Commercial Agencies & Federal Law No. (14)
Of 1988 On The Amendment Of Certain
Provisions In Federal Law No. (18) Of 1981

Commercial Agent Guide

Reviewing the provisions and articles of the above mentioned Federal Law regulating the practice of commercial agency in the UAE, one can find out that the most important articles forming the spine of the law are those which we would like to throw lights on, so as to convince member agents of the necessity for acquainting themselves with the law provisions before entering into an agency agreement with any foreign principal.
 

1-  The authority concerned with the law implementation is the "Ministry of Economy & Commerce" which registers agency agreements in a special register called "Commercial Agents Register". The Ministry thereafter sends notification on registration to all Municipality departments; customs authority and the Federation of UAE Chambers of Commerce & Industry in the UAE. (Article 1, 10 & 11).

2- The practice of commercial agency activity is confined to national individuals or firms totally owned by national legal persons. (Article 2).
 
3- Commercial agency activity is not permitted to be practiced save by those who have their names registered in the Commercial Agents Register kept by the Ministry for the purpose. Any unregistered agency may not be recognized nor any relating lawsuit may be filed with any court of law. (Article 3).
 
4-  An agency agreement may not be considered valid or legally authentic unless the agent is directly bound with a principal by virtue of a written authenticated agreement. (Article 4).
 
5- A principal may seek the services of a sole agent in the UAE as a single territory. He may also appoint an agent in each emirate or in a group of emirates, providing that distribution of goods and services subject matter of the agency should be restricted within the agency territory and to such certain agent himself. However an agent may appoint a distributor in an emirate or in a group of emirates included in the territories of the agency. (Article 5).

6- An agency is to be signed for the mutual benefit of both signatories, whereas the UAE courts of law should be concerned with viewing any dispute arising from the agency agreement implementation between the principal and the agent. The law also stipulated that any contravening agreement shall not be considered. (Article 6).
 
7-  An agent is entitled to commission on transactions effected by the principal himself or by any third party within the territory specified in the agreement to be that of the agent's activity even if such transactions do not come as a result of the agent's efforts. Article (7).

8-  A principal may not terminate the agency agreement nor abstain from renewing it. An agency agreement, furthermore, may not be registered in the name of any other agent even though its lifetime is limited to a fixed period of time, unless the previous agreement is rescinded to the satisfaction of both the original agent and the principal or if there exist certain substantial reasons justifying termination or non-renewal and be at the same-time, convincing to the committee provided for in article 27 of the said law. (Article 8).

9-  In case an agency is withdrawn at an improper time, or for a reason with which the agent has nothing to do, the principal may be claimed to pay indemnification against losses or damages suffered by the former. Among those cases which are to be counted as "abuse of right cases" incurring appropriate indemnification is abstention by the principal from renewal of the agency agreement upon the expire of its primary lifetime. Therefore, if an agent proves that his activity has conducted to obvious success in distributing and promoting the products of the principal and that non-renewal may incur losses or forfeit the fruits anticipated due to his efforts, he shall have the right to request indemnification, unless otherwise the principal could prove that the agent has committed certain mistake justifying non-renewal (Article 9).

10- An agent should approach the Ministry of Economy & Commerce (the authority ~concerned with implementation of the law) requesting registration of his agency agreement in the register called the "Commercial Agent's Register". The application for registration should include the agent's name and address, the principal's name; address and nationality, products and services subject matter of the agreement, agency territory, agreement date of commencement and date of expire. (Article 10).
- The Ministry should issue its decision within fifteen days from the date of application.
- In case of approval, the agent is granted an accredited certificate to denote registration. The decision of approval along with other pertinent details are, thereafter, promulgated in the official gazette. (Article 11).
- In case of failure to fulfill the terms and conditions provided in the Law, the Ministry refuses application and sends the applicant a copy of its decision notifying him of the reasons of refusal through a letter to be sent either by registered mail or delivered by hand within one month from the date of application. However, failure to do so, is to be considered a decision on refusal, a case in which the applicant may appeal against the Ministry's decision before the concerned civil court within a period of sixty days from the date at which he has been notified of refusal, or upon the elapse of one month from the date at which he has submitted his application. (Article 12).

11- A commercial agent; his legal attorney, or his inheritors in case of demise - should apply to the Ministry to effect in the register any alteration or amendment that might be introduced to the statements referred to in the law, as to the case and within a period of sixty days from the date of alteration or amendment occurrence. The decision approving the application and pertinent details should, thereafter, be promulgated in the official gazette. (Article 13).

12-  In case an agency agreement is rescinded or expired, the agent; his legal attorney or his inheritors - in case of demise - should apply to the Ministry with supporting documents requesting agreement write-off in the register of commercial agents within sixty days, at the most, from the date of rescindment; demise or expire. The Ministry, however, has the right of writing an agreement off the register if there exists any reason incurring such write-off. In all cases, this should be done after notifying the concerned through a registered mail requesting presence within a period of sixty days for objection hearing. In case of failure to attend within the said period, re-notification in the same way should be made to request presence again in an identical period. In case of re-failure to attend, the Ministry may write off the agreement in question after seeking the opinion of the concerned authority. (Article 14).

13- He who exercises the activity of commercial agencies in contravention to the law provisions shall be fined the amount of not less than five thousand UAE Dirhams. (Article 22).

14- It shall not be permissible for anybody to clear into the country any goods; products; manufactured items; materials or any other type of financial assets subject matter of any agency agreement duly registered at the Ministry in the name of other agent for the purpose of trading in them not via the agent, unless upon prior permission by the Ministry or the agent himself. (Article 23).
 
15- The Commercial Agencies Committee provided for in article (27) of the law comprises the Undersecretary of the Ministry of Economy & Commerce (Chairman); a representative from the municipality of each emirate to be nominated by the Municipal Chairman; a representative from each board of directors of each Chamber of Commerce & Industry in each Emirate to be nominated by the Chairman; a representative from the Municipalities General Secretariat to be nominated by the respective board; and a representative from the Federation of UAE Chambers of Commerce & Industry to be nominated by the Board of the said Federation.
 
 The Committee is concerned with viewing any dispute arising from the agency agreement within sixty days from the date of the complaint lodged to it. (Article 28).