Key Things to Know about the New UAE Commercial Agencies Law
The UAE has repealed a forty-year-old law for regulating commercial agencies and replaced it with Federal Law No. 3/2022– Regulating Commercial Agencies (New Commercial Agency law). The new law for regulating commercial agencies in the UAE aims to strengthen the growth of the commercial agencies sector, diversify its activities, boost its economic performance and increase its contribution to the country’s gross domestic product (GDP).
The new UAE commercial agencies law will allow firms to have more control over how long the registered agency agreements will last and when such contracts can be terminated. The new law will come into effect from June 15th 2023 and brand owners need to know the provisions of the law before signing any contract including the franchise agreements. Trademark agents in the UAE can provide you with more insights into the new UAE commercial agency law. Read ahead to gain further insights into the important provisions of the law:
Who Can Carry Out a Commercial Agency Business in the UAE?
As per the UAE commercial agency law, only any of the following types of persons can practice the commercial agency business in the country:
- A natural person who is a citizen
- A public legal person
- A private legal person owned by public legal persons
- A private legal person wholly owned by natural persons who are citizens
Can International Firms Practice Commercial Agency Business in the UAE?
The law says the Cabinet may allow international companies, even if they are not owned by UAE nationals, to carry out commercial agency business for the products they own following the recommendation made by a minister. Moreover, the international company must meet the two conditions listed below to practice the business of a commercial agency in the UAE:
- The Commercial Agency should not have a commercial Agent inside the UAE
- The Commercial Agency should be new and not previously registered in the UAE
What Will Be the Contract Term for a Commercial Agency?
As per the law, the term of the contract will be five years if the agent is required under the contract to establish showrooms or buildings, commodity stores or maintenance or repair facilities unless the parties agree otherwise. Consult with the best trademark agents in the UAE for more details.
Expiration of the Commercial Agency Contract
The UAE’s new commercial agency law allows the expiration of the commercial agency agreement at the end of its term, However, the agents can claim the principal compensation for the damage it has incurred due to the expiration of the agreement unless the agreement explicitly mandates otherwise. Consult with IP firms in Dubai for more information on the expiry provisions of the new law.
Early Termination of an Agency
As per the new commercial agency law in the UAE, either the agent or the principal can terminate the commercial agency contract before the end of its term as per the terms and conditions stipulated in the agreement. However, a termination notice must be issued to the other party at least one year before the date of termination or the lapse of half of the agreement term, whichever is less, unless the parties agree otherwise.
The termination, however, can be challenged before the Commercial Agency Committee. Moreover, the agent is allowed to claim compensation for the damage. In such a case, the agent needs to prove that it has significantly contributed to the success of the products and has led to the increase of customers for such products which would have then led to the loss of profit as a result of the early termination.
Hire the Best Intellectual Property Firms in Dubai, UAE
In conclusion, we can say that the new law indicates a significant change in the regulation of commercial agencies in the UAE in terms of allowing the early termination of the commercial agency. If you want to know how the new law will affect your business or business intentions, talk to the best IP firms in Dubai such as Jitendra Intellectual Property (JIP). We are is one of the best IP firms providing reliable trademark services in Dubai, UAE. Protect your IP interests by arranging a consultation with us today.