An international exclusive distribution agreement turns on four points that are handled badly when they are discovered along the way: governing law and jurisdiction, the real scope of the exclusivity under competition law, what the distributor must give in return, and the exit. Without a clause, the agreement is governed by the law of the distributor’s country (Article 4(1)(f) of the Rome I Regulation). In other words, a French supplier that chooses nothing has already chosen, and it is rarely what it would have wanted.
A manufacturer of professional kitchen equipment based in the Sarthe, in western France, granted exclusivity for Belgium and Luxembourg to a Brussels distributor in 2019. A six-page contract, drafted from a template found online, with no governing law or jurisdiction clause. Sales stalled. In 2025, the manufacturer signed with another importer and sent the first one a termination letter giving three months’ notice. Six weeks later it was served with a writ before the Brussels enterprise court: compensation in lieu of reasonable notice calculated over several years, additional compensation for the goodwill brought in, and reimbursement of advertising investment. The manufacturer thought it had signed an ordinary commercial contract. Without knowing it, it had signed a contract governed by one of the most distributor-friendly laws in Europe.
1. What the Rome I Regulation decides for you
The distribution contract has its own connecting factor in Regulation (EC) No 593/2008, known as Rome I: absent a choice, it is governed by the law of the country where the distributor has its habitual residence. The rule makes sense, since that is where the distributor performs most of its obligations, but it surprises suppliers used to selling on French general terms and conditions. It should be added that the general terms of sale do not settle the question: they govern the successive sales, not the framework agreement that organises the exclusivity, and these are two separate contracts, whose governing laws may differ. The sales themselves are often subject to the Vienna Convention, which is better mastered than endured (applying and excluding the CISG).
The answer is a single clause: expressly choose French law, or another law you know, for the framework agreement (drafting the governing law and jurisdiction clause). Between businesses, this choice is free. It does have one limit, which is the subject of point 5.
2. The competent court: the Corman-Collins judgment
Within the EU, the Brussels I bis Regulation gives jurisdiction in contractual matters to the court of the place of performance. In 2013 the Court of Justice held that a distribution contract falls within the category of provision of services and that the relevant place is where the distributor provides its services, in other words its territory (CJEU, 19 December 2013, Corman-Collins, C-9/12). Without a jurisdiction clause, a Belgian distributor therefore sues in Brussels, and an Italian distributor in Milan. The Court also held that an action for abrupt termination of an established relationship can be contractual in nature where a tacit contractual relationship exists between the parties (CJEU, 14 July 2016, Granarolo, C-196/15), which closes a loophole often tried before French courts. That argument no longer works.
Outside the EU, the issue is settled by an arbitration clause or a jurisdiction clause that you have checked will be upheld in the distributor’s country. A French judgment against a distributor based in Brazil or India is only worth as much as the local enforcement procedure; an arbitral award, by contrast, circulates under the New York Convention. The forum is chosen country by country.
3. Exclusivity and competition law
Territorial exclusivity is lawful, but it must be drafted within a framework. In the EU, the block exemption Regulation (EU) 2022/720 of 10 May 2022 covers vertical agreements where each party’s market share does not exceed 30%, provided they contain no hardcore restriction. The supplier may prohibit the exclusive distributor from making active sales outside its territory, meaning targeted prospecting of customers in a territory reserved to someone else. It may not prohibit passive sales, those made in response to unsolicited requests, including online. Nor may it impose a resale price. A clause stating that “the distributor shall make no sales outside Benelux” must therefore be rewritten, failing which it exposes the whole agreement to nullity and to enforcement action.
Outside the EU, each country has its own competition law, but the logic is similar. The practical issue is often the reverse: it is the distributor’s non-compete obligation, which in principle may not exceed five years under the EU regime, that must be calibrated to survive scrutiny.
4. What the distributor gives in return: targets, information, trade mark
Exclusivity without anything in return is a gift. The agreement should set figures for sales or purchase targets, per year and if possible per product range, with graduated consequences for missing them: loss of exclusivity first, termination next. It organises reporting (stock, customers, complaints), the use of the trade mark, which remains the supplier’s property and should be registered by the supplier in the country, and what happens to stock and domain names when the agreement ends.
A French supplier recruiting a distributor in France must also consider the pre-contractual disclosure required by Article L. 330-3 of the French Commercial Code, which applies as soon as it makes a name or trade mark available while requiring exclusivity. For a foreign distributor, the question depends on the governing law and on any local franchise legislation.
5. The exit: notice, compensation and overriding mandatory rules
This is where disputes are fought. Choosing French law does not always rule out the protective rules of the distributor’s country where those rules qualify as overriding mandatory provisions (lois de police). Belgium is the most cited example: the Law of 27 July 1961, now incorporated into Book X of the Belgian Code of Economic Law, grants a terminated exclusive dealer reasonable notice or equivalent compensation, as well as additional compensation, and gives jurisdiction to the Belgian courts where the dealership has effects in Belgium. Other countries, notably in the Middle East and Latin America, have comparable regimes or require the contract to be registered. A choice of law is therefore not enough.
In France, the distributor can rely on abrupt termination of an established commercial relationship under Article L. 442-1, II of the French Commercial Code, with written notice reflecting the length of the relationship, and liability capped where eighteen months’ notice has been given. The right approach is to provide in the contract for notice graduated according to the length of the relationship, a fixed term with express renewals, and a formula for the buy-back of stock, because a badly drafted exit clause costs more than the rest of the contract put together, and it is always better negotiated while both parties still hope the relationship will last than once one of them has already found something better elsewhere and simply wants to leave at the lowest cost, which judges in every country read perfectly well in the correspondence exchanged, and it is also the only moment when the supplier can still get the distributor to accept, in return for the exclusivity it is being granted, a notice period fixed in advance and a stock buy-back formula rather than compensation left to the discretion of a foreign court.
The Sarthe manufacturer settled, for an amount close to two years of the distributor’s gross margin. The bill was heavy. With a French law clause, an arbitration clause and six months’ contractual notice, the dispute would probably have been settled around an extended notice period. That would not have made Belgian law disappear, but it would have moved the discussion onto familiar ground.
6. Distributor or agent: choosing the right contract
A distributor buys to resell, bears the stock risk and sets its own prices; a commercial agent negotiates on the supplier’s behalf, without buying, and in the EU is entitled to mandatory end-of-contract compensation under Directive 86/653. A contract headed “distribution” under which the distributor holds no stock and is paid by commission will be recharacterised. Courts look at the facts, not the title. Both regimes are covered in our article on international commercial agents and termination compensation.
Having your agreement reviewed or drafted
The firm drafts and renegotiates distribution and agency agreements for French and foreign suppliers, and acts for either side when the relationship ends. See our international contract lawyer page and, if your distributor has stopped paying, the article foreign distributor stops paying: where to sue. For an initial discussion, use our contact page.
Further reading: Export agents and intermediaries: managing bribery risk under Sapin II.
Frequently asked questions
Which law governs a distribution agreement with no choice-of-law clause?
Within the EU, the law of the country where the distributor has its habitual residence, under Article 4(1)(f) of the Rome I Regulation. The sales made under the agreement may, however, be governed by the Vienna Convention.
Where can a foreign distributor sue a French supplier?
Without a jurisdiction clause, before the courts of the territory where it distributes the products, following the Court of Justice’s Corman-Collins judgment (C-9/12). An arbitration or jurisdiction clause avoids this outcome, subject to protective national laws such as Belgian law.
Can an exclusive distributor be prohibited from selling outside its territory?
It can be prohibited from making active sales into a territory reserved to another distributor or to the supplier. Passive sales, in response to unsolicited requests, remain free under Regulation (EU) 2022/720.
Does choosing French law protect against Belgian law?
Not entirely. Belgian courts apply their dealer protection rules as overriding mandatory provisions where the dealership has effects in Belgium. An arbitration clause improves the supplier’s position, with no absolute guarantee.
How much notice should be given to end an exclusive distribution agreement?
Written notice, proportionate to the length of the relationship. Under French law, eighteen months’ notice shields the supplier from an abrupt termination claim. A contractual scale by length of relationship remains the best protection.
On the same subject: the governing law and jurisdiction clause in international contracts, exporting from France in 2026, the legal checklist before signing and force majeure and hardship clauses.