The new law will enter into force on June 16
Limiting the practice of commercial agency business in all its forms to citizens
Al Saleh stressed that the law consolidates the UAE's position as an attractive destination for major brands globally.
From the source
The Undersecretary of the Ministry of Economy, Abdullah Al Saleh, affirmed that Federal Law No. (3) of (2022) regarding the regulation of commercial agencies opens the way for citizens of the country to enter the activity of agencies in a wider way, and provides a stimulating environment for them to establish new and innovative commercial and investment projects, including It enhances the resilience of the national economy and supports its global competitiveness, in addition to consolidating the country's position as an attractive destination for major regional and international companies and brands.
Al Saleh reviewed, during a briefing organized by the Ministry of Economy yesterday, the most prominent provisions and outputs of the new law, which confirms the proactive approach of the state as follows:
• The new law permits public shareholding companies incorporated in the country, in which the shareholding of state citizens is not less than 51% of its capital, to practice commercial agency business, while limiting the practice of commercial agency business to citizens only in various forms of agencies, which contributes to creating opportunities And additional fields for family companies that own commercial agencies, and support their transformation into public shareholding companies.
The law also authorized the Council of Ministers to allow any of the international companies to carry out the business of commercial agencies for their own products, according to specific conditions, the most important of which is that this commercial agency should not have a commercial agent inside the country.
The law affirmed that it is not permissible to practice commercial agency business in the country 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 this register is not considered.
The law specified explicit and specific cases for the termination of the commercial agency contract, in the interest of the national economy, providing the best services and prices to consumers through fair competition between agents, whether current or potential entry into the market from national companies, and encouraging agents to improve their performance to ensure the continuity of the relationship.
The law also regulated the procedures and provisions for the termination of the commercial agency with mandatory controls, provisions, and periods regarding notices (one year or half of the remaining contract period, whichever is less, unless otherwise agreed), while regulating the transfer of assets to the new agent at fair value, according to clear and specific conditions.
The new law addresses the phenomenon of interruption of services and goods when there is a dispute between the principal and the agent, so that the law guarantees the continuity of the flow of goods and services during the period of the dispute, and the ministry is responsible for determining exclusive sources to enter them for a temporary period, provided that the principal is responsible for any compensation awarded in favor of the agent by a final judicial decision.
The law introduced a new mechanism for settling disputes between the parties by resorting to arbitration, whenever the agency parties agree to that, and after the committee’s decision is issued within the prescribed appeal period.
In addition, Al Saleh said, "The Commercial Agencies Law targets many diverse groups that will benefit from its provisions and outputs, primarily business owners, national companies and entrepreneurs, local and international commercial agencies that wish to transfer their activities to the Emirates, and local and foreign investors."
He indicated that the law will enter into force six months after its issuance, specifically on June 16, 2023. As for the provisions for the termination of the agency contract, they will be applied as follows:
After two years for valid commercial agency contracts.
After the lapse of 10 years for commercial agencies whose registration of the same agent has passed for more than 10 years, or commercial agencies in which the volume of the agent’s investment exceeded 100 million dirhams, the law thus protects the stable conditions and national investments in this vital sector.
Al Saleh said: “This new law, which replaces the previous legislation that spanned more than 40 years, is aimed at promoting the growth of the commercial agencies sector in the country, contributing to diversifying its activities, improving its economic performance, and maximizing its contribution to supporting the growth of the country’s gross domestic product.”
He stressed that the importance of the Commercial Agencies Law lies in the fact that its interlocutors are based on the principle of the authority of the will, and that the contract is actually the law of the contracting parties as they agreed upon, in order to achieve an attractive environment for investments on the one hand, and reassuring the parties to the agreement and protecting their rights in what they agreed on on the other hand, pointing out that the law will contribute In increasing national investments, and stimulating foreign direct investments to the state, in addition to the growth and prosperity of the business of commercial agencies, and increasing their number.
He explained that "the law will enhance the development and growth of the number of activities of commercial agencies in the country," adding that "the total number of commercial agencies in the country currently exceeds about 6,000 agencies."
• A new mechanism for settling disputes between the principal and the agent by resorting to arbitration whenever they agree to do so.
• Introducing specific cases for the termination of the commercial agency contract through controls and requirements for the notification period and exit mechanisms.
• Allowing international companies to carry out the business of commercial agencies for their own products in accordance with specific conditions and a decision of the Council of Ministers.
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