In a significant development, the UAE Commercial Agencies Law has recently been amended, introducing stricter penalties for violations. These amendments include the confiscation of goods and fines reaching up to Dh400,000.
UAE Commercial Agencies Law Strengthens Penalties
This legal framework aims to maintain the integrity of commercial agency agreements within the UAE, Hasan Al Kilany, a senior legal counsel at the Ministry of Economy, emphasized that these penalties would be applied without discrimination. Whether the violation is committed by a third party or one of the contractual parties, the law will be enforced rigorously. The objective is clear: to uphold the sanctity of commercial agreements in the UAE.
Introduction of a Disciplinary Cabinet Resolution
In conjunction with the revised Commercial Agencies Law, a new disciplinary Cabinet resolution has been enacted. This resolution addresses anyone who undermines the UAE's commercial agencies law, reinforcing the commitment to a robust and fair commercial environment.
Tiered Penalties Under the New Resolution
Under this disciplinary Cabinet resolution, penalties are imposed in a tiered manner. The first offense results in a warning, followed by a Dh100,000 fine. For recurrent violations or actions leading to the seizure of goods, the fine increases to Dh200,000. Finally, a substantial fine of Dh400,000 is imposed for the most severe violations. Hasan Al Kilany disclosed these details during a press briefing held jointly by the Ministry of Economy and Al Tamimi & Co., shedding light on the new regulations governing commercial agencies.
Effective Date and Applicability of the New Law
The revamped Commercial Agencies Law took effect on June 16, 2023, marking a significant shift in how disputes related to commercial agencies are addressed. Previously, such disputes were referred to civil courts. However, with the introduction of the new law, these disputes will now be adjudicated under its provisions, ensuring a more streamlined and consistent approach to handling violations.
Notably, the revised law also delineates the exclusivity of commercial agency businesses. Under the new framework, this business sector is reserved for UAE nationals and public joint-stock companies in which at least 51 percent of ownership rests with nationals. This provision aims to safeguard the interests of the UAE and promote local business participation in this crucial sector.
Geographical Limitations and Violations
In a broader context, the penalties encompass various types of wrongdoing. For instance, if an agent operating in one emirate attempts to bypass geographical limitations and sell goods in another emirate, they would be subject to these penalties. The law thus seeks to curb any actions that undermine the sanctity of commercial agreements and ensure a fair and just commercial environment throughout the UAE.