Choice of law – agency and distribution agreements
In order to identify the respective rights and obligations of wine producers and their agents, distributors or joint-venturers, it is first necessary to establish which country's law governs the agreement between them.
As will be seen from applicable law, the parties are generally free to agree that the law of a specified country will be the governing law, but in the absence of such a choice there are legal rules for determining which country's law shall apply. You might propose the law of country X when negotiating the agreement. Or, where there is no agreed choice and a dispute has arisen, you might argue that the law of country X should apply. In either situation you need to be sure of what your, and the other party's, rights and obligations will be under the law of the country you propose. You need to be equally sure of what the position will be (a) under any choice of law the other party proposes, or (b) if neither of you proposes a choice, or you fail to agree upon one.
In the context of a wine agency or distribution agreement, one of the main reasons why a choice of law can make a difference to the parties is because, under the law of some countries, the agent or distributor will be entitled to claim “goodwill compensation” from the producer upon termination of the agreement. In the EU, commercial agents are entitled to this kind of compensation on termination, although there can be substantial differences between what commercial agents will be awarded in different EU member states. In some countries, both in and outside the EU, distributors are entitled to goodwill compensation. A choice of law can therefore make a big difference in terms of minimising or maximising potential liabilities and entitlements.
Commercial agents
The EC Commercial Agents Directive (the Directive) aimed to harmonise the law in relation to commercial agents throughout the EEA (the EU Member States plus Iceland, Liechtenstein and Norway). In theory the legal position should be pretty much the same in all EEA countries, and it should make no difference which country's law applies, if it has to be that of one or another (see applicable law). But in practice ...........
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