Last month, it was announced that, following a Government consultation, the Commercial Agents (Council Directive) Regulations 1993 (‘the Regulations’) would continue to apply in the UK.
In this article, our Dispute Resolution Lawyers, examine the purpose of the Regulations, the nature of the consultation, and the impact of the decision to retain the Regulations.
The Regulations derive from EU law and have been applied in the UK for over 30 years.
Fundamentally, they protect agents in areas including termination and compensation.
In particular, the Regulations offer:
The introduction of the Retained EU Law (Revocation and Reform) Act in 2023 afforded ministers a greater ability to replace or revoke EU laws that had been retained following Brexit. This sparked a consultation on whether the Regulations were required and worthwhile in the UK.
The consultation saw the Government reach out to agents and principals from a variety of businesses, alongside lawyers, academics and other informed parties. Interestingly, approximately 70% of the 86 respondents were commercial agents, whilst only 8% were principals.
The consultation evaluated the extent to which respondents comprehended the Regulations’ impact, the importance of the Regulations’ protections, and the impact that deregulation would have on the ability for agents and principals to contract and the frequency of disputes between the two parties.
Perhaps unsurprisingly, there was a contrast between the views of agents and principals.
Agents feared deregulation, believing such a step may lead to legal uncertainty and reduced financial protections for their businesses.
Principals, meanwhile, deemed the Regulations to be strongly in favour of agents, resulting in an unequal relationship that makes it challenging to negotiate fair terms, terminate for breach or avoid providing compensation or an indemnity.
On 13 February 2025, the Government published its response to the consultation.
It was decided that the Regulations would be retained, with the Department for Business and Trade stating that the feedback showed they ‘work well for commercial agents’ and ‘were well understood by respondents’. Indeed, the Government response cited the fact that principals are often larger businesses than commercial agents when referring to the protections the Regulations afford to the latter.
As a consequence, legal certainty will remain in place in principal-agent relationships, as will the various protections afforded to agents. In turn, the decision may have saved future time negotiating and disputing matters between parties.
Though some principals may be disappointed by the decision, agents may well have demanded greater commission or compensation had the Regulations been revoked.
Ultimately, regardless of one’s opinion on the decision, the Regulations are here to stay and must continue to be applied in commercial agency contracts.
If you would like assistance with your agency contract or advice on the Regulations, contact our Dispute Resolution Solicitors.
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Oliver is a Trainee Solicitor and is currently undertaking his fourth seat in the Dispute Resolution department.
Furthermore, Oliver is a Health and Wellbeing Director at Manchester Trainee Solicitors Group (MTSG), as well as a member of the Northern Trainee sub-committee of the Society for Computers and Law (SCL).
Prior to joining Myerson Solicitors in September 2023, Oliver graduated from Durham University with a 2:1 degree in Law. He later completed the Legal Practice Course with Distinction.
About Oliver Hinds