Month: December 2023

Introduction

Commercial agency law No.3 0f 2022 play a crucial role in regulating business practices and protecting the interests of contracting parties. In this article, we will delve into the key clauses of a commercial agency law, highlighting the importance of registration, contract validity, dispute resolution, contract terms, multiple use of agents, entitlement to agent commission, and the procedures for application, rejection, amendment, and deletion of registrations in the Commercial Agencies Register.

Registration in the Commercial Agencies Register

The foundation of a legitimate commercial agency business lies in its registration in the Commercial Agencies Register maintained by the Ministry. Practicing commercial agency activities within the State is restricted to those entities listed in the register. Any commercial agency not listed in the register is considered invalid. This provision emphasizes the significance of proper registration to ensure compliance with the law.

Commercial Agency’s Validity

To establish a valid commercial agency, the agent must be engaged by the original principal through a written and documented contract. Additionally, the commercial agency itself must be listed in the Commercial Agencies Register. This requirement underlines the importance of formalizing the relationship between the parties involved and ensuring compliance with the law to maintain the validity of the commercial agency.

Commercial Agency Contract

A commercial agency contract should be based on the common interests of the contracting parties. Any provisions contrary to the law are deemed invalid. Furthermore, in case of disputes arising from the commercial agency contract, the courts of the State have jurisdiction to hear and resolve such conflicts. This provision highlights the necessity of aligning contractual terms with the provisions of the law and provides a clear mechanism for dispute resolution.

Contract Term

When the commercial agency contract includes provisions for the establishment of showrooms, commodity stores, or maintenance and repair facilities, the contract term is set at five years, unless otherwise agreed upon. This clause establishes a standard duration for contracts involving physical infrastructure, promoting stability and predictability in commercial agency relationships while allowing flexibility for alternative agreements.

Multiple Use of an Agent or Distributor

An original principal can engage the services of a single agent for a specific territory, and depending on the scope of the commercial agency, may seek the assistance of additional agents within one or multiple emirates. However, the distribution of commodities and services subject to the commercial agency should remain exclusive to the designated territory. Similarly, the agent may utilize the services of a distributor within the emirate(s) covered by their commercial agency. This clause facilitates the expansion of commercial agency activities while maintaining territorial exclusivity.

Entitlement to Agent Commission

The agent is entitled to receive commission for transactions concluded by the principal, either directly or through intermediaries, within the designated territory. This entitlement applies even if the transactions are not a direct result of the agent’s efforts. This provision recognizes the agent’s contribution to the principal’s business and ensures fair compensation for their role in facilitating transactions within the designated territory.

Submission of the Application for Registration

To initiate the registration process, an application must be submitted to the Ministry, accompanied by substantiating documents, including a copy of a valid business license and a copy of the attested and legalized commercial agency contract. This clause outlines the required documentation and establishes the Ministry as the authority responsible for reviewing and processing applications for registration.

Consideration of the Application for Registration

The Ministry is obliged to review the application for registration in the Commercial Agencies Register and provide a decision within ten working days once all registration requirements have been fulfilled. If the application is accepted, the Ministry issues a ratified certificate and notifies the competent authority and relevant parties.

Rejection of the Application for Registration

In the event that the application for registration is rejected, the Ministry may provide reasons for the rejection and notify the concerned party via registered letter, hand delivery, or email. Failure to respond within ten working days from the submission date of a complete application is considered a rejection. The rejected party has the right to challenge the decision within sixty days by filing a lawsuit before the competent court. This clause establishes a transparent process for handling rejected registration applications.

Change or Amendment of Commercial Agencies

The agent, their legal representative, or their heirs to inform the Ministry of any changes or amendments to the commercial agency within sixty days of becoming aware of such changes. The Ministry then notifies the relevant authorities and parties involved about the amendments. This provision ensures the accuracy and up-to-date status of commercial agency registrations.

Deletion of Registration from the Commercial Agencies Register

If the agent no longer meets the conditions stipulated by the law or if the commercial agency has expired and not been renewed, the agent or their legal representative must apply for the deletion of the registration from the Commercial Agencies Register within sixty days of the reason for deletion. Alternatively, the Ministry can initiate the deletion process if it determines that the conditions are no longer met. The Ministry notifies the relevant authorities and parties of the decision for deletion. This ensures that the register remains accurate and reflects the current status of commercial agencies.

Documents to be Submitted for Amending or Deleting the Commercial Agency

When applying for an amendment or deletion of a commercial agency, the applicant must provide substantiating documents. The Ministry has the authority to request additional documents deemed necessary for the amendment or deletion process. This clause ensures that the Ministry has the necessary information to process requests accurately and efficiently.

Extract from the Registration Sheet in the Register

Any interested party has the right to obtain an extract from the registration sheet in the Commercial Agencies Register. This extract provides relevant information about the registered commercial agency. Additionally, interested parties can request a certificate stating that a registration has not been made. This provision promotes transparency and allows stakeholders to access essential information regarding commercial agencies.

Conclusion

The above mentioned highlight the key aspects of commercial agency registration and validity. Proper registration, adherence to contract terms, dispute resolution mechanisms, and transparency in the registration process are crucial for establishing and maintaining legitimate commercial agency relationships. These provisions aim to protect the rights of contracting parties and ensure fair and transparent business practices within the State.

For further assistance please contact Al Safar & Partners on +971.4.4221944 email reception@alsafarpartners.com  – www.alsafarpartners.com  

Written By: Mrs. Kavitha Panicker – Managing Partner at Al Safar and Partners Law Firm.

Introduction:

Federal Law No. (3) of 2022, which regulates commercial agencies in the United Arab Emirates (UAE), introduces the establishment of the Commercial Agencies Committee. This committee plays a crucial role in resolving disputes that arise between the parties involved in registered commercial agency agreements. In this article, we will explore the competencies of the committee, its procedures, and the option of resorting to arbitration under Federal Law No. (3) of 2022.

Formation and Functions of the Commercial Agencies Committee:

Under Article (23) of Federal Law No. (3) of 2022, the Commercial Agencies Committee is established. The Cabinet issues a resolution to determine the committee’s formation, work system, member remuneration, and fees for hearing disputes. This committee serves as an alternative dispute resolution mechanism for commercial agency disputes, aiming to provide a prompt and efficient resolution for the parties involved.

Competencies and Procedures of the Committee:

a. Exclusive Jurisdiction: According to Article (24), the Commercial Agencies Committee has exclusive jurisdiction to hear disputes related to registered commercial agencies. Before parties can resort to courts, they must first submit their dispute to the committee. This requirement ensures that the committee has an opportunity to address the dispute before it proceeds to formal litigation.

b. Timely Resolution: The committee is mandated to address the dispute within twenty-two (22) working days from the date of application submission or completion of the required documents. The committee may seek assistance from relevant experts or entities to assist in the resolution process. Ultimately, the committee must render a decision on the dispute within one hundred and twenty (120) days from the application submission date. Failure to reach a decision within this timeframe allows either party to resort to the courts within sixty (60) days.

c. Binding Decision: Once the committee issues its decision, there is no admissible challenge against it after sixty (60) days from the notification date. The decision holds the force of a writ of execution, ensuring that parties comply with the committee’s ruling.

Assistance of Experts:

Article (25) of the law grants the Commercial Agencies Committee the authority to seek the assistance of experts or specialized entities when necessary. This provision ensures that the committee has access to relevant expertise and knowledge, enhancing the quality and accuracy of the decision-making process.

Arbitration as an Alternative:

a. Arbitration Agreement: Federal Law No. (3) of 2022 acknowledges the parties’ right to include arbitration clauses in their commercial agency agreements. This allows them to refer any disputes arising from the agreement to arbitration.

b. Arbitration Within the State: Unless otherwise agreed by the parties, arbitration proceedings should take place within the UAE. This provision ensures that the dispute resolution process remains within the jurisdiction of the UAE.

c. Committee Decision and Arbitration: If either party resorts to arbitration after the Commercial Agencies Committee has issued its decision, the committee’s decision will have no effect or consequence on the arbitration proceedings. This provision ensures that parties can pursue arbitration irrespective of the committee’s decision.

d. Transitional Provision: Article (26) clarifies that the provision allowing arbitration does not apply to disputes that were already being heard by the committee or the competent courts before the publication of Federal Law No. (3) of 2022.

Conclusion:

The establishment of the Commercial Agencies Committee under Federal Law No. (3) of 2022 provides a dedicated mechanism for resolving disputes in commercial agency agreements. Through its exclusive jurisdiction, timely procedures, and binding decisions, the committee aims to facilitate efficient and fair resolutions. In cases where parties prefer arbitration, the law recognizes their autonomy to pursue this alternative avenue. Overall, these provisions contribute to a robust framework for resolving commercial agency disputes in the UAE.

For further assistance please contact Al Safar & Partners on +971.4.4221944 email reception@alsafarpartners.com  – www.alsafarpartners.com  

Written By: Mrs. Kavitha Panicker – Managing Partner at Al Safar and Partners Law Firm.