For many years the claimant (“Nagel”) acted as a broker for the defendant and appellant (“Pluczenik”) in negotiating the purchase of rough diamonds from De Beers. In 2013 Pluczenik terminated this relationship. In this action Nagel has claimed compensation for the termination of its agency on two legal bases: (1) under the Commercial Agents (Council Directive) Regulations 1993 (“the Regulations”) and (2) at common law for breach of contract. The trial judge, Popplewell J, rejected the claim under the Regulations but upheld the claim for breach of contract, for which he awarded damages of US$3,326,555 (as well as certain outstanding commissions and sums owed pursuant to a loan account). On this appeal Pluczenik challenges the decision that it is liable to pay damages for breach of contract and in the alternative argues that only nominal damages should have been awarded, as Nagel failed to prove loss. Nagel has cross-appealed, contending that the judge was wrong to hold that the Regulations do not apply to its agency and that the Regulations provide an alternative legal justification for the award of compensation which the judge made.

The following summary of the background facts is abbreviated from the findings made at paras 1 to 27 of the judgment of Popplewell J: [2017] EWHC 1750 (Comm).

The claimant is a partnership formed in 1991 between Mr William Nagel and his family company, W Nagel Ltd, to carry on a business previously conducted by Mr Nagel personally as a broker in the diamond industry, assisting clients with the purchase of rough diamonds from De Beers. One such client for whom Mr Nagel, and subsequently the claimant firm, acted for nearly 50 years was Pluczenik. Pluczenik is a Belgian company founded in 1963 by Mr Isaac Pluczenik. It is one of the world’s leading diamantaires, purchasing rough diamonds and processing them into polished diamonds and jewellery for retail sales. It also resells rough diamonds as a smaller part of its business. Mr Isaac Pluczenik died in 1997 and the business is now run by his son, Mr Chaim Pluczenik.

For much of the twentieth century the global market in rough diamonds was dominated by De Beers. It was not until the 1990s that other major producers started selling rough diamonds independently of De Beers, who still controlled over 80% of global production at the start of that decade. By 2010 De Beers’ market share had fallen significantly to approximately 35% of the market by value. De Beers nevertheless remains the world’s largest diamond producer by value and continues to mine, sort and market a significant proportion of the world’s rough diamonds.

For many years one of the methods by which De Beers exercised control over the supply of rough diamonds was by selling to wholesalers at “sights” held ten times a year in London. The sights were organised and sales made by De Beers’ Central Selling Organisation which was later known as the Diamond Trading Company (“the DTC”) – both trading names of De Beers UK Ltd. No one could purchase diamonds at the sights unless they were accredited by De Beers as a “sightholder”. Until 2003, each sightholder was required by De Beers to have an accredited broker, referred to as a “DTC broker”.

The rough diamonds sold at the sights were sorted by De Beers into defined categories by colour, crystal shape, size and quality, and were for the most part sold in boxes of stones by category. In addition, there were “special” stones of a larger weight, and “exceptionals” which were very high value stones sold individually.

Before 2003, the system was that the DTC broker would apply about a month before each sight for the allocation of diamonds which its client sought. Shortly before the sight, De Beers would notify the allocation to each sightholder through its broker. The basis of allocation was entirely discretionary and opaque. At the sight, the sightholders could inspect the allocated boxes or specials and were not obliged to accept the diamonds at the price offered by De Beers or at all. There might sometimes be negotiation over the price. Sometimes additional stones over and above the allocation might be made available at the sight. The sightholder might complain that the sorting had gone awry and that the box contained non-conforming stones. There also in later years grew up a practice of permitting a sightholder to reject up to 10% or 15% of the stones in a box but this did not happen very often. Although there was no obligation on the sightholder to buy, there was an incentive to take up the full allocation, not only because of the shortage of supply but also to achieve goodwill for future allocations.

In 2003 the sightholder system underwent a change. The system of accreditation was replaced by a policy known as Supplier of Choice under which De Beers entered into fixed term contracts with sightholders who satisfied objective selection criteria. The number of sightholders was substantially reduced (from about 350 to something of the order of 80 to 100). Under the new system the process of allocation of rough diamonds at sights was also made more formal and transparent. De Beers ceased to insist that sightholders had an accredited broker, although it encouraged them to do so. The majority retained a DTC broker, although a significant minority ceased to use one. As one of the smaller brokers, Nagel had nine sightholder clients when the Supplier of Choice system was introduced, of whom only four still retained their sight when its broking relationship with Pluczenik was terminated.

With effect from November 2013, the international sights were moved from London to Gaborone in Botswana. On 7 July 2013 Pluczenik wrote to Nagel saying that, in the light of this prospective move, it had decided to enter into a direct relationship with the DTC without the intervention of a broker and to terminate its relationship with Nagel. The relationship was terminated on 27 August 2013.

The primary claim made by Nagel in these proceedings, and the main focus of the trial, was its claim for compensation under the Regulations. The Regulations give a commercial agent to whom they apply a statutory right to receive compensation on the termination of the agency contract. There were issues at the trial as to: (1) whether Nagel came within the definition of a “commercial agent” in Regulation 2(1) as “a self-employed intermediary who has continuing authority to negotiate the sale or purchase of goods on behalf of another person”; and (2) whether, if so, Nagel’s claim was nevertheless excluded by Regulation 2(2)(b), which provides that the Regulations do not apply to “commercial agents when they operate on commodity exchanges or in the commodity market.” The judge found that the claimant was a “commercial agent” as defined, rejecting an argument that it did not have continuing authority to negotiate purchases on behalf of Pluczenik. However, the judge also held that the sales made at sights were made “on commodity exchanges or in the commodity market” within the meaning of Regulation 2(2)(b), with the result that the Regulations do not apply. Accordingly, the claim under the Regulations failed.

In the alternative and very much as a secondary claim, Nagel claimed damages at common law for breach of an oral contract made in about 1994 whereby Nagel had agreed to reduce its rate of commission on purchases made by Pluczenik from De Beers from 1% to 0.5%, allegedly in return for a promise by Pluczenik to retain Nagel as its broker for as long as Pluczenik held a sight with De Beers. Nagel’s case was that this agreement was reached between Mr William Nagel and Mr Isaac Pluczenik at the Intercontinental Hotel in London. Pluczenik denied that any agreement was made to retain Nagel as its broker. Its case was that the reduction in commission was negotiated by Mr Chaim Pluczenik with Mr Nagel without Pluczenik making any commitment in return, in circumstances where other brokers were offering their services to Pluczenik at the lower rate of 0.5%.

The judge rejected the evidence of Mr Chaim Pluczenik which, on this issue as more generally, he found unreliable, and accepted the evidence of Mr Nagel that a commitment was given by Pluczenik in return for the reduction in the commission rate. The judge went on to consider of his own accord whether the commitment given was, as Nagel maintained, a promise to retain Nagel as its broker for so long as Pluczenik had a sight or whether it was only that Pluczenik would not appoint another broker for as long as it had a sight. The latter possibility was not one which Pluczenik had suggested either in its defence or in its evidence at the trial. However, a witness called Mr Marcus Schwalb who worked for Nagel gave evidence that he recalled a conversation with Mr Chaim Pluczenik in 2013, shortly after Pluczenik announced its intention to terminate the agency, in which Mr Chaim Pluczenik had said that he had done nothing wrong because Pluczenik would no longer be using a broker. Mr Schwalb’s evidence was that, although in this conversation he had himself referred to not appointing another broker, he had always understood the agreement, since he was told about it shortly after it was made, to be that Pluczenik would retain Nagel as its broker for so long as it had a sight.

The judge observed that the distinction between retaining Nagel as a broker and not appointing another broker would not have been one which occurred to anyone when the agreement was reached in 1994, because at that time it was compulsory to have a broker. He nevertheless regarded the distinction as critical to the issue he had to decide as, if all that was agreed was that Pluczenik would not appoint another broker, Pluczenik was not in breach of the agreement when it terminated its relationship with Nagel. The judge concluded that on the balance of probabilities the agreement was, as Nagel contended, an agreement to retain Nagel as broker, not merely an agreement not to appoint a different broker. He accordingly held that the termination of the agency in August 2013 was a breach of the terms of the agreement.

Nagel’s case on damages was that (subject to one point about taxation) the damages for breach of contract should be quantified in the same way as its claim for compensation under the Regulations. No separate calculation was provided and the same factual and expert evidence was relied on for both claims. The position of Pluczenik was that no damages for breach of contract should be awarded as Nagel had not particularised or proved any loss. The judge accepted that there were material differences between the assessment of compensation under the Regulations and at common law. But he considered that there was sufficient evidence to enable him to assess damages at common law for breach of contract, making adjustments where necessary to the quantification of the claim under the Regulations to take account of the differences between the two measures. As mentioned earlier, the damages were assessed in the sum of US$3,326,551.

The grounds of appeal which Pluczenik has been given permission to pursue raise two main issues. First, Pluczenik argues that the judge was wrong to conclude that the oral agreement to vary the rate of commission payable to Nagel required Pluczenik to retain Nagel as its broker when Pluczenik was no longer required by De Beers to retain a broker and chose not to use one: the judge should have held that Pluczenik was free to terminate its agency contract with Nagel in these circumstances. Secondly, Pluczenik argues that, even if its termination of the agency contract was unlawful, the judge should have held that Nagel had failed to make good its claim for damages for breach of contract and should have awarded no more than nominal damages.

By its cross-appeal, Nagel contends that the judgment in its favour should be upheld in any event because Nagel was entitled to compensation under the Regulations in at least the amount that was awarded as damages for breach of contract. It is common ground that this would follow if, as Nagel argues, the judge was wrong to hold that Nagel was operating on a “commodity exchange” or in the “commodity market” for the purposes of the Regulations and on that basis to conclude that the Regulations do not apply.

I will consider each of these three issues in turn.

The effect of the oral agreement

The first issue is whether the judge was entitled to find that the oral agreement made in or about 1994 to vary the rate of commission required Pluczenik to retain Nagel as its broker for as long as Pluczenik had a sight with De Beers, even if Pluczenik was no longer required by De Beers to retain a broker.

On behalf of Pluczenik, Mr Clive Freedman QC (who did not appear below) advanced two arguments. First, he submitted that the judge was wrong to find that the sense or thrust of the oral agreement was that Pluczenik would retain Nagel as its broker – rather than merely that Pluczenik would not appoint another broker – for so long as Pluczenik held a sight. Secondly, Mr Freedman submitted that, even if the gist of what was agreed was as the judge found, the judge should have concluded that, as a matter of interpretation, the agreement that Pluczenik would retain Nagel as its broker no longer applied in the changed and unforeseen circumstances that obtained in 2013 when using a DTC broker was no longer compulsory.

The first submission would be a difficult argument to make at the best of times, involving as it does an attempt to persuade an appeal court to interfere with a finding of fact about what was orally agreed made by the judge who heard the evidence and whose role it was to find the relevant facts. But in the circumstances of this case I do not consider that this argument is even open to Pluczenik. The case which Pluczenik has sought to advance on this appeal about the thrust of what was agreed is not a case which it pleaded or put forward at the trial. Nor was this case put to Mr Nagel, who negotiated the oral agreement on behalf of Nagel, when he was cross-examined. As the judge observed (at para 80 of the judgment):

The obligation on a party to put its case in cross-examination to a witness called by an opposing party is not to be taken too far. It is not and has never been the law that every fact asserted in evidence by a witness is deemed to be admitted unless it is challenged in cross-examination. But if on an important disputed factual issue in the proceedings a witness called by one party gives first hand evidence which contradicts a case which the opposing party wishes to invite the judge to accept, procedural fairness requires that this case should be put in cross-examination to the witness so that he has an opportunity to answer it.

Mr Nagel’s evidence about the terms of the oral agreement was challenged in cross-examination by counsel for Pluczenik. But it was challenged solely on the basis that, so it was suggested, no commitment at all was given by Pluczenik to retain Nagel as its broker. It was not suggested to Mr Nagel that, if any commitment was given, it was or might have been limited to a commitment not to appoint another broker. It would have been perfectly possible for Pluczenik to advance at the trial and put to Mr Nagel such an alternative case. It may be that a decision was taken for tactical reasons not to do so out of concern that it might undermine Mr Chaim Pluczenik’s evidence. But the fact that a decision is made for what may be good tactical reasons not to advance a case at trial does not relieve a party from the consequences of failure to advance that case. In my opinion, it is not permissible for Pluczenik to seek to put forward for the first time on appeal a new factual case, not made or put in cross-examination below, about what was orally agreed between the parties.

A second reason why it is not open to Pluczenik to advance such a case is that permission to do so was refused by Asplin LJ when she dealt with Pluczenik’s application for permission to appeal to this court and granted it only in part.

The reason why Pluczenik was refused permission to challenge the judge’s findings of fact about what was orally agreed was, as Asplin LJ ruled, that such an appeal had no prospect of success. That ruling, with respect, is unimpeachable. The judge’s conclusion about the probable nature of the agreement falls squarely within the province of the court whose responsibility it is to ascertain the relevant facts. As such it is a conclusion with which an appellate court ought not interfere unless satisfied that it is plainly wrong or is one that no reasonable judge could have reached: see e.g. McGraddie v McGraddie[2013] UKSC 58; [2013] 1 WLR 2477 and Henderson v Foxworth Investments Ltd[2014] UKSC 41; [2014] 1 WLR 2600.

Not only was the judge’s finding as to the gist of what was orally agreed founded on evidence given by Mr Nagel and by Mr Marcus Schwalb, which the judge was entitled to accept, but no one gave evidence which supported the case that Pluczenik is now seeking to advance – that the gist of the agreement was a commitment not to appoint another broker.

Mr Freedman sought to justify asking this court to overturn the judge’s finding on the footing that the judge had regard to which form of agreement was “inherently more likely”, recognising that Mr Nagel did not purport to recall the particular language used. The judge thought it inherently more likely that the agreement was one to retain Nagel as the broker, rather than merely an agreement not to appoint another broker. He gave as a reason for this opinion the fact that the agreement was the quid pro quo for Nagel reducing its commission, such that the emphasis would have been on what Nagel would continue to receive, which depended on it remaining the broker. Mr Freedman submitted that the judge made an error in failing to recognise that an agreement to retain Nagel for so long as Pluczenik required a broker provided a very real quid pro quo for the reduction in commission. Mr Freedman further submitted that it would make no commercial sense for a party in Pluczenik’s position to commit itself to retaining a broker even if it no longer needed one. Accordingly, the view taken by the judge about what is inherently more likely to have been agreed is plainly wrong and is a matter on which the Court of Appeal is entitled to, and should, reach a different conclusion.

I would accept that an agreement to retain Nagel as its broker for so long as Pluczenik required a broker would have provided a quid pro quo for Nagel reducing its commission. So too of course would an agreement to retain Nagel as its broker for so long as Pluczenik had a sight with De Beers. Had the parties focused on the distinction between these different forms of agreement, I see no a priori reason to assume that they would have been more likely to have entered into one rather than the other. It would have been a matter for negotiation. What Pluczenik would have been prepared to agree in such a negotiation would have depended on the value that it attached to Nagel’s services and what future possibilities it was prepared to foreclose in order to secure the benefit of those services at half the price previously paid. From Nagel’s point of view, what level of commitment it would have been willing to accept in return for a 50% reduction in its commission rate would have depended on the value that it attached to the Pluczenik business, its perception of the likelihood that it would lose that business if it did not agree to reduce the commission rate and its perception of the risk that retaining a DTC broker might become optional. I think it imponderable what the outcome of such a negotiation would have been and impossible to characterise either possible form of agreement as inherently improbable or lacking in commercial sense.

This assumes, however, that when they entered into the agreement the parties were contemplating the possibility that Pluczenik might at some time in the future retain a sight with De Beers but cease to require a broker. On the facts it is clear that they were not. The judge found that this possibility would not have been one which occurred to anyone when the agreement to vary the commission rate was reached in 1994. Pluczenik has not sought to challenge that finding. In these circumstances the judge’s conclusion as to the inherent probability of what was agreed seems to me unassailable. The very fact that no one would have had in mind the possibility that Pluczenik would cease to require a broker makes it inherently improbable that the agreement was to retain Nagel for so long as Pluczenik required a broker and much more likely that it was to retain Nagel for so long as Pluczenik had a sight.

I therefore see no reasonable basis for the attempted challenge to the judge’s finding that the thrust of the oral agreement reached was that Pluczenik would retain Nagel as its broker for as long as Pluczenik had a sight with De Beers.

The second argument made on behalf of Pluczenik is that, on the judge’s finding as to the gist of what was agreed, the agreement should nevertheless be interpreted as no longer requiring Pluczenik to retain Nagel as its broker in circumstances where it was no longer compulsory for sightholders to have a broker.

As already indicated, it is clear from the facts found by the judge that a regime in which sightholders were not required by De Beers to have a DTC broker was not foreseen when the parties made the agreement to vary the commission rate in 1994. It is, however, commonplace for circumstances to arise which the parties to a contract did not foresee when the contract was made. When this happens, it does not follow that the contract ceases to be binding or ceases to apply. On the contrary, unless the change of circumstances is so radical or fundamental as to frustrate the contract by making it impossible to perform, the parties are held to their bargain. What the contract requires in the changed circumstances depends on its proper construction. As Chadwick LJ explained in Bromarin AB v IMD Investments Ltd [1999] STC 301, 310:

A recent example of a case where the context in which a contract came to be applied was “unthinkable” when the contract was entered into is Lloyds TSB Foundation for Scotland v Lloyds Banking Group plc[2013] UKSC 3; [2013] 1 WLR 366. In that case sums payable under a deed were to be calculated as a percentage of the “group profit [and loss] before taxation … shown in the audited accounts”. Before the relevant payment became due, a change occurred in accounting practice which henceforth required an unrealised “gain on acquisition” to be included in a company’s accounts. Lord Mance said (at para 23):

The question which has to be considered in the present case is therefore what should reasonable parties who agreed that Pluczenik would retain Nagel as its broker for as long as it had a sight with De Beers be taken to have intended those words (or words to similar effect) to mean in the changed and unforeseen circumstance that it was no longer compulsory for a sightholder to have a broker.

There is nothing in the terms expressly agreed which would allow Pluczenik to terminate its broking contract with Nagel in this circumstance. To interpret the agreement as permitting Pluczenik to do so, it is necessary to read into the agreement an implied qualification or exception that the commitment to retain Nagel as broker would cease to apply in the event that Pluczenik was no longer required by De Beers to have a broker and chose not to retain one. Whether the question is characterised as one of interpretation or of implication of a term, the test to be applied is effectively the same: it is only legitimate to construe the agreement as ceasing to apply in such a situation if it is clear that this is what reasonable parties would have intended: see Lord Neuberger’s sixth principle in Arnold v Britton[2015] UKSC 36; [2015] AC 1619, para 22; and Astor Management v Atalaya Mining Plc[2018] EWCA Civ 2407, para 40. The underlying policy is that the role of the court is limited to identifying and interpreting what the parties have expressly or impliedly agreed and does not extend to re-formulating or altering the parties’ bargain.

On the facts found by the judge, I think it far from clear that reasonable parties who had contemplated the possibility that the use of a broker would cease to be compulsory would have intended the obligation to retain Nagel as broker not to apply in this situation. That might well be a proper inference to draw if the landscape were to change to the extent that brokers became entirely redundant. But on the judge’s findings the situation in 2013 was that sightholders were still encouraged by De Beers to have a broker and a significant number did so. I have already expressed my opinion that an agreement which required Pluczenik, as part of the consideration for a 50% reduction in the rate of commission charged by Nagel, to continue to retain Nagel as its broker in this situation could not be characterised as commercially improbable or lacking in commercial sense. There is accordingly no justification for reading into the agreement a term which permitted Pluczenik to terminate Nagel’s agency if such a change of circumstances occurred.

The judge noted (at para 81 of the judgment) that he did not need to consider whether there were circumstances which might have arisen whilst Pluczenik still held a sight which the parties would implicitly have agreed would allow termination of the agency, as counsel for Pluczenik had not argued for any such implied terms. On this appeal it has been necessary to consider the question, as such an argument has now been raised. For the reasons given, I would reject it.

A further argument raised in Pluczenik’s grounds of appeal and skeleton argument, though wisely not developed by Mr Freedman in his oral submissions, is that the agreement to retain Nagel as broker was too uncertain to have contractual effect. This is an untenable suggestion. There is nothing at all uncertain – let alone so vague and uncertain that it cannot be given any practical or legal meaning – in an obligation to retain Nagel as broker which was agreed to last for as long as Pluczenik remained a sightholder with De Beers. Nor is there any difficulty in concluding that Pluczenik was in breach of the obligation when it terminated its agency contract with Nagel while still retaining a sight.

I would accordingly reject the challenge to the judge’s decision on liability.

The assessment of damages

Pluczenik’s second and alternative challenge is to the award of damages. Mr Freedman emphasised that Nagel never pleaded particulars of the loss that it claimed to have suffered as a result of the termination of its agency contract and only adduced evidence (which included expert accounting evidence) directed to its claim under the Regulations. At the trial Nagel took the position that there was a substantial degree of overlap between the compensation claimed under the Regulations and the damages claimed at common law such that the same evidence could be relied on for both purposes. On this appeal Pluczenik has argued that this approach was based on a false premise and that there are fundamental differences between the way in which compensation is calculated for the purposes of the Regulations and the principles which govern the calculation of damages for breach of contract. Pluczenik contends that, as a result of these differences, the evidence adduced at the trial was not capable of proving loss or supporting an award of substantial damages.

Under regulation 17 of the Regulations a commercial agent, after the termination of the agency contract, is entitled to an indemnity if the contract so provides or otherwise to compensation “for the damage he suffers as a result of the termination of his relations with his principal”: see regulation 17(6). The way in which such compensation is to be calculated was considered by the House of Lords in Lonsdale v Howard & Hallam Ltd[2007] UKHL 32; [2007] 1 WLR 2055, paras 10-14. As explained by Lord Hoffmann (with whose opinion the other law lords agreed), the agent’s entitlement is to be compensated for being deprived of the benefit of the agency relationship, consisting in the prospect of earning commission. What therefore has to be valued is the income stream which the agency would have generated. This can be valued by estimating what a hypothetical purchaser would have been willing to pay for the right to take over the agency (assuming for this purpose that the agency could have been transferred and would have continued).

By contrast, the object of an award of damages for breach of contract is to place the claimant in an equivalent position financially to the position that it would have been in if the contract had not been breached. This is not an exercise in valuing the contract considered as an asset but an inquiry into the loss actually sustained by the claimant as a result of non-performance. To estimate this loss, it is necessary to compare the income that would have been earned and the costs that would have been incurred by the claimant if the contract had been performed with the income and costs which the claimant has in fact earned and incurred (or would if acting reasonably have earned and incurred) following the breach. Although it has often been said that damages should be assessed “as at” the date of breach, following the decisions of House of Lords in Golden Strait Corp v Nippon Yusen Kubishika Kaisha (The “Golden Victory”)[2007] 2 AC 353 and the Supreme Court in Bunge SA v Nidera NV[2015] UKSC 43, [2015] Bus LR 987, it is now clear that this is not a rule of law but merely a rule of thumb which reflects the usual result in practice of applying the mitigation principle where there is an available market. Where there is an available market, it is presumed that the claimant acting reasonably will enter the market at once and obtain a replacement performance. Hence applying the mitigation principle has the result of crystallising the claimant’s loss at or at least shortly after the time of breach. But where the mitigation principle does not yield this result – for example because there is no readily available market – subsequent losses (and gains) have to be brought into the calculation.

Despite these differences, there is potentially a considerable overlap in the evidence relevant in quantifying a claim under regulation 17 and a claim for damages for breach of contract. A common method of valuing a business – which both experts used in the present case – is the capitalised earning approach. This involves identifying the maintainable profits of the business and multiplying them by a factor which is intended to reflect the present value of future profits. For that purpose, as for the purpose of a claim for damages for breach of contract at common law, it is necessary to consider what the profits of the business would have been if the agency contract had not been terminated.

Although it is clear from the judgment (at para 83) that he had little help from counsel on this point, the judge was fully alive to the fact that the quantification exercise for a regulation 17 claim is not the same as for a common law claim. He described the differences at paras 84-87 of the judgment. In particular, the judge noted that compensation awarded under regulation 17 is calculated by reference to a notional sale of the agency at the date of termination, whereas damages for breach of contract are intended to put the innocent party in the same financial position as if the contract had been performed. In relation to the date of assessment, the judge referred to The Golden Victory (although this authority had not been drawn to his attention by counsel). However, he observed that neither side had contended for any date of assessment later than the date of breach and said that he could therefore take the date of breach as the relevant date.

The judge then proceeded (at paras 101-114 of the judgment) to specify how compensation should be calculated (a) for the purpose of the regulation 17 claim and (b) for the purpose of the common law damages claim, identifying where and how the calculation should be performed differently for each claim.

The starting point taken for each calculation was the level of maintainable future commission that Nagel could be expected to earn on purchases of rough diamonds made by Pluczenik from De Beers at international sights. The judge held that this should be based on the average commission from sights over a three year period prior to termination. Based on accounting information for the same period, he then identified infrastructure and staff costs attributable to the Pluczenik agency which should be deducted in order to calculate, respectively, net maintainable earnings and lost profits.

In selecting an appropriate multiplier to apply in valuing the agency for the purposes of the regulation 17 claim, both accounting experts had looked for published information about the market value of comparable businesses. As recorded at para 110 of the judgment, neither had found any material on remotely comparable agencies and each took as a starting point a simple average of the four figures for the mean and median price/earnings valuations of small companies for November 2012 and November 2014 according to the UK 200 Group in its Small and Median Enterprises Valuation Index. This produced a multiplier of 6.6 for net earnings after tax. Nagel’s expert did not consider that this figure required upward or downward adjustment for the particular features of the Pluczenik agency. Pluczenik’s expert considered that such features justified a very considerable reduction.

While rejecting various adjustments proposed by Pluczenik’s expert, the judge thought the figure of 6.6 too high because it failed to apply any sufficient discount for the following risks, viewed at the date of termination: (1) the risk that Pluczenik would lose its sight with De Beers; and (2) the risk of Pluczenik sourcing diamonds from elsewhere in the light of its obligation to pay commission to Nagel in respect of continued purchases from De Beers. Allowing for these risks, the judge decided that the appropriate multiplier to be applied to the net annual earnings after tax was 5, for the purposes of both the regulation 17 claim and the common law claim.

At a subsequent hearing, the judge held that the multiplier should be based on pre-tax profits and that in these circumstances the appropriate multiplier to apply (equivalent to a post-tax multiplier of 5) was 3.95. By applying this multiplier to the pre-tax annual profits figure of US$842,165, the damages were quantified in the sum of US$3,326,551. Interest was awarded on this sum from the date of termination of the agency.

I have mentioned that the judge received little assistance on the approach which should be adopted in quantifying the damages for breach of contract. At the trial counsel for Nagel argued, wrongly, that the damages should be calculated in the same way as compensation awarded under the Regulations, while counsel for Pluczenik hardly addressed the question at all. The case made in closing submissions for Pluczenik was confined to a submission that Nagel had failed to particularise or prove its loss, and in particular had adduced no evidence of the likely period for which Pluczenik would have a sight with De Beers. A similar submission has been made on this appeal.

I have no doubt that the judge was right to reject that submission. Certainly, it was unsatisfactory that Nagel did not properly plead and give particulars of its claim for damages for breach of contract. But the remedy for that omission, if Pluczenik considered that it was prejudiced by the lack of particulars in preparing its case, was to seek an order requiring such particulars to be provided. No such order was sought. When the subject was raised in oral opening submissions, counsel for Pluczenik accepted, rightly, that if the claim under the Regulations failed and Nagel’s case as to the terms of the commission rate variation agreement was accepted, there could be a substantial claim for damages for breach of contract.

In terms of evidence, the fact that the expert evidence was directed solely at the regulation 17 claim meant that the court had less assistance in assessing damages for breach of contract. But the fact that further or better evidence could have been obtained does not relieve a defendant of the obligation to pay damages, provided that there is a rational basis on which to estimate the claimant’s loss. It is a well established principle that, where it is clear that the claimant has suffered a substantial loss, but the evidence does not enable it to be precisely quantified, the court will assess damages as best it can on the available evidence: see Chitty on Contracts (32^nd Ed, 2015), vol 1, para 26-015, cited with approval in One Step (Support) Ltd v Morris-Garner[2018] UKSC 20; [2018] 2 WLR 1353, para 38; Karim v Wemyss [2016] EWCA Civ 27, paras 43-49.

Certainly, a point may come where the court concludes that the claimant’s failure to adduce evidence on which the court can reasonably rely in order to prove loss means that the claim must fail for want of proof. In Capita Alternative Fund Services (Guernsey) Ltd v Drivers Jonas (A Firm)[2012] EWCA Civ 1417; [2013] 1 EGLR 119 there was a difference of opinion between the members of the Court of Appeal about whether that point had been reached in circumstances where the report of an expert relied on by the claimant to establish a critical element of its claim was discredited. Lloyd LJ took the view (para 123) that it was not for the court “to embark on what could be no more than guesswork to make good the failure of the claimants’ attempt to adduce evidence on which the court could rely in order to prove the amount of their loss.” The majority of the court (Gross and Moore-Bick LJJ), however, considered that there was a rational and evidential basis on which the judge was entitled to rely to do the best he could to determine a figure for damages (see paras 44 and 45). With reference to a comment of Devlin J in Biggin & Co Ltd v Permanite Ltd[1951] 1 KB 422, 438, that “where precise evidence is obtainable, the court naturally expects to have it”, Moore-Bick LJ observed (at para 80):

I would endorse that observation and add that, although persuaded that the claimant has suffered loss which justifies a substantial award of damages, shortcomings in the evidence adduced by the claimant may lead the court to assess the damages on a less generous or more conservative basis than might have been justified if better evidence had been adduced. That seems to me to have been the approach which the judge quite properly adopted in the present case.

Taking in turn each element of the calculation of damages for breach of contract, the commission which Nagel would have earned if its agency had continued was 0.5% of the total price of purchases made by Pluczenik from De Beers at international sights. The best evidence from which to calculate the commission which Nagel would have earned between August 2013, when the agency was terminated, and the time of the trial in 2017 would have been evidence of the purchases actually made by Pluczenik at international sights during this period. The figures for such purchases would also have provided a more reliable basis for estimating the likely level of future purchases than the historic information relating to the three years before the termination of the agency which was in fact used. However, as the judge recorded (at para 86 of the judgment), the court was not given evidence of the actual purchases by Pluczenik from international sights since November 2013. The judge therefore had to base his assessment on the figures for earlier years which were the best evidence available. Although the absence of more up-to-date and better evidence was unsatisfactory, Pluczenik cannot legitimately complain about that fact, as the relevant information was obviously within its knowledge and it was open to Pluczenik to adduce evidence of its purchases from sights in the period after August 2013 if it chose. It is reasonable to infer, as the judge did, that the reason why Pluczenik did not adduce such evidence is that treating that date as a cut-off worked to its advantage.

The next element in the calculation is the amount of costs saved by Nagel as a result of the termination of its agency. This amount could have been assessed by examining what actual impact the loss of the Pluczenik agency had on Nagel’s costs in the period following termination – which, according to Nagel, was minimal. Instead, the judge examined the detailed evidence of Nagel’s witnesses and both expert accountants regarding the costs referable to the agency in the period prior to its termination, in order to arrive at a figure based on the proportion of such actual historic costs which was fairly attributable to the Pluczenik agency. Again, I do not consider that Pluczenik can legitimately complain about this method of assessment – which, although not optimal, was favourable to Pluczenik.

The third element in the calculation of damages was the choice of a multiplier. Here I consider that two criticisms can fairly be made of the approach adopted. First, in selecting the multiplier the judge, as mentioned, took as a starting point a figure used by the experts which was an average of price/earnings valuations of small companies. Although this was no doubt a proper approach in seeking to estimate a market value for the agency in the context of the regulation 17 claim, it was not suitable for an assessment of common law damages. What was required for that purpose was an estimate of the length of time for which Nagel would have continued to earn commission from Pluczenik if its agency contract had not been wrongly terminated. Insofar as there was a range of possibilities, the relevant figure was the mid-point in that range such that there was an equal chance of the contract ending sooner or later. It was also necessary to take account of the possibilities that the level of commission earned might increase or decrease during the relevant period. An adjustment was then required (unless this was done as a separate calculation) to allow for the fact that if at the date when damages were awarded part of the relevant period lay in the future, some of the estimated lost profits would be received early.

I cannot see that in making this assessment average price/earnings valuations of small companies in November 2012 and November 2014 are of any relevance at all. It is true that the judge then made a downwards adjustment from that starting point to reflect the risks that Pluczenik would lose its sight with De Beers and/or would choose to source diamonds from elsewhere. But what was required was not a discount from an arbitrary starting point but a straightforward assessment of how long, having regard to those risks, Nagel would probably have continued to earn commission.

The unsuitability of the method used for the assessment of damages at common law is also illustrated by the further adjustment which was made to the multiplier after the court had heard argument about the impact of taxation. The choice of a multiplier for the common law damages claim did not depend on any question about the incidence of tax. If the best estimate of the period for which Nagel would have continued to earn commission was 5 years, then that was so irrespective of whether it was appropriate to calculate damages using pre-tax earnings or earnings after tax.

The second problem with the approach used in selecting the multiplier is that the risks which affected when Nagel would cease to earn commission were viewed at the date of termination of its agency. As already discussed, the object of an award of damages for breach of contract is to compensate the claimant for loss which it has actually suffered – not for the loss which it might reasonably have been predicted to suffer at the date when the contract was terminated. It was therefore wrong in principle to discount the damages awarded for risks existing at the time of termination which had not in fact materialised. In accordance with the Bwllfa principle (see Bwllfa and Merthyr Dare Steam Collieries (1891) Ltd v Pontypridd Waterworks Co[1903] AC 426), where the court has knowledge of what actually happened, it need not speculate about what might have happened but should base itself on the known facts.

The respects in which the approach adopted in choosing the multiplier was unsuitable operated, however, strongly in favour of Pluczenik. The multiplier selected by the judge was 3.95 years running from the date of termination of the agency in August 2013. As the judge observed (at para 86 of the judgment) there was evidence that Pluczenik still retained its sight with De Beers at the time of the trial and a multiplier assessed at that date would therefore have taken account of the existing period of almost four years as well as a projection of a future period for which Pluczenik would remain a sightholder. In these circumstances, if the multiplier had been assessed on the correct basis, it seems to me that the judge could quite reasonably have selected a multiplier which was two or three times the figure that he in fact used.

An argument pressed in a supplemental skeleton argument served on behalf of Pluczenik and which Mr Freedman put at the forefront of his oral submissions on this issue was that there was a further very substantial risk which ought to have been, but was not, taken into account in assessing the likely duration of the agency if the contract had been performed. This was said to be the risk that, because of Mr Nagel’s age (he was born in January 1925 and was 92 at the time of the trial) and the fact that the De Beers sights were moved to Gaborone, the Nagel firm would not be able to perform its contract with Pluczenik for much longer. The short answer to this point is that, although pleaded in Pluczenik’s defence, it was not relied on at the trial and the judge therefore cannot be criticised for not attaching weight to this alleged risk. Nor is the point one which is raised in Pluczenik’s grounds of appeal. In any case I accept the submission of Mr Oliver Segal QC on behalf of Nagel that there is no substance in the point, as the broking contract was with the Nagel firm, not with Mr Nagel personally, and the evidence given at the trial showed that for some years prior to the termination of the agency most of the broking work had been done by others (in particular, Mr Nagel’s daughter, Toni Nagel, and Mr Schwalb). It is therefore difficult to see why Mr Nagel’s death or complete retirement from the business would have had any effect on the ability of the firm to earn commission. In any case, at the time of the trial Mr Nagel was just as active as he had been in 2013. So even if his death or complete retirement would have put at risk the firm’s ability to perform the agency contract, it was known at the trial that this is not a risk which would have eventuated for at least four years.

Viewed overall, the damages for Pluczenik’s wrongful termination of its agency contract with Nagel were assessed by the judge in a manner which was generous – and perhaps even unduly generous – to Pluczenik. In these circumstances Pluczenik’s complaints about the assessment of damages and its attempt to argue that the judge should have awarded no or only nominal damages are entirely without merit.

Nagel’s cross-appeal

By its cross-appeal against the dismissal of its claim under the Regulations, Nagel does not seek to recover any greater sum in compensation than it has in fact been awarded as damages for breach of contract. It argues only that there is an alternative justification for the award of that sum. On the view I take that Pluczenik’s appeal fails, it is not strictly necessary to decide the cross-appeal. However, the issue raised on the cross-appeal about the scope of the Regulations is potentially of wider importance and, in circumstances where I have reached a different opinion on this issue from the judge, I think it right to express it.

The Regulations are intended to implement in the United Kingdom Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the member states relating to self-employed commercial agents (“the Directive”). As such, a domestic court in the UK is required to interpret the Regulations, so far as possible, in the light of the wording and purposes of the Directive, in order to achieve the result pursued by the Directive: see Marleasing SA v La Comercial Internacional de Alimentacion SA (Case C-106/89) [1990] ECR I-4135, paras 7-8; and (with specific reference to this Directive) Centrosteel Sri v Adipol GmbH (Case C-456/89) [2000] ECR I-6007, paras 16-17. The primary consideration must therefore be the meaning of the Directive, which is to be determined in accordance with principles of EU law. Those principles require the instrument to be interpreted having regard to its context and the objective pursued by the legislation, as well as its wording: see e.g. CILFIT v Ministero della Sanità (Case 283/91)[1982] ECR 3415.

The overall aim of the Directive, as set out in its recitals, is to harmonise the laws of the Member States relating to commercial agents by removing or reducing differences between national laws which were thought substantially to affect competition and to be detrimental to the protection available to commercial agents vis-à-vis their principals. Whereas protections for commercial agents were already well established in German and French law – on which the Directive was primarily based – UK law did not previously recognise a separate category of “commercial agents” or afford any special protection to such persons.

From the point of view of UK law, the most significant protection required by the Directive is the right to an indemnity or compensation on termination of the agency contract provided for by article 17 (transposed into regulation 17 of the Regulations). The right to an indemnity is derived from German law and, as embodied in article 17(2), reflects the extent to which the commercial agent “has brought the principal new customers or has significantly increased the volume of business with existing customers and the principal continues to derive substantial benefits from the business with such customers.” The right to compensation is derived from French law. As explained by Lord Hoffmann in the Lonsdale case, para 9:

Regulation 2(2)(b) tracks the wording of the Directive which provides in article 2 that it shall not apply to (amongst specified exceptions): “commercial agents when they operate on commodity exchanges or in the commodity market.” I will refer to this exclusion as the “commodity market exception”.

In interpreting the commodity market exception, the judge observed (at para 59) that he would expect to have found assistance on its scope from an examination of its purpose. However, he was not able to identify, from the history of the Directive or otherwise, any clear or convincing underlying rationale for the exclusion.

His starting point was that, in interpreting a Directive and Regulations aimed at commercial agents, it is necessary to interpret the term “commodities” in its commercial sense, i.e. as it would be understood by commercial parties (see para 63 of the judgment). The judge considered that in this sense the term is not synonymous with “any tangible goods” (an explanation of the term “commodity” given in guidance published by the Department of Trade and Industry in 1994 on the interpretation of the Regulations). The judge observed that in the commercial world the term “commodities” includes, for example, oil and gas products, some precious and industrial metals, grain, and other agricultural or raw food stuffs such as coffee, sugar or pork bellies.

While regarding this as a useful starting point, however, the judge then observed (para 66) that the relevant question is not whether the goods concerned are a commodity but whether the sale is of the goods as a commodity and the sale is on a “commodity exchange” or in “the commodity market”. He considered that the focus must therefore be on the manner and place of sale as well as the nature of the goods sold. In this regard the judge considered that a commodity sale will generally be of generic goods in bulk, which are indistinguishable in origin or features from other goods of the same type (see para 67).

In the present case, the judge concluded that sales of boxes of rough diamonds by De Beers at sights were sales on the commodity market and that the sights were in this respect a commodity exchange. The essence of his reasoning (in para 68 of the judgment) was that the sights were the first point of sale of a raw material (rough diamonds) mined from the ground which had not been processed, save by sorting them for the purposes of categorisation; that the majority of the purchasing activity at the sights was of boxes of a generic class of goods of a certain description at a fixed price; and that, at least since 2003, boxes purchased at sights could be and were traded on to third parties unopened and sight unseen. In the judge’s view, it followed from his finding that it was appropriate to treat sales of rough diamonds in this way as sales of commodities that they are properly to be categorised as sales on the rough diamond commodity market. Moreover, in his view, the sights had the hallmarks of an organised market or exchange, being regular organised events in which a regulated and restricted class of persons was able to buy a share of the commodities in question. The fact that, as well as sales of boxes of rough diamonds at the sights, there were sales of special and exceptional stones did not alter his conclusion, as such sales were ancillary and secondary to the predominant activity of selling the boxes (see paras 70-74).

The judge accordingly concluded that the Regulations do not apply to Nagel’s agency.

In this court, Pluczenik has adopted the judge’s findings and conclusion on this issue, submitting that they are undoubtedly correct.

I see no reason to disagree with the judge’s analysis of the term “commodity” and of the concept of a “commodity sale”, as they would be understood by commercial parties. In particular, I agree that the term “commodity” would not reasonably be understood to denote any tangible goods. That is reinforced by the text of the Directive in other languages – all the different language versions being equally authoritative. For example, the French text uses the term “matières premières”, the German text uses the term “Rohstoffe” (in the word Rohstoffmärkten) and the Italian text refers to “materie prime” – all expressions which would naturally be translated into English as “raw materials”. I would also agree that, if the relevant question were whether a reasonable person would regard sales of rough diamonds at sights as commodity sales or as involving the sale of rough diamonds as a commodity, that question would properly be answered “yes”. I accept the force of the points made by the judge that the goods sold were unprocessed raw materials and that the sales made at the sights were predominantly sales of such goods in generic form, made available by De Beers in boxes which each contained a standardised selection of stones in a particular category.

However, the relevant question is not whether the goods were sold by De Beers as a commodity but whether they were sold on a “commodity exchange” or in “the commodity market”. It is the meaning of those expressions which has therefore to be identified.

Taking first the concept of a “commodity exchange”, I am unable to agree with the judge that an exchange in its historical and commercial sense is simply a place for sales to take place. No one, for example, would reasonably describe a supermarket as an exchange. Nor are the facts that the class of persons able to buy is restricted and the process of selling regulated sufficient to make a place where sales take place an exchange. An auction house, for example, where only people who satisfy specified criteria are permitted to bid and where sales are conducted in accordance with the auctioneer’s rules would not be regarded in the commercial world as an exchange. The nature of an “exchange”, as I believe the term would generally be understood, is a place where trading takes place among members of the exchange and subject to its rules. The corresponding phrases in the French and German text (“les bourses du commerce” and “Handelsbörsen”) have a similar connotation. Thus, well known examples of commodity exchanges in the UK are the London Commodity Exchange, which in 1996 merged to become part of the London International Financial Futures Exchange (LIFFE), and the London Metal Exchange. Trading on such exchanges was traditionally conducted by open outcry, but now generally takes place electronically. Most of the trading on modern commodity exchanges is in futures and options but, like the judge, I see no reason to regard the availability of trading in such contracts as an essential characteristic. What would in my view be regarded as an essential feature of a commodity exchange is that the commodities (or rights to buy and sell commodities) which are traded on the exchange can be freely bought and sold among the participants.

I agree with the judge that the fact that the Directive uses two different expressions (“commodity exchanges” and “the commodity market” in the English version) indicates that the two expressions must be intended to have different, even if overlapping, meanings. Thus, the phrase “the commodity market” must be wider than simply connoting the sum of all commodity exchanges; otherwise its inclusion would be superfluous. But equally, the phrase “the commodity market” must be given a meaning which does not make the inclusion of the reference to “commodity exchanges” superfluous. That is achieved, as it seems to me, by interpreting “commodity exchanges” as typical or paradigmatic instances of “the commodity market”. Thus, transactions negotiated or concluded in the commodity market are transactions of a similar kind as those which are negotiated or concluded on a commodity exchange. So understood, the commodity market encompasses any general trading in commodities that takes place in the open market.

In my view, sights held by De Beers would not be understood by commercial people as a commodity exchange nor would sales made by De Beers at such sights be understood as trading in the commodity market in the relevant sense. Rather, the sights are a distribution outlet for one particular producer of a particular commodity – albeit a producer with a very substantial market share. There is no evidence that at the sights any trading takes place among sightholders (and, if it did, it would be very much secondary to the main activity). Sights involve sales made by a single seller to selected buyers. Moreover, the sales are made for the most part at fixed prices, set in advance by the seller. They resemble a shop where goods are sold on a wholesale basis and customers are restricted to trade buyers, rather than a commodity exchange or similar forum.

So far I have only been considering the wording of the Directive. But, as mentioned earlier, in interpreting an EU legal instrument it is essential to have regard not just to the wording of the instrument but to its purpose. Although the judge found it difficult to identify any clear rationale for the commodity market exception, he had no difficulty in identifying the purpose of the Directive to which the Regulations give effect as being “to protect agents by giving them a share of the goodwill which they have generated and from which the principal has benefited after the agency agreement has been terminated”: see para 42 of the judgment, citing Tamarind International Ltd v Eastern Natural Gas (Retail) Ltd[2000] CLC 1397, para 28. As discussed earlier, I think it clear that this is indeed a central purpose of the Directive which underpins the right to an indemnity or compensation on termination.

On the interpretation that I would give to its wording, the commodity market exception is consonant with this purpose. The trading which takes place on a commodity exchange is not an activity by which members of the exchange who buy and sell on behalf of clients build up goodwill for their principals with counterparties. It is trading of a nature where the identity of a counterparty is largely irrelevant. Sales are made to whoever is able and willing to pay the agreed price. Considerations of customer or supplier loyalty and goodwill are of little or no significance. Indeed, the rules of an exchange are usually intended to promote this by providing confidence that any contract made between members of the exchange will be honoured. Thus, it would be implausible for a commodity broker to suggest that, because it has executed many trades on behalf of a particular principal over a long period, it has thereby helped to develop valuable relationships between the principal and other traders from which the principal will continue to benefit if it decides to use a different broker.

This is in marked contrast to the activities of Nagel as DTC broker for Pluczenik, as found by the judge. Critical to his conclusion that Nagel had authority to negotiate on behalf of Pluczenik within the meaning of the Regulations was his finding that “the generation and maintenance of Pluczenik’s goodwill with De Beers was at the heart of the services which [Nagel] was engaged to perform” (see para 54 of the judgment). Interpreting the commodity market exception in the broad sense given to it by the judge which encompasses sales of rough diamonds made by De Beers at sights accordingly seems to me to frustrate rather than promote the purpose of the Directive and the Regulations. The result is to exclude from their scope an agency such as that of Nagel in this case which is of exactly the kind to which the protection afforded by the Directive would be most expected to apply. Such an interpretation of the exception could only be justified if it were possible to identify a clear countervailing purpose which would be served by treating the agency in this case as falling outside the scope of the Directive. However, the judge was unable to identify any such purpose, none has been suggested by Pluczenik and I am equally unable to discern one.

Counsel for Pluczenik submitted that the question whether an agent is a commercial agent and whether, if so, its activities are excluded by the commodity market exception are separate questions which have to be addressed separately. That is plainly correct. But it does not follow that the definition of a commercial agent and the exclusion from the Directive of operations on commodity exchanges or in the commodity market do not share the same underlying purpose. The creation of goodwill for the principal is not an element of the definition of a commercial agent: it is a concept which informs its interpretation. It ought likewise to inform the interpretation of the commodity market exception – all the more so in the absence of any other identified purpose for it.

Mr Segal QC suggested that a further purpose of the exception is or may be to exclude trading on exchanges and in a market where much of the trading is in financial instruments rather than physical goods. He submitted that the exclusion of such trading avoids anomalies that would otherwise arise if the application of the Directive depended on whether a commodity broker was dealing in “goods”, as well as difficult definitional questions as to whether transactions in commodity derivatives are transactions in goods or not. This explanation, if correct, would support a similar interpretation of the commodity market exception to that which I would give it. But it seems to me speculative to attribute this purpose to the exception in the absence of any historical evidence to support it. By contrast, the purpose of protecting the right to benefit from goodwill generated by the agent is one that can be derived from the scheme of the Directive itself as well as from the French and German law on which article 17 is based. In my view, this is a surer basis for interpretation than the supposition that commodity trading was viewed as falling within the scope of financial services rather than goods. But both purposes (or potential purposes) point decisively against construing the commodity market exception as covering the purchases from De Beers which are the subject matter of this case.

Even if it were not possible to identify any underlying rationale for the commodity market exception, this would not justify giving it a wide interpretation as the judge did. It is a principle of EU law that exceptions from the general scope of a Directive should be interpreted strictly, although not in such a way as to deprive the exceptions of their intended effect: see Belgium v Temco Europe SA (Case C-284/03) [2004] ECR I-11237, para 17; and (with specific reference to this Directive) Volvo Car Germany GmbH v Autohof Weidensdorf GmbH (Case C-203/09) [2012] Bus LR D13, para 42. Where the intended effect of an exception is not apparent, the exception should therefore be interpreted narrowly, and certainly not in a way which would undermine a central purpose of the Directive. That is the effect, however, of treating the activities of Nagel which generated goodwill for Pluczenik with De Beers as operations on a commodity exchange or in the commodity market and hence as excluded from the general scope of the Directive.

I would accordingly hold that, in acting as a commercial agent for Pluczenik in negotiating purchases of rough diamonds from De Beers, Nagel was not operating on a commodity exchange or in the commodity market and that its activities were therefore within the scope of the Directive and the Regulations. It follows that on the termination of the agency contract Nagel was entitled to compensation from Pluczenik under regulation 17.

Although I have reached a clear view about the scope of the commodity market exception, it is a view which differs from that of the judge and involves the interpretation of an EU law instrument which cannot be said to be acte claire. Despite the fact that neither party wished the court to do so, it might in other circumstances have been necessary to consider requesting the Court of Justice of the European Union to give a preliminary ruling on this question. Such a ruling is not necessary, however, to enable this court to give judgment if Pluczenik’s appeal is dismissed, as in that event Nagel does not seek any award of compensation under the Regulations.

For the reasons given, I would dismiss the appeal. As, in this event, Nagel does not seek any award of compensation under the Regulations, I would make no order on the cross-appeal.

I agree.

I also agree.