New commercial agency law will take effect in the UAE on June 16

UAE citizens and publicly traded enterprises with at least a 51% national capital contribution may conduct business with commercial agencies.

The new commercial agency law will apply to all sectors. It will take effect on June 16, 2023, announced the UAE's Ministry of Economy.

The Ministry announced that any international business should be permitted to serve as a commercial agent for its products under specific circumstances and with the UAE Cabinet's consent.

The new draught commercial agency law from the Ministry of Economy, which replaces the previous legislation, aims to speed up the growth of commercial agencies by diversifying operations, enhancing their financial performance, and raising their contribution to the expansion of the national economy.

Any international business, nevertheless, will be able to serve as a commercial agent for its products under specific circumstances and with the UAE Cabinet's blessing, stated the Ministry.

By diversifying their operations, enhancing their financial performance, and boosting their contribution to the expansion of the national economy, commercial agencies are expected to grow faster under the new draught commercial agency law. It replaces the previous 40-year-old legislation.

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 ensured.

“This creates an environment that is favorable for investment and safeguards the rights of parties per their agreement,” he said. In addition to that the law would help increase national investments and DFI to the country.

The law will also enable commercial agencies to expand and thrive by diversifying their business ventures, guaranteeing the greatest goods and services for customers while also achieving their goals of offering competitive rates and first-rate services. 

Furthermore, the law would provide aftersales services and assurances, as well as create new job opportunities for the country, he added.

Before the law's implementation in June, the UAE Cabinet will impose administrative penalties on violators.

A new protocol has been introduced to resolve disputes between the agent and the client by agreeing on arbitration.

Under the new law, the concurrent agency contract's termination provisions regarding non-renewal or early termination for convenience will not apply immediately.

However, existing agencies with the same agent for more than ten years or where the agent's investment exceeds Dh100 million were given either two or ten years under the law.

However, it is illegal to provide agency services unless the commercial agency is registered in the Ministry of Economy's records.

Furthermore, by the decision of the UAE Cabinet, a commercial agency committee specializing in resolving disputes between registered agency parties will be formed.