W NAGEL (A FIRM) v PLUCZENIK DIAMOND CO NV

[2018] EWCA Civ 2640, Court of Appeal, Lord Justice Henderson, Lord Justice Newey and Lord Justice Leggatt, 28 November 2018

Agency - Compensation following termination of agency relationship - Meaning of "commercial agent" - Meaning of "commodity exchange" - Commercial Agents (Council Directive) Regulations 1993 (SI 1993 No 3053), Regulation 2 - Breach of agreement not to terminate agency

PD, a Belgian diamond trader, entered into an arrangement with WN in 1967 under which WN became PD's broker in London. For that purpose WN became a "Sightholder" accredited by De Beers thereby enabling WN to purchase rough diamonds in London. The London Sight was replaced by a Sight in Gaborone, and PD wrote to WN terminating the relationship. WN claimed various sums from PD arising out of the termination of the relationship under both the Commercial Agents (Council Directive) Regulations 1993 and at common law. Popplewell J held ([2017] 2 Lloyd's Rep 215) that the 1993 Regulations had no application; the matter had to be looked at when the relationship terminated and not when it started, and at that date WN had authority to negotiate the sale or purchase of goods within Regulation 2(1), but the agreement was excluded by Regulation 2(2)(b) in that it related to operations on a commodity exchange or in a commodity market. Popplewell J also held that the evidence showed that in 1994 the parties had orally agreed that if commission was reduced from 1 per cent to 0.5 per cent then WN would remain PD's broker for as long as PD held a Sight with De Beers: on that basis, termination of the agency relationship constituted a breach of that term and damages of US$3,326,555 would be awarded accordingly. PD appealed.