Defendant, a Belgian transportation company, appointed Claimant as an independent contractor to perform specified services in a Central European country. Their agreement was governed by Belgian law. After four years' collaboration, Defendant terminated the agreement with three months' notice. Claimant thereupon sought compensation, invoking the Belgian agency statute of 13 April 1995 in support of its claims. It argued that this statute was designed to protect any independent intermediary that performs commercial activities for a principal, provided such intermediary works on a permanent basis and for remuneration. It maintained that its activity corresponded to that of an agent within the meaning of the statute, insofar as it promoted and sold Defendant's services (while at the same time performing certain related services independently), it legally represented Defendant, and it peformed its tasks on a permanent basis and for remuneration. According to Claimant, since the statute came into force on 12 June 1995, it was thus applicable to the termination of the agreement, which occurred on 24 July 1995. Defendant contended that the Belgian statute was not applicable to the agreement, since the two parties were both principal transporters, offering complementary services, Defendant by air and Claimant by road. It also denied having empowered Claimant to represent it legally. The arbitral proceedings were divided into three phases. The 'Partial Final Award' of May 1998 concluded the second phase dealing with the applicability of the Belgian statute to the parties' agreement, the consequences thereof as regards the validity of certain clauses of the agreement, and Claimant's entitlement to relief, leaving the monetary aspects of Claimant's claims, the Defendant's counterclaims and the issue of costs to be dealt with in the third and final phase of the proceedings.

The Belgian agency statute

'Scope of application: section 1 of the Agency Act 1995 defines the commercial agency agreement as:

The agreement according to which one of the parties, the commercial agent, is entrusted by the other part, the principal, on a permanent basis and with financial compensation, but without being under the authority of the latter, with the negotiation and, possibly, with the conclusion of bargains on behalf and for the account of the principal.

The commercial agent organizes its activities at its sole discretion and remains free of its time-table.

(Translation, from Claimant's First Memorial, p. 3)

The essential features of the commercial agency agreement under the Agency Act 1995 may be summarized as follows:

- an agreement,

- between two parties,

- by which the "agent" (the "Agent") is entrusted by the "principal" (the "Principal"),

- to negotiate and, as the case may be, to conclude transactions,

- on behalf and for the account of the Principal, but without being under the authority of the Principal,

- on a permanent basis,

- with a financial compensation.

The Agent's duties are to carry out its activity, to communicate to the Principal all useful information and to comply with all reasonable directions given by the Principal.

The Principal's duties are to put at the Agent's disposal the information and material necessary or useful for the Agent's functions, to inform the Agent of any modification to the volume of the business and to keep the Agent informed of the follow up of the business generated by the Agent (see P. Devos, De nieuwe wet betreffende de handelsagentuurovereenkomst, Mys & Breesch, Ghent, 1995, pp. 25 et seq.).

The Agent's compensation may be fixed and/or variable. The most common system of compensation is based on turnover with a fix[ed] portion.'

The applicability of the agency statute to the parties' agreement

'When did the Agency Act 1995 become effective and to which agreements does it apply?

The Agency Act 1995 has been published in the Belgian Official Journal dated 2 June 1995.

Article 29 of the Act provides that "la présente loi ne s'applique pas aux obligations dont l'exécution a été demandée en justice avant la date de son entrée en vigueur" (free translation: the Act is not applicable to the obligations the performance of which has been requested in Court prior to the date on which the Act became effective).

The Act contains no other specific provision dealing with the date of effectiveness.

According to a first opinion (P. Devos, De nieuwe wet betreffende de handelsagentuurovereenkomst, Mys & Breesch, Ghent, 1995, p. 101), the above-quoted article 29 derogates from the non retroactive nature of legislation, in such a manner that the Agency Act 1995 has become effective immediately, i.e. on 2 June 1995.

According to a second opinion (M. and S. Willemart, La concession de vente et l'agence commerciale, Larcier, Brussels, 1995, p. 79), whatever the exact bearing of article 29 may be, the Act became effective, according to the general principle, ten days after its publication in the Official Journal, i.e. on 12 June 1995.

Irrespective of the opinion which is adopted - the Arbitrator considers - obiter - that the second opinion is the correct one - the Agency Act became effective at the latest on 12 June 1995, as rightly stated by Claimant. Pursuant to article 29, the Act applies, and, in any event, its imperative provisions apply, among which the provisions concerning the termination of the agreements and to the indemnities to which the agent is entitled to [sic] (which are the relevant provisions in this case), to the agency agreements which were still in force on 12 June 1995.

The notice of termination of the Agreement having been notified on 24 July 1995, the Agency Act 1995 applies rationae tempore to the relations between the Parties, subject to the other conditions of applicability of the Act being met, as will be examined hereafter.

2. The written contract between the Parties (the "Agreement")

[Defendant]'s defence centers on the very wording of the Agreement. On this basis, [Defendant] maintains, as is recalled below, that the Agreement cannot be deemed to be an agency contract within the meaning of the Agency Act 1995.

It is correct to state, as [Defendant] does, that the Agreement cannot, as such, constitute an agency contract, considering that (i) it is not provided that [Claimant] will carry out the duties that are characteristic of such a contract; (ii) [Claimant] cannot, under the terms of the Agreement itself, represent [Defendant]; (iii) [Claimant] is not [Defendant]'s agent and cannot conduct itself as if it were; and (iv) [Claimant]'s responsibilities were - apparently - rather to carry out material deeds, relating mainly to transportation services in [Territory]. . . .

Nevertheless, the Arbitrator does consider that the interpretation of agreements and the determination of the Parties' intentions require that he seek, beyond the terms of the Contract and the classification given to it by the Parties, what exactly are the nature, scope and effects of their agreement, especially in the light of the manner in which the Agreement has been performed. . . .

The Arbitrator does not therefore, as he is invited to by [Defendant], limit his review to the mere wording of the Agreement.

3. Performance of the Agreement

The performance of the Agreement, as it appears from the documentary evidence and witness evidence submitted to the Arbitrator, presents the following principal and useful elements for resolving the dispute, taking into account in addition certain specific provisions of the written Agreement that are not disputed by the parties:

(a) The task entrusted to [Claimant] by [Defendant] did not simply comprise the acceptance and home delivery of certain parcels on behalf of [Defendant] or the endusers.

[Claimant] also had other responsibilities to carry out for [Defendant], particularly in preparing transactions, the customs clearance of parcels, the organisation of relations with the local authorities, receiving clients' claims, it being understood that [Claimant], albeit in part or for certain transactions, had de facto power to negotiate and conclude transactions on behalf of [Defendant].

[Claimant]'s activities, carried on for the account, directly or indirectly, of [Defendant], are evidenced by the following elements:

- the relations with the local authorities are not, in themselves, denied. Moreover, they are provided for in the Agreement itself . . ., [Defendant] itself presents [Claimant] vis-à-vis the [customs authority] as its "agent".

- section 18 (c) of the Agreement gives [Claimant] the power to administer claims from shippers or consignees when it receives the initial notice of claim.

(b) [Claimant] was, in a certain manner, associated with the development of [Defendant]'s business in [Territory], as appears from the negotiations between [Claimant] and [Defendant] on tariff policy . . ., from the incentives given by [Defendant] to [Claimant] . . ., and from training and sales instruction for [Claimant]'s staff, whether wholly or partially at [Claimant]'s cost . . . The parties also conferred on advertising policy.

(c) [Claimant] made certain offers of [Defendant] services directly to certain customers or certain potential customers . . .

(d) [Claimant] and [Defendant] exchanged information of such a nature as to develop the [Defendant] services in [Territory], especially on competitive activities and marketing policy . . .

Section 11 (c) of the Agreement requires [Claimant] "to promptly provide a written report to [Defendant] on the activities of any competitors and potential competitors of [Defendant] in the Territory, and to advise [Defendant] on marketing strategies".

(e) [Defendant] had undertaken to cooperate in the promotion and services for which [Claimant] had assumed responsibility; this characteristic follows from the Agreement itself . . . and is not, as such, disputed by the Parties.

(f) [Claimant] made limited use of the "[Defendant]" name, under conditions that were hardly, at the time at least, criticizable, nor were they criticized.

(g) [Claimant] received a commission on turnover: [Claimant]'s remuneration is not in itself contested. In this regard, the Arbitrator is of the opinion that, even if on appearances, the Parties had agreed on a reduction of price granted to [Claimant] on transactions dealt with by it in [Territory] and on a payment per parcel carried, what was really involved was a compensation system based on a "commission", the amount of which - albeit limited - was fixed depending on the turnover realised by [Claimant]. There is nothing that would support a contention that such a system of payment would cover the costs (plus a certain profit) of the mere transportation services.

It is only in interpreting the payment due to [Claimant] that, as the case may be, a distinction has to be drawn between the various types of tasks entrusted to [Claimant]. This question has no bearing on the classification itself given to the Agreement by the parties.

(h) The contract is intuitu personae: this characteristic follows from the Agreement itself and is not, as such, disputed by the Parties.

(i) For its tasks, [Claimant] had exclusivity in [Territory]: this characteristic follows from the Agreement itself and is not, as such, disputed by the Parties.

(j) [Claimant] was bound by a non-competition clause, regardless of the broader or narrower interpretation that the Parties give to it now and in connection with this dispute: this provision follows from the Agreement itself and is not, as such, disputed by the Parties.

(k) [Claimant] acted on a permanent basis: this characteristic follows from the Agreement itself and from the relations that existed between the parties over four years; it is not, as such, disputed by the Parties.

(l) [Claimant] acted in a self-employed capacity: this characteristic follows from the Agreement itself and is not, as such, disputed by the Parties.

4. The classification of the Agreement

It follows from the foregoing considerations - which constitute a recognition by course of conduct of the intention of the parties and of their rights and obligations, as construed in his discretion by the Arbitrator - that the Parties were in reality, over and above the pure appearance of the words, bound under an agency contract within the meaning of the Agency Act 1995.

The relationship between the Parties did, indeed, present all the characteristics of an agency contract within the meaning of that Act . . .:

(a) an agreement: it is not disputed that the Parties were bound under a contract; only the classification thereof is in dispute;

(b) between two parties: [Claimant], on the one hand, and [Defendant], on the other.

(c) by which one party, the "Agent", is entrusted by the other, the "Principal" : whatever [Claimant]'s task was, this task was entrusted to it by [Defendant]. This finding is founded on the inception of relations between the Parties, on the written contract between them and on the manner in which their relationship was carried on. The fact that, as [Defendant] contends, [Claimant] was involved in certain transactions as the "client" of [Defendant] is of no relevance here.

(d) to negotiate and, as the case may be, to conclude business: whatever the precise legal form or precise type of "representation", [Claimant] acted in certain situations, which were nevertheless significant and numerous, in the name and, in all cases, on behalf of [Defendant].

Reference may be made to what is said above with regard to the relations of [Claimant] with certain clients, in [consultation] with [Defendant], to the relations between [Claimant] and the local authorities (especially the customs authorities) and to [Claimant]'s involvement in receiving the claims of customers.

The argument that [Claimant] was allegedly only involved in order to carry out material deeds and in order to provide transportation services, is too simplistic and does not take account of the other tasks entrusted to [Claimant] or for which [Claimant] assumed responsibility; consequently, it cannot be accepted.

Indeed, it makes little sense for a person who is dealing with a simple carrier to act in conjunction with him with regard to the pricing of [Defendant] services in [Territory] and on advertising policy, let alone exchanging with that person information concerning the activities of competitors with the [Defendant] service . . . On the other hand, such exchange of information and such cooperation are to be found in an agency contract.

Nor is there any reason in the context of the case at hand, unless it be - in the Arbitrator's view - within the framework of an agency contract, to train [Claimant]'s staff in sales techniques and standards in force within the [Defendant] organisation.

Nor can it be justified, in the restrictive line of argument put forward by [Defendant], that [Claimant] be given incentive to develop business (the [Defendant] services in [Territory]) and be encouraged to that end.

This significant number of convergent elements is reinforced by the presence in the Agreement of a non-competition clause - albeit limited.

(e) on behalf and for the account of the Principal: the Arbitrator takes the view that, even though [Claimant] was pursuing his personal interests and although the wording of the Agreement is phrased to the contrary, de facto [Claimant] acted in the name and for the account of [Defendant], and [Defendant], at the very least, tolerated this.

It is not denied that [Claimant] presented himself to customers and in written reports to [Defendant] as "the exclusive contractors for [Territory] of [Defendant]".

Furthermore, the Arbitrator has noted during the hearing of witnesses that, on the building occupied by [Claimant] in . . . and in the immediate vicinity of that building, there was a sign mentioning this link between [Claimant] and [Defendant].

Moreover, it can be inferred from [Claimant]'s statements - which are not seriously disputed - that most of the persons in relations with [Claimant] in [Territory] considered that it was the (local) agent of [Defendant] - in the general sense of the term.

(f) without being under the authority of the Principal: this point is not contested and, in any event, does not give cause for doubt in the mind of the Arbitrator.

(g) on a permanent basis: this point is not disputed and, in any event, is inferred from the duration of the relationship between the Parties themselves.

(h) for remuneration: the Parties are in dispute as to the method of remuneration and the justification therefor. [Defendant] maintains that the price paid covers the transport services and, for the rest, the sums paid over to [Claimant] by [Defendant] were by way of price reductions, bearing in mind [Claimant]'s status as a "preference" customer. For its part, [Claimant] maintains that all sums that were paid to it constituted agency commissions.

The Arbitrator considers that the existence of remuneration is apparent from the arguments of the Parties. The question of the nature and scope of the sums paid by [Defendant] to [Claimant] concerns more specifically the determination of the payments due to [Claimant] by reason of the termination of the agency contract, and are to be dealt with during phase three of these proceedings.

5. Conclusion

By way of conclusion, the Arbitrator finds that, for the foregoing reasons, [Claimant] is in principle entitled to obtain the protection conferred on an Agent by the Agency Act 1995.'

With regard to the validity of certain clauses of the Agreement

' [Claimant]'s claim

[Claimant] asks the Arbitrator to declare as void sections 3(b), 4(c) and 21 of the Agreement, and all sections of the Agreement which could affect [Claimant]'s right to obtain indemnification under the Agency Act 1995 and the reimbursement of certain expenses.

Preliminary remark

Although the majority of the provisions of the Agency Act 1995 are mandatory in favour of the Agent, the Arbitrator nevertheless considers that it is appropriate to examine separately the validity of each of the contractual clauses the nullity of which is alleged.

Where what is involved are mandatory provisions of public policy in the Agency Act 1995, the Arbitrator, as the case may be, will dispense with the application of or rule on the ex officio nullity of any clause in the contract that might be in contravention of such statutory provisions.

Section 3(b) of the Agreement

Section 3(b) of the Agreement contains a non-competition clause incumbent on [Claimant], in favour of [Defendant]. . . .

This clause is not in contravention of the provisions of article 24(1) of the Agency Act 1995, which does allow of a non-competition clause in an Agency Contract, insofar as this clause satisfies the following conditions:

- it is stipulated in writing,

- it concerns the type of business for which the Agent was responsible,

- it only covers the geographic sector or group of persons and geographic sector entrusted to the Agent,

- it does not exceed six months following the termination of the contract.

The non-competition clause in section 3(b) of the Agreement meets these conditions and is therefore valid.

However, this clause cannot be effective, by application of article 24(2) of the Agency Act 1995, which provides that:

The non-competition clause shall not be effective where the agency contract is terminated by the principal without invoking a reason provided for in section 19, para. 1, or by the agent, by invoking a reason provided for in section 19, para. 1.

To recall, article 19, para. 1, of the Act states that:

Each of the parties may, subject to damages, rescind the contract without notice or prior to the expiry of the term, where exceptional circumstances render any business collaboration between the principal and agent impossible by reason of a serious shortcoming by the other party in relation to his obligations.

It is undisputed that (i) the termination was effected at the initiative of [Defendant] (the Principal) and, (ii) [Defendant] did not invoke such exceptional circumstances to justify the rescission of the Agreement.

Consequently, [Claimant] is not bound by the obligations under the non-competition clause in section 3(b) of the Agreement.

. . .

Section 21 of the Agreement

Section 21 provides that:

Upon the termination of this Contract in any manner and for any reason, [Defendant] shall not be liable to Contractor, either for fees, expenses, other compensation or damages of any kind or character whatsoever (except for Contractor Services already performed), whether on account of the loss by Contractor of present or prospective profits or fees on sales or anticipated sales, or expenditures, investments or commitments made in connection therewith, or in connection with the establishment, development, or maintenance of the business of Contractor. Contractor expressly waives any claims whatsoever which it might have regarding reimbursement of expenditures in support of this Contract. Such termination shall not prejudice or otherwise affect the rights or liabilities of either party with regard to any indebtedness owing by the other party to it at the time of termination, or with respect to any other obligation specified in this Contract, or with respect to damages for breach incurred prior to the termination of this Contract.

The application of this clause is set aside by the mandatory provisions of the Agency Act 1995 that protect the Agent, which, in the cases set out in this Act, accord the Agent compensation to cover the consequences of termination without notice or with inadequate notice.'

Claimant's entitlement to compensation

'Section V.A.2(i) of the Terms of Reference - Indemnification for shortage of notice period

[Claimant]'s claim is one month's compensation, based upon the average amount of the commissions earned during the last 12 months preceding the termination.

Article 18 of the Agency Act 1995 provides for a notice period of at least one month for each period of one year during which the agreement has been in effect, with a maximum of six months. When no notice period is given or when such notice is not sufficient, the Agent is entitled to compensation equal to the amount of the commissions earned before the termination, and in proportion to the duration of the required notice period or to the extent to which it is deemed to be too short. For the calculation of that compensation, one must consider the monthly average commissions paid to the Agent during the last twelve months prior to the termination date.

Taking into account the duration of the Agreement (three years and ten months when notice of termination was served), Claimant was entitled to a notice period of four months. The notice given by Defendant was a three-month notice period. Therefore [Claimant] is entitled to one month's compensation, based upon the average amount of the commissions earned during the last twelve months, pursuant to article 18, § 3 of the Act, the amount of such compensation being a matter to be decided in the Final Award.

Section V.A.2(ii) of the Terms of Reference - Special compensation covering the loss of goodwill

Pursuant to article 20 of the Agency Act 1995, the Agent is entitled to claim compensation covering the loss of goodwill "when the agent has brought new customers to the principal or when he has significantly developed the business with the existing customers, provided that this activity continues to provide the principal with substantial advantages".

When the agreement contains a non-competition clause, it is assumed (i) that the Agent has brought customers to the Principal (article 24, al. 3, of the Act) and (ii) that the Agent's activity continues to provide the Principal with substantial advantages (article 20, al. 2, of the Act).

The amount of the compensation is determined by taking into account the development of the business and the new customers brought in by the Agent. This compensation cannot exceed the amount of one year's commissions, based on the average for the last five years.

Since a non-competition clause is contained in section 3(b) of the Agreement, Defendant has to compensate [Claimant] for the loss of goodwill, unless Defendant adduces sufficient evidence that no goodwill was brought to it after the termination.

The view must be taken that the presumption flowing from the non-competition clause is inherent to its existence and that the Agent may assert the presumption even if the non-competition clause is ineffective, as is stated above (A. de Theux, La fin du contrat d'agence commerciale, Bruylant, Brussels, 1997, p. 76, no. 55).

Defendant, whose denials are purely formal, fails in this proof and does not rebut the presumption set up by the aforementioned provisions. . . .

Therefore, in principle, [Claimant] is entitled to compensation for eviction from his status of Agent. . . .'