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Contracting parties bound by terms in basic contract

Q: We are the exclusive agent in the UAE for a renowned trademark of products manufactured by a foreign company. We unfortunately had a dispute, and I would like to refer the matter to the authorities concerned here. The foreign company has refused and is insisting on referring the litigation to the authorities concerned in London since we had earlier agreed to the condition that the arbitration shall be heard in London in case of litigation. What should I do? Is it possible to have the litigation heard here?

A: As per Article 203 of the UAE Federal Civil Procedures Code, the contracting parties are generally entitled to set as condition in the basic contract or in a later agreement that litigation, if any, shall be referred to an arbitrator or more. They are also entitled to agree on certain conditions for arbitration in case of litigation.

However, no one is entitled to practise any of the trade agency activities in the country unless registered as a trade agent in the Ministry of Economy and Trade. Any unregistered trade agency shall be considered null and void, according to Article 3 of the Federal Law No. 18/1981.

As such, if the questioner’s trade agency is registered here, his agreement on the condition of hearing litigation in London shall be ruled void, and the litigation shall accordingly be heard in the country’s courts or the trade agencies committee concerned with hearing such litigations between the trade agency contracting parties.

If the questioner’s agency is not registered here, the condition of arbitration in London in case of litigation shall be ruled valid and must be executed if the other party insists on having the dispute heard in London, and the case shall not be heard in the country’s courts. — Compiled by Ahmed Shaaban

• UAE