Important ruling of the Supreme Court in case regarding the protection of Commercial Agents

Famanet Holdings Limited v. Refinitiv US LLC and Others

Supreme Court of Cyprus – Appellate Jurisdiction Civil Appeal No. 87/2015 – Judgment dated 29 April 2025 (G.N. Yiasemis, E. Efraim, A. David, JJ. – unanimous judgment)

Summary

The Supreme Court, by unanimous judgment, allowed the appeal of the Cypriot company Famanet Holdings Limited and ordered the reinstatement and retrial of Action No. 475/2006 of the District Court of Nicosia, by which the appellant claims damages of €58,992,609 (alternatively €15,326,157) from companies of the Reuters group (now Refinitiv), in connection with the termination of a Distribution Agreement covering Greece, Cyprus, Spain and Portugal.

The first-instance judgment, which had dismissed the action without examining its merits, on the basis of a foreign jurisdiction clause in favour of the Supreme Court of the State of New York and the principle of res judicata, was held to be erroneous. The appellant was represented by our firm.

Background

The appellant and respondent 1 entered into a written Distribution Agreement on 07/03/2002, for a term of three years, under which the appellant acted as distributor of financial information products, establishing and maintaining at its own expense a network of subscribers. The agreement was extended twice, and the parties' cooperation continued even after the expiry of the last extension. When negotiations for the acquisition of the appellant did not bear fruit, respondent 1 terminated the agreement, discontinuing the provision of its services as of 09/01/2006.

The respondents, by way of preliminary defences, contended that (a) under clause 15.11 of the agreement, exclusive jurisdiction lay with the Supreme Court of the State of New York, and (b) the dismissal of a counterclaim which the appellant had filed in proceedings before that court created a res judicata binding upon the Cypriot court. The trial court accepted these submissions and dismissed the action, relying principally on the doctrine of res judicata (Maxana Oil Limited v. Poltava Petroleum Company (2002) 1 C.L.R. 834).

The decisive interim ruling of 08/11/2006

Decisive for the outcome of the appeal was the interim ruling of the District Court of Nicosia, dated 08/11/2006, delivered by a different composition of the court, on the defendants' application to set aside service and to stay or dismiss the action on the basis of the foreign jurisdiction clause and forum non conveniens.

The Court then found that:

1. The defendants had submitted to the jurisdiction of the Cypriot courts. Although the filing of the application without prior leave was permissible under O.16 r.9 of the Civil Procedure Rules then in force, the memorandum of conditional appearance (appearance under protest) ought to have been filed simultaneously with the application. Its filing four days later had the consequence, in application of Magdon G.J. Ltd v. A.L. Metal Trading Ltd (2001) 1 C.L.R. 2064, that the defendants submitted to the jurisdiction of the Court and forfeited their right to pursue the application.
2. Even irrespective of such submission, sufficient reasons existed for the non-application of the clause. The Court, while acknowledging the binding nature of foreign jurisdiction clauses and the burden borne by the party seeking to be released from them (The Eleftheria [1969] 2 All E.R. 641; Phassouri Plantations v. Adriadica di Navigazioni (1983) 1 C.L.R. 949; Amathus Navigation Co Ltd v. Concord Express Liners (1993) 1 C.L.R. 1030), held that the plaintiffs had discharged that burden and that the continuation of the proceedings in Cyprus was justified.
3. Directive 86/653/EEC on commercial agents. The Court took into account the plaintiff's position that Directive 86/653/EEC applied, as transposed into the Cypriot legal order by the Regulation of the Relations between Commercial Agent and Principal Law of 1992 (Law 51(I)/1992), with reference to the case law of the CJEU (Bellone C-215/97; in particular Ingmar G.B. Ltd v. Eaton Leonard Technologies Inc., C-381/98), according to which the protection afforded to a commercial agent operating within the European Union cannot be circumvented by means of a clause in favour of the law or the courts of a third country. The substantive question of whether the plaintiff had the status of a commercial agent was referred to the trial on the merits.

The defendants' appeal against that interim ruling (Civil Appeal 351/2006 — Reuters Telerate L.L.C. v. Famanet Holdings Limited (2009) 1 C.L.R. 1316) was dismissed as non-appealable under the case law in force at the time.

The Supreme Court's ruling

The Supreme Court held that the trial court, in its final judgment dated 30/01/2015, erred in considering that the interim ruling had not conclusively determined the question of jurisdiction. On the contrary, the referral of the issues concerning the Directive to the trial on the merits confirmed precisely that, in light also of the above CJEU case law, jurisdiction to try the action lay with the District Court of Nicosia, notwithstanding the existence of the foreign jurisdiction clause in the agreement.

A procedural element also proved decisive: the respondents, following the dismissal of their appeal against the interim ruling as non-appealable, could, and ought to, have challenged it together with the final judgment on the action. They failed, however, to take that procedural step at the appropriate time. Consequently, the interim ruling that the Cypriot courts had jurisdiction and that the foreign jurisdiction clause should not be applied remained intact and binding.

The appeal was allowed, the reinstatement and retrial of the action was ordered, with appropriate case management so that the action is concluded as soon as possible, and costs of €7,000 plus VAT were awarded in favour of the appellant.

Key legal points

1. Submission to jurisdiction through procedural conduct: The failure to file a memorandum of conditional appearance simultaneously with an application contesting jurisdiction constitutes submission by the litigant to the jurisdiction of the Cypriot courts, resulting in the forfeiture of the right to contest it.
2. Foreign jurisdiction clauses: Such clauses are in principle binding; however, their application is subject to the discretion of the Court. The party seeking release from such a clause bears the burden of establishing strong cause, a burden which in the present case was discharged.
3. Protection of commercial agents (Directive 86/653/EEC – Law 51(I)/1992): Under the Ingmar jurisprudence of the CJEU, the mandatory protection afforded to a commercial agent operating within the EU constitutes a material factor in favour of the dispute being tried by a court of a Member State, as against a clause in favour of the courts of a third country.
4. Binding effect of an unchallenged interim ruling: An interim ruling on jurisdiction which was not challenged on appeal together with the final judgment, when it became possible to do so, remains intact and binding; it is not permissible to reopen the issue so determined at the stage of the final judgment.
5. Limits of the doctrine of res judicata: The dismissal of an action on the basis of a res judicata arising from foreign proceedings cannot stand where the question of the jurisdiction of the Cypriot courts has already been conclusively determined within the same proceedings.

This text is intended for general information purposes only and does not constitute legal advice. For any information regarding the judgment or for tailored guidance, please contact our firm.