Ministry of Economy highlights new law commercial agency law
Abu Dhabi, 25 January 2023:
His Excellency Abdulla Al Saleh, Under Secretary of the Foreign Trade and Industry at the UAE Ministry of Economy, emphasized that the UAE is determined to foster the attractiveness and competitiveness of the business environment in order to keep pace with the future economic trends.
The UAE further aims to offer a legislative framework that will enable companies that promote the new economic model, particularly the commercial agencies sector. With innovative projects and crucial commercial activities, this sector significantly contributed to the country’s development during the past several years. This allowed for the availability of a variety of services and goods for local markets, which improved the reputation of the national economy.
This was stated by His Excellency during a press conference to introduce the Federal Law No. (3) of 2022 on regulating commercial agencies. “The new Law, which replaces the previous 40-year-long legislation, aims to accelerate the growth of commercial agencies in the nation by diversifying their activities, improving their economic performance, and increasing their contribution to the growth of the national GDP in accordance with the Principles of the 50 and the UAE Centennial 2071,” he said.
He added: “The Ministry of Economy has collaborated with all of its federal and local partners, the corporate sector, and other pertinent organizations over the recent time. Following the constitutional processes established after the enactment of the nation’s federal legislation, they further discussed the revised law in the UAE Federal National Council. These initiatives attempt to ensure an optimum legislation that would best benefit the nation’s economy, satisfy the goals of the current commercial agencies, encourage the nation’s economy’s flexibility, and support its openness to foreign markets.”
Al Saleh emphasized that the significance of the Federal Decree Law on regulating commercial agencies stems from its provisions, which are based on the principle of autonomy/will and that the contract is indeed a pacta sunt servanda. “This creates an environment that is favorable for investment and safeguards the rights of parties per their agreement,” he said, adding that the law would contribute to increasing national investments and DFI to the country. “The law will further allow the businesses of commercial agencies to grow and prosper, by diversifying their activities, thereby ensuring the best products and services for consumers, and fulfilling their ambitions for competitive prices and high-level services. The law will further offer guarantees and after-sale services as well as creating new job opportunities in the country,” His Excellency added.
Moreover, the new law allows the broad participation of UAE nationals as commercial agents, offering them an encouraging environment to establish new and innovative commercial and investment projects. The law will accordingly promote the flexibility of the national economy and enhance its international competitiveness, as well as consolidating the UAE’s position as a favored destination for top regional and international companies and trademarks.
H.E Al Saleh further highlighted key provisions of the new law, ensuring the proactive approach of the country as follows:
Moreover, His Excellency emphasized that the Federal Law on the regulation of commercial agencies targets various categories that will benefit from its provisions and outcomes, including national business owners, companies, and entrepreneurs, as well as local and international commercial agencies wishing to relocate their activities to the UAE, and local and foreign investors.
He also noted that the law comes into force six months after its proclamation in the official gazette, which kicks in June 16th, 2023. However, reiterating the termination provisions regarding the current agency contract in the instances respectively of non renewal, or termination for convenience will not imminently apply. However, it applies as the following:
- After two years for existing agency contracts.
- After ten years for contracts been already existing with the same agent for the past 10 years since they were registered or where the size of the agent’s investment exceeded AED 100 million, thereby protecting stability and national investments in this vital sector.
Al Saleh concluded his statement by emphasizing that the law is a new landmark in the future legislative structure initiated by the country to increase national and foreign investments. The law further guarantees the best services for consumers, hence ensuring the sustainable development of the national economy and enhancing the country’s position as an attractive hub for future economic models.
Last Updated on 2 years by News Desk 2
