Following termination of a commercial agency agreement, companies cannot blanketly retain what is referred to in Germany as the “Stornoreserve” (or simply “cancellation reserves”), i.e. the amount withheld in the insurance sector from the commercial agent in case the policy he or she concluded is cancelled. That was the verdict of the Oberlandesgericht (OLG) Karlsruhe, Karlsruhe’s Higher Regional Court, in a judgment from September 13, 2017 (Az.: 15 U 7/17).
The Stornoreserve is used to guarantee commission payments made in advance in case the agreements concluded by the commercial agent fall through. We at the commercial law firm GRP Rainer Rechtsanwälte can report that the position of commercial agents has been strengthened by a ruling from the Oberlandesgericht Karlsruhe from September 13, 2017. According to the OLG’s judgment, companies cannot blanketly retain accumulated cancellation reserves but must instead provide specific justifications.
In the instant case, the plaintiff had asserted claims for reimbursement of commission following termination of the commercial agency agreement. The respondent, in turn, demanded payment of the Stornoreserve.
Both parties had agreed in the commercial agency agreement that performance-based commission would not be paid in full. Only 90 per cent of the expected commission was credited to a so-called “Diskont-Konto”, a “discount account”, held by the commercial agent. The remaining ten per cent was deposited in a commission reimbursement account. Cancellations were to be initially offset against this account, with any remaining balance being charged to the commercial agent’s Diskont-Konto. After the commercial agency agreement was terminated, the company asserted claims for outstanding amounts.
The OLG Karlsruhe ruled in favour of the commercial agent, stating that if the company demands reimbursement of supposedly overpaid commission or advance payments then it bears the burden of proof. This means that it must be able to provide specific justifications and, where appropriate, supporting evidence for each and every claim for repayment. Accordingly, in the event that agreements are cancelled, the company must be able to cite the reasons for why the agreement was terminated, the time and nature of the notice as well as the commercial agent’s briefing regarding the risk of cancellation, and calculate the amount of commission paid in advance to be reimbursed. The Court went on to say that the company’s burden of proof also entails that enough revisionary work have been carried out, albeit unsuccessfully, or that this have exceptionally been unnecessary. The OLG concluded that this had not been the case here.
It is not uncommon for disputes to arise after commercial agency agreements are terminated, e.g. because of claims brought by the commercial agent for compensation or, as in this case, reimbursement of commission. Lawyers who are experienced in the field of commercial law can offer advice.
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