Mr. Justice Clarke has delivered his judgment in the case of Michael Kenny -v- Ireland ROC Limited on the preliminary issue of whether or not the Plaintiff constituted a commercial agent of the Defendant for the purposes of Article 1(2) of Council Directive of 18th December, 1986 on the co-ordination of the laws of the Member States relating to self-employed commercial agents (the "Directive") and the European Communities (Commercial Agents) Regulations, 1994 and 1997 (the "Regulations").

The Plaintiff ran the Martello Service Station of the Defendant who was a wholly owned subsidiary of Esso Ireland Limited which in turn was a wholly owned subsidiary of Exxon Mobil Corporation of New York, USA. The Plaintiff sold products on behalf of the Defendant which were broadly categorised into two groups namely petrol products and non petrol products.

The preliminary issue was whether the Plaintiff constituted the commercial agent of the Defendant for the purposes of the Directive and Regulations.

Article 1(2) of the Directive stipulates that the commercial agent "shall mean a self employed intermediary who has continuing authority to negotiate the sale or the purchase of goods on behalf of another person, hereinafter called "the principal", or to negotiate and conclude such transactions on behalf of and in the name of that principal".

The High Court held that three tests must be satisfied in order to qualify as a commercial agent for the purpose of the Directive.

Firstly, the agent must be self employed. Secondly, the agent must have continuing authority on behalf of the principal. Thirdly, the person must "negotiate the sale or the purchase" of goods. The High Court pointed out that the contentious issue in this case was whether or not the Plaintiff negotiated the sale and purchase of goods on behalf of the Defendant.

The High Court confirmed the following in relation to negotiation:

1. Haggling not Required: "active bargaining" or "haggling" is not required to qualify as negotiation. The High Court held out that the definition does not require a process of bargaining in the sense of invitation to treat, offer, counter offer and acceptance.
   
   
2. The Test: The High Court stated that the proper approach to the question of negotiation was to consider whether the person who may be said to be negotiating has to "deal with, manage or conduct" the sale or purchase concerned as per the Oxford Dictionary definition and in doing so the person must use "some skill or consideration". The High Court ruled out that the skill or consideration must, in some manner, be brought to bear on the sale or purchase.
   
   
3. Different Ways of Doing Business and Satisfying the Test: The High Court pointed that the business of purchase or sale of goods is conducted in very many different ways emphasising that in some types of business it would be commonplace for there to be significant bargaining prior to any sale being concluded and in other cases the price will be relatively fixed and the manner in which persons may secure additional sales will be by virtue of other aspects of the way in which the goods are presented to the public such as through marketing and promotion or by the attractiveness of the presentation of the product.
   
   The High Court stated that the precise way in which a particular type of good is typically sold should not necessarily be a significant factor in determining whether a person engaged in the sale of that good on behalf of a principal in order to be regarded as a commercial agent.
   
   The test is whether having regard to the manner in which the sale of the good or goods concerned is carried out (or where relevant the purchase of such goods) it is necessary for the agent to bring a material level of skill to the activity i.e. dealing with, managing or conducting the sale or purchase concerned.
   
   The skill that may be brought to the activity may vary depending on the way in which the goods concerned are typically sold. The Court held out that in some cases it may involve the skill in bargaining and in other cases it may be the skill in marketing and promotion. The High Court pointed out that in other cases it may be a skill in the presentation of the product in such a way as to make it attractive to members of the public so that they will purchase more of it thereby encouraging sales.
   
   The High Court held out that in substance there was no material difference between an agent who uses a skill in judgement to individually promote a product to one or more identified individual potential purchasers and an agent who (having regard to the nature of the product of the principal which he is involved in seeking to sell) uses more general methods but applying equal skill to making the products attractive to the public generally and thus increase sales.

Mr. Justice Clarke referred to the only other decision of the Irish courts in which the meaning of the term commercial agent was considered namely, Cooney & Company and another -v- Murphy Brewery Sales Limited (unreported, High Court Costello P., 30th July, 1997).

Mr. Justice Clarke cited with approval the passage from the judgment of Costello P. in the Cooney decision where Costello P. makes it absolutely clear that negotiation does not in some way require bargain or haggle so as to endeavour to reach some sort of arrangement between the agent and the proposed customer. In the Cooney case, Costello P. decided on an interlocutory application that the Plaintiff constituted the commercial agent of the Defendant for the purposes of the Directive. The Plaintiffs were appointed exclusive sales agents of Murphy's Draft Heineken lager and Murphy's stout in a specified area.

Mr. Justice Clarke in Michael Kenny -v- IRELAND ROC Limited also referred to the decision of the UK Court of Appeal in Parks -v- Esso Petroleum Company Limited (2000) Eu LR 25. The Parks case was similar to the Kenny case in that the Plaintiff occupied a service station owned by Esso pursuant to an agency agreement which appeared in some respects to be similar to that of Mr. Kenny.

Mr. Justice Clarke pointed out that one significant difference between the Parks and the case before him was that the agreement between Parks and Esso related solely to the sale by the Plaintiff of motor fuels and Mr. Parks like Mr. Kenny also operated a shop and a car wash but in the case of Mr. Parks (unlike Mr. Kenny) these were operated for his own account and not as agent for Esso.

The High Court in the Kenny decision reviewed the decision of the Court of Appeal in Parks and noted a distinction between the implementation of the Directive in Ireland and the United Kingdom. The High Court referred to the provisions of Article 2 (2) of the Directive which stipulates as follows:

"..each of the Member States shall have the right to provide that the Directive shall not apply to those persons whose activities as commercial agents are considered secondary by the law of that Member State."

The High Court in the Kenny decision noted that the UK had chosen to exercise its discretion to exclude persons whose activities as commercial agents are considered secondary and referred to the relevant UK Regulations.

The High Court held out that Ireland did not exercise the above discretion and that therefore no similar exclusion applied under Irish law. The High Court held out that there could be no doubt that the Court of Appeal placed at least some reliance on the fact that the Regulations in the UK made it clear that cases where goods were selected by customers who merely ordered through the agent give rise to the activity of the agent concerned being regarded as secondary and thus permissibly excluded from the operation of the Directive as implemented into UK law.

The High Court in the Kenny decision then referred to the decision of Costello P. in the Cooney case and pointed out that it is difficult to see how the role of the distributors in Cooney was in practice any greater than that of Mr. Parks and Costello P's decision in Cooney that the distributors constituted commercial agents of the Defendant for the purposes of the Directive.

Mr. Justice Clarke in the Kenny decision held that if the decision of the Court of Appeal in Parks is to be taken as implying that it is not possible for a person to be a commercial agent while that person exercises skill in attracting customers but where the ultimate transaction is by self service and payment, he pointed out "I do not regard the judgment as persuasive and I would not propose to follow it".

The Plaintiff was represented by LK Shields Solicitors. For further information contact Marco Hickey.

October 2005.