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The new law regulating commercial agencies in the UAE, which bears No. (3) for the year (2022), entered into force last Friday, June 16, 2023, after 41 years of implementing the previous law.
Under the new law, the practice of commercial agency business within the UAE is limited to national individuals, companies and institutions that are wholly owned by any of the following: a natural citizen person, a public legal person, a private legal person owned by public legal persons, a private legal person wholly owned by national natural persons .
The law allows the Council of Ministers, based on the minister’s recommendation, to allow any international company, even if it is not owned by citizens, to carry out the business of commercial agencies for its own products, under the conditions and within the limits it deems appropriate in this regard and when the following conditions are met: This commercial agency does not have an agent Commercial in the UAE, and the agency is new in the country and has not previously been registered with the Ministry of Economy.
The new economic paradigm
According to Abdullah bin Touq Al-Marri, Minister of Economy, the importance of Federal Decree-Law No. (3) of 2022 regarding the organization of commercial agencies lies in enhancing the attractiveness and competitiveness of the business environment in the country, in line with the new economic model of the country, in light of the fifty goals. and the determinants of the UAE centenary 2071.
The commercial agency sector has a prominent role in supporting the development process of the UAE, and the Ministry of Economy, in cooperation with its partners, has worked on issuing an innovative law that supports the growth of commercial agency activities, and establishes the foundations for its sustainability through advanced and thoughtful governance rules, in accordance with international best practices.
The new law will contribute to the growth and prosperity of the commercial agencies sector, increasing their number, and maximizing their contribution to the GDP.
Likewise, the new law opens the way for citizens to enter the agencies’ activities in a wider way, and provides a stimulating environment for the establishment of new and innovative commercial and investment projects.
The law will increase the momentum and competitiveness in the UAE markets, and enhance the country’s attractiveness to foreign direct investment, in addition to stimulating national investments towards new sectors, thus creating job opportunities.
Duties of the agent
The law defines a number of duties for agents, which include the provision of spare parts, tools, materials, accessories, and accessories necessary and sufficient for the maintenance of durable goods, in addition to the provision of maintenance services under the agency in accordance with the agreement of the two parties.
The law prohibits the entry of goods, products, manufactures, materials, or other funds subject to any commercial agency registered with the ministry with the intention of trading without an agent, and obliges the customs departments not to release these imports imported through other than through the agent, except with the approval of the ministry or the agent.
The customs departments, the concerned authorities and the competent authorities, each in its own jurisdiction, shall, upon the request of the agent through the Ministry, seize these imports and deposit them in the port warehouses or the importer’s warehouses until the dispute is settled.
The Ministry may, by a justified decision, bring goods, commodities, and provision of services into the subject of the commercial agency contract on a temporary basis.
Exceptions
The law excludes public shareholding companies established in the state, in which the shareholding of state citizens is not less than 51% of its capital.
In accordance with the law, and based on a recommendation from the Minister of Economy, the Council of Ministers issues a decision on the procedures, controls and conditions necessary for public shareholding companies established in the country to practice commercial agency business.
The law stressed that it is not permissible to practice commercial agency business in the UAE except for those who are registered in the commercial agencies register at the Ministry of Economy, and any commercial agency that is not registered in the register is not considered.
According to the law, for the validity of a commercial agency within the country, the agent must be linked to the original principal by a written and notarized contract, and the commercial agency must be registered in the Commercial Agencies Register.
And Article (5) of the law considered that the commercial agency contract is in the mutual interest of the contracting parties, and any agreement to the contrary is not considered, and the state trial is concerned with examining disputes that arise regarding the commercial agency contract.
Article (6) stated that if it was stipulated in the contract that the agent establish buildings for display, warehouses for goods, or facilities for maintenance or repair, the term of the contract shall be five years, unless otherwise agreed upon.
Article (7) of the law indicated that the original principal may seek the services of one agent in the country as one region, and he may also seek the assistance of one agent in each emirate, or in a number of emirates, provided that the distribution of goods and services in place of the commercial agency is limited to him within agency area. The agent is also entitled, according to the law, to use the services of a distributor in one or more emirates that are covered by his commercial agency.
According to Article 8 of the law, the agent deserves the commission for the deals concluded by the principal himself, or through others in the area designated for the agent’s activity, even if these deals were not concluded as a result of the latter’s efforts.
A committee that looks into disputes
The new Commercial Agencies Law revealed the establishment of a committee called the “Commercial Agencies Committee”, whose formation, work system, remuneration for its members, and fees for handling disputes before it are issued by a decision of the Council of Ministers.
The committee is concerned with examining the dispute that arises between the commercial agency parties registered with the Ministry of Economy, and the case is not accepted before the courts in this regard before it is referred to it. or from the date of completion of the required documents. The law permitted the committee to seek the assistance of whomever it deems appropriate to perform its duties, and it must decide on the dispute within 120 days from the date of submitting the application, otherwise any party may resort to the judiciary within 60 days from the date of expiry of the request.
