New Commercial Agency Law is a welcoming change for both the Principal and Agent.
02 February 2023
Bini Saroj
It shall come into effect from 15th June 2023.
Who can practice
Commercial agency?
• UAE Citizens
• Companies fully owned by UAE Citizens
• PJSC or Companies Owned by PJSC
Exception
to this is:
An International Company may be allowed even if it is not owned by
nationals for products that are owned by such company, under the conditions
prescribed by the Council of Ministers
Term of
the Contract:
A Contract has to be for a minimum term of five years if the agent
is establishing showrooms or buildings, commodity stores or maintenance or
repair facilities, unless the parties agree otherwise.
Termination
of agency contract:
The New Law provided for the first time, unilateral termination of
an agency contract by either parties, or non-renewal of the contract by serving
notice as prescribed in the law, unless the parties agree otherwise
This termination can be challenged by either of the parties.
Agreements that are in force at the time of issuance of the New
Law cannot apply termination clause except after the lapse of two years from
16th June 2023. The timeframe for the application of such provisions is
extended to 10 years, in case of same agent for more than 10 years or when
agency has invested more than 100 million dirhams
Resorting
to Arbitration:
the Agent and the Principal can resort to Arbitration in
accordance with Contract. This Arbitration will take place within UAE, unless
the parties agrees otherwise. Parties whose dispute is being heard by the
Committee or Court before this Law was published cannot resort to Arbitration.
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