The Commercial Agents Regulations: alive and kicking

Speculation as to whether the Commercial Agents Regulations would be removed from the UK statute book was put firmly to bed with the enactment last month of the controversial Retained EU Law (Revocation and Reform) Act.

That said, while the Regulations (and their Northern Irish equivalents) remain as law, the position is not quite as clear cut as might have been hoped.

How we got here

Before the UK left the EU on 31 December 2020 a decision was taken by the government that all EU law existing at that date (EU retained law or REUL) would remain part of UK law. This meant, for example, that the EU Agents Directive and judgments of the Court of Justice of the European Union (“European Court”) remained part of UK law after Brexit.

At that time, it was recognised that over time EU retained law might change. However, in 2022 the situation changed fundamentally with the publication of a Bill which would have seen, among other things, all EU law repealed or sunsetted on 31 December 2023, unless expressly saved.

Why the controversy?

In practice, this would have applied to around 4,000 pieces of legislation and would have created great legislative uncertainty as well as uncertainty for a host of cases before the courts of the UK.

With the enactment of the Retained EU Law (Revocation and Reform) Act, as Mark Twain (almost) wrote, reports of the death of the Commercial Agents Regulations has been grossly exaggerated.

However, the Act results in (among other things):

• The abolition of the supremacy of retained EU law in the UK on 31 December 2023. As such UK courts will not have to follow the judgments of the European Court as at 31 December 2020 when it comes to the interpretation of the Regulations and, in turn, the Directive.
• The abolition of the general principles of EU law in UK law on 31 December 2023. Again principles of EU law as at 31 December 2020 which have been applied by UK courts in the interpretation of the Directive will no longer be applied in the interpretation of the Regulations.
• The giving of significant powers to the Government to revoke and replace secondary REUL after 31 December 2023.

What does this mean in practice?

Barring fundamental shifts in the UK’s status as a “third country” so far as the EU is concerned and in the Government’s approach to its relationship with the EU, it is inevitable that over time there will be divergence between the judgments of the UK courts and the European Court in how the Regulations and the Directive are interpreted.

It is a small part of a much larger issue described recently in the Financial Times as Brexit 2.

As such:

• UK principals with agents in the EU will be faced with great uncertainty in the understanding of their agents’ legal position if the agency agreements in place are not expressly stated to be governed by and interpreted in accordance with one of English, Scottish, or Northern Irish law.
• The same will be true for UK agents with EU principals where their agency agreements are expressly governed by and interpreted in accordance with the laws of one of the 27 Member States of the European Union.

What should principals and agents do?

The enactment of the Act highlights the need for principals and agents to review their existing agency agreements in order to:

1. Check what is stated as the governing law.
2. Check that they are comfortable with relevant agency agreements being governed by the law stated.
3. Understand what their position is if no governing law is stated in an agreement.
4. Take the opportunity to put in place written agency agreements if their existing agreements are unwritten.

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