UAE’s new commercial agency law to come into effect from June 16

The business of commercial agencies will be exclusive to UAE nationals as well as public joint-stock companies with at least 51 per cent of national capital contribution



by

Waheed Abbas

Published: Wed 25 Jan 2023, 3:13 PM

Last updated: Wed 25 Jan 2023, 6:13 PM

The UAE’s Ministry of Economy on Wednesday announced that the new commercial agency law will come into effect on June 16, 2023, which will apply to all sectors.

The business of commercial agencies will be exclusive to UAE nationals as well as public joint-stock companies with at least 51 per cent of national capital contribution.

However, any international company, under certain conditions and with the approval of the UAE Cabinet, will be allowed to act as a commercial agent for its own products, the Ministry said on Wednesday.

The Ministry of Economy’s new draft commercial agency law replaces the previous 40-year-long legislation and is aimed at accelerating the growth of commercial agencies by diversifying their activities, improving their economic performance, and increasing their contribution to the growth of the national economy.

The law introduces a new mechanism to settle disputes between the agent and client by resorting to arbitration upon agreement and also grants the Ministry of Economy the authority to enter products and services for a short term.

Abdulla Al Saleh, undersecretary of foreign trade and industry at the UAE Ministry of Economy, emphasized that the significance of the Federal Decree Law on regulating commercial agencies stems from its provisions, which are based on the principle of autonomy/will and that the contract must be kept.

“This creates an environment that is favourable for investment and safeguards the rights of parties per their agreement,” he said, adding that the law would contribute to increasing national investments and DFI to the country.

“The law will further allow the businesses of commercial agencies to grow and prosper, by diversifying their activities, thereby ensuring the best products and services for consumers, and fulfilling their ambitions for competitive prices and high-level services. The law will further offer guarantees and after-sale services as well as create new job opportunities in the country,” he added.

The UAE Cabinet will issue administrative penalties for violators ahead of the implementation of the law in June.

A new mechanism has been introduced to settle disputes between the agent and client by resorting to arbitration upon agreement.

The new law addresses the disruption of goods and services in the UAE markets in the case of dispute between the two parties and grants the Ministry of Economy the authority to specify exclusive resources vis a vis entering products and services for a short term with extended indemnities to the commercial to hold the principle accountable against any liability defined by the irrevocable court verdict.

According to the new law, the termination provisions of the concurrent agency contract will not apply imminently regarding non-renewal or early termination for convenience. However, the law provided either two or 10 years for existing agencies with the same agent for more than ten years or where the size of the agent's investment exceeded Dh100 million.

It is also prohibited to offer agency services unless registered in the commercial agency’s records in the Ministry of Economy.

Moreover, a commercial agency committee will be formed by the decision of the UAE Cabinet specialising in resolving the dispute between the registered agency parties.


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