Winelawcentre Bulletin Board
10th February 2010
Vodka copykat cops for it
In Diageo v Intercontinental Brands (ICB) (High Court, 19th January 2010), it was held that the marketing of an alcoholic drink made from vodka and fermented alcohol, under the brand name “ VODKAT”, amounted to passing that product off as vodka. The judge held that "vodka" had a reputation giving rise to a protectable goodwill, and that there was substantial evidence of confusion among consumers, wholesalers and retailers. ICB's marketing had been calculated to deceive a substantial number of members of the public into believing that the product was vodka, or a weaker version of vodka.
This decision extends the line of cases establishing that product descriptions such as Champagne, Sherry, Scotch Whisky, and Advocaat are protectable in the UK in this way. But it makes you wonder why it took a private lawsuit by a vodka producer, based on the common law doctrine of “passing-off”, rather than action by the responsible regulator, to get ICB to stop what they were doing.
http://www.winelawcentre.com/private/Vodkat-case/
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16th December 2009
Applicable law -- distribution agreements
The EU "Rome I" Regulation takes effect in relation to contracts made after 17th December 2009. It introduces revised rules for determining the law applicable to contracts, which are intended to be more clearly understood and uniformly applied across the EU. The parties' choice of law will still generally be upheld, but there are more rigid and specific rules in the absence of an express or inferred choice. One such rule provides that distribution contracts are governed by the law of the country where the distributor has his habitual residence (in the case of a company, the place of its central administration).
Under the old rules (the Rome Convention 1980), it was usually necessary to determine which party was to effect the "characteristic performance" under the contract. In England, the Court of Appeal (Print Concept GmbH v GEW (EC) Ltd (2001)) has held that the characteristic performance under a distribution agreement is that of the supplier/seller of the goods in question. Some courts in other EU countries took the opposite view: the distributor would effect the characteristic performance — the main object of a distribution agreement is that the distributor will develop the market in his territory for the supplier's goods. The latter, we thought, was the better view. At first sight, therefore, the new standard rule under Rome I was to be welcomed.
Unfortunately, the attempt to achieve EU-wide uniformity on this basis appears to have been botched. The wording of the relevant provisions of Rome I means that where a distribution agreement regulates both obligations in relation to the distributorship and obligations in relation to the individual sales made under it, it may be necessary to apply the old rules. Print Concept is, therefore, still likely to be followed in many cases despite the "standard rule" set out in Rome I. A recipe for continued uncertainty and disputation, precisely the opposite of what was intended. And another good reason for the parties to agree the choice of law wherever possible.
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11th November 2009
Commercial agency compensation claims and arbitration clauses
In a recent High Court case (Accentuate Ltd v Asigra Inc, October 2009) it has been held that an agreement which chose the law of Canada as the governing law, and also required disputes to be submitted to arbitration in Canada, was ineffective in preventing a party claiming to be a commercial agent from pursuing a claim in the English courts for compensation under the Commercial Agency Regulations. As regards the choice of law, the High Court was merely following the decision of the ECJ in Ingmar v Eaton Leonard. The novel question was whether the clause referring disputes to arbitration would prevent an agent from claiming compensation under the Regulations in the courts. The Accentuate decision does not mean that every clause requiring such a claim to be arbitrated will be invalid. Where there is an otherwise binding arbitration clause, but it is not disputed that the Regulations (or the law of another EU country) must be applied by the arbitrator, it is thought that the onus will be on the agent to show that insistence on arbitration would be to his detriment. See applicable law — mandatory rules of law.
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22nd October 2009
EU wine regulation
Jeremy Beadles of the WSTA has produced an excellent "idiot's guide" to the new EU wine regulatory regime, available on the Harpers website at: http://www.harpers.co.uk/misc/content/article/8439-jeremy-beadles-comment-october-2009.html.
Those wishing to lose themselves in the fine detail Council Regulation (EC) No 479/2008 of 29 April 2008 on the common organisation of the market in wine, and the further Regulations made pursuant to it, should visit: http://ec.europa.eu/agriculture/markets/wine/leg/index_en.htm.
For information about other regulations applicable to the production, packaging, labelling, distribution and sale of wine in the UK, see: http://www.winelawcentre.com/private/regulatory-matters/.
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13th October 2009
Retention of title and sub-sales
A producer (P) agrees to sell wine to his UK distributor (D). The contract includes a retention of title (ROT) clause. D re-sells the wine to his UK customer (C), and that sale is likewise subject to ROT. D becomes insolvent and a liquidator is appointed. At that point, C has not paid D, and D has not paid P. If the wine, or at least some of it, is still in C's possession, can P recover it — or claim payment for it — from C?
If D hasn't paid P for it, and hasn't paid D for it either, P must still be the owner, right? Sadly, it's not quite as simple as that in practice. See http://www.winelawcentre.com/private/ret-title-sub-sale/
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13th August 2009
When is an agent not a commercial agent?
We recently — February 2009, see below — pointed out the risks run by producers who allow their UK agents to collect customer payments for them. But such arrangements can also cause problems for agents. If the producer (P) invoices the agent (A), and A re-invoices the customer (C) for the same amount (invoicing P for commission):
- A may find himself facing a claim for VAT on the basis that his invoices to C are part of his sales turnover;
- by getting into a “hybrid” arrangement such as this A may inadvertently surrender rights he would have previously had under the Commercial Agents Regulations. If A's "back-to-back" invoice to C makes no reference to P, the court is likely to conclude that A, not P, is contracting with C. In Sagal (trading as Bunz UK ) v Atelier Bunz GmbH (Court of Appeal, 3rd July 2009), it was confirmed that an agent who contracts on a principal's behalf but in his own name is not a commercial agent. The case emphasises the importance of the contract documentation in establishing what the position is, and that it will normally be conclusive unless it can be shown to be a sham.
What can A do to protect his position? See http://www.winelawcentre.com/private/a-debt-collects/ for our suggestions.
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12th March 2009
Tough economic times — planning for the worst case
As conditions in the UK trade continue to get tougher, we review the issues that can arise when either a producer or his UK agent/distributor
becomes insolvent:
http://www.winelawcentre.com/private/insolvency/
... we look at an important, and very simple, way in which producers can protect themselves by claiming retention of title in respect of wine supplied but not paid for:
http://www.winelawcentre.com/private/retention-of-title/
... and we look at other ways in which producers can guard against late payment or - worse still - non-payment:
http://www.winelawcentre.com/private/payment-problems/
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5th February 2009
Wine producers beware! Allowing your UK agent to collect payments for you can seriously damage your health.
In an article recently published in Harpers, Andrew Park of APP Law outlined some of the dangers for producers whose UK export business is based on the agency model rather than the distribution model. Click here for the full article: http://www.winelawcentre.com/content/Harpers-30-01-2009.pdf
We can't emphasise too strongly how dangerous it can be for producers to allow their agents to collect payments for them. It may be the producer's money the agent is holding, but if they fall out the agent will be able to withhold it, and set it off against whatever he is claiming, unless the producer has insisted on putting proper legal protections in place. We have seen this more and more frequently over the last twelve months — often because a particular distributor is no longer seen as an acceptable credit insurance risk in these very tough economic times. In many cases, the amount held by the agent could be well into six figures, but no thought seems to have been given to what might happen if the worst came to the worst. For more information about suggested protective measures, see:
http://www.winelawcentre.com/private/a-debt-collects/
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30th July 2008
Enforcing compliance with an agency or distribution agreement
Following on from the item below, here's a new content page looking at the types of order the English courts can make to enforce compliance with an agency or distribution agreement where one party has terminated prematurely, or plans to do so.
http://www.winelawcentre.com/private/contract-injunction/
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3rd July 2008
What is "reasonable" notice of termination?
Where the parties to a distribution agreement, or to an agency agreement to which the Commercial Agency Regulations do not apply, have not agreed what notice of termination must be given, the notice given by either must be reasonable in all the circumstances at the time it is given. Where an "annual planning" modus operandi has been adopted, it may be arguable that a producer will only have a relatively short window each year in which he can reasonably give a notice of termination effective at the end of the following year. For further information see:
http://www.winelawcentre.com/private/notice-of-termination/#rnwindow
Dispute Resolution — Independent expert determination
It has been held in a recent High Court case that if the parties have agreed that an independent expert's decision will be final then — as long as the expert deals with the issue referred to him, ie answers the right question — his decision will bind them, even if he has made errors (even gross and obvious ones), or he has acted perversely or contrary to "natural justice". For further information, and suggestions on avoiding this problem, see:
http://www.winelawcentre.com/private/disputes/#expertdetermination
Commercial agents compensation
The first High Court case on the assessment of compensation to be reported since the Lonsdale decision (see below, 4th July 2007) supports the view that when assessing compensation you should deduct notional "market rate" salaries attributable to running the agency where those have not in fact been paid. See:http://www.winelawcentre.com/private/compensation-assessment/#salaries
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4th June 2008
Wine turns green
No, it's not about defective products! Sally Easton MW looks at the increasing focus on environmental, ethical and sustainability issues in the wine trade, and to what extent consumers can be confident they're buying what they think they're buying.
http://www.winelawcentre.com/private/easton-5/
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17th April 2008
We never signed the contract — how could we be bound by it?
It's surprising how often in the UK wine trade one party produces a draft agency or distribution contract for the other's consideration, which they have some dialogue about, but ends up never being signed.
This can, and frequently does, raise the question:
can a contract be binding even if it wasn't signed?
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20th February 2008
Entitlement to commission under the Commercial Agency Regulations
In 1996 the ECJ held (in Kontogeorgas) that where a commercial agent has "an exclusive right to a specific geographical area or specific group of customers" and the transaction is with a customer "belonging to" that area or group, the agent is entitled to commission even if he played no part in bringing the transaction about.
In Chevassus-Marche v Group Danone and others (17th January 2008) the ECJ was asked to extend this "agent-friendly" approach even further, by ruling that an agent is entitled to commission whenever the principal's products are sold to a customer in the agent's designated territory, even though (a) the agent has played no part in the transaction, and (b) someone other than the principal is the seller. A surprising suggestion, at first sight, but arguable. Click below to see what the ECJ made of it:
http://www.winelawcentre.com/private/commission-during/
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17th January 2008
Promotional discounting — everybody happy?
How does promotional discounting work in UK wine retail? What funding mechanisms are used, and do all concerned regard them as satisfactory? Andrew Catchpole investigates.
http://www.winelawcentre.com/private/catchpole-4/
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17th October 2007
The Closure Conundrum
For the past decade and more the wine industry has been preoccupied with issues surrounding the types of closures used to seal bottles — Sally Easton MW investigates exclusively for the Winelawcentre.
http://www.winelawcentre.com/private/easton-4/
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5th July 2007
Compensation for commercial agents — House of Lords decision released
The long-awaited decision of the House of Lords in the case of Lonsdale v Howard & Hallam Limited was published on 4th July 2007. We are pleased to say that it brings much needed clarity and common sense to this hitherto highly uncertain area of UK law — click here for the full update.
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5th June 2007
The UK's first 'virtual' wine merchant?
From Vineyards Direct claims to be the UK 's first truly ‘virtual' wine merchant. Andrew Catchpole investigates.
http://www.winelawcentre.com/private/catchpole-3/
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23rd May 2007
Compensation for commercial agents — House of Lords finally consider the problem
The appeal to the House of Lords in the case of Lonsdale v Howard & Hallam Limited was concluded on 17th May 2007. The appeal was brought against the Court of Appeal's rejection of the argument that the French approach of awarding a commercial agent two years' gross commission on termination should be followed in England.
Unusually, the Winemakers' Federation of Australia was given permission to intervene in the case, in order to put arguments on behalf of its wine producer members. APP Law represented the WFA — click below for an exclusive "inside track" report on the hearing.
http://www.winelawcentre.com/private/Lonsdale/
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22nd March 2007
Agency or distribution — customer decides?
One of the major UK supermarkets recently announced that, rather continuing to make individual payments each month to its many winery suppliers, it will from now on only accept invoices from their UK agents. Convenient for the supermarket, maybe, but it raises some pretty serious issues for both producers and agents.
http://www.winelawcentre.com/private/a-or-d-customer-decides/
Compensation for commercial agents — Lonsdale
The UK House of Lords will hear the appeal in the Lonsdale case on 16th/17th May 2007. Watch this space for news of a recent development that could have a significant effect on the outcome.
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1st February 2007
Bulk shipping and UK bottling
Shipping bulk wine into the UK is big business that's getting bigger — Sally Easton MW investigates, exclusively for the Winelawcentre:
http://www.winelawcentre.com/private/easton-3/
To what extent do legal constraints limit the expansion of UK bulk bottling? Click below for our survey of the legal framework: http://www.winelawcentre.com/private/uk-bottling/.
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29th November 2006
Avoiding UK excise duty on wine — window of opportunity firmly closed
It was widely suggested that the judgment of the ECJ in the Joustra case could have dramatic implications for wine retailing in the UK. Click here for our report and commentary on the decision.
Use of oak chips in EU wines
Since EC Regulation 1507/2006 came into force (see below) the French INAO has outlawed the use of oak chips in all "appellation controlee" wines. Similarly, the Italian Ministry of Agriculture has outlawed the use of oak chips in Italian "quality wines psr" (i.e. any DOC, DOCG or IGT wine sold as a product of a specified region).
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18th October 2006
Use of oak chips in EU wines
19th October 2006 sees the entry into force of the EC Regulation 1507/2006,
detailing the basis on which oak chips may be used in wine-making. Annex
I sets out the oenoligical and labelling requirements. Annex II lists
the terms ("barrel fermented", "barrel aged", and similar)
which are designated as the only terms that may be used to describe a wine that
has been fermented, matured or aged in an oak container. None of those
terms may be used to describe a wine made with the aid of pieces of oak wood,
even in association with the use of oak containers. Click below for the full
text of the regulation:
http://eur-lex.europa.eu/LexUriServ/site/en/oj/2006/l_280/l_28020061012en00090011.pdf
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20th September 2006
Post-termination restrictive covenants
BCM Group v Visualmark Limited (High Court, 26th May 2006) provides some useful guidance on what will, and will not, be regarded as reasonable restrictive covenants in the context of agency contracts. The contract in question provided that for two years after termination the agent could not solicit business from any person who had been a customer of the principal during the twelve months preceding termination. When the principal ('P') tried to enforce it, the agent ('A') argued that it was unreasonably wide, and therefore unenforceable, because (a) it was too long, and (b) it was not limited to customers with whom A had had dealings.
The Judge had no problem with the two year period, but he accepted A's second argument. In the absence of direct authority on the point in relation to agents (as opposed to employees), he looked to the Commercial Agents Regulations. They provide that a post-termination restrictive covenant in a commercial agency agreement may be valid if, inter alia, it relates to "the geographical area or the group of customers and the geographical area entrusted to A and to the kind of goods covered by his agency."
For a detailed review of this subject see restrictive covenants.
When champagne loses its fizz
Very few wine trade disputes get as far as being decided by the court and having the decision published. A recent exception concerned some champagne that proved something of a disappointment. Not only did the case go all the way to the High Court, it then went on to the Court of Appeal — Friarwood Limited v Champagne Cattier SA.
Compensation for commercial agents — an update
The decision of the House of Lords in the case of Lonsdale v Howard & Hallam is still awaited (see items dated 29th June 2006 and 22nd February 2006 below). We understand that the next procedural milestone in the case is 11th October 2006, but that it is unlikely to be heard before the end of 2006.
In the most recent reported case on this subject ( Vick v Vogle-Gapes Limited, High Court 30th June 2006) the Judge did not actually need to assess compensation. Apart from some helpful observations regarding the need for expert valuation evidence if the Court of Appeal's ruling in Lonsdale is to be followed, the decision does not take matters further.
Our view as to the proper approach in agency compensation cases pending the outcome of Lonsdale remains as before — see assessment of compensation.
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29th June 2006
Compensation for commercial agents
On 27th June 2006 Mr Lonsdale, (of Lonsdale v Howard & Hallam fame, see item dated 22nd February 2006 below) was granted leave to appeal to the House of Lords. The Lords will, we hope, put right what is wrong with Court of Appeal decision and settle the vexed question of the proper approach to assessing compensation in these cases once and for all.
See assessment of compensation for guidance on the legal position pending the outcome of this further appeal.
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6th June 2006
Spoiled wine — who pays the bill?
Spoiled wine — and especially cork taint — is a major problem for the wine industry. Andrew Catchpole finds out who foots the bill:
http://www.winelawcentre.com/private/catchpole-2/
To coincide with Andrew's article we have added a new section to the site which deals in some detail with the issues connected with liability for defective products:
http://www.winelawcentre.com/private/defective-products/
We have also reviewed and improved the coverage of regulatory matters, which now includes an updated and expanded set of links to sources of additional information and guidance:
http://www.winelawcentre.com/private/regulatory-matters/
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14th March 2006
Time for a change?
How and why do producers change agents, once they are in the UK market? Sally Easton MW talks to some producers and agents to discover some of the reasons. Click below to read Sally's report — exclusive to the Winelawcentre.
http://www.winelawcentre.com/private/easton-2/
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22nd February 2006
The English Court of Appeal has at last (in Lonsdale v Howard & Hallam Ltd, 8th February 2006) been given the opportunity to consider how the assessment of compensation for commercial agents should be approached. The decision is in some ways good news, but overall pretty bad news for principals.
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For older items see the Bulletin archive
Please do not hesitate to contact us if you have a specific query.
