Distribution agreement France
In France parties to a longstanding distribution agreement have to adapt the termination notice period, regardless of contractual provisions.
Termination notice period in France after a long-term commercial 的关系
Regarding the termination notice period, 法国法院 have determined that the assessment of the duration of the notice period must be based on all 情况下 likely to influence its appreciation at the time of the notice, in particular the length of the commercial 的关系, the business volume, the commercial activity sector, the victim’s state of economic dependence, possible non-recoverable expenses incurred and the time needed to find a new business partner (巴黎法院 Appeal, 13 September 2017, No. 14/23934).
法国法院 concur to consider that the notice period for the termination of a long-standing business 的关系 must be calculated on the basis of one month per year of business 的关系, with a ceiling that has long been recognized as amounting to approximately two years, and can be extended to three years (巴黎 Court Appeal, 4 November 2016, No. 14/15362).
Such case law also applies whenever the parties (法国 or foreign) have included an arbitration clause in their distribution agreement – for instance an ICC arbitration clause – and indicated that 法国 law is applicable.
Further, Article L. 442-6-I 5° of the 法国 商业 Code expressly sets out that in cases where the commercial 的关系 concerns the supply of distribution brands, the minimum notice period should amount to the double of the notice period that would apply if the product was not supplied under the distribution brand.
Damages and compensation
法国法院 and arbitral tribunals concur that any damage caused by a wrongful conduct gives rise to compensation.
In case of an abrupt termination of a long-standing business 的关系, 法国法院 consistently recognize that the damage is that caused by the “brutality” of the termination (巴黎法院 Appeal, 7 June 2017, No. 14/17158; Court of Cassation, 6 September 2016, No. 15-10.324).
The valuation of the Claimant’s damages are calculated on the basis of the turnover achieved with the commercial partner. 法国 courts compensate the loss of gross margin – the difference between the turnover and the purchase 的成本 the products – on the turnover that the victim of the termination could have expected to achieve with its partner during the period of insufficient notice if such notice had been executed, equivalent to the gross margin rate of the last financial year (巴黎 Court of Appeal, 4 November 2016, No. 14/15362; 17 November 2016, No. 15/14350).
Further, the 法国 Court of Cassation grants any victim of a brutal termination due to the non-application of a sufficient notice period the above-mentioned mandatory compensation for the period what the victim would have earned if the notice period would have been 受人尊敬的 (巴黎法院 Appeal, 12 December 2016, No. 15/10619).
The above case law is also applied by international arbitral tribunals, even when the distributor in not a 法国 national.
The victim of the sudden termination of a long-standing business 的关系 can also claim damages for the harm caused to its image, moral damages along with restructuring charges (i.e. 的成本 dismissal), caused by the brutality of the termination.
With respect to the valuation of such damages, courts consider the high dependence between the parties (巴黎法院 Appeal, 18 June 2015, No. 14/04455).
This article has been prepared for informational purposes only. It is not a substitute for legal advice addressed to particular 情况下. You should not take or refrain from taking any legal action based upon the information contained herein without first seeking professional, individualized counsel based upon your own 情况下. The hiring of a lawyer is an important decision that should not be based solely upon advertisements.
Information by ALARIS AVOCATS, English speaking lawyers in France (巴黎) specialized in 法国 labor law, especially any kinds of Social Plans, dismissal procedures and labor contract clauses.