Application of European Law to Californian Contract

Ingmar GB Ltd v Eaton Leonard Technologies Inc (TLR 16 November ECJ)

Article 17(1) of the Commercial Agents (Council Directive) Regulations provides: ‘Member States shall take the measures necessary to ensure that the commercial agent is, after termination of the agency contract, indemnified in accordance with paragraph (2) or compensated for damage in accordance with paragraph (3)’. The claimant was a UK company appointed by a Californian company as its commercial agent in the UK by a contract, a clause of which stated that the contract was governed by the law of the State of California. Did the provision that the contract was governed by the law of the State of California preclude the operation of the directive in Article 17(1)? The High Court judge held that it did and on appeal the Court of Appeal referred the question to the European Court of Justice.