OPINION OF ADVOCATE GENERAL

POIARES MADURO

delivered on 25 October 2005 (1)

Case C-465/04

Honyvem Informazioni Commerciali Srl

v

Mariella De Zotti

(Reference for a preliminary ruling from the Corte Suprema di Cassazione (Italy))

(Self-employed commercial agents – Commercial agent’s entitlement to indemnity on termination of the contract)

1.        In this reference for a preliminary ruling, the Corte Suprema di Cassazione (Supreme Court of Cassation) (Italy), refers a question to the Court of Justice seeking clarification of several aspects of the rules set out in 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) More specifically, those various aspects to be clarified relate to the conditions for the recognition and computation of the commercial agent’s entitlement to indemnity, provided for by Article 17(2) of the directive, and to the prohibition laid down in Article 19 thereof of derogations from Article 17, to the detriment of the commercial agent, agreed before the termination of the contract. That falls within the specific context of the Italian legal order, in which the collective agreements applicable to commercial agents have long played a central part in determining the indemnities to which a commercial agent will be entitled on termination of the contract.

I –  Facts, relevant law and questions referred to the Court of Justice for a preliminary ruling

2.        By a letter of 23 October 1997, Honyvem Informazioni Commerciali srl (‘Honyvem’) terminated with effect from 30 June 1998 its agency contract with Mariella De Zotti, by virtue of clause 10 of which it was governed ‘by the provisions of the Civil Code, by special laws on the mandate of the commercial agent and by collective agreements in the sphere of commerce.

3.        In an action brought against Honyvem in the Tribunale di Milano (District Court, Milan) on 12 April 1999, Ms De Zotti asked the court to order the principal to pay the indemnity for termination of contract which, she claimed, amounted to LIT 181 889 420 in accordance with the criteria set out in Article 1751 of the Codice Civile (Italian Civil Code, ‘the Civil Code’).

4.        That provision, relating to the indemnity upon termination of contract, transposes Articles 17, 18 and 19 of Directive 86/653 into Italian law and when the contract was terminated it was worded as follows:

‘Upon termination of the contract, the principal shall pay the commercial agent an indemnity provided that at least one of the following conditions is fulfilled:

the agent has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers;

the payment of this indemnity is fair, having regard to all the circumstances and, in particular, the commission lost by the agent on the business transacted with such customers.

The indemnity shall not be payable:

where the principal has terminated the contract because of default attributable to the commercial agent which, by reason of its seriousness, does not permit continuation of the relationship, even temporarily.

where the agent has terminated the contract, unless such termination is justified by circumstances attributable to the principal or on grounds of age, infirmity or illness of the commercial agent, in consequence of which he cannot reasonably be required to continue his activities;

where, with the agreement of the principal, the commercial agent assigns his rights and duties under the agency contract to another person.

The amount of the indemnity may not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent’s average annual remuneration over the preceding five years and, if the contract goes back less than five years, calculated on the average for the period in question.

The grant of such an indemnity shall none the less not prevent the agent from seeking damages.

The agent shall lose his entitlement to the indemnity provided for in this article if, within one year following termination of the contract, he has not notified the principal that he intends pursuing his entitlement.

No derogation from the provisions of this article may be made to the detriment of the commercial agent.’ (3)

5.        The Tribunale upheld the arguments of the defendant, Honyvem, and awarded the lower amount of LIT 78 880 276, found by applying the criteria for calculating the indemnity upon termination of contract set out in the Collective Economic Agreement (‘the CEA’) of 28 November 1992, made between Confcommercio (an organisation representing firms in the field of commerce, tourism and services) and FNAARC (an organisation representing commercial agents and representatives) on 27 November 1992 in the following terms:

‘...

I.

With reference to Article 1751 of the Civil Code, as amended by Article 4 of Legislative Decree 303 of 10 September 1991, and in particular to the principle of equity, in all cases of termination of contract the agent or representative shall be paid an indemnity, the amount of which shall be equal to 1% of the total amount of commission accruing and paid during the validity of the contract.

The basic percentage specified above shall be supplemented as follows:

A.      Agents and representatives bound to a single firm by an exclusivity clause:

–        3% of the commissions up to LIT 24 000 000 a year;

–        1% of the commissions between LIT 24 000 001 and LIT 36 000 000 a year.

B.      Agents and representatives not bound to a single firm by an exclusivity clause:

–        3% of the commissions up to LIT 12 000 000 a year;

–        1% of the commissions between LIT 12 000 001 and LIT 18 000 000 a year.

An amount equal to any sum that the agent or representative is entitled to receive as a result of pension contributions voluntarily paid by the principal shall be deducted from such indemnity.

In calculating the indemnity for termination of the contract, account must be taken also of sums paid specifically and expressly as reimbursement of expenses or contribution to expenses.

II.

Likewise in accordance with Article 1751 of the Civil Code, in addition to the sums described in paragraph I of this agreement, a further amount shall be paid to the agent, calculated as follows:

–        3% of the commissions accruing in the first three years of the agency contract;

–        3.5% of the commissions accruing from the fourth to the sixth year;

–        4% of the commissions accruing in subsequent years.

...

III.

The parties agree that the terms of the above agreement as regards percentages and rates comply with the principle set out in the third paragraph of Article 1751 of the Civil Code

...

Declaration for the record

The parties confirm that these collective provisions regarding termination of agency contracts in application of Article 1751 of the Civil Code together constitute better treatment than that provided for by law. They are interdependent and inseparable one from another and may not be cumulated with any other scheme.

...’

6.        Ms De Zotti appealed against the judgment of the Tribunale to the Corte d’appello di Milano (Court of Appeal, Milan), which in part upheld her appeal. According to the Corte d’appello, Article 1751 of the Civil Code lays down a criterion based on a meritocratic principle, rewarding the agent for customers brought in who, even after the termination of the contract, continue to bring benefits to the principal. In so far as the CEA, by contrast, lays down criteria in which that principle plays no part at all, derogation from the criterion in Article 1751 cannot be justified by the freedom of the parties to arrange their own affairs. So applying Article 1751, the Corte d’appello, deducting the sum already awarded by the court of first instance and paid by Honyvem, awarded Ms De Zotti the further (rounded up) sum of LIT 57 000 000 plus interest and inflation adjustment.

7.        Honyvem has brought an appeal against that last judgment before the Court of Cassation, claiming in essence, first, that derogation from the rules prescribed in Article 1751 is prohibited only when it is to the detriment of the commercial agent and, second, that whether the rules laid down in the CEA relating to the indemnity upon termination of contract are more or less advantageous than those laid down in Article 1751 of the Civil Code is not to be determined after the event, that is to say, after the contract is terminated, but rather before. That being so, it must be concluded that the rules of the collective contract are more favourable than those under Article 1751 of the Civil Code since in every case they guarantee an indemnity for the commercial agent, which is not necessarily guaranteed under the statutory scheme.

8.        Ms De Zotti has brought a cross-appeal in cassation on the ground that the indemnity for termination of contract was not fixed at the amount she claimed.

9.        Against that background of facts and law, the Corte Suprema di Cassazione has referred a question to the Court of Justice for a preliminary ruling, which must to advantage be reformulated and divided into the two following questions:

‘(1)      Having regard to the tenor and purpose of Article 17 of Directive 86/653, may Article 19 thereof be interpreted as permitting a collective agreement to provide for an indemnity which, first, is payable to a commercial agent whether or not the conditions laid down in Article 17(2) have been fulfilled and, secondly, is to be calculated, not on the basis of criteria that may be inferred from the directive, but in the light of different criteria defined in advance in the collective agreement?

(2)      Must the indemnity provided for in Article 17(2) be calculated analytically or are other methods making greater use of the criterion of equity acceptable?’

10.      The Court of Justice is thus called upon to interpret Articles 17 and 19 of Directive 86/653. (4) Article 17 of the directive states:

‘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.

2.      (a) The commercial agent shall be entitled to an indemnity if and to the extent that:

–        he has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers, and

–        the payment of this indemnity is equitable having regard to all the circumstances and, in particular, the commission lost by the commercial agent on the business transacted with such customers. Member States may provide for such circumstances also to include the application or otherwise of a restraint of trade clause, within the meaning of Article 20;

(b) The amount of the indemnity may not exceed a figure equivalent to an indemnity for one year calculated from the commercial agent’s average annual remuneration over the preceding five years and if the contract goes back less than five years the indemnity shall be calculated on the average for the period in question;

(c) The grant of such an indemnity shall not prevent the commercial agent from seeking damages.

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:

–        depriving the commercial agent of the commission which proper performance of the agency contract would have procured him whilst providing the principal with substantial benefits linked to the commercial agent’s activities,

–        and/or which have not enabled the commercial agent to amortise the costs and expenses that he had incurred for the performance of the agency contract on the principal’s advice.

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.      Article 19 provides that ‘[t]he parties may not derogate from Articles 17 and 18 to the detriment of the commercial agent before the agency contract expires’.

II –  Analysis

12.      In Article 17(2) and (3) of the directive, the Community legislature has established two different sets of rules for indemnifying commercial agents following termination of their contracts. Under Article 17(1), Member States may opt for either of those schemes when transposing the directive. The Italian legislature opted for the rules provided in Article 17(2).

13.      It is common knowledge that, before Directive 86/653 was transposed into domestic law, the Italian rules on indemnities for termination of the agency contract were largely based upon collective contracts and were different from either of the alternative schemes provided in Article 17(2) and (3). (5) In those circumstances, a longer period was granted to the Italian Republic to transpose the directive in respect of Article 17. (6) Although the adoption of such rules does reflect the concern to leave Member States some latitude, the legislature allowed each Member State to opt for one of the two alternative bodies of rules laid down in Article 17(2) and (3) but not, obviously, to adopt a body of statutory rules of a third kind incompatible with either of the first two bodies of rules.

A –     Meaning and purpose of the indemnity laid down in Article 17(2) of Directive 86/653

14.      In the ends which it pursues, the indemnity established in Article 17(2) of the directive undeniably has its own, multi-faceted character, being modelled on the system introduced in the 1950s in Paragraph 89b of the German Commercial Code, the Handelsgesetzbuch (HGB). (7)

15.      This singular scheme of indemnity comes about as the response to a problem which arises when an agency contract is terminated: to the extent that the principal continues, after termination of the agency contract, to conduct business with clients brought in by the agent, he will continue to benefit from gains deriving at least in part from the commercial agent’s activity whilst the contract was in force and where, but for termination of the contract, the earning of such gains would, from the outset, involve the continued payment of commission to that agent.

16.      In this context, the Community legislature established, in Article 17(2) of the directive, that the commercial agent is to be entitled to an indemnity provided that three conditions are fulfilled. Firstly, that the agent should have brought new customers or has significantly increased business with existing customers. Secondly, that the principal should continue to derive substantial benefits from the business with such customers after the termination of the agency contract. This condition will, logically, be relevant only if no obligation has been maintained to pay commission to the agent after such termination. Lastly, it will also be essential for none of the circumstances to obtain that exclude the commercial agent’s entitlement to indemnity, as specified in Article 18 of the directive.

17.      Considered from the commercial agent’s point of view, this indemnity, which one may very properly call a goodwill indemnity, possesses a compensatory aspect. It compensates him for his good performance, in so far as there are economic benefits to the principal which continue to accrue after the agent has brought in customers or developed business with them. Regarded from the principal’s point of view, the goodwill indemnity also makes it possible to prevent a situation of unjust enrichment. As a matter of fact, if there were no obligation to pay an indemnity after the contract ends, the principal – not being bound to pay any quid pro quo to the agent – could continue to receive profits to which the commercial agent had in one way or another contributed by means of his activity. (8)

18.      The benefits to the principal are not, in fact, exhausted with the transactions effected between the principal and those customers before the term of the contract. They may continue beyond that term in so far as those transactions are still performed. At the same time, remuneration of the agent by the payment of commission does not occur at one single moment, coinciding with that at which the commercial agent introduced a customer or increased business with him, nor does it consist of payment of one inclusive sum. It is rather remuneration which grows over time in the form of commission paid as and when each transaction between the principal and a customer is carried out. (9)

19.      A contractual framework of this kind will give rise to cases of unjust enrichment of a principal after a contract has come to an end and, consequently, justifies the requirements laid down in Article 17(2) of the directive. It is also obvious that the indemnity provided for in Article 17(2) also does away with the risk of the principal’s behaving opportunistically in putting an end to the contract, as he would clearly be encouraged to do if there were no such rules. (10)

B –     Comparison of the indemnity system provided for in Article 17(2) of Directive 86/653 with a scheme such as that provided for in the CEA

20.      The problem arising in the case under consideration results from the Community legislature’s requirement, in Article 19 of Directive 86/653, that ‘[t]he parties may not derogate from Articles 17 and 18 to the detriment of the commercial agent before the agency contract expires’. It is here that the indemnification rules laid down in Article 17(2) of the directive, transposed by Article 1751 of the Civil Code, conflict with the requirements laid down in the CEA.

21.      A contrario, Article 19 leads to two conclusions. The first of these is that, before the contract expires, the parties may derogate from the rules laid down in Article 17 provided that they agree on a scheme that is not more disadvantageous to the commercial agent. The second is that, after the contract expires, the parties may agree any derogating scheme, even if it is more disadvantageous to the commercial agent. (11)

22.      The question which arises, and which the discussion in the case-law and the academic writing in Italy, described by the parties, clearly reflects, is therefore whether indemnity rules such as those provided in the CEA, described above, are more unfavourable to the commercial agent than those laid down in Article 17(2) of the directive. The rules for the protection the commercial agent laid down in Articles 17 to 19 of the directive being mandatory, (12) if the rules in the agreement should be more disadvantageous to the commercial agent, they will be unlawful and devoid of effect.

23.      To ascertain whether rules under a collective agreement might be more disadvantageous than the statutory rules, it is of course a presupposition in logic that it must be possible to compare the two contrasted sets of rules. We cannot compare the incomparable. I believe that such a comparison is not possible in circumstances such as those of the case in point, because the rules under the agreement provide for an indemnity based on presuppositions and pursuing objectives of those rules quite different from those underlying Article 17(2) of the directive. In reality, the two regimes are based on opposed approaches which do not allow any decision as to which of them, in the abstract, is more advantageous to the commercial agent.

24.      Firstly, in applying an indemnity scheme such as that set out in the CEA, it is unimportant that a commercial agent may have brought in new clients or consolidated the already existing clientele. It is also unimportant that a principal should continue to derive substantial benefits from business with those customers after the agency contract has ended. By contrast, it is the duration of the contract, the amount of remuneration received each year by the commercial agent during the contract and whether or not the agency contract is exclusive which are relevant in determining the indemnity due to the commercial agent under the agreement.

25.      It is also important to note that, unlike the legal indemnity, the basis for which also includes consideration of the situation after the contract ends, indemnity under the agreement is subject solely to past considerations (sums received by the agent and duration of the relationship).

26.      Apart from these essential differences in the content and meaning of the two contrasting indemnity schemes, it is to be found, from the point of view of its underlying objective also, that the purpose pursued by indemnity under the agreement is entirely different from that set out in Article 17(2) of the directive, where the approach is unquestionably ‘meritocratic’ and gives the agent entitlement to indemnity to the extent that his activity of bringing in clients and developing the clientele has contributed to continued gains for the principal after termination of the contract. By contrast, indemnity such as is provided in the CEA described above is diametrically opposed to this ‘merit’ approach: this indemnity is to be accorded to each and every agent upon expiry of the contract even where he has not brought in nor developed business with any clients and, of course, even where the principal has not benefited from continued business with those clients after termination of the contract.

27.      Establishing which of the two indemnity schemes is the more favourable to the agent will depend upon the work actually performed by the agent and can only be assessed after the event, when the contract is terminated. It is expressly stated in the collective agreement document that the indemnity specified is the same as the legal indemnity but, essentially, having regard to their content and their aims, the two schemes cannot be compared. Whatever legal term may be used in the contract or in the CEA for the indemnity under the agreement, or regardless of any claim that the indemnity in the agreement fully substitutes for the legal indemnity, it does not make them any less impossible to compare.

28.      It is certainly possible to compare the two schemes from the standpoint of the particular indemnifying effects which derive from the application of each upon termination of the contract. But such a comparison will be of the outcome or the consequences of indemnification, conducted exclusively on the basis of the external event triggering application of the scheme, which is termination of the contract. That is not a true comparison of the two schemes, which would have to start from a consideration of the content and the aims of each.

29.      However, I do not think that a comparison for the purposes of Article 19 of the directive simply compares the two amounts of indemnity resulting, in a particular case, from application of the rules in the agreement and in the law upon termination of each contract. In my view, what is required in terms of Article 19 of the directive is a substantive comparison between the indemnity schemes in the agreement and in the law, taking account of the content and the aim of each: not simply a comparison of the specific indemnifying effects of those schemes, which will essentially depend upon the exact timing and the condition of the market when the contracts expire. In that sense, the two schemes are so opposed that it becomes impossible to determine which of them is more advantageous to the agent. (13)

30.      If a comparison were to be made in each case when the agency contract expires, that would also create an uncertain and insecure situation, until it has expired, regarding the compatibility of the scheme in the agreement with the legal rules on customer indemnity. It is important for the scheme agreed by contract not to remain in a grey area of legality up to the time that the contract expires. I would also add that, because of the uncertainty and insecurity which this would immediately create for the principal as regards the indemnity scheme which applies, a method of comparison after the event and in the individual circumstances would also have the effect of inducing the principal to keep up contracts which might in fact be unproductive and should therefore be terminated, in order to give new and possibly more entrepreneurial commercial agents an opportunity to come into the market.

31.      The practice of comparison after the event based on the consideration of actual indemnifying effects would, in my view, only be sustainable if we were to hold economic protection of the agent as the only and exclusive concern of Directive 86/653. Clearly that is not the case. On this, the Court of Justice has already had occasion to rule that, at the same time as it protects the agent, the directive is also intended, as we see in the initial recitals of the preamble, ‘to eliminate restrictions on the carrying-on of the activities of commercial agents, to make the conditions of competition within the Community uniform and to increase the security of commercial transactions’. (14) Protection of the commercial agent is therefore not an end in itself, to be guaranteed at any price in interpreting Directive 86/653 and entirely excluding consideration of the concern to safeguard legal certainty and security in commercial transactions.

32.      Honyvem is right to maintain, in its written observations, that the opposing schemes must be compared in advance. Where I feel that Honyvem’s position cannot be sustained is in concluding that such an advance analysis shows that an indemnity scheme like that set out in the CEA is more favourable to the agent than the legal scheme set out in Article 17(2) of the directive. If that were the case, that would be a derogation allowable in terms of Article 19.

33.      However, as I stated earlier, it cannot be concluded from an advance analysis that the scheme set out in an agreement such as the CEA is, in the abstract, no more disadvantageous to the commercial agent than the scheme provided in Article 17(2) of the directive.

34.      To reach such a conclusion, one would have to accept as well founded Honyvem’s original premiss – contrary in any case to the ‘meritocratic’ teleology of the Community scheme – that all commercial agents are so fundamentally risk-averse that they necessarily prefer an egalitarian type of scheme, guaranteeing at least something for everybody, to a scheme, such as that provided in Article 17(2) of the directive, which only ensures an indemnity, although that can be much more generous, to those agents who have managed to bring in or increase the clientele over the life of the contract.

35.      It is true that, with the ‘meritocratic’ scheme provided in Article 17(2) of the directive, some agents would finish without an entitlement to indemnity. But, in that case, strictly speaking, no scheme can in the abstract be worse than the ‘meritocratic’ scheme provided in Article 17, since the use of that scheme may always produce no indemnity. By that approach, therefore, any scheme which from the outset guaranteed a commercial agent an indemnity greater than zero would be a derogation from the scheme under Article 17 as permitted in Article 19 of the directive. That means that virtually all indemnity schemes guaranteeing some indemnity to the agent upon expiry of the contract would pass the test of Article 19 as allowable derogations from Article 17. Clearly such an approach cannot be used in that it removes all effectiveness from the prohibition on derogations that is laid down in Article 19.

36.      The difficulty with an advance comparison between the two indemnity schemes, as supported by Honyvem in its observations, is that it is based on consideration only of hypothetical commercial agents who, if the ‘meritocratic’ scheme from Article 17(2) of the directive were applied to them, would not be entitled to indemnity. By contrast, where Article 19 of the directive states that the parties may not derogate from Article 17 ‘to the detriment of the agent’, that is a reference in the abstract to any and every commercial agent in an individual contractual relationship, whether or not he is an agent awarded an indemnity under Article 17(2).

37.      Thus it cannot be concluded that, from an advance analysis, an indemnity scheme such as that established in the CEA is more advantageous to the agent than that provided in Article 17(2) of the directive.

38.      This interpretation of Article 19 of the directive obviously does not mean that agreements derogating from the rules in Article 17(2) cannot be allowable or even, if relevant, that such agreements cannot share some similarities with a scheme such as that in the CEA. What is important is that they should establish a scheme which, in the abstract, cannot be worse for any commercial agent than that provided in Article 17(2) of the directive, even where agreements are governed by an approach very different from that underlying the Community scheme. For example, one might imagine that a collective agreement ensures the agent a fixed minimum amount of indemnity, set on the basis of duration of contract and quantity of business, regardless of compliance with the requirements specified in Article 17(2), plus the amount given by these latter rules. Such a scheme would naturally involve a derogation from the provisions of Article 17(2) of the directive, in that it will be applied whether or not all those requirements are met. Furthermore, no agent can consider that being subject to that scheme leaves him in a worse position than if the scheme in Article 17(2) were applied strictly and unaltered. A derogation of that type would be allowable in terms of Article 19 of the directive.

39.      What cannot be allowed, as is pointed out by Ms De Zotti in line with some of the Italian legal literature, (15) is that, using business initiative and reference to some CEA, there should in practice remain in force an indemnity scheme essentially the same as applied before Article 17(2) was transposed into Italian law and not guaranteeing to each and every commercial agent more than is ensured by the Community scheme.

40.      I am therefore of the opinion that the Court’s answer to the first question referred by the Corte Suprema di Cassazione should be that Article 19 of the directive must be interpreted to mean that a collective agreement such as the CEA, providing a scheme for indemnifying a commercial agent after termination of the contract, in which the content and purpose are incompatible with those characteristic of the indemnity rules provided in Article 17(2) of the directive and which is intended to replace it entirely, is to be regarded as a derogating scheme to the detriment of the agent.

C –     Method of calculating the customer indemnity provided in Article 17(2) of Directive 86/653

41.      First of all it is important to point out that Article 17 of the directive lays down not only the conditions for recognising entitlement to the customer indemnity but also the items actually needed to calculate the indemnity. That is shown by the very wording of Article 17(2), using the expression ‘if and to the extent that’. Article 17 therefore lays down not only the terms on which customer indemnity must be awarded but also the way of calculating the amount of indemnity. That then is how, in accordance with established case-law, the Italian courts are bound to interpret Article 1751 of the Civil Code: so far as possible, in the light of the wording and the purpose of the directive concerned in order to achieve the result sought by the directive. (16)

42.      Certainly, some difficulties may be caused in calculating the indemnity that is provided in Article 17(2) of the directive: it requires forecasts to be made regarding the progress of the principal’s business with clients who have previously been brought in or developed by the agent and regarding the benefits which he will receive from business with those clients after the agency contract expires but without having to pay further commission to the agent.

43.      In any event, it is normal for courts to make forecasts, first of all when they have to appraise damage, comparing the situation which exists with the hypothetical situation which would exist had a given harmful event not occurred. Regardless of the difficulties inherent in such operations to calculate damages on the basis of forecasts, the courts will still carry them out in practice. Regarding this, one need only consider for example, the calculation of a loss of revenue (17) or calculation of the harm from a lost opportunity, which are somewhat similar not only to each other (18) but also to calculation of the indemnity laid down in Article 17(2) of Directive 86/653. In particular, as regards the Italian legal system, which apparently accepts that the harm from loss of an opportunity may be open to indemnity and allows the possibility, from the outset, of quantifying it on the basis of forecasts and probabilities, (19) it will assuredly not be particularly difficult to calculate customer indemnity according to the pattern laid down in Article 17(2) of the directive. Lastly, what is required in such a calculation is to make forecasts as to the realisation of certain events after the agency contract is terminated.

44.      If there are difficulties in making such forecasts, that is no reason to replace the indemnity scheme provided in Article 17(2) of the directive with another such as, for example, that in the CEA, in the present case. Although it is easy to effect the calculation required for this latter scheme, it is incompatible with the former scheme in terms of content, meaning and purpose.

45.      The calculation of indemnity pursuant to Article 17(2) of the directive may therefore usefully be represented as three stages. (20)

46.      During the first stage, a quantified estimate is required of the benefits which the principal will receive after termination of the contract, and these will, by and large, correspond to the commissions that, after termination, he will not be paying to the agent on account of the clients brought in or developed by the agent. Here, it seems clear that, for example, the quantity of business and the commission paid to the agent whilst the contract is in force are factors useful in quantifying the benefits which the principal will probably enjoy in the future and, consequently, are useful in quantifying the amount of indemnity due to the agent. However, such factors will be significant only to the extent that they are intrinsically relevant to the forecast needed in calculating the indemnity provided in Article 17(2) of the directive and not to the extent that they may be regarded as significant in any collective agreement in calculating the indemnity.

47.      That stage will be followed by one to establish whether payment of the indemnity is fair. Fairness plays a subsidiary part within the broad logic of Article 17(2) of the directive and acts as a safety valve that the court may use, in the light of the particular circumstances of the case, to adjust the amount of indemnity or even, in borderline cases perhaps, to rule against any indemnity. Every judgment of fairness is inherently based on individual circumstances and, in my view, that precludes any enumeration or description of particular circumstances of the case that might be regarded as important in making that judgment. Such an analysis will naturally fall to the relevant national courts.

48.      In the third stage, finally, the amount of indemnity is subject to the upper limit laid down in Article 17(2)(b) of the directive. That is a maximum and is not to be taken as the starting point in calculating the indemnity but rather as a ceiling applicable only if the amount of indemnity found in the two earlier stages of calculation exceeds that.

49.      In consequence, I believe that the Court’s answer to the second question referred by the Corte Suprema di Cassazione must be that Article 17(2) of the directive must be interpreted to mean that it specifies not only the conditions for recognising the commercial agent’s entitlement to indemnity but also the actual items for calculating the indemnity, so that fairness criteria may come to take effect only where, because of the particular circumstances of the case, it is necessary to adjust the amount of indemnity initially quantified in accordance with the objective factors laid down in Article 17(2)(a) of Directive 86/653.

III –  Conclusion

50.      In light of the foregoing considerations I therefore propose that the Court should reply in the following terms to the questions referred by the Corte Suprema di Cassazione:

(1)      Article 19 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 to mean that a collective agreement such as the Collective Economic Agreement in the present proceedings, providing a scheme for indemnifying a commercial agent after termination of the contract, in which the content and purpose are incompatible with those characteristic of the indemnity rules provided in Article 17(2) of the directive and which is intended to replace it entirely, is to be regarded as a derogating scheme to the detriment of the agent.

(2)      Article 17(2) of Directive 86/653 must be interpreted to mean that it specifies not only the conditions for recognising the commercial agent’s entitlement to indemnity but also the actual items for calculating the indemnity, so that fairness criteria may come to take effect only where, because of the particular circumstances of the case, it is necessary to adjust the amount of indemnity initially quantified in accordance with the objective factors laid down in Article 17(2)(a) of Directive 86/653.

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1 Original language: Portuguese

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2 – OJ 1986 L 382, p. 17, ‘Directive 86/653’ or ‘the directive’.

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3 –      Legislative Decree 65 of 15 February 1999 was adopted subsequently and contains a number of amendments to the rules on agency contracts, for a more faithful transposition of Directive 86/653. The first paragraph of Article 1751 of the Civil Code was amended to read: ‘Upon termination of the contract, the principal shall pay the agent an indemnity if the following conditions are met.’ In addition, a new paragraph was inserted at the end, providing for the indemnity also to be paid if the contract is terminated by the death of the agent.

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4 – The Court has interpreted Directive 86/653 before, specifically in its judgments in Case C‑104/95 Kontogeorgas [1996] ECR I-6643; C‑215/97 Bellone [1998] ECR I-2191; Case C‑456/98 Centrosteel [2000] ECR I‑6007; and Case C‑485/01 Caprini [2003] ECR I-2371. In Case C‑381/98 Ingmar [2000] ECR I ‑9305 Articles 17 and 19 were the immediate subject of analysis. More recently Advocate General Geelhoed delivered his Opinion in Case C‑3/04 Poseidon Chartering [2005] ECR I-2505. In any event, the matters considered by the Court in the past are different from those referred by the Corte Suprema di Cassazione in the present case.

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5 – See for example Baldi, R., Il contratto di agenzia, 7th. ed, Giuffrè, Milan, 2001, p. 247 et seq.

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6 – See the sixth recital in the preamble to the directive, expressly referring to the need for ‘additional transitional periods [to] be allowed for certain Member States which have to make a particular effort to adapt their regulations, especially those concerning indemnity for termination of contract between the principal and the commercial agent, to the requirements of this Directive’. By virtue of Article 22(3) of the directive, Italy was one of those States, specifically as regards the obligations under Article 17.

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7 – This point is often mentioned in the legal literature. See also page 2 of the Report on the application of Article 17 of the Council Directive on the coordination of the laws of the Member States relating to self-employed commercial agents (86/653/EEC), COM/96/364 final.

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8 – See Pinto Monteiro, A., ‘Il contratto di agenzia rivisitato. La direttiva CEE N. 86/653’, Diritto privato comunitario vol. I (ed. Vito Rizzo), edizioni scientifiche italiane, 1997, pp. 252-253, and Gomes, J., O Conceito de enriquecimento, o enriquecimento forçado e os vários paradigmas do enriquecimento sem causa, Publicações Universidade Católica, Porto, 1998, pp. 279-282.

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9 – See, in particular, Article 10 of Directive 86/653, concerning the time at which entitlement to commission is earned.

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10 – Concurrently, Article 18 of the directive is intended to prevent the agent from unlawfully taking advantage of the indemnity where it is he who is responsible for terminating the contract or when the goodwill indemnity is cumulated with some other, functionally similar, compensation.

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11 – In academic writing justification is to be found for this restriction on private initiative in a ‘paternalistic’ reasoning that arises from the unequal positions of the two parties within the contractual relationship. It seeks to prevent the agent’s position of dependence and inequality of information compared with the principal, while the contract is in force, from actually preventing him from deciding what is best for him. See, for example, v. Hoyningen-Huene, G., Münchener Kommentar zum Handelsgesetzbuch, Commentary on Para. 89b, No 188, p. 1174, C.H. Beck, Munich, 1996, and Cunha, C., A indemnização de clientela do agente comercial, 2003, Coimbra Editora, pp. 346 et seq.

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12 – To this effect, see Ingmar, paragraphs 21 and 22.

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13 – This view can be found in the Italian legal literature, for example and, most recently, in Sordi, P., ‘La contrattazione collettiva e l’indennità di cessazione del rapporto nel contratto di agenzia’, Massimario di giurisprudenza del lavoro, 2001, p. 546 et seq, particularly p. 548, and more recently, again by Sordi, P. – ‘L’invalidità degli accordi del 1992 sull’indennità di cessazione del rapporto di agenzia’ Giustizia civile, 2002, p. 487. Baldi, R. (in Il contratto di agenzia, p. 266, particularly pp. 278-282), among others, also holds that the collective-agreement scheme is ineffective and incompatible with Article 1751 of the Civil Code and with Article 17(2) of Directive 86/653. And some Italian decisions, although apparently a minority, have used the same arguments, as is seen immediately from the description given by the Corte Suprema di Cassazione in the reference for a preliminary ruling.

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14 – See Bellone, paragraphs 13 and 17, and Ingmar, paragraphs 20 and 23.

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15 – See, in particular, Baldi, R., Il contratto di agenzia, p. 268.

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16 – See the recent judgment in Joined Cases C-397/01 to C-403/01 Pfeiffer and Others [2004] ECR I-8835, paragraph 113.

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17 – De Cupis, A., Il danno – Teoria generale della responsabilità civile, Vol. I, 3rd ed., Giuffrè, Milan, 1979, p. 297, notes that, in calculating this type of damage, one must evaluate ‘whether a given advantage occurred or not ... Within the field of hypothesis, there cannot be absolute certainty: we must therefore be content with a degree of certainty, that is, a well-founded and reasonable expectation’ (free translation).

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18 – On this, see Bocchiola, M., ‘Perdita di una ‘chance’ e certezza del danno’, Rivista trimestrale di diritto e procedura civile, Anno XXX (1976), p. 55 et seq., in particular pages  60-61, pointing out that, since certainty is only relative, both in a loss of an opportunity and in a loss of revenue, ‘in borderline cases, the two hypotheses may be confused and practically overlap’ (free translation).

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19 – See judgment No 5026 (29 April 1993) by the Corte Suprema di Cassazione, in Giurisprudenza italiana, 1994, Part One, Section I, cols 234 et seq., especially col. 241, with notes by A. Musy.

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20 – As the Commission notes in its Report on the application of Article 17 of the Council Directive on the coordination of the laws of the Member States relating to self-employed commercial agents (cited in footnote 7), pp. 3 to 5.