mbs commercial law june and july 2009
TRANSCRIPT
Munich, June and July 2009 Dr. Martin Rothermel, Taylor Wessing
Commercial Law
Part A – Commercial: Typical Agreements Part B – Warranty and Liability etc.Part C – International Business and German/European LawPart D – DistributionPart E – Antitrust Law
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Content
A. Commercial: Typical Agreements – an overview • Supply and Sale Agreements (including: purchase contracts, contracts for work,
service contracts, terms and conditions, etc.) • Distribution Agreements (including: agency agreement, reseller agreements, etc.)• Loan Agreements• Other Agreements
B. Warranty and Liability under German Law and the Convention for the International Sale of Goods• Warranty• Guarantee• Liability • Product Liability
C. International Business and German / European Law• Applicable Law and Choice of Law • Competent Jurisdiction and Choice of Venue Clauses• International Arbitration and Arbitration Clauses
D. Distribution • Agency versus Distributor Agreements• Antitrust (Cartel) law in Vertical Agreements
E. Antitrust Rules on Vertical Agreements
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Glossary
BGB = German Civil Code
HGB = German Commercial Code
GWB = Law against restraint in competition
…
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A. Typical Agreements
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A. Question: Starting Business – what agreements do we need?
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A. Typical Agreements – an overview
Sale and Purchase Agreements
Rental Agreements
Specialty: Lease Agreements
Service Agreements
Specialty: Employment
Agreements for work results
Specialty: Supply of goods to be manufactured
Loan Agreement
Real Estate, Mortgage, etc.
General Terms & Conditions (all of above and below)
Agency Agreements
Commission Agent
Distribution & Franchise Agreements
§§ 433 etc. BGB
§§ 535 etc. BGB
§§ 433, 535, etc. BGB
§§ 611 etc. BGB
§§ 611 etc. and other BGB
§§ 631 etc. BGB
§§ 651 etc. BGB
§§ 488 etc. BGB
§§ 873,1113 etc. BGB
§§ 305 etc. BGB
§§ 84 etc. HGB
§§ 383 etc. HGB
§§ various – see above
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B. Warranty and Liability, etc.
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B. I. Basic differentiation
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B. I. Please differentiate
Outline
Cause
Moment
Consequence
Warranty1
Guarantee2
Liability3
� Defect in quality
(§ 434 BGB)
� Defect in title
( § 435 BGB)
� Transfer of risk(defect in quality)
� Transfer of title (defect in title)
� Subsequent performance
- Replacement
- Rectification
� Avoidance (withdrawal)
� Price reduction
� Guarantee for (§ 443 BGB as example):
- Quality
- Durability
- etc.
� Relevant moment:
- Transfer of risk
- Guarantee period
No default required
� As agreed
� Breach of obligatione.g.: - Defect, delay- Other obligation- Strict liability
� Breach of obligation
Default required (notstrict liability)
� Compensation
Please Note: Difference betweenliability for default and guarantee
� Compensation
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B. II. Warranty
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B. II. 1. Warranty
� Defect in quality (§ 434 BGB)
� Defect in title (§ 435 BGB)
� „Agreed Quality“
- Prototypes (with acceptance)
- Specification
- etc.
� Explain „use“
� Explain Durability (Service Level)
� Explain Destination
� Passing of risk is important; INCOTERMS?
� Please note the inspection obligation in § 377 HGB
� etc.
Statutory Law Practical Tipps
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B. II. 2. Statute Limitation for warranty
Period
2 yearsregular
5 yearsBuildings
30 yearsProperty rights
Statute Limitation
Start
§ 438 Abs. 2:
Please note:
- Suspension in the event of negotiations (§ 203 BGB)
- Suspension by pursuit of rights (§ 204 BGB)
- Beginning a new if acknowledged (§ 212 BGB)
In case of land the limitation begins upon its being handed
over, in other cases upon delivery
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B. II. 3. Specialty: Consumer warranty rights
Sale of consumer goods (§§ 474 ff. BGB)
� Mandatory Provisions: warranty rights of consumers may not be limited in advance
- Neither with respect to claims
- Nor with respect to statute limitation: at least one year (for used goods) or longer
� Presumption: defect in quality existent at passing of the risk if defective within first 6 months thereafter
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B. II. 3. Specialty: Consumer warranty rights
Right of recourse (§§ 478, 479 BGB)
Manufactureror Supplier
Consumer
Buyer/Supplier Buyer/Supplier Buyer/Supplier Retailer
� Recourse within chain of delivery
• Warranty rights of consumer
• No period of grace• Reimbursement of expenditures • Reversal of burden of proof • Statute limitation at least 2 months after fulfillment of rights by claiming tier• Applicable for whole chain• No exclusion in advance – unless not compensated
Manufacturerbears costs of
defects
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B. II. 4. Subsequent performance by replacement or rectification
Subsequent Performance
Typical place of goods
Place of performance
Choice of purchaser
Place
Measure
Costs
Reasonable forseller
Replacement?
Rectification?
What if delivered elsewhere?
Details:
� Costs of seller
� Costs of purchaser
Details:
� Costs of seller
� Costs of purchaser
Replacment?
Rectification?
neither nor Other rights• Avoidance• Price reduction
?
§ 439 Abs. 2 BGB
The seller must bear all expenditure required for the purpose of
supplementary performance
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B. III. Guarantee
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B. III. Guarantee
Basics
BGB Consequences
� Manufacturer‘s or Seller‘s guarantee
� Terms are decisive
� Detailed provisions necessary
Please note: In English language no clear distinction between warranty and guarantee e.g. „warrants“, „guarantees“, „represents“, „…“ – clarify that!
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B. IV. Compensation for damages
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Defects Strict liability„Producer liability“
� Compensation � Compensation � Compensation
� Delivery of defectiveproducts
� Compensationwithout default
� Default in obligations
� Seller � Producer
� Labeler
� Importer
� Producer
B. IV. Compensation rights
Outline (1)
Content
Basis
Who
Otherobligations
� Compensation
� Default in otherobligations
� Seller
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Defects Strict liability„Producerliability“
� Description
� Quality
� Exculpation
� ??? � Exculpation
� Qualityassurance
� No limits � Limitation- Personal injury:
85 Mio. EUR
- Other: ?
� No limits
� Nicht: Vermögens-schaden
� Buyer � Buyer
� Enduser
� Buyer
� Enduser
B. IV. Compensation rights
Outline (2)
Prevention
What
Claimant
Otherobligations
� Exculpation
� No limits
� Buyer
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B. IV. 1. Liability for contractual obligations
Liability for defects and other obligations
� Defects: as above
� Other obligations resulting from contract
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B. IV. 2. Strict liability
Liability without default
Construction
Liability without default
Product not safe = less safety than reasonably expected
� DIN, ISO, GPSG etc.� Reasonableness
� Expectation
Product is not safe
Fabrication Instruction
Theoretically Important
No liability, if- Not marketed- Based on mandatory rules - Not to defect/avoid
Manufacturer, Labeller, Importer: Mutual liability
Liability for- Personal injuries - Damages in privately used goods
+
� State of the art
� Current knowledge
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B. IV. 3. Liability as producer
Liability as producer
Construction
Default in general obligations
� Certification rules� State of the art� Reasonability
� Expectation
Defective product, product is not safe
Fabrication Quality Organisation Instruction Surveillance Reaction
… … … … … … …
� Current knowledge
Case law
+
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B. IV. 4. Compensation
Liability
� Breach of obligation
� DefaultPrecondition
Consequence
Practical Tips
� Compensation of damages
� No differentiation as to subsequent damages
� Limitation in T&C difficult
Examples:- Defects (not in all cases default of seller – no obligation
for inspection)
Amount� Causality!
- Everything predictable- Within scope of provision
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C. International Business and German / European / International Law
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(1) Example – taken from an international distribution agreement
C. International Business
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C. International Business
(2) Example – taken from an international distribution agreement
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Example
Manufacturer, Seller
Distributor, Purchaser
Germany Contractual relationship Foreign Country
• Which law?
• Which choice of law?
• Which court?
• Which choice of venue?
Distribution Agreement
Supply AgreementsManufacturer,
SellerDistributor, Purchaser
C. International Business – A continuous example will explain the basics (distribution agreement)
• Arbitration?
I
II
III
IV
V
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C.I. Which Law
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C. I. 1 Differentiation between intra European cases and involvement of third countries
Outline: Which law to apply?
� Rome Convention of 1980 for contractual obligations („EVÜ“)
� „Transformed“ into EGBGB in Germany
- contractual obligations (Art. 27-37EGBGB) and
- non contractual obligations (Art. 38-42 EGBGB)
� Rome-I-Regulation for contractual obligations – coming 12/2009
� Rome-II-Regulation for non contractual obligations – effective since 01/2009
� National law (similar principles):
- freedom of choice of law
- grouping of contacts or place of
contract = center of gravity
- protection of weaker party
- ordre public
- internationally mandatory rules of national law
Third Countries
RenvoiOrdre publicChoice of law
EU
It differs„Unified“ in EU (for contractualobligations)
Predictable Not predictable
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C. I. 2 EU: for contractual obligations the principle of relevant contact(center of gravity) prevails
EU: Principles (1) – Relevant Contact
Relevant Contactof agreement to national law
� Characteristic performance (Art. 4 EVÜ, 28 EGBGB, Art. 4 Rome I)
� Even for definable parts of the agreement
� Material law applicable – no „renvoi“ (Art. 15 EVÜ, 35 EGBGB, Art. 20 Rome I)
� Assumption (Art. 4 II EVÜ,
28 II EGBGB)
- characteristic performance
� Unless: more closely connected to other country(Art. 4 V EVÜ, 28 V EGBGB)
� Not: - non-contractual obligations (Art. 1 EVÜ,38 ff. EGBGB, Art. 1 Rome I)
- title on real estate (Art. 4 III EVÜ, 28 III EGBGB and lex sedes materiae)
- property law (Art. 43 EGBGB und lex rei sitae)
� Beneficial comparision: - Consumer (Art. 5 EVÜ, 29 EGBGB, Art. 6 Rome I)- Employee (Art. 6 EVÜ,
30 EGBGB, Art. 8 Rome I)
� International mandatory law (Art. 34 EGBGB, 7 II EVÜ f. „law of forum“– 7 I EVÜ f. „law of third
country“, Art. 9 Rome I)
� Ordre Public
(Art. 6 EGBGB, Art. 21 Rome I)
Backup
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EU: Principles (2) – Characteristic Performance
C. I. 2 EU: Characteristic Performance
Details
Sales
Work Supply
Services
Law of Seller
Law of Contractor
Law of Service Provider
as: � Distributor
� Agent (attend: Ingmar-Decision)
� Franchisee
� Others
May differ in distribution
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Non-EU-Countries: Outline
C. I. 3 Third Countries: Principles are similar
Basics
Freedom of Choice
Specific Performance
Details
� Ordre public
� Mandatory rules
� International contract
� Grouping of contacts, most significant relationship
� Place of contract
Difficult to predict
Detailed review to recommend
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C. II. Choice of Law
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C. II. Choice of law clauses
Basic Questions
1. Subject of choice of law?
2. Law to be chosen?
3. How to choose?
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C. II. 1 Subject of Choice of Law
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C. II. 1 EU: Freedom of choice is predominant for contractualobligations
Principles (1) – Freedom of choice
Freedom of choiceArt. 3 EVÜ, 27 EGBGB, Art. 3
Rome I
� Choice of material law (Art. 3 EVÜ, Art. 4 II EGBGB, Art. 3 Rome I)
- no renvoi (Art. 15 EVÜ, Art. 35 EGBGB,
Art. 20 Rome I)
� Even for „neutral law“ (Art. 2 EVÜ, Art. 2 Rome I) = law of third country
� Completely or partly (Art. 27 I3 EGBGB, 3 I3EVÜ, Art. 3 Rome I); Dépeçage
� Escape from inconvenient law !?
But:
� Consumer protection (Art. 5
EVÜ, 29 EGBGB, Art. 6 Rome I)
� Employees (Art. 6 EVÜ, 30 EGBGB, Art. 8 Rome I)
Beneficial comparision
But:
� International mandatory law(Art. 34 EGBGB, 7 II EVÜ –7 I EVÜ, 22 EVÜ, Art. 9 Rome I)
E.g.: Belgian Distributor� Ordre Public (Art. 6 EGBGB, Art. 21 Rome I)
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C. II. 1 Conclusion
Summary
Manufacturer,Seller
Distributor, Purchaser
Germany Contractual relationship Foreign Country
Distribution Agreement
Supply AgreementsManufacturer,
SellerDistributor,Purchaser
Contractual obligation Not: Non-contractual obligationNot: Property lawNot: Competition law
Choice of law possible?
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C. II. 2 Law to be chosen?
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Details (1) – Freedom of choice
C. II. 2 The choice of „neutral“ law is not free of doubts – at least outside the EU
� EVÜ/EGBGB: possible within the borders of 3 III EVÜ, 27 III EGBGB (pure national contracts and except of mandatory rules)
� Rome I: as above, even for pure national contracts (Art. 2 Rome I)
� Non-EU:
- depends on national law
„Neutral“ Law (law of third country)
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Details (2) – Freedom of choice
C. II. 2 The choice of Soft Law is doubtful
UNIDROIT Principles, Lando Principles (PECL), lex mercatoria, Sharia etc.
� EU
- no exhaustive application of Soft Law – national law still applicable
� Non-EU
- ?
Soft Law (no national law)
It is to differentiate:
� Selection of the law for the whole contract („kollisionsrechtliche Verweisung“)
� Incorporation of some of the provisions of the choosen law („materiellrechtliche Verweisung“)
It is to differentiate:
� Selection of the law for the whole contract („kollisionsrechtliche Verweisung“)
� Incorporation of some of the provisions of the choosen law („materiellrechtliche Verweisung“)
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C. II. 2. „Soft Law“ – mostly will only be applicable if agreed or ratified
Details (3) – Soft Law - What is it?
Partly ratified
� „Material Law“
If agreed (?)
If agreed (!)
If agreed (?)
If agreed (?)
UNCITRAL
UNIDROIT
ICC
Lando - PECL
CENTRAL - Lex mercatoria
CISG, New York Convention
UNIDROIT Principles
Incoterms, ICC Rules of Arbitration
Principles of European Contract Law
Common or Customary Law
„Organisations“ Content Application
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C. II. 2. „Soft Law“ contains basics of contractual law
Details (4) – Soft Law - What does it contain?
UNIDROIT Principles Lando (PECL) lex mercatoria
� Application of Principles
� Conclusion of contracts
� Binding character
� Interpretation
� Third party rights
� Performance
� Non-performance and compensation
� Set-off
� Assignment, Transfer
� Limitation periods
� General Principles - Good faith and fair dealing,
venire contra factum proprium, pacta sunt servanda, etc.
- Freedom of contract - Cooperation - Set-off, retention
� Warranty, Liability - Culpa in contrahendo- Foreseeable loss - Lost profits
� Limitation � Burden of proof � Private International law
- Center of gravity test
� Application of Principles, General Principles
� Conclusion of contract
� Validity, interpretation
� Content
� Performance
� Non-performance remedies
� Assignment
� Set-off
� Limitation
� Conditions
� Interest
?
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(1) Example – taken from an international distribution agreement
C.II. Again: What that law is applicable
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C. II. 3 How to choose?
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Details (1) – Form of choice
C. II. 3 Choice of law should be expressed and certain
Form
� EU (Art. 3 I EVÜ, 27 I EGBGB, Art. 3 Rome I)
- The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or
the circumstances of the case
� EU (Art. 3 IV EVÜ, 27 III EGBGB, Art. 3 Rome I)
- Choice shall be determined by the law which shall be chosen
� Third countries
- Depends on national law difficult to predict
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Details (2) – Form of choice
C. II. 3 Problems: Choice of law in General Terms and Conditions
Choice of law in T&C
� Inclusion
- depends on national law
- Ideally: written form and enclosure of T&C
� Conflicting choice of law in T&C
- Last shot doctrine
- Knock-out-rule
- Center of gravity
� Language
- Allocation of risk: party who wants to include the T&C
- Ideally: „Global Language“ or language of contractual partner
- Special issue: reference on German letterhead
Ideally: written form and enclosure of T&C in the language of contractual partner; see
Federal High Court 31 October 2001 (WM 2002, 442) – CISG, but arguments are convincing
Ideally: written form and enclosure of T&C in the language of contractual partner; see
Federal High Court 31 October 2001 (WM 2002, 442) – CISG, but arguments are convincing
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C. III. Competent Court, Choice of Venue, Enforcement
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Questions
Manufacturer, Seller
Distributor, Purchaser
Germany Contractual relationship Foreign Country
Distribution Agreement
Supply AgreementsManufacturer,
SellerDistributor, Purchaser
� What to enforce and where?
C. III. Being smart: Stipulations for Conflicts
� What to be chosen?
� A combination of arbitration and ordinary courts?
� How to choose?
� What is reasonable?
� Who is deciding without a choice of venue?
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C. III. 1. Enforcement
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Outline – Recognition and Enforcement
C. III. 1. Difference between intra EU relationships and relationshipswith third countries
EU + EEA Non EU + EEA (third countries)
� ZPO (§§ 328, 722 ff.)
- Recogniton
- Procedures
� National law
- Judgement may not be enforced everywhere
- Better: Arbitration? (Due to New York Convention
of 1958)
� Brussels Regulations
� Lugano Convention
(Iceland, Norway, Switzerland)
- Prevail all national laws
- Enforcement in EU + EEA harmonized & possible (at least in theory)
in EU/EEA in Germany
in third countries
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C. III. 2. Competence
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� ZPO (§§ 12 ff.)
- Prevail all national law
- Competent court of seat of defendantand eventually at place of performance
- only in special cases at place of claimant
� National rules on competence
� ???
- Double competence conceivable
- Only in special cases at place of claimant
� Brussels Regulations
� Lugano Convention
(Iceland, Norway, Switzerland)
- Prevail all national laws
- Competent court at seat of defendant and eventuallyat place of performance
- Only in special cases at place of claimant
Outline – Competence of courts
C. III. 2. Difference between intra EU relationships and relationshipswith third countries
EU + EEA Non EU + EEA (third countries)
in EUGermany
third countries
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C. IV. Choice of Venue
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C. IV. Difference between intra EU relationships and relationships with third countries
Outline – Choice of venue
National (Germany) EU + EEA Third Countries
� § 38 I ZPO
- Only merchants
- No form, explicit or implicit
� § 38 II ZPO
- No general domestic court in Germany
- Written or in writing and
confirmed
But:
� Art. 23 Brussels Regulation- Not: consumer, employees- Written or in writing and
confirmed- In trade usances
� § 38 II ZPO
- No general domestic court in Germany
- Written or in writing and
confirmed
� Respective national law
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C. V. Arbitration Clauses
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Criteria
C. V. Arbitration
� Due to New York Convention of 1958 (140 Member States) better to enforce
� Selection of Arbitrators
� International: Not focusing national law/circumstances
� Free to find applicable law
� Free to find appropriate procedures – but might be dangerous
� No publicity
� Speed?
� Costs?
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0,00
50.000,00
100.000,00
150.000,00
200.000,00
250.000,00
300.000,00
350.000,00
400.000,00
450.000,00
500.000,00
DIS Kostenrisiko 3 SR (mit RVG Anwälte) 17.615,00 22.955,00 61.565,00 97.165,00 254.165,00
ICC Kostenrisiko Mittel 3 SR (mit RVG Anwälte) 23.027,72 33.668,82 83.973,64 125.414,50 289.402,40
Gericht Kostenrisiko 1. Instanz 6.598,00 9.338,00 23.848,00 35.848,00 131.848,00
Gericht Kostenrisiko 1. und 2. Instanz 14.279,60 20.344,40 52.449,60 78.849,60 290.049,60
Gericht Kostenrisiko 1., 2. und 3. Instanz 24.509,20 34.914,80 89.999,20 135.299,20 497.699,20
50.000 100.000 500.000 1 Mio 5 Mio
Details
Comparision in costs* - ordinary courts/arbitration
Streitwert
Verfahrenskosten
* net without in expenses in Germany
C. V. Arbitration
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0,00
500.000,00
1.000.000,00
1.500.000,00
2.000.000,00
2.500.000,00
3.000.000,00
DIS Kostenrisiko 3 SR (mit RVG Anwälte) 17.615,00 22.955,00 61.565,00 97.165,00 254.165,00 378.665,00 561.665,00 810.665,00 909.665,00
ICC Kostenrisiko Mittel 3 SR (mit RVG Anwälte) 23.027,72 33.668,82 83.973,64 125.414,50 289.402,40 412.209,65 605.673,50 874.171,95 970.914,70
Gericht Kostenrisiko 1. Instanz 6.598,00 9.338,00 23.848,00 35.848,00 131.848,00 251.848,00 491.848,00 731.848,00 731.848,00
Gericht Kostenrisiko 1. und 2. Instanz 14.279,60 20.344,40 52.449,60 78.849,60 290.049,60 554.049,60 1.082.049,60 1.610.049,60 1.610.049,60
Gericht Kostenrisiko 1., 2. und 3. Instanz 24.509,20 34.914,80 89.999,20 135.299,20 497.699,20 950.699,20 1.856.699,20 2.762.699,20 2.762.699,20
50.000 100.000 500.000 1 Mio 5 Mio 10 Mio 20 Mio 50 Mio 100 MioStreitwert
Verfahrenskosten
30 Mio. Cap in RVG and GKG
Details
Comparision in costs* - ordinary courts/arbitration
* net without in expenses in Germany
C. V. Arbitration
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D. Distribution
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D. I. Effective entry and penetration of markets require activity and knowledge
Situation of Principal (Manufacturer)
Market entry
Estabilishment of customer relations
Analysis of the market
Reasonable activity
Flexible structure
Tax considerations
1
2
3
4
5
6
Status quo Objective
No presence on market
No customer relations
No knowledge about markets
No huge investments
No fix structures
No tax implications
Presence on market
Customer relations
Growing knowledge
Efficient structure
Flexibility
No tax implications
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D. II. Analysis of potential structures and systems
Outline
� Mostly companies
� Purchase and sale
� In own name on own account
� Risk of sales with D
� Double margins
Distributor (D)
� Persons and companies
� Constant promotion
� Solicitation with authority
� Risk of sales with principal
� Success related remuneration
Agent (A)
� Persons
� Protection of employee
Employee (E)
Cleardistinction
Cleardistinction
MixturesMixtures
Franchisee Commissioner Freelancer
� Only on occasion� Own name on account of principal
� Concept, CI, CD, Royalties
Branch
� Tax implications
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D. II.1. Distributorships – legal character
OutlineBackup
• not clearly stipulated in statutory law
• antitrust law applicable => typical limitation (such as exclusivity, non-competition, etc. require legal review)
• no compensation – if properly drafted
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D. II.2. Agencies – legal character
OutlineBackup
• clearly stipulated in statutory law – all over Europe and maybe beyond
• strong protection of distributor: number of advantageous internationally mandatory provisions for agent
• no antitrust law applicable – if properly drafted
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Base YearNew
regulars Year 1 Year 2 Year 3 Year 4 Year 5
Base Year Forecasting Horizon CapEquitableness• approx.: 5 years (example)• churn rate: 20 % (example)
• normally last yearbefore effectivetermination
• only new customerswho became regularcustomers
• term• etc.
Average annual
provisionwithin last 5 years
Sum1 to 5
EquitableAmount
Compen-sation
expiry of contractual term or mutual understanding without waiver or termination by principal without good cause given by agent or termination by agent with good cause given by principal
Compensation claims require Termination of Agreement by
Burden of proof: Agent Burden of proof: Principal
D. II. Calculation of Compensation Claims (Sec 89b German Commercial Code, HGB)
Compensation Claim § 89 b HGB (Germany) – Abstract
Backup
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D. II. Calculation of Compensation Claims (Sec 89b German Commercial Code, HGB) – mutatis mutandis for distributors!
German JurisdictionBackup
Compensation claims in mutatis mudandis application on distributors
According to German jurisdiction the precondition for such mutatis mutandis application under German law is (cumulative):
� the integration of the distributor into the sales organisation of the company
and
� any obligation (in the agreement or factual) of the distributor to forward customer data (names, addresses, etc.) during the term of the agreement or in the course of its termination to the company.
In such cases German jurisdiction applies the rules for goodwill compensation of agencies (Sec. 89 b German Commercial Code) and some other agency provisions (e.g. pertaining to the waiver on compensation in settlements and termination notice etc.) to distributors mutatis mutandis.
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D. II. It cuts both ways …
Structures and systems – advantages and disadvantages for principal
� Risk of sale with D
� No goodwill compensation (if properly drafted)
� Investments by D
� Availability of goods
Distributor (D)
� No antitrust law (if properly drafted)
� Success related remuneration
� Knowledge about market
Agent (A)
� Strong directives possible
Employee (E)
FeaturesFeatures� Antitrust law, limited directives
� Double margins
� Limited forwarding of market knowledge
� Risk of sale with principal
� Goodwill compensation mandatory
� Costs
� Costs
� Employee protection
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D. II. Chances and risks must be balanced
Outline of chances and risks
� Allocations of risks
� No goodwill compensation
� Antitrust rules on restrictions
� Potential goodwill compensation
Risks
Chances
� Strong directives and exhaustive reports on market
� Success related remuneration
� Employment law (?)
� Interests protection
� Goodwill compensation mandatory
Risks
Chances
Distributor (D) Agent (A)
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D. II. Advise necessary
Distributor or Agent
Chances
Risks
Commission as ”best of both worlds“ – concept?
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F. Antitrust Law – on Vertical Agreements
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Article 81 – Treaty of Rome (similar in German law – GWB)
1. The following shall be prohibited as incompatible with the common market: all agreements between undertakings, decisions by associations of undertakings and concerted practices which may affect trade between Member States and which have as their object or effect the prevention, restriction or distortion of competition within the common market, and in particular those which: (a) directly or indirectly fix purchase or selling prices or any other trading conditions;(b) limit or control production, markets, technical development, or investment; (c) share markets or sources of supply;(d) apply dissimilar conditions to equivalent transactions with other trading parties, thereby placing them at a competitive disadvantage; (e) make the conclusion of contracts subject to acceptance by the other parties of supplementary obligations which, by their nature or according to commercial usage, have no connection with the subject of such contracts.
2. Any agreements or decisions prohibited pursuant to this article be automatically void.
3. The provisions of paragraph 1 may, however, be declared inapplicable in the case of: - any agreement or category of agreements between undertakings,- any decision or category of decisions by associations of undertakings, - any concerted practice or category of concerted practices, which contributes to improving the production or distribution of goods or to promoting technical or economic progress, while allowing consumers a fair share of the resulting benefit, and which does not: (a) impose on the undertakings concerned restrictions which are not indispensable to the attainment of these objectives;(b) afford such undertakings the possibility of eliminating competition in respect of a substantial part of the products in question.
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F. I. Antritrust law – in Germany, Europe and third countries
Outline
National (GWB) EU + EWR Third countries
� GWB
- § 1 GWB „Prohibition“
- § 2 GWB „Exemptions“ leads
to EU Block exemptions
� Respective national law� Art. 81 ff. EGV
� Block exemptions
- Vertical Agreements
- Technology Transfer
- R&D
- Specialisation
- Vehicle Distribution
- etc.
+ Guidelines
� De-minimis Notices
=> market share
(5% / 10% / 15% / 30%) – applied in Germany as well
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F. II. Systematic review is required
System (for vertical agreements)
Restraint?1
Beyond de minimis?3
Exemption?4
Vertical or horizontal?2
Definition of relevant market very important
� hardcorerestrictions, already
for de minimis test of importance
� > 30 % Marketshare of Supplier
� Other preconditions on Block Exemption for verticalagreements
� De-minimis-Note, Marketshare
- < 10 % for Competitors
- < 15 % for Non Competitors
- < 5 % in cumulative Systems
� if no free to decide aboutactivity
� between (at least potential) Competitors
horizontal
� different level of production ordistribution (Not-Competitors)
vertical
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F. III. Typical Restraints
Outline
� Price Fixation => hardcore restriction!
� Restriction in Territory => depends on active/passive trade and market share
� Exclusivity => depends on restriction for buyer or seller and marketshare etc.
� Non compete obligations => depends on marketshare and term
� etc.
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Thanks for your attention!
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