Sudden termination of established commercial relations and compensation for the detrimental consequences arising from insufficient notice

Issue

A major French distributor of medical equipment for aesthetic practitioners, operating in the French and North African markets, saw its long-standing US supplier abruptly terminate their commercial partnership after nearly twenty years of business relations. This breakdown led to a legal dispute concerning the insufficient notice given and compensation for the resulting damages.

Challenges

The main stake was the role this supplier played in the distributor’s business: a relationship dating back nearly twenty years had come to an end without the notice period that such a long-standing relationship should have warranted. It was necessary to seek redress for the damaging consequences of this breakdown, whilst taking into account the nature of the dispute, which pitted two long-standing business partners against one another, where an amicable settlement might prove more appropriate than a legal battle pursued to its conclusion in the courts.

Solution

Rather than relying solely on litigation, Cahn Wilson employed a two-pronged approach: referral to the competent French consular court to immediately assert the abrupt nature of the termination and the inadequacy of the notice period given, and negotiations conducted within the confidential framework of an ad hoc mandate procedure, a mechanism provided for under the Commercial Code (Article L. 611-3) enabling the parties to seek an amicable settlement under the auspices of a third party appointed by the court. The firm thus secured negotiated compensation for the damages resulting from the termination, without allowing the dispute to drag on.