Background
Kerish International Motors Agency, a Palestinian automobile dealer based in Ramallah, was appointed by Opel Automobile GmbH as a non-exclusive distributor under a Dealer Sales and Services Agreement dated 16 March 2012. The agreement was governed by English law but contained clause 19.1, providing that upon termination Kerish had a right to compensation or indemnification “if expressly mandated by national law.” On 21 February 2019, Opel terminated the agreement with 12 months’ notice, effective 28 February 2020, pursuant to Article 18.2, which permitted termination without cause.
Kerish brought proceedings claiming compensation as a commercial agent under Palestinian Law No. 2 of 2000 (Commercial Agents Law), which provides for compensation when a commercial agent’s agreement is terminated for a “non-serious reason.” The High Court dismissed the claim, holding that although “national law” in clause 19.1 referred to Palestinian law, Kerish did not qualify as a commercial agent within the scope of that law. Kerish appealed.
The Court’s Holding
The Court of Appeal affirmed the High Court’s judgment. The court confirmed that “national law” in clause 19.1 meant Palestinian law, not English law. However, it upheld the finding that Kerish was not a commercial agent under Palestinian law. A commercial agent under Palestinian law must act “on behalf of” or “for the account of” the principal. The court found that Kerish’s arrangement—buying and reselling Opel vehicles, parts, and accessories in its own name and for its own financial account—was inconsistent with the legal definition of a commercial agent.
The court applied the proper appellate standard for foreign law findings, recognizing that trial judges who have heard expert testimony on foreign law enjoy significant deference. The trial judge had heard competing expert evidence from Palestinian and Jordanian law experts, reviewed relevant Palestinian and Jordanian case law, and examined the detailed terms and practical operation of the agreement. The Court of Appeal found that the judge’s multifactorial analysis—considering the agreement’s terms (Articles 4.11 and 4.12 establishing Kerish as an independent business), the transfer of ownership of goods to Kerish, the purchase obligations, and the nature of the distributorship relationship—was sound and well-grounded in Palestinian and Jordanian jurisprudence establishing that parties who purchase and resell goods do not act as commercial agents.
Key Takeaways
- Registration of a distributorship agreement as a commercial agency with the relevant ministry is not determinative of actual status under the law; substance controls over form.
- A distributor who purchases goods from the supplier and resells them in its own name and for its own account does not qualify as a “commercial agent” under Palestinian law, even if the agreement is formally registered as such.
- Appellate courts strongly defer to trial judges’ findings on disputed foreign law when based on expert testimony and detailed factual analysis, reversing only when the conclusion is plainly wrong.
- The distinction between a commission agent (who sells for another’s account) and a distributor (who buys and resells for its own account) is fundamental to Palestinian commercial law.
Why It Matters
This judgment clarifies an important gap between the legal form and substance of distributor arrangements in Palestinian commercial law. Many automotive and other distributorship agreements are formally registered as commercial agencies, yet the parties understand the distributor to be an independent business buying and reselling goods. This case establishes that such arrangements do not trigger statutory compensation rights under Palestinian law upon termination, even if registered. The decision will affect how multinational companies structure distributor relationships in Palestinian territory and what statutory protections distributors may claim.
The judgment also reinforces a significant procedural principle: appellate courts will not second-guess a trial judge’s assessment of expert evidence on foreign law absent clear error. This gives weight and finality to trials involving foreign law disputes where expert witnesses are tested in cross-examination, and it discourages appellate attempts to reinterpret foreign statutes and cases based solely on translation disputes or differing textual analysis.