An innovative judgment of the Italian Supreme Court on distribution agreements
A very innovative judgment on distribution agreements was issued on December, 21st 2020 by the Italian “Corte di Cassazione a Sezioni Unite”, the plenary session of the Supreme Court that is competent, inter alia, for questions of jurisdiction.
The concrete case regarded a dispute pending before the Court of Milan and introduced by the Italian company Blackboard.
The plaintiff used to purchase and resell sport shoes produced by the Spanish company Berneda – the defendant – which had terminated without any prior notice their commercial relationship dating from 2003. The delivery of the goods from Berneda to Blackboard used to take place in the former’s facility in Spain and the relationship was not disciplined by a written agreement.
The subject of the controversy brought by Blackboard before the Court of Milan was the classification of the commercial relationship between the parties in terms of distribution with exclusivity or sale concession, in absence of a written agreement; the declaration of illegitimacy of the termination; the compensation for damages and, eventually, the condemnation of Berneda to the payment of indemnities for various reasons. Among these, the indemnity for the termination of the commercial relationship by means of the analogical application of the discipline set forth by the Italian Civil Code for commercial agents.
Berneda immediately claimed in Court the lack of jurisdiction of the Italian judge in favour of the Spanish one, as the terminated commercial relationship between the parties was to be classified as a simple sequence of contracts for purchase and sale and not as an unwritten distribution agreement.
Therefore, Berneda invoked the application of the special jurisdiction set forth by art. 7, n. 1, lett. b), first part of the EU Regulation n. 1215/2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters.
This provision foresees that jurisdiction is determined “in the case of the sale of goods, [with reference to] the place in a Member State where, under the contract, the goods were delivered or should have been delivered”.
Therefore, in this case, Berneda invoked the jurisdiction of the Spanish judge.
The question of jurisdiction was then deferred by the Court of Milan to the plenary session of the Italian Supreme Court.
The main question in this case concerned the classification of the commercial relationship between the parties. Was it to be qualified as a simple purchase and resale of goods or was it a distribution agreement, although unwritten?
The Corte di Cassazione, in the grounds of its judgment, started from the special jurisdiction foreseen by the EU Regulation: the above mentioned one regarding the sale of goods and the one envisaged by art. 7, n. 1, lett. b), second part for the provision of services: “in the case of the provision of services, the place in a Member State where, under the contract, the services were provided or should have been provided”.
To determine the classification of the relationship as a sale or as a distribution of goods, the Court applied the criterion of the “characteristic performance” that derives from various rulings of the European Court.
Then, the Cassazione made some considerations on distribution agreements, pointing out that they are generally represented as framework agreements followed by single sales and that this kind of contractual relationship includes particular activities carried out by the distributor (such as promotional activities, inclusion in the grantor’s network, achievement of a minimum turnover, advertisement of the goods and communication of the customers’ names, etc.), as well as special advantages for the distributor (such as particularly competitive prices, inclusion in the grantor’s network, participation in the commercial strategies, etc.).
Joining the European Court case-law (especially the very relevant and innovative judgments in Corman-Collins v. La Maison du Whisky c-9/12, Granarolo v. Ambrosi C-196/15 and Saey-Home v. Lusavouga C-64/17 cases), in the light of the considerations above, the Italian Supreme Court came to the conclusion that distribution includes a series of further activities that differentiates it from the mere sale and allows its classification as a provision of services.
Consequently, the Corte di Cassazione affirmed that, in the concrete case pending before itself, the commercial relationship between the parties could not be classified as a mere sequence of single sales as asserted by Berneda.
The activities carried out by Blackboard were further and more articulate than the simple purchase-resale and this circumstance could find its confirmation even in the letter of termination sent by Berneda, where the latter assumed that Blackboard had not fulfilled some obligations that are typical for a distributor, as for example the market promotion.
In conclusion, the Court rejected Berneda’s claim on jurisdiction and declared the jurisdiction of the Italian judge, in particular of the Court of Milan seized by Blackboard.
This judgment was particularly innovative and in contrast with the previous case-law of the same Court on distribution agreements.
In fact, before this ruling, the Corte di Cassazione had affirmed in various cases that the characteristic performance consisted in the supply of goods, from which derived the following activity of distribution.
Therefore, the Court had asserted that the jurisdiction belonged to the Judge of the Member State where the delivery took place, pursuant to art. 7, n. 1, lett. b), first part of the EU Regulation n. 1215/2012, as for a simple sale.
By means of this very recent ruling, the Italian Supreme Court seems to have turned the tide in the footsteps of the well-established European jurisprudence on the classification of distribution agreements as provision of services and on the consequent special jurisdiction provided for by the above-mentioned EU Regulation.
This concrete case demonstrates once again the importance of a written agreement that disciplines the commercial relationship, in order to avoid disputes in Court regarding its classification.