- Arbitral Award
- Centro de Arbitraje y Conciliación Mercantil de la Cámara de Comercio de Bogotá
LONG-TERMS CONTRACTS - COMMERCIAL AGENCY CONTRACT - BETWEEN TWO COLOMBIAN COMPANIES - REFERENCE TO UNIDROIT PRINCIPLES IN ORDER TO SUPPLEMENT APPLICABLE DOMESTIC LAW (COLOMBIAN LAW)
AGENCY CONTRACT - CONTRACT DRAFTED BY THE PRINCIPAL - POWER TO UNILATERALLY MODIFY THE AMOUNT OF COMMISSIONS - CONFERRED ON THE PRINCIPAL - MUST BE EXERCISED ACCORDING TO GOOD FAITH AND REASONABLENESS - REFERENCE TO ART. 5.1.7 UNIDROIT PRINCIPLES
Two Columbian companies concluded a commercial agency contract for the sale of mobile telephony services and other products of the principal’s company, which was terminated by the agent for just cause attributable to the principal. The agent commenced arbitral proceedings asking for the payment of the sums still owed by the principal in relation to the agency contract, in addition to compensation for damage. Among others, the agent complained that the principal had unilaterally modified the contract - in particular the economic conditions on the payment of commissions - and that it still had to pay the remaining commissions after the termination of the contract.
On the issue the Arbitral Tribunal decided in favour of the agent, affirming that the principal had unilaterally and unlawfully modified the original terms of the contract and consequently the agent had the right to terminate the contract for “just cause” attributable in part to the principal and to receive compensation in respect thereof. In the opinion of the Arbitral Tribunal, although in commercial agency contract it is feasible to attribute to one of the parties the power to unilaterally modify some commissions, it is also appropriate that said power is exercised under criteria of good faith and, ultimately, of reasonableness and free from abuse. In so doing, the Tribunal referred not only to the relevant provisions of the Colombian Civil Code and Commercial Code, but also to Art. 5.1.7(2) of the UNIDROIT Principles (2010 edition), according to which “where the price is to be determined by one party and that determination is manifestly unreasonable, a reasonable price shall be substituted notwithstanding any contract term to the contrary”.