TME LEGAL | DUBAI – RECHT KLAR

Modernized Commercial Agency Law: Current Developments in the United Arab Emirates

Modernized Commercial Agency Law: Current Developments in the United Arab Emirates

The Commercial Agency Law in the United Arab Emirates (UAE) has been updated in recent years to regulate the rights and obligations of commercial agents and companies. The new law, known as Federal Law No. 13 of 2006 on Commercial Agents (Commercial Agency Law), came into force on June 1, 2006.


The law applies to all types of commercial agencies, regardless of the industry. It regulates the relationship between the commercial agent and the company he represents and establishes the rights and obligations of both parties. The aim of the law is to protect the rights of commercial agents and ensure fair conditions for their activities.


Starting June 15, 2023, a new law regulating commercial agency will come into effect in the United Arab Emirates, bringing significant changes. The new Commercial Agents Law expands the scope of individuals to include public joint stock companies in which at least 51 percent of the shares are UAE-owned, acting as commercial agents.


Previously, acting as a commercial agent was reserved exclusively for natural persons with Emirati citizenship or companies under full Emirati ownership. Another significant change concerns internationally operating companies. For the first time, these companies now can obtain permission from the UAE Cabinet to engage in direct sales. However, it is a prerequisite that the company has not previously had a commercial agent in the UAE and that the commercial agency is new and not yet registered.


In addition, the provisions on the termination of agency agreements have also been restructured. Under the new regulations, the party wishing to terminate the contract in accordance with the terms of the contract must inform the other party of its intention to terminate. This must be done either at least one year in advance or before the end of half of the contract term, whichever is shorter.


The new Commercial Agents Law in the UAE thus creates expanded opportunities for companies, while at the same time setting out clear rules for the termination of contracts.


It is important to note that commercial agency law in the UAE is specific to the country and there may be differences with commercial agency laws in other countries.


If you have specific questions or need further information on certain aspects of commercial agency law in the UAE, we encourage you to contact one of our attorneys.

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