Uae Agency Law Amendment
« Terminating an agency contract is difficult, and in most cases, the mutual consent of the client and agent is required, » Munshi said. « Disputes are dealt with by the Committee of Commercial Agencies. » Recently, there have been significant changes to many regulations in the UAE, and it is likely that the Commercial Agents Act will also be revised. The Agency Act provides that registered agents are entitled to commissions for transactions carried out by the client himself or through other persons in the area covered by the registered agency agreement. The parties to a registered agency contract may not exclude the provisions of the Agency Act or agree on a foreign law governing such an agreement. The Committee is the Agency`s primary dispute resolution forum and refuses the agency agreement registered with the Department. The committee has the power to review all disputes, so the parties cannot go to court. The Committee may review and decide disputes – and such decisions may be challenged within thirty (30) days in the competent court. According to Article 3 of the CAL, « no one may engage in commercial representations in the United Arab Emirates unless his name has been entered in the commercial register kept at the Ministry ». In the event that a person takes the risk of distributing products or providing services without being registered, which is common in the UAE, he must acknowledge and accept that « no claim related to the commercial agency will be recognized or heard » in accordance with Article 3. In addition, the amendment now allows shareholders to transfer their shares to their heirs in the event of death.
A stricter provision can be observed in the context of the new amendment concerning the termination of the agency contract. The amendment prohibits the customer from terminating the agency contract or even prevents him from not renewing the contract without justified reason for termination or non-renewal. In addition, the law does not allow the agent to register a new commercial agency until the previous commercial agency contract has been mutually terminated by both parties or the agent committee is convinced of the legitimate reasons for terminating the agency contract. According to the Agency Act, the agency`s activities cannot be carried out in the UAE except by commercial agents registered with the Ministry of Economy. In addition, the courts of the United Arab Emirates are effectively prevented from hearing cases related to unregistered agency contracts. The effect of Article 3 leaves limited recourse to parties where agency contracts are not registered. An agency is considered legally terminated only when the entry in the commercial register is deleted. As long as the commercial agency is not abolished, it is still in force. If a dispute is not resolved and the registration is deleted, the procuring entity may not appoint or register a new representative in accordance with Article 8 of the CAL.
In accordance with Article 3 of the CAL, only the commercial representation registered in the register is recognized and may be heard in the event of a dispute. The United Arab Emirates Federal Act No. (18) of 1981 on the Organization of Commercial Agencies (as amended) (« Agency Act ») regulates agency contracts registered with the Ministry of Economy of the United Arab Emirates. However, only regulations that meet certain criteria of the Agency Act may be registered under this Act and are therefore subject to its provisions. There are many unregistered commercial agency contracts in the UAE that are governed by other UAE laws, including the UAE Business Transactions Act and the UAE Civil Code. The United Arab Emirates, with the aim of strengthening the national framework for promoting trade and investment in the most advanced economy in the Middle East, has approved amendments to Federal Law No. 18 of 1981 concerning the Agency Act. The Cabinet of the United Arab Emirates has approved a bill to amend the provisions of the national law, a step that is part of improving the development of the country`s trade and investment. Indeed, it would provide the necessary legal protection to owners of small and medium-sized enterprises (SMEs) and small or small shareholders in the event of termination or non-renewal of the agreement without substantial reasons. In a way, this amendment aims to ensure a continuum of family businesses with sound management and remedies in the event of default […].