Includes typical use of agents and distributors and how to find a good partner, e.g., whether use of an agent or distributor is legally required.
Last Published: 4/23/2018
UAE law does not distinguish between an agent and distributor, referring to both as commercial agents.  The provisions relating to commercial agencies are collectively set out in Federal Law No. 18 of 1981 on the Organization of Commercial Agencies as amended by Federal Law No. 14 of 1988 (the Commercial Agency Law).  Under the Commercial Agency Law, agency activities may not be performed within the UAE. except by commercial agents registered with the Ministry of Economy.  Furthermore, the UAE. courts are effectively barred from hearing cases relating to unregistered agency agreements.  This local law leaves parties with limited recourse where agency agreements are unregistered.

The Commercial Agents (Council) Regulations 1993 (the Regulations) promulgated under the Commercial Agency Law recognize that commercial agents are often in a relatively weak position when contracting with principals, and for this reason the Regulations seek to impose certain restrictions on the actions of principals while conferring benefits on agents.  The Regulations are in favor of protecting UAE. nationals with the persons or entities able to qualify as commercial agents being very narrowly defined.  The Ministry of Economy and Commerce handles registration of commercial agents.  Only UAE nationals or companies wholly owned by UAE. nationals are entitled to carry out commercial agency activities in the UAE and register with the Ministry of Economy and Commerce as local agents.

An agent must have a presence and be licensed to operate in each emirate in which it carries on business, as there is no blanket license for the whole of the UAE.  Any commercial agency covered by the Commercial Agency Law must be registered in the commercial agencies register maintained by the Ministry of Economy in the relevant emirate or, if for the entire UAE, with the Ministry of Economy in the federal capital, Abu Dhabi.  An agreement must be signed before a notary public (and attested if signed outside the UAE.).

Commissions and other forms of compensation are a matter of commercial negotiation as between the parties, typically dependent on the amount of work required of the agent and sales volume.  Responsibilities, performance measures, and geographic territory covered should be clearly defined in the agency contract.  UAE law awards automatic exclusivity to the agent in the geographic area covered by the agreement. 

On March 22, 2010, the UAE issued Federal Law No. 2 of 2010 amending certain provisions of the Commercial Agency Law.  The amendments prevent the termination, or non-renewal, of a commercial agency unless the principal has a material reason to justify the termination or non-renewal and re-introduced the specialized Commercial Agencies Committee designed to deal with disputes relating to commercial agencies, a body which had formerly been dissolved by amendments to the law in 2006.  Under the current legislation, the Committee has full powers of investigation, including the ability to appoint experts and the ability to apportion the costs of a hearing between the parties.  In order to be binding, the Committee must rule on disputes within 60 days of receiving a complaint from either party to an agreement.  Parties can also appeal the decisions of the Committee before the UAE courts. In addition, a principal may not re-register the commercial agency in the name of another agent even if the previous agency was for a fixed term unless: (i) it is amicably terminated by the principal and the agent; (ii) termination or non-renewal is for justifiable reasons that are satisfactory to the Commercial Agencies Committee; or (iii) a final judicial judgment is issued ordering the cancellation of the agency.  This committee typically rules in favor of the local agent.  In most cases, compensation to a terminated agent is required even if the Committee rules in favor of the foreign firm.

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United Arab Emirates Trade Development and Promotion