The sales concession is a crucial pillar of modern distribution law and offers entrepreneurs unique opportunities for commercial cooperation. This comprehensive legal overview covers all aspects of Belgian sales concession law and provides practical insights for both grantors and concessionaires.
1. Introduction
The sales concession has developed into a special distribution technique that allows close cooperation between two parties who are at different stages of the distribution process. The characteristic aspect of this cooperation lies in the fact that both parties maintain their legal independence while still forming an economic unit that is mutually beneficial.
In practice, the concessionaire is involved in the global distribution system of the grantor, which, by using a specialized vendor, seeks to optimize the distribution of its products. This distribution strategy provides the concessionaire with access to local markets and expertise without the need for direct investment in infrastructure or personnel.
In return, the concessionaire enjoys special rights that distinguish him from ordinary resellers. These rights manifest themselves both vis-à-vis the licensor, through the right to continuous supply and the right to sell specific products, and vis-à-vis other sellers, through protection against competition from third parties within his allotted territory or market segment.
At the legal level, the sales concession is primarily governed by the principle of will-autonomy, meaning that parties are in principle free to contractually define the content and modalities of their cooperation. However, this freedom of contract is significantly restricted by special laws, competition law provisions and international treaties aimed at protecting the interests of economically weaker parties.
The modern regulation of sales concessions has its origins in the law of July 27, 1961, which was later amended by the law of April 13, 1971. This legislation was modernized in 2014 and integrated into Book X of the Code of Economic Law. The provisions of this new scheme are immediately applicable to contracts entered into after May 31, 2014, while older contracts continue to be governed by the provisions of the original 1961 law.
2. Definitions
2.1 The legal nature of the sales concession
The sales concession is defined in Belgian law as a framework agreement whereby one party, the grantor, reserves to the other party, the concessionaire, the right to sell, for a definite or indefinite period of time, in its own name and for its own account, the products manufactured or distributed by the grantor.
This definition emphasizes the synallagmatic nature of the contract, since the sales concession gives rise to both rights and obligations for both parties. The resulting contractual freedom means that in principle the parties are free to determine the content of their contract, albeit within the limits of general contract law and the special legislation applicable to sales concessions.
An important aspect of the sales concession is its character as a framework agreement, meaning that it constitutes the overarching legal structure within which individual purchase and sale transactions take place. This framework agreement regulates the general modalities of cooperation without directly addressing specific transactions, which remain the subject of separate agreements between the parties.
The concessionaire may in turn enter into such agreements with one or more subconcessionaires, to whom it will then act as grantor. This possibility of subdividing concession rights can play an important role in the distribution of products over a vast territory or various market segments.
2.2 The parties to a sales concession
§ 1. The grantor
The licensor, usually the manufacturer or importer of certain products, has a direct commercial interest in marketing its products in the most efficient and widely distributed manner. Rather than building an extensive distribution network himself, which is often costly and time-consuming, he prefers to leave this task to specialized concessionaires who also often have a better knowledge of local markets and customer needs.
This distribution strategy is particularly popular in international trade relations, where the grantor relies on local partners who master the cultural, legal and commercial peculiarities of their market. Opting for distribution through concessionaires also offers the grantor advantages in terms of risk management, since the concessionaire invests its own resources and bears the commercial risk itself.
The case law unanimously recognizes that the grantor has the right to choose between several potential concessionaires on the basis of objective criteria that it sets for itself. These selection criteria may include various factors such as geographical location, available resources and equipment of the company, the potential of the market in which the potential concessionaire operates, its solvency and creditworthiness, its experience in the sector, its existing clientele, and its willingness to accept certain conditions regarding personnel, stock levels, sales quotas, and guarantees offered.
Likewise, the grantor has the right to decide whether or not to grant an exclusive sales concession to a particular concessionaire within a defined territory or market segment. This decision often depends on strategic considerations regarding market penetration, competitive positioning and the desired intensity of distribution.
§ 2. The concessionaire
The sales concession is based on a fundamental principle of equality between the parties, which means that the concessionaire also enjoys significant rights within the contractual relationship. The concessionaire has the right to select the product it wishes to commercialize according to the market in which it operates and the profitable prospects associated with it.
In this product selection, the licensee will obviously take into account its already existing business organization, its accumulated expertise, its form of establishment, its existing customer base and other business factors that may affect the chances of success of the new distribution activity.
Although the concessionaire acts in its own name and for its own account and therefore primarily pursues its own commercial interests, the sales concession also entails the obligation to take into account the legitimate interests of the grantor. This mutual advocacy is the basis for a lasting and successful cooperation in which the benefits of the commercial relationship accrue to both parties to a reasonable extent.
Case law has recognized that the concessionaire enjoys a privileged position vis-à-vis ordinary resellers or other distributors. This special status manifests itself mainly in the fact that the parties deal with each other in such a way as to create a kind of legal and economic integration between the parties, without this integration affecting their respective legal independence.
§ 3. The subconcessionaire
In principle, the sub-concessionaire enjoys the same legal position vis-à-vis the main concessionaire as the latter enjoys vis-à-vis the original licensor. This parallel structure allows for a hierarchical distribution where products find their way to the final consumer through multiple levels of distributors.
If the subconcession meets the conditions of Book X, Title 3 of the Code of Economic Law, under certain conditions the subconcessionaire has a direct claim against the principal grantor. This direct claim may be important if the main concessionaire defaults or becomes insolvent, allowing the subconcessionaire to assert its rights directly against the original grantor.
2.3 Characteristics of the sales concession
§ 1. Duty to sell
A fundamental feature of the sales concession is the mutual commitment created between the parties regarding the sale of certain products. The grantor undertakes to sell to its concessionaire the products defined in the contract according to the agreed terms and conditions.
This selling obligation of the grantor is not limited to occasional transactions, but involves a permanent commitment to supply the concessionaire with the contract products regularly and as needed. This permanent obligation to supply is an essential distinction from ordinary commercial relationships where there is no structural guarantee of supply.
§ Right to sell
The licensor's duty to sell corresponds to the right of the licensee to sell the products produced or distributed by the licensor in its own name and for its own account. This right to sell constitutes the legal basis for the distribution activities of the concessionaire and distinguishes him from ordinary commercial agents who merely perform intermediary activities.
Case law and legal doctrine emphasize as an essential characteristic of the sales concession the granting of special rights to the concessionaire. The Brussels Court of Appeal, in a judgment dated June 5, 2008, emphasized that for there to be a sales concession, the seller must have special rights, in particular that the right to sell is contractually reserved to him, and that joint advertising alone is insufficient to support the existence of a sales concession.
In particular, these special rights consist in reserving to the concessionaire the exclusive or semi-exclusive right to sell certain products within a defined territory or to a specific target group. This also implies the right to permanent and regular deliveries by the grantor throughout the duration of the contract.
§ 3. In his own name and for his own account
A crucial distinguishing feature of the sales concession is that the concessionaire acts in his own name and for his own account, which means that he acts as an independent entrepreneur and not as a representative or agent of the grantor. This autonomy manifests itself in various areas of commercial activity.
Legally, acting in his own name means that the concessionaire himself becomes a party to the sales contracts he enters into with his customers. He bears full legal responsibility for these transactions and cannot sue the grantor for commitments he himself has made to his customers.
Economically, acting for his own account implies that the concessionaire bears the commercial risk of his distribution activities himself. He invests his own resources in purchasing stock, bears the costs of his operations, and enjoys the profits resulting from his sales activities. At the same time, he also bears the risk of any losses, bad debts, or depreciation of his stock.
§ 4. Sale of products
I. The agreement must be for resale
The sales concession aims primarily at the resale of well-defined products, which means that the distribution activity must be aimed at marketing or distributing these products to end users or other distributors. The mere fact that an entrepreneur purchases products from a supplier is insufficient to give rise to a sales concession; there must be a structured distribution relationship aimed at systematic resale.
II. The sales concession covers products
Products within the meaning of the sales concession legislation are to be understood as all tangible goods that are in commerce and consequently susceptible to sale. This definition implies that sales concessions relating to public goods not in commerce, or relating to pure service, are excluded from the application of the special legislation.
However, services can be part of a sales concession, provided that these services remain secondary to the resale of products. Examples include installation of sold products, after-sales service, technical support, or maintenance services directly related to the distributed products.
Whether the sales concession covers one or more products is irrelevant for legal qualification. Parties are free to contractually determine which products are covered by the concession. If the parties have not clearly agreed on the product scope, it can sometimes be difficult to determine whether the concessionaire also has the right to distribute new products marketed by the grantor.
III. It concerns the sale of the licensor's products
The sales concession specifically seeks to sell products originating from the grantor, either as a manufacturer or as an importer or distributor. The product ultimately distributed by the concessionaire must remain recognizable as originating from the concessionaire.
It is of no importance whether the concessionaire still slightly processes the goods by, for example, assembling, packaging, or configuring them. As long as the grantor's basic product remains recognizable, its qualification as a sales concession is not affected. However, as soon as the grantor's product is incorporated into a larger whole or transformed in such a way that it is no longer recognizable as the original product, there will no longer be a sales concession in the technical sense.
§ 5. Framework agreement
The sales concession is characterized by lasting and organized relationships between grantor and concessionaire. A true sales concession requires organized, structured and permanent cooperation beyond the mere succession of individual buying and selling transactions.
This clearly distinguishes the sales concession from ordinary successive buy-sell agreements, even if they are repeated or even regular. Maintaining a long-term business relationship on an occasional basis, even if regular orders and deliveries result from it, is not sufficient to speak of a sales concession.
A successive number of purchases does not in itself constitute proof that a concession contract was concluded, even if the purchases extend over several years and the buyer obtains substantial discounts. The concession contract requires the existence of a framework agreement governing the commercial relations between the parties, which is more comprehensive and has a different purpose than the mere succession of buy-sell transactions.
Successive transactions must result from the execution of an overarching agreement that organizes and justifies these transactions within a framework that encompasses all other components of the sales concession. This framework agreement creates a sustainable and organized relationship that is consciously pursued by both parties and mutually beneficial to both.
§ 6. Territory
A sales concession usually covers a specific territory within which the concessionaire has the right to sell the licensor's products. This territorial delineation can be very diverse and can range from a limited local area to vast regions or even entire countries.
However, the Court of Cassation clarified in a decision of September 10, 1987 that a sales concession does not necessarily have to be territorially defined. A sales concession can also be granted in function of well-defined products within the licensor's range, or in function of a well-defined clientele or market segment, regardless of its geographical distribution.
§ 7. Agreement intuitu personae
The sales concession is often entered into in view of the special skills, knowledge and experience of the concessionaire. After all, it is the concessionaire who must ensure the optimal distribution of the licensor's products within its assigned market or territory.
This personal nature of the contract means that the identity and specific qualities of the concessionaire played a determining role in the formation of the contract. This determination has important implications for aspects such as transferability of the concession, change in the legal form of the concessionaire, or change in the ownership structure of his company.
§ 8. No exclusivity
Contrary to what the name "sales-only concession" might suggest, exclusivity is not an essential component of any sales concession. Parties can freely agree that the concessionaire enjoys exclusive rights within its territory or market segment, but they can equally agree on a non-exclusive concession whereby multiple concessionaires may sell the same products in the same territory.
2.4 Modalities and evidence
No form requirements § 1.
The sales concession is not subject to any specific formal requirements, meaning that it can be made in writing or orally. This contractual freedom as to form is in line with the general principle of consensualism in Belgian contract law.
Although no written form is required, in practice it is strongly recommended to put sales concessions in writing to avoid subsequent difficulties of proof and disputes over the content and extent of mutual rights and obligations.
§ 2. Burden of proof
I. Evidence
The existence of a sales concession can be proven by any means of law, which means that both direct and indirect means of proof can be used. Case law has developed a rich caseload regarding the factors that may indicate the existence of a sales concession.
A. Examples where the existence of a sales concession was recognized
Case law has recognized the existence of a sales concession in situations where several indicative elements combined to form a picture of structured and lasting cooperation aimed at exclusive or semi-exclusive distribution.
Important elements that argue for the existence of a sales concession include the absence of any protest by the grantor against his distributor claiming legal fees after termination of the contract by invoking his status as a concessionaire. This inaction is interpreted as tacit recognition of the existence of the concession relationship.
The expectation of well-defined sales results, for example the achievement of certain quotas or sales targets, indicates a structured commercial relationship that goes beyond ordinary occasional purchases. These performance indicators indicate an intentional and organized collaboration aimed at optimal distribution.
Regular cooperation between the parties in order to achieve improved dissemination of the products often manifests itself in joint activities such as company tours for clients of the concessionaire in the presence of the concessionaire, participation of the latter in promotional campaigns organized by the concessionaire, or conducting joint publicity campaigns.
The Supreme Court recognized the existence of a sales concession in a case where the grantor had granted the concessionaire exclusivity in the wholesale distribution sector. The decisive elements were the fact that the concessionaire bought in his own name and for his own account to resell, that he financed the purchase of his stock and bore the risk of insolvency of his customers, despite the fact that his remuneration consisted of a fixed percentage of each sale brought about by his intervention.
Other indicative elements include the prohibition of selling competing products, the imposition of certain repurchase terms, training of personnel by the grantor, and communication by the manufacturer to the distributor of specifications, technical changes, descriptive catalogs and price lists for the various products.
B. Examples where the existence of a sales concession was rejected
Case law has rejected the existence of a sales concession in situations where the essential characteristics of structured and intentional cooperation were lacking, even though a regular commercial relationship existed between the parties.
The acceptance of a certain information obligation by the distributor is not in itself sufficient to prove the existence of a sales concession, since even in ordinary distribution agreements the parties must inform each other in order to optimally adapt production to market requirements.
The absence of customary obligations normally associated with concessions, such as the obligation to furnish and organize the business in accordance with criteria established by the grantor, to provide far-reaching after-sales service, to observe purchase or sales quotas, or to use prescribed materials or equipment, argues against qualification as a sales concession.
The absence of concrete agreements between the parties on key aspects such as prices, sales to be achieved, stocks to be built, or promotional strategies may preclude the existence of a structured concession relationship, even if the distributor is the only one selling the products in its region.
3. Legal framework
3.1 Principle - the sales concession is governed by general contract law
As emphasized in the introduction, the sales concession is primarily governed by the will of the parties and falls within the scope of general contract law. This contractual freedom means that the parties can in principle decide for themselves what rights and obligations they assume and how they wish to organize their commercial cooperation.
In this context, Title 2 of Book X of the Code of Economic Law concerning "pre-contractual information within the framework of commercial cooperation agreements" should not be forgotten. These provisions, previously contained in the Law of December 19, 2005, may be applicable to concession contracts under certain circumstances, although their applicability is not automatically established and must be evaluated in each specific case.
In addition to general contract law, the provisions of special laws must of course be observed, especially in the areas of competition and market practices. At the European level, competition law provisions that may apply to distribution agreements must also be taken into account.
3.2 Limitations on the principle of will autonomy
§ 1. Public order and morality
The contractual freedom of parties in entering into sales concessions is limited by the general principles of public policy and morality. These limitations are inherent in all contract law and require that contractual arrangements remain compatible with the fundamental values and principles of the legal order.
In the context of sales concessions, provisions that create an excessive imbalance of power or unacceptably restrict the economic freedom of one of the parties may be contrary to public policy. Agreements aimed at distorting competition or harming consumers may also be declared null and void.
§ 2. Good faith
I. The doctrine of abuse of rights
The principle of good faith, which occupies a fundamental place in Belgian contract law, plays a particularly important role in the context of sales concessions. This principle requires parties to exercise their contractual rights and obligations in a reasonable and fair manner, without unduly prejudicing the legitimate interests of the other party.
The doctrine of abuse of right constitutes an important concrete elaboration of the good faith principle. Abuse of law occurs when a party exercises its contractual rights in a manner that evidently exceeds the limits of the normal exercise of those rights by a prudent and reasonable contractor under the same circumstances.
II. Abuse of law in sales concessions
In sales concessions, legal abuse can manifest itself in different areas of the contractual relationship. A grantor who suspends his delivery obligations without objective justification may be guilty of abuse of law, as may a grantor who interferes with his concessionaire in the normal exercise of his distribution activities.
Conversely, a concessionaire may be guilty of abuse of law by, for example, systematically failing to meet agreed sales quotas without valid reasons, or by damaging the reputation of the concessionaire through careless commercial practices.
§ Belgian competition law
I. Book VI WER market practices and consumer protection.
The Economic Law Code contains extensive provisions in Book VI on market practices and consumer protection that may apply to aspects of sales concessions. These regulations aim to promote fair business practices and protect consumers from misleading or aggressive commercial practices.
For sales concessions, these provisions may be relevant when the distribution activities are targeted at consumers, or when the commercial communication between grantor and concessionaire contains elements that may distort competition or mislead consumers.
II. The competition law
A. Legislation
Belgian competition law, as contained in Book IV of the Code of Economic Law, contains specific provisions that may apply to sales concessions to the extent that they contain agreements capable of restricting or distorting competition.
B. Anti-competitive agreements.
Sales concessions may contain elements that fall within the scope of Article IV.1 of the Economic Law Code, which prohibits agreements between companies that may restrict or distort competition. Examples include geographic exclusivity agreements, price-fixing clauses, or restrictions on sales to certain categories of customers.
C. Sanction - nullity
Agreements that violate the competition rules are void by operation of law, which means that they cannot produce legal effects. This nullity can be partial, meaning that only the problematic clauses are null and void while the rest of the agreement remains valid, provided the agreement can still be meaningfully executed without them.
D. Exemption
Certain categories of vertical restraints, which may include sales concessions, may benefit from a block exemption if they fulfil the conditions set out in relevant European regulations. These exemptions recognize that certain vertical restraints may provide economic benefits that outweigh potential restrictions of competition.
E. Declaration of non-application of Article IV.1, § 1 of the WER by an RD
In certain cases, the government may, by royal decree, exclude certain categories of agreements from the application of the general prohibition of anti-competitive agreements if these agreements contribute to economic progress and the consumers concerned obtain a fair share of the resulting benefits.
F. Organs and procedure on restrictive competition practices.
The enforcement of Belgian competition law rests with the Belgian Competition Authority, which can investigate alleged competition violations and impose sanctions. Decisions of the Competition College can be appealed to the Brussels Court of Appeal.
§ 4. European competition law
The intervention of the Belgian legislator in the field of competition regarding distribution agreements is largely the result of specific European regulations. This European approach, in the context of the free movement of persons, goods and services, seeks uniformity between member states, but also aims to protect economically weaker parties.
The European competition law, as contained in Articles 101 and 102 of the Treaty on the Functioning of the European Union, applies directly to sales concessions that may affect trade between member states. Article 101 prohibits agreements between companies that may restrict competition, while Article 102 prohibits the abuse of a dominant position.
3.3 Exception - Book X, Title 3 WER (formerly the Act of July 27, 1961)
§ 1. Mandatory nature - police law
An important exception to the principle of at-will autonomy regarding sales concessions was provided by the legislature through the Law of July 27, 1961, on the unilateral termination of exclusive sales concessions granted for an indefinite period, later amended by the Law of April 13, 1971. This legislation was modernized and integrated into Book X, Title 3 of the Code of Economic Law in 2014.
This legislation is mandatory in nature and is considered a police law, which means that parties cannot derogate from the protection provisions to the detriment of the concessionaire. The legislation has as its primary purpose the protection of the concessionaire, especially in the termination of commercial relations between the parties.
§ 2. Scope
I. Sales concessions governed by Book X, Title 3 WER.
A. Definition
The legislation applies to sales concessions as defined in Article I.11 of the Code of Economic Law: "any contract under which a grantor reserves to one or more concessionaires the right to sell, in his own name and for his own account, products which he himself manufactures or distributes."
B. The three sales concessions governed by Articles X.35 to X.40 of the WER
The legislation recognizes three specific categories of sales concessions under its protection: the exclusive sales concession, the quasi-exclusive sales concession, and the sales concession with significant obligations on the concessionaire.
II. Elaboration on the Belgian territory
The protective provisions apply to sales concessions that have full or partial effect on Belgian territory, regardless of the nationality of the parties or the place where the contract was concluded.
III. Sales concession of indefinite and definite duration
A. Open-ended sales concession
Open-ended sales concessions enjoy the most extensive protection under the legislation, with specific provisions regarding notice periods and compensation in the event of unilateral termination.
B. The fixed-term sales concession
Fixed-term sales concessions are also covered by the legislation, albeit with modified protective provisions that take into account the temporary nature of these agreements.
4. The termination of the sales concession
4.1 The indefinite sales concession
§ 1. The unilateral termination
I. Definitions
Unilateral termination of a sales concession of indefinite duration means that either party can terminate the contract without the consent of the other party and without the need for a default or breach by that other party.
II. Principle - reasonable notice or termination fee
The fundamental principle of the legislation is that the party wishing to unilaterally terminate an open-ended sales concession must give the other party reasonable notice or, failing that, fair compensation.
III. Form Conditions
The termination must be unconditional and unambiguous. If these requirements are not met, the terminating party loses the benefits of notice and the sales concession is considered terminated without notice, resulting in the payment of a replacement termination fee.
§ 2. The notice period
I. Preliminary remarks
A. Starting point - free determination by the parties
The parties can determine in their contract what notice period will apply in the event of unilateral termination. However, this contractual freedom is limited by the requirement that the agreed term be reasonable.
B. Determination by the court
If the parties have not agreed on a notice period, or if the agreed period is deemed unreasonable, the court may set a reasonable notice period or award a substitute payment.
II. Definition of reasonable notice
Initially, case law defined a reasonable notice period as one that is sufficiently long to allow the terminated party to find an equivalent concession with equivalent benefits. Since 2003, this strict definition was gradually abandoned in favor of a more realistic approach.
The Brussels Court of Appeal has redefined reasonable notice as the time needed to find an "equivalent source of income." This evolution takes into account the economic reality that finding an equivalent concession has often become difficult or impossible.
III. Criteria for determining reasonable notice to be given to the concessionaire
A. The duration of the sales concession
The duration of the existing sales concession is a fundamental criterion for determining reasonable notice. The longer the partnership has lasted, the more time the concessionaire will normally need to find an alternative source of income.
B. The vastness of the territory.
The geographical extent of the territory covered by the sales concession is also considered essential by case law. It is obviously more difficult to find an equivalent sales concession for all of Belgium than for a limited regional area.
C. Sales and profits
The amount of business realized by the concessionaire and the resulting profit may be determinative in determining the notice period. A significant and profitable concession will be more difficult to replace than a marginal business.
D. The share of the sales concession in the total sales of the concessionaire
If the sales concession is the entire activity of the concessionaire, he will need more time to find an equivalent replacement than if the concession is only part of his overall commercial activity.
E. Brand awareness.
The fame and reputation of the brand distributed by the concessionaire can affect the difficulty of finding alternative distribution. Reputable brands tend to be more difficult to replace than lesser-known products.
F. Investments
The specific investments made by the concessionaire as part of the concession, such as adapted infrastructure, specialized equipment, or brand-specific staff training, may affect the necessary notice period.
G. Poor performance by the concessionaire.
If the concessionaire himself has failed to perform his obligations, this may give rise to a shortening of the reasonable notice period.
H. Situations arising after termination
In principle, the court assesses the reasonable notice period in the abstract at the time of termination, without regard to developments occurring after the termination.
IV. Determining the length of the notice period - examples
Belgian case law has developed a rich casuistry concerning the concrete determination of notice periods. A term of 20 months was granted for a sales concession that had lasted 15 years, covered the Benelux, involved a brand of high fame, represented 11 to 16 percent of the concessionaire's activity, and in which the concessionaire had made significant investments.
A 21-month term was granted for a 12-year concession that covered Flanders, constituted the entire activity of the concessionaire, and also involved significant investment and effort in promotion and sales.
V. Criteria for determining reasonable notice to be given to the grantor
Reasonable notice should also be given to the licensor when the licensee unilaterally terminates the contract. In principle, the same criteria are used for this as for termination by the licensor, taking into account the ability of the licensor to transfer the sales of the discontinued licensee to other distributors.
§ 3. The termination fee
I. Introductory Remarks
If no or insufficient notice was given, the terminated party is entitled to equitable compensation to compensate for the lack of notice.
II. Definitions
The termination fee is a substitute for the ungranted or insufficient notice period and is calculated based on the income the terminated party could have realized during the reasonable notice period.
III. Calculation of replacement damages
The substitute compensation is calculated based on the semibrut profit that the concessionaire would have realized during the non-granted notice period.
IV. Concept of "semibrut profit
A. Net profit
Net profit is the starting point for the calculation and includes all concession revenues less all directly attributable costs.
B. Non-impressive overhead costs
Added to the net profit are the non-impressible overhead costs, which are those costs that the concessionaire would continue to bear despite the termination of the concession.
V. The reference period
The calculation of the average semi-annual profit is generally based on the results of the last three years prior to termination, unless special circumstances warrant a different reference period.
§ 4. The equitable additional compensation
I. Definitions
A. Conditions of application
In addition to the termination compensation, the terminated concessionaire may, under certain conditions, claim equitable additional compensation for specific damages not covered by the ordinary termination compensation.
B. Nature of additional compensation
This compensation is exceptional in nature and requires proof of specific damages directly resulting from how the termination occurred.
C. Proof
The burden of proving the existence and extent of collateral damage is on the concessionaire claiming the compensation.
II. Discussion of the three different components of the additional fee
A. The added value regarding clientele
This component aims to compensate the concessionaire for the loss of the commercial value of the clientele it has accumulated from which the concessionaire will benefit after termination.
B. Costs incurred by the concessionaire.
Specific costs incurred by the concessionaire under the concession that lose their utility due to termination may be eligible for reimbursement.
C. The mourning fee
This refers to costs directly resulting from the termination itself, such as costs of laying off staff, settling contracts, or other reorganization costs.
§ 5. Intervention of the judge in summary proceedings
Concessionaires sometimes turn to the judge in summary proceedings to obtain a suspension of the effects of the termination or to order interim measures. Since the termination is irrevocable, the court cannot order the parties to continue cooperation, but it can order certain transitional measures.
4.2 The fixed-term sales concession
§ 1. Introductory remarks
Sales concessions of definite duration are subject to a specific legal regime that differs from that of concessions of indefinite duration, particularly in terms of termination modalities and the legal consequences associated with them.
§ 2. Fixed-term sales concession
A fixed-term sales concession shall terminate by operation of law upon expiration of the agreed term, without notice or notice being required.
§ 3. Termination modalities.
I. Notice period
For fixed-term sales concessions in which tacit renewal is stipulated, specific termination modalities apply to avoid automatic renewal.
II. Form Rules
The notice of termination must comply with the formal requirements stipulated in the contract, failing which the tacit renewal will automatically take effect.
III. Sanction
A. Provision of tacit renewal
If a clause of tacit renewal was agreed upon and notice of termination was not served in time or in accordance with the required form, automatic renewal takes effect.
B. Absence of a clause of tacit renewal
In the absence of such a clause, the contract ends automatically without further formalities.
IV. Right of non-renewal
The parties have the fundamental right to decide not to renew the agreement at the expiration of the agreed term.
§ 4. Limiting the number of fixed-term renewals
The legislation includes provisions to prevent the systematic extension of fixed-term sales concessions to circumvent the protection provisions for open-ended concessions.
§ 5. The intervention of the judge in summary proceedings
Even for concessions of limited duration, the court may intervene in summary proceedings to grant interim measures pending final settlement of disputes.
4.3 The subconcessionaire
§ 1. Definitions.
The subconcessionaire is a distributor that has received a concession from a main concessionaire to distribute products originally produced or imported by the main concessionaire.
§ 2. Subconcession of indefinite duration - direct claim
Under certain conditions, a subconcessionaire may bring a direct action against the principal concessionaire, particularly if the principal concessionaire fails to fulfill its obligations.
§ 3. Fixed-term subconcession - termination
Fixed-term subconcessions are subject to modified termination modalities that take into account the specific position of the subconcessionaire in the distribution chain.
4.4 Termination for gross misconduct
§ 1. Definitions.
I. Impossibility of continuing contractual relations.
A sales concession may be terminated for gross negligence when the behavior of one of the parties makes the continuation of contractual relations impossible.
II. Criteria for gross deficiency
Case law has developed criteria for determining when a default is of such severity as to warrant immediate termination without notice.
5. The international context - applicable law and competent court
Introduction
On October 1, 2004, the Code of Private International Law came into force with the aim of gathering all rules on international jurisdiction of Belgian courts, applicable law and consequences of foreign decisions in a single text. This code has a supplementary character and is only applicable if no regulation exists in European law, treaty law or special laws.
5.1 National law
If all or part of the sales concession is implemented in Belgium, in accordance with Article X.39 of the Code of Economic Law, the dismissing grantor can always be held liable for the Belgian courts be sued. This authority concerns claims from Articles X.36 and X.37 of the WER regarding reasonable notice and additional compensation.
5.2 International law
§ 1. International jurisdiction
I. Article 4.1. of the Brussels Ibis Regulation - general rule
The general rule for international jurisdiction is that persons domiciled in a member state may be sued in the courts of that member state.
II. Article 7.1. of the Brussels Ibis Regulation - special jurisdiction
Contractual obligations are governed by a special rule of jurisdiction that allows connection to the place of performance of the characteristic obligation.
III. Article 25 of the Brussels Ibis Regulation - the court designated by the parties
The parties may contractually agree which court will have jurisdiction over disputes arising from their sales concession, provided such choice of forum meets the requirements of the Regulation.
§ 2. Applicable law
I. Free choice of law
The parties may choose the law that will apply to their sales concession, such choice being express or implied.
II. Absence of choice of law
In the absence of choice of law, the contract shall be governed by the law of the country with which it is most closely connected, determined according to objective connecting criteria.
§ 3. Decision
The international aspects of sales concessions require careful analysis of the applicable rules of private international law, taking into account both European regulations and national legislation.
Conclusion and practical recommendations
The sales concession remains a fundamental form of commercial cooperation in the modern economy, but it requires thorough legal knowledge and careful contractual planning. For entrepreneurs considering entering into a concession agreement or who have disputes over existing concessions, the following recommendations are critical.
Careful contractual preparation is the basis for a successful sales concession. Parties should have their agreement drafted by specialized lawyers who master the complexities of sales concession law and can take into account both commercial objectives and legal requirements and risks.
Systematic documentation and preservation of all relevant documents is essential for proving the existence and terms of the concession relationship. This includes not only the original agreement, but also all correspondence, invoices, commercial documents, and other evidence that can demonstrate the structured nature of the collaboration.
Early legal assistance in disputes can often avoid costly litigation and helps parties protect their rights in the best possible way. Given the complexity of the matter and the extensive case law to be analyzed, professional guidance by specialized lawyers is indispensable.
Regular review and adaptation of concession agreements to changing circumstances, new legislation, and evolving commercial practices helps prevent disputes and optimize cooperation between parties.
Sales concessions will continue to evolve with the digital transformation of the economy, new distribution models, and changing consumer and business expectations. A proactive approach that takes these developments into account will determine the success of future concession relationships.
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