In the EU
Where the agent operates in a member state, the Directive's mandatory protections apply whatever law the contract chooses (Ingmar).
1978
The Hague Convention of 14 March 1978 sets the applicable law absent a choice — in principle the law of the agent's establishment.
Art. 7.1.b
Under the Brussels I bis Regulation, the competent court is that of the place where the agent's services were, or should have been, provided.

Which law governs an international commercial agency contract?

An international commercial agency contract raises two connected questions: which law governs it, and which court decides a dispute. The parties can, in principle, choose both — but the choice is bounded. The mandatory, public-order provisions of Council Directive 86/653/EEC of 18 December 1986 on self-employed commercial agents must be applied, according to the Court of Justice of the EU, whenever the situation has a close link with the EU — in particular where the agent carries on its activity in a member state — whatever law the parties have chosen. Where the parties have made no choice, the applicable law and the competent court are found through the ordinary rules of private international law.

The practical significance is that a foreign principal cannot escape the agent's protections — above all the termination indemnity — simply by writing a non-EU governing law into the contract, if the agent sells inside the EU. But the choice of law is decisive on one question in particular: it mainly determines the amount of the indemnity and commission the agent receives on termination. The Directive is transposed in every member state, yet it deliberately left them a choice between two very different payment systems, so the same agency can be worth two or three years' commission under one national law and only one year under another. Determining the applicable law is therefore the first and most valuable step in any cross-border agency dispute.

Where the Agent Works Drives the Analysis

The single most useful question in a cross-border agency is not "what law did we choose?" but "where does the agent carry on its activity?" If that is inside the EU, expect the Directive's mandatory rules to apply whatever the contract says. If it is outside the EU, the choice of law does far more work — as set out below.

Why the applicable law decides how much the agent is paid on termination

The most important practical reason to fix the applicable law is that it mainly determines the amount payable to the agent when the contract ends. The Directive harmonised the existence of a termination payment across the EU, but it deliberately left member states a choice between two very different systems, and that choice produces very different sums for an otherwise identical agency.

Article 17 of the Directive offers each member state the option of an indemnity system or a compensation system. Under the indemnity system (Article 17(2)), the agent is entitled to an indemnity for the customers it has brought or developed, but the amount may not exceed a figure equivalent to one year's remuneration, calculated from the agent's average annual remuneration over the preceding five years (Article 17(2)(b)). Under the compensation system (Article 17(3)), the agent is entitled to compensation for the damage suffered as a result of the termination, with no such statutory ceiling. The parties may not derogate from these rules to the agent's detriment before the contract expires (Article 19).

France and Ireland are the only member states that adopted the uncapped compensation system; every other member state chose the capped indemnity. The table below sets out, for all twenty-seven member states — with the United Kingdom added for comparison — the system each adopted, the national statute and article, and the ceiling or typical amount. It is the difference between these regimes that makes the choice of applicable law worth so much:

Member state System National statute & article Cap / typical amount
AustriaIndemnityHandelsvertretergesetz 1993 (HVertrG), §24 HVertrGIndemnity — capped at 1 year’s average annual remuneration (5-yr average)
BelgiumIndemnityCode of Economic Law (Code de droit économique / Wetboek van economisch recht), Book X, Title 1, art. X.18 (supplementary damages under art. X.19)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
BulgariaIndemnityCommercial Act (Търговски закон / Targovski zakon), Art. 40 (esp. Art. 40(1)-(2))Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
CroatiaIndemnityCivil Obligations Act (Zakon o obveznim odnosima / ZOO), art. 830 ZOO (special indemnity / "posebna naknada")Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
CyprusBoth / mixedRegulation of the Relations between Commercial Agents and Principals Law (Commercial Agents Law) 51(I)/1992, Section 18 (indemnity: §18(2)Both systems transposed — indemnity capped at 1 year, or uncapped compensation/damages
CzechiaIndemnityCivil Code, § 2514 (right to special remuneration / "zvláštní odměna")Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
DenmarkIndemnityHandelsagentloven (Lov om handelsagenter og handelsrejsende / Danish Commercial Agents Act), § 25 (entitlement to godtgørelse/indemnity)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
EstoniaIndemnityLaw of Obligations Act (Võlaõigusseadus, VÕS), § 688Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
FinlandIndemnityAct on Commercial Representatives and Salesmen (Laki kauppaedustajista ja myyntimiehistä) 417/1992, Section 28 (cap in § 28(2))Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
FranceCompensationCode de commerce, art. L.134-12Compensation — customarily ~2 years’ commission, up to 3; no cap
GermanyIndemnityHandelsgesetzbuch (HGB), §89b HGBIndemnity — capped at 1 year’s average annual remuneration (5-yr average)
GreeceIndemnityPresidential Decree 219/1991 (Π.Δ. 219/1991), transposing Directive 86/653/EEC, Art. 9(1) (goodwill indemnity)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
HungaryIndemnityAct CXVII of 2000 on the Contract of Self-employed Commercial Agents (2000. évi CXVII. törvény az önálló kereskedelmi ügynöki szerződésről), §§ 18-19 (entitlement in § 18Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
IrelandCompensationEuropean Communities (Commercial Agents) Regulations 1994 (S.I. No. 33 of 1994), Reg. 2(3) of S.I. 33/1994 applies Directive 86/653 directlyCompensation — reparation of the damage; no statutory cap
ItalyIndemnityCodice Civile (Italian Civil Code), art. 1751Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
LatviaIndemnityCommercial Law (Komerclikums), Section 59Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
LithuaniaBoth / mixedCivil Code of the Republic of Lithuania (Lietuvos Respublikos civilinis kodeksas), Book Two, on commercial representation, art. 2.167 ("Right to Compensation and Damages")Both systems transposed — indemnity capped at 1 year, or uncapped compensation/damages
LuxembourgIndemnityLoi du 3 juin 1994 portant organisation des relations entre les agents commerciaux indépendants et leurs commettants, art. 19 (indemnité: art. 19(1)-(2)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
MaltaBoth / mixedCommercial Code (Chapter 13 of the Laws of Malta), art. 78D (indemnity: 78D(2)Both systems transposed — indemnity capped at 1 year, or uncapped compensation/damages
NetherlandsIndemnityBurgerlijk Wetboek (Dutch Civil Code), Book 7, Title 7 (agentuurovereenkomst), art. 7:442 BW (klantenvergoeding / customer indemnity)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
PolandIndemnityCivil Code (Kodeks cywilny), art. 764³ (art. 764(3))Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
PortugalIndemnityDecreto-Lei n.º 178/86 (Decree-Law 178/86 of 3 July 1986, Agency Contract Regime), art. 33 (indemnização de clientela / goodwill indemnity)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
RomaniaIndemnityCivil Code (Codul civil, Law 287/2009); originally Law No. 509/2002 on permanent commercial agents, art. 2091 Codul civil (agency contract: arts. 2072–2095)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
SlovakiaIndemnityObchodný zákonník (Commercial Code), § 669 (agency provisions §§ 652–672a)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
SloveniaIndemnityObligations Code (Obligacijski zakonik, OZ), art. 833(3)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
SpainIndemnityLey 12/1992, de 27 de mayo, sobre Contrato de Agencia (Spanish Agency Contract Act), art. 28 (cap in art. 28(3))Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
SwedenIndemnityLag (1991:351) om handelsagentur (Commercial Agency Act, SFS 1991:351), § 28 (avgångsvederlag)Indemnity — capped at 1 year’s average annual remuneration (5-yr average)
United Kingdom (non-EU, for comparison)Both / mixedCommercial Agents (Council Directive) Regulations 1993 (SI 1993/3053), reg. 17 (compensation: reg. 17(6)-(7)Default compensation at the agency’s market value (Lonsdale); optional indemnity capped at 1 year

The gap is wide. An agent whose contract is governed by French law can recover the equivalent of two to three years' commission, while the same agent under an indemnity-system law that caps the award at one year — Germany, Spain, Italy, the Netherlands and most others — recovers materially less. The United Kingdom sits between the two: it uses the compensation system, but values it as the saleable value of the agency rather than as a multiple of commission, which in practice often yields less than the French approach. A small group of states — Cyprus, Lithuania and Malta — transposed both prongs of Article 17, so that an agent may rely on the indemnity or on compensation for damage, though not cumulatively for the same loss. For a foreign principal, this is the real stake of the choice-of-law clause: it is not only about which rules apply, but about how large the cheque at the end will be.

Same Directive, Very Different Sums

Do not assume the termination payment is the same across the EU because the Directive is transposed everywhere. Twenty-five member states cap the award at one year's commission; only France and Ireland use the uncapped compensation system, and France reaches two to three years. Where the applicable law is genuinely open, its selection can multiply or divide the agent's recovery — which is precisely why it is worth settling deliberately at the drafting stage.

National legislation — official sources

The termination-payment provision for each jurisdiction in the table above, with a link to the official national legislation (or, for the EU framework, EUR-Lex). Institutional sources are given in preference to commentary.

Sources compiled July 2026 from official national legislation portals and EUR-Lex; article numbers cross-checked against authoritative practitioner guides. National provisions and collective-agreement calculations change over time and should be verified before reliance in a specific matter.

When is a commercial agency contract "international"?

A commercial agency contract is international where it is connected — through the parties, the contract, or the acts entrusted to the agent — to the legal norms of more than one state. That cross-border character is what opens the door to a choice of jurisdiction and of applicable law, and to the private-international-law rules that apply in the absence of a choice.

The characterisation is drawn from the ordinary criteria of private international law. It is not defeated by the parties sharing a nationality where the operation genuinely reaches across borders, and the analysis looks at the substance of the relationship rather than a single factor. Once the contract is international in this sense, the questions this article addresses arise; a purely domestic French agency, by contrast, is governed by French law and the French courts without more.

Choosing the governing law — and why the choice may not hold

The starting point is party autonomy: in an international agency the parties may agree the competent court and the applicable law. But the autonomy is limited by the mandatory character of the Directive's protections. The Court of Justice held, in the leading case, that the national provisions transposing Articles 17 and 18 of the Directive — the termination indemnity and the reparation regime — are mandatory rules that must be applied where the agent carries on its activity within the EU, even if the parties have submitted the contract to the law of a non-member state (Court of Justice of the EU, Ingmar GB Ltd v Eaton Leonard Technologies Inc, Case C-381/98, 9 November 2000). A clause choosing, say, the law of a US state cannot deprive an agent operating in the EU of the indemnity the Directive guarantees.

The same logic reaches choices between member-state laws. Where both parties are nationals of member states, even the law of a member state that the parties have chosen can be set aside in favour of the law of the forum, on the ground of the mandatory character, in the legal order of the court seised, of the rules governing the situation of independent commercial agents. Under French law the protective regime is expressly mandatory — any clause derogating from it to the agent's detriment is deemed unwritten (Article L 134-16 of the Commercial Code) — which is what gives these provisions their overriding force in a cross-border dispute.

A Governing-Law Clause Is Not a Shield

Choosing a foreign, non-EU law will not remove the indemnity and the other mandatory protections for an agent working in the EU. Drafting a contract on the assumption that the chosen law controls everything is the most common and most expensive error a foreign principal makes in a French or EU agency.

No choice of law: the Hague Convention of 1978

Where the parties have not chosen the applicable law, the law governing an international agency contract is determined, in France, by the Hague Convention of 14 March 1978 on the law applicable to agency and to representation. The Convention is universal: it applies in France without any condition of reciprocity, and can be invoked before the French courts even by parties who are neither domiciled in, nor nationals of, a contracting state (Cour de cassation, première chambre civile, 4 April 2024, no. 21-22.949).

Its default rule looks to the agent. In principle the applicable law is that of the state where, at the time the contract is concluded, the agent has its establishment or, failing that, its habitual residence (Article 6, first paragraph). But the rule shifts to the principal in one case: the law of the state where the principal has its establishment or habitual residence applies where the agent carries on its activity principally in that state (Article 6, second paragraph). Separately, whatever law governs under Article 6, the law of the place where the contract is performed must be taken into account for disputes concerning the modalities of performance (Article 9).

The result is that, absent a choice, an agent that operates from and works mainly in France will usually find French law applied — bringing with it the protective regime of Articles L 134-1 and following. This is one reason a foreign principal should treat the governing-law question deliberately rather than leave it to the default rules, which tend to point to the agent's home law.

Which court hears a dispute over an international agency contract?

The law that governs the contract and the court that hears the dispute are separate questions. On jurisdiction, and absent a valid choice-of-court agreement, the Brussels I bis Regulation applies within the EU. For a contract for the provision of services — which the commercial agency is — it designates the courts of the member state where, under the contract, the agent's services were provided or should have been provided (Article 7.1.b). For an agent working in France, that generally means the French courts.

A particular difficulty arises where the obligation in dispute was to be performed in another territory, which can displace the ordinary rule of Article 7.1.b for that obligation. The interaction of the applicable-law rules and the jurisdiction rules is not automatic — a contract can be governed by one state's law and litigated in another's courts — which is why a clear, valid choice of court and of law, made at the drafting stage, is worth far more than leaving both to be reconstructed after a dispute has arisen.

Between member states: when the forum's law overrides the chosen law

The clash between a chosen member-state law and the forum's own protective rules has its own refinement. The Court of Justice held that where the parties to an agency contract have chosen the law of a member state that satisfies the minimum protection required by the Directive, a court seised in another member state may set that chosen law aside in favour of its own law (the lex fori) — but only on a specific condition. The court must find, in a detailed and reasoned way, that in transposing the Directive the legislature of the forum state regarded the rules protecting commercial agents as crucial, going beyond the protection the Directive requires, having regard to the nature and object of those mandatory provisions (Court of Justice of the EU, Unamar, Case C-184/12, 17 October 2013).

This is a narrower gateway than Ingmar. Where the chosen law is that of a member state meeting the Directive minimum, the forum cannot simply prefer its own law; it must justify, in a circumstantial way, that its transposition went further than the Directive and that this additional protection is imperative in its legal order. For parties choosing between member-state laws, the point is that the choice is largely respected — the override is available only where the forum's law is demonstrably more protective and treats that extra protection as overriding.

Agents operating outside the EU: how the position changes

Everything above assumes a link with the EU. Where the agent is established and carries on its activity outside the EU, the analysis is different, and party autonomy is much wider. The Directive's mandatory provisions do not apply automatically, because they belong only to French internal public order; and the mere fact that the principal is established in a member state is not, by itself, a sufficiently close link with the EU to trigger the Directive (Court of Justice of the EU, Agro Foreign Trade & Agency Ltd v Petersime NV, Case C-507/15, 16 February 2017). Where the agent assumes the representation of the principal in the territory of a non-EU state, the parties are entirely free in their choice of law.

Two consequences follow for a contract touching France. First, if the parties choose French law, the agent characterisation and the protective regime apply in line with the European interpretation, even where the intermediary is established and operates outside the EU (Cour de cassation, chambre commerciale, 11 January 2023, no. 21-18.683) — choosing French law brings the whole regime, indemnity included. Second, even for an agent established and operating outside the EU, the parties may grant a right to the indemnity by an express clause, under the principle of freedom of contract in private international law (Cour de cassation, chambre commerciale, 20 March 2024, no. 22-22.450). Absent a choice, the applicable law is found through the ordinary rules; in several cases involving non-EU parties, French law has been applied where the contract's connecting factors pointed to France.

What those connecting factors look like, in practice, is worth spelling out, because they are what a court weighs when the parties have said nothing. French law has been applied to a contract concluded in Paris, in the French language, conferring jurisdiction on the Paris commercial court; to an orally concluded contract with a non-EU company where the correspondence was in French although English was the usual commercial language, and the commissions were paid into a Paris account and declared to the French tax authorities; and to a contract concluded in France, for distribution abroad, of products originating in and paid for in France in the currency of the parties' earlier dealings. The lesson for a foreign principal is that silence does not mean neutrality: the accumulation of French connecting factors — the place of signature, the language, the currency, the account, a jurisdiction clause — can lead a court to apply French law, and with it the protective regime, even though the contract never chose it.

Where the agent operates Do the Directive's mandatory protections apply?
Inside the EU Yes — whatever law the contract chooses (Ingmar). A non-EU choice of law does not remove the indemnity.
Inside the EU, chosen law is another member state's The forum may still apply its own stricter mandatory rules, but only on a reasoned finding that it went beyond the Directive (Unamar).
Outside the EU Not automatically (Agro) — unless the parties choose French law, or grant the indemnity by an express clause.

Arbitration and jurisdiction clauses in an international agency contract

International agency disputes can be referred to arbitration. Even where national rules provide that disputes between a foreign principal and a distributor or agent acting on the national territory fall to the national courts, such disputes have been recognised as arbitrable where the arbitration clause is contained in an international contract. An arbitration clause that is doubtful in a purely domestic setting is treated as valid for the sole reason that it concerns international commerce.

This gives the parties a further lever, but it does not dissolve the mandatory-rules problem: an arbitral tribunal seated to decide an EU agency will still have to reckon with the overriding protections the Directive imposes where the agent operates in the EU. A jurisdiction or arbitration clause should therefore be drafted alongside the choice of law, with the location of the agent's activity in mind, so that the forum and the governing law are consistent with each other and with the protections that will apply in any event.

How to work out the law governing your international agency contract

Step 1
Is the contract international?
Look for a connection to more than one state through the parties, the contract or the agent's acts. If it is purely French, French law and the French courts apply without more.
Step 2
Where does the agent carry on its activity?
Inside the EU, expect the Directive's mandatory protections to apply whatever law is chosen. Outside the EU, the choice of law does much more work.
Step 3
Did the parties choose a law?
If yes, it governs — subject to the mandatory-rules override for an EU agent, and to the Unamar limit between member states. If no, the Hague Convention 1978 points, in principle, to the law of the agent's establishment.
Step 4
Which court, and is there a valid clause?
Absent a valid choice-of-court agreement, Brussels I bis designates the court of the place where the agent's services were to be provided (Article 7.1.b). A clear choice-of-court or arbitration clause, consistent with the chosen law, avoids reconstructing this after the event.

Frequently asked questions about the law governing an agency contract

Can I choose the law that governs my international commercial agency contract?

Yes, in principle the parties may choose the governing law and the competent court. But where the agent operates inside the EU, the mandatory protections of the 1986 Directive — notably the termination indemnity — apply whatever law is chosen (Ingmar, Case C-381/98).

Does the amount of the agent's termination payment depend on which country's law applies?

Yes — this is the main practical stake. The Directive let each member state choose an indemnity system, capped at one year's average commission (Article 17(2)), or a compensation system with no cap (Article 17(3)). France and Ireland use compensation, and France awards around two to three years' commission; the other twenty-five member states cap the award at one year; the United Kingdom uses compensation but values it as the market value of the agency. The applicable law can therefore multiply or divide the sum payable.

Which law applies if the agency contract does not choose one?

In France, the Hague Convention of 14 March 1978 applies. In principle it designates the law of the state where the agent has its establishment when the contract is concluded, unless the agent carries on its activity principally in the state where the principal is established, in which case that state's law applies.

Can a non-EU governing law defeat the French agent indemnity?

Not where the agent operates inside the EU: the Directive's mandatory rules apply whatever law is chosen (Ingmar). Where the agent operates outside the EU, the indemnity does not apply automatically (Agro, Case C-507/15) — unless the parties choose French law or grant it by an express clause.

Which court hears a dispute over an international agency contract?

Absent a valid choice-of-court agreement, the Brussels I bis Regulation designates the courts of the member state where the agent's services were, or should have been, provided (Article 7.1.b). For an agent working in France, that generally means the French courts.

Does the Hague Convention 1978 apply only between contracting states?

No. The Convention is universal: it applies in France without any condition of reciprocity and can be invoked before the French courts even by parties who are neither domiciled in nor nationals of a contracting state (Cour de cassation, première chambre civile, 4 April 2024, no. 21-22.949).

Can we agree to arbitrate an international agency dispute?

Yes. An arbitration clause in an international agency contract is valid for the reason that it concerns international commerce, even where a purely domestic version might be doubtful. But an arbitral tribunal must still apply the Directive's mandatory protections where the agent operates in the EU.

Key takeaways

In brief
Party autonomy, bounded: the parties may choose the governing law and the court, but the choice is limited by the mandatory protections of the 1986 Directive.
Applicable law decides the amount: the Directive (Article 17) let states choose an indemnity system (capped at one year's commission) or a compensation system (no cap). France and Ireland use compensation — France gives two to three years; the other twenty-five states cap at one; the UK values compensation as the agency's market value.
Agent in the EU (Ingmar, C-381/98): the Directive's mandatory rules — above all the indemnity — apply whatever law is chosen; a non-EU choice-of-law clause does not remove them.
No choice of law: the Hague Convention of 14 March 1978 points, in principle, to the law of the agent's establishment; it is universal and applies without reciprocity (Cass. 1re civ., 4 April 2024).
Jurisdiction (Brussels I bis): absent a valid clause, the competent court is that of the place where the agent's services were, or should have been, provided (Article 7.1.b).
Between member states (Unamar, C-184/12): a chosen member-state law can be displaced by the forum's stricter rules only on a reasoned finding that the forum went beyond the Directive.
Outside the EU (Agro, C-507/15): the mandatory regime does not apply automatically — unless French law is chosen (Cass. com., 11 January 2023) or the indemnity is granted by an express clause (Cass. com., 20 March 2024).

How our French lawyers help with the law governing your agency contract

Get the governing-law and jurisdiction clauses right before the dispute

We advise foreign principals and agents on the law and the forum for cross-border agency contracts — drafting choice-of-law, choice-of-court and arbitration clauses that hold, assessing whether the Directive's mandatory protections will apply, and litigating the applicable-law and jurisdiction questions when a dispute has already arisen, in France and across the EU.

Discuss your cross-border agency

This article is for general information only. It does not constitute legal advice. Conflict-of-laws and jurisdiction questions in cross-border agency are highly fact-specific. Contact our French lawyers for qualified advice before relying on a choice-of-law or jurisdiction clause or taking any step in a cross-border dispute.