UAE COMMERCIAL LAW
New UAE Commercial Agencies Law (2023)
The UAE Government has recently enacted a new Commercial Agencies Law, No. 3 of 2022, which will take effect on June 15, 2023.
The new Commercial Agencies Law No.3 2022 (full text in English is here) replaces the previous commercial agency law, which dates back 40 years and has faced criticism from principals for being too favorable towards local agents. The new law reflects the UAE's shift towards relaxed rules and regulations between agents and principals, and greater openness to foreign investments.
The new law gives both principals and agents more control and flexibility over the terms of registered agencies and how they can be terminated. Previously, commercial agency activities were restricted to UAE nationals, but under the new law, international companies can perform these activities, subject to conditions. This change is expected to increase the UAE's competitiveness and attractiveness as a business destination.
The most significant changes in the new law include the following:
The new law gives both principals and agents more control and flexibility over the terms of registered agencies and how they can be terminated. Previously, commercial agency activities were restricted to UAE nationals, but under the new law, international companies can perform these activities, subject to conditions. This change is expected to increase the UAE's competitiveness and attractiveness as a business destination.
The most significant changes in the new law include the following:
- Foreign multinational companies can carry out commercial agency activities without being registered as commercial agent, as the agency is protected and governed by the agreement between the parties.
- Commercial agencies may be terminated by mutual consent, expiry, non-renewal, or as per the terms set in the agreement. Termination remains subject to the agent's right to compensation.
- The provisions relating to the expiry and termination of commercial agency agreements will not apply to existing commercial agencies registered with the Ministry of Economy for a period of 2 years or over 10 years, or where the agent has invested over AED 100 million. This protects existing agencies' and agents' investments.
- The law supports arbitration in the UAE, providing parties the option to resolve disputes arising from registered agency agreements through arbitration. Any decisions by the Commercial Agency Committee will have no significance in relation to disputes in arbitration.
- The Ministry of Economy is empowered to address potential disruption of goods and services in the event of disputes between parties.
How can we help?
Our professional legal and tax team advises free zones and local companies in the Middle East and North Africa (MENA) region. If you require any further information, please contact us and ask for advise.