For decades, the UAE's Commercial Agency Law was regarded as one of the most protective legal regimes for registered commercial agents. While it provided certainty for agents, it also made it challenging for foreign principals to exit agency arrangements.
That changed with Federal Decree-Law No. 3 of 2022.
The reforms mark a significant shift towards a more balanced and commercially practical framework.
At its core, a commercial agency involves a foreign manufacturer or supplier appointing a UAE national or UAE-owned company to market or distribute its products or services in the UAE.
Under the new law, fixed-term agency agreements can generally come to an end upon expiry of their term, provided the statutory requirements are met and the parties do not agree to renew the arrangement. This represents a notable departure from the previous regime, where terminating or not renewing a registered agency could be considerably more complex.
Importantly, the reforms do not remove the protections afforded to agents. Registered agents continue to benefit from important statutory rights, including exclusivity, commission entitlements, customs protections, and, where applicable, compensation.
The objective of the new law is clear: to modernise the commercial agency framework, encourage foreign investment, and strike a fairer balance between the interests of principals and agents.
The UAE continues to strengthen its legal and regulatory framework in line with international business practices, providing greater certainty and flexibility for companies operating in the region.
Has the new Commercial Agency Law changed how international businesses approach the UAE market? In many cases, the answer is yes.
Note: This Legal Update / Newsletter / Podcast is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.
That changed with Federal Decree-Law No. 3 of 2022.
The reforms mark a significant shift towards a more balanced and commercially practical framework.
At its core, a commercial agency involves a foreign manufacturer or supplier appointing a UAE national or UAE-owned company to market or distribute its products or services in the UAE.
Under the new law, fixed-term agency agreements can generally come to an end upon expiry of their term, provided the statutory requirements are met and the parties do not agree to renew the arrangement. This represents a notable departure from the previous regime, where terminating or not renewing a registered agency could be considerably more complex.
Importantly, the reforms do not remove the protections afforded to agents. Registered agents continue to benefit from important statutory rights, including exclusivity, commission entitlements, customs protections, and, where applicable, compensation.
The objective of the new law is clear: to modernise the commercial agency framework, encourage foreign investment, and strike a fairer balance between the interests of principals and agents.
The UAE continues to strengthen its legal and regulatory framework in line with international business practices, providing greater certainty and flexibility for companies operating in the region.
Has the new Commercial Agency Law changed how international businesses approach the UAE market? In many cases, the answer is yes.
Note: This Legal Update / Newsletter / Podcast is intended for general informational purposes only and should not be construed as legal advice. It is based on laws and legal interpretations in effect as of the date of publication. Laws and regulations may change over time, and their application can vary depending on individual circumstances. Readers are strongly encouraged to seek specific legal counsel before acting on any of the information provided herein.