sell products to a customer who has not previously bought those products.

57.

Consequently, if the commercial agent for the first time sells products forming part of this particular category which the principal has created for the partitioning of the market (as, in this case, ‘brands’), the commercial agent within the meaning of Article 17(2)(a) of the Directive acquires ‘new customers’ for the principal — irrespective of whether the principal had previously had a business relationship with the purchaser of such products.

58.

In the light of the foregoing considerations, I propose that the following reply be given to the question referred by the German Bundesgerichtshof:

Article 17(2)(a), first indent, of Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents must be interpreted as not precluding the application of a national provision under which ‘new customers’ can also be customers acquired by the commercial agent who have previously had a business relationship with the principal with respect to products sold by the principal from a range of products but not with respect to products sole representation for the sale of which the principal has entrusted to the agent.