{"id":1,"date":"2018-10-28T07:41:20","date_gmt":"2018-10-28T03:41:20","guid":{"rendered":"http:\/\/www.mbhlawfirm.com\/?p=1"},"modified":"2020-09-29T18:13:50","modified_gmt":"2020-09-29T14:13:50","slug":"a-concise-overview-of-uae-agency-law","status":"publish","type":"post","link":"http:\/\/www.mbhlawfirm.com\/index.php\/2018\/10\/28\/a-concise-overview-of-uae-agency-law\/","title":{"rendered":"A Concise Overview Of The UAE Agency Law"},"content":{"rendered":"

What is commercial agency?<\/strong>
\nCommercial agency is an arrangement where one party (the principal) appoints another as an agent for
\nthe sale of its products or services.
\nA foreign company who does not want to acquire license in the United Arab Emirates but want to carry
\nout business in the region through minimal investment may opt to appoint a commercial agent to be
\nable to sell its products and services in the UAE.
\nIn UAE, commercial agency is governed by The Federal Law No. 18 of 1981 on Commercial Agencies as
\namended by Federal Law No. 14 of 1988, Federal Law No. 13 of 2006 and Federal Law No. 2 of 2010 (the
\n\u00e2\u20ac\u0153Commercial Agency Law\u00e2\u20ac\u009d)
\nAs per the Commercial Agency Law, commercial agency is defined as, \u00e2\u20ac\u0153representation of a principal by
\nan agent for distribution, sale, display or provision of a commodity or service in the state in return of
\ncommission or profit\u00e2\u20ac\u009d. The agent has to be a UAE national or a company wholly-owned by UAE national.
\nThe Commercial Agency Law makes no distinction between commercial agency agreements,
\ndistributorship agreements, franchise agreements, commission arrangements and other forms of sales
\nagency relationships. Such forms of arrangements may thus fall under the definition of commercial
\nagency under the Commercial Agency Law.<\/p>\n

Registration and requirements<\/strong>
\nAs per the Commercial Agency Law, the commercial agent must be registered with the Ministry of
\nEconomy and Commerce. Further it is mandatory to register the agency agreement in the Ministry of
\nEconomy and Commerce, otherwise agreements which are not registered will not be protected under
\nthe Commercial Agency Law.<\/p>\n

Requirements for registration of commercial agency contract<\/strong>
\nAgency contract, distribution or exclusive representation contract with agent should be attested by
\nofficial bodies along with legal translation into Arabic Language if the contract is in foreign Language.
\nThe agency contract should contain name and address of parties, exclusiveness, and place of activity,
\nproducts and services, trade name of products, approval to register the contract, period of contract,
\nattestation and certification.
\nThe contract has to be submitted to the Ministry of Economy along with the identity card of local agent,
\nauthorization signature of owner or authorized manager and filled out agency application form available
\nat the Ministry.<\/p>\n

Protection through registration<\/strong>
\nBy registering the agency agreement in the Ministry of Economy, the agent enjoys exclusivity to import
\nand distribute the products of the principal in the defined territory. The exclusivity applies to a territory
\nwithin the UAE, i.e. an Emirate in UAE. Exclusivity may also apply to multiple Emirates or the UAE as a
\nwhole.<\/p>\n

The agent can also block third parties from importing the products in to the UAE for the products it is
\nthe registered agent (Article 23 of the Commercial Agency Law). The agency agreement can provide a
\nlist of product or services to be distributed in the territory.
\nThe agent is entitled to receive commission for the sale of the products in the designated territory no
\nmatter whether such sales are made by or through the agent (Article 7 of the Commercial Agency Law)
\nAs per Article 8 of the Commercial Agency Law, the agency agreement is deemed renewable regardless
\nof any specified expiry date. Therefore, these provisions help prevent the principal from appointing a
\nnew agent. In accordance with Article
\n9 of the Commercial Agency Law upon termination of the agency agreement the principal is entitled to
\ncompensate the agent for non-renewal of an agency agreement [see section termination of agency
\nagreement below].<\/p>\n

The Commercial Agency Committee<\/strong>
\nFederal Law no. 2 of 2010 re-instated the Commercial Agency Committee (the \u00e2\u20ac\u0153Committee\u00e2\u20ac\u009d). On 10
\nApril 2011, H.H Mohammad Bin Rashid Al Maktoum, the Vice President of the UAE and Ruler of Dubai
\nissued Decree No. 3 of 2011 (the \u00e2\u20ac\u0153Decree\u00e2\u20ac\u009d) Establishing the Committee of Commercial Agency whose
\nrole is to review any dispute pertaining to any commercial agency registered with the Ministry of
\nEconomy.
\nAs per Commercial Agency Law, it is compulsory for agent and principal in dispute with one another to
\nrefer the matter to that Committee before going to the courts.
\nA party may challenge the determination of the Committee by bringing a matter to the UAE courts
\nwithin thirty (30) days of the date of receiving notice of the Committee\u00e2\u20ac\u2122s resolution.
\nAs per Article 3 of the Commercial Agency Law, only the commercial agency which are registered with
\nthe Ministry of Economy may be heard by the Committee in case of dispute. Any unregistered agency
\nagreement would therefore be heard in the Courts and would be governed by the Federal Law No. 18 of
\n1993 on Commercial Transactions and the Federal Law No. 5 of 1985 on Civil Transactions.<\/p>\n

Termination of commercial agency<\/strong>
\nThe provisions governing termination of agency underwent several amendments. Under the old
\nprovisions the principal could only terminate the agency agreement for \u00e2\u20ac\u02dcvalid reason\u00e2\u20ac\u2122 as accepted by the
\ncommercial agency committee in the Ministry of Economy. Also, the principal would often find itself in
\nthe position of compensating the local agent as a result of termination of the agency agreement.
\nIn 2006, the Commercial Agency Law was amended to state that the commercial agency agreement shall
\nterminate on the date if such is fixed in the agreement. It also allowed either party to the agency
\nagreement to seek compensation in the event of any breach of the agreement or law. It further
\nabolished the commercial agency committee to hear the matters arising from the agency agreement
\nplacing the authority exclusively in the hands of the courts.<\/p>\n

Under Federal Law No. 2 of 2010, the provisions on termination and renewal of the agency agreement
\nswitched back to the spirit of the original law whereby the principal has to show a \u00e2\u20ac\u02dcmaterial reason\u00e2\u20ac\u2122 to
\njustify the termination or non-renewal of the agency agreement. The legislation does not define what
\nconstitutes as \u00e2\u20ac\u02dcmaterial reason\u00e2\u20ac\u2122 but places the onus on the principal to provide with a very convincing
\nreason in order to seek termination of the agency contract. This thus becomes a question of facts and
\ncircumstances surrounding the case.
\nSome of the reasons that a judge may take into account while considering cancellation of the agency
\nagreement by the principal may include: failure of the parties to meet specified sakes target, action of
\nagent that impinges the reputation of principal\u00e2\u20ac\u2122s the products or the services, where the agent is
\ninvolved in activities in conflict with the principal\u00e2\u20ac\u2122s product and services, the agent breaches any agency
\nlaw. These reasons are not exhaustive and provided the broad wordings of the legislation, the judges or
\nCommittee enjoy certain discretion to use its creative reasoning in deciding on what counts as a valid
\nreason.<\/p>\n

By Shadha Zawawi<\/strong>
\nSenior Associate<\/strong>
\n\u00c2\u00a9 Maha Bin Hendi Law Firm<\/strong><\/p>\n

This Article does not constitute legal advice and refers to legislation as of the date of publication of this<\/em>
\nArticle. Specific legal advice should be taken before acting on any of the topics covered.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

What is commercial agency? Commercial agency is an arrangement where one party (the principal) appoints another as an agent for the sale of its products or services. A foreign company who does not want to acquire license in the United Arab Emirates but want to carry out business in the region through minimal investment may opt to appoint a commercial agent to be able to sell its products and services […]<\/p>\n","protected":false},"author":5,"featured_media":3674,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-1","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insights"],"_links":{"self":[{"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/posts\/1","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/users\/5"}],"replies":[{"embeddable":true,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/comments?post=1"}],"version-history":[{"count":8,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/posts\/1\/revisions"}],"predecessor-version":[{"id":3894,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/posts\/1\/revisions\/3894"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/media\/3674"}],"wp:attachment":[{"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/media?parent=1"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/categories?post=1"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/www.mbhlawfirm.com\/index.php\/wp-json\/wp\/v2\/tags?post=1"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}