Defence to a Customer Compensation Claim

Critical points

- The case concerned a dispute between a well-known energy provider company operating in Greece (our assignor) and a company operating in the field of mediation for the completion of electricity sales applications (the opposing party). 

- We undertook this case at second instance, having to deal, firstly, with a decision of the first instance court which was not favourable to the interests of our client and, secondly, with the strategy already implemented at first instance.

Background

A well-known energy company active in the trading and supply of electricity and natural gas had entered into a fixed-term service contract with a company in Northern Greece for the provision by the latter of brokerage services for the completion of electricity supply applications. The cooperation was running smoothly until the principal company terminated the cooperation with the opposing company for great reason, in particular because of the latter's breach of its contractual obligations and of its duty of good faith and non-competition. In particular, the principal company learns that one of the three partners of the opposing party and the key person in the cooperation between them has left the opposing party and is setting up a new company, which is contracting with another competing energy supplier. Subsequently, the principal company received information that the second of the three partners of the opposing company was also informally cooperating with the newly established company, while the cooperation between the principal company and the opposing company was still in force (!). At the same time, the rate of loss of customers who had been introduced specifically by the opposing party company was increasing at a rate never seen before by the principal company. Thus, the client company's trust in its relationship with the opposing party was irreparably shaken, as the departure of the key partner and his creation of the new company was a ploy to circumvent the non-competition clause by the opposing party. The opposing party then filed a lawsuit against the principal company seeking payment of 1. customer compensation under the provisions of Decree-Law 219/91 "On Commercial Agents in compliance with Directive 83/653/EEC of the Council of the European Communities", 2. compensation for loss of profit for the early termination of a fixed-term partnership, 3. compensation for non-material damage under the provisions on unfair competition and 4. payment of an unpaid invoice. The Court of First Instance upheld the opposing party's claim in respect of all its claims and awarded it damages totalling almost half a million euros. This case was assigned to our office by the energy provider company after the issuance of the not at all favorable to it first instance judgment.  

Strategy

Key points for the successful outcome of the case were the following:

- Extensive research into the evidence provided by the opposing party and its beneficial use for our client. As soon as we took over this case, we studied in depth and critically all the evidence adduced at first instance, both by our client and - even more so - by the opposing party, and sought further evidence. In particular, we processed hundreds of emails exchanged throughout the contractual relationship to enable us to prove specific allegations. Long-term experience in the courtrooms has proven that through a thorough study of the opposing parties' evidence, one gains considerable knowledge, which can be properly exploited and arguments can be made. In this case, the appellate judgment was based to a very considerable extent on details which emerged from the evidence adduced by the opposing party and which were properly brought out by us.

- The invocation of successive legal bases, as they have been developed in Greek case law and in the Court of Justice of the European Union, namely the relevant legal framework on the legality of the termination of continuing contracts, the compensation of the commercial agent's clientele and the law on unfair competition.

 - The demonstration before the Court of Appeal of the unlawful and bad faith tactics used by the opposing party in order to achieve its objective, namely to win the the case. Also, through lawful and justified aggressive actions, such as for example, filing of interlocutory appeals and new applications for injunctions, we have managed to harm the credibility of the opposing party vis-à-vis the appellate court. 

- Proving before the judge that our client acted in good faith and lawfully. We believe that in every case before the court, in addition to serious legal reasoning, counsel must impress upon the judge the general reality of the case in order to draw conclusions and form an opinion as to the conduct of the parties.

- We realized that the strategy followed at first instance was not the appropriate and responsive strategy. We therefore did not hesitate to devise a new strategy for handling the case, based on conducting the trial in good faith and at the same time highlighting the bad faith of the opposing party.

Outcome

The appellate judgment was issued, which accepted our claims and arguments and dismissed the opposing party's lawsuit in respect of all its claims. The judgment held that the principal company had good cause to terminate the agency agreement, as the departure of a key partner and the establishment of a competing company by him constituted a great reason to terminate the agency agreement. In particular, it was held that: "However, this court finds that good cause and extraordinary circumstances are established for such termination. This is because it was proved with certainty that after the withdrawal of the above significant partner ... from the plaintiff and the already reduced performance of the latter in new connections ... reasonable suspicion was created about the possible cooperation of other partners of the plaintiff with the above competing company (as was the case, even after the termination) and certainly distrust about the plaintiff's ability to cooperate in the future with the first defendant". Finally, the Court of Appeal upheld the objection of vagueness raised by us in relation to the amount of the customer compensation, which we based on the relevant case-law of the Court of Justice of the European Union.  

Conclusion 

Very often decisions are issued by Courts of First Instance which seem prima facie impossible to overturn, as they do not suffer from obvious errors. Our experience in this case demonstrates once again that through a thorough investigation of the evidence adduced by our opponents, through the correct theoretical and jurisprudential substantiation of our claims and through the development of a sound and bona fide strategy, a case that was lost at first instance can be won.