A foreign company wishing to supply goods and services from abroad, but without establishing a physical presence in Dubai, may find it advantageous to appoint a commercial agent. The main provision of the Federal Commercial Agency Law No. 18 of 1981 as amended by Law No. 14 of 1988 is that an agent must be a UAE national, or a company 100% owned by UAE nationals.
A commercial agent may not carry out activities in the UAE unless its name is entered in the Commercial Agency Registry maintained at the Ministry of Economy and Commerce. The procedures and conditions for such an appointment are as follows:
A commercial agency agreement should be drawn up specifying the products and territories to be covered by the contract;
The agreement should be signed by both parties (pand agent) and, if signed in Dubai, legalised before a Court Notary Public. The agreement should then be translated into Arabic by a sworn translator licensed to operate within the UAE. The services of sworn translators are readily available in Dubai.
If the agency agreement is signed outside the UAE:
- it must be authenticated by a local notary public;
- the local Ministry of Foreign Affairs must then certify and authenticate the signature and seal of the notary public;
- the agency agreement must be certified by the UAE Embassy or Consulate or, where none exists, the Embassy of any other Arab country;
- when the documents arrive in the UAE they should be taken to the Foreign Ministry, so that the stamp of the UAE Embassy or Consulate may be authenticated, and translated into Arabic by a sworn translator licensed to operate within the UAE;
The agency should be registered at the Federal Ministry of Economy and Commerce.
Principals may seek the services of a sole agent in the UAE or may appoint a commercial agent in each emirate or for each product. In practice, many overseas companies appoint several agents to cover different defined areas of the country. A commercial agent is entitled to territorial exclusivity and, as such, will receive infringement commissions on transactions concluded by the principal himself or through others within the agent's area of activity.
Although the term of the agreement may be limited to a specified period, it is not permissible for a principal to terminate an agency agreement without the agent's approval, except for reasons seen as valid by the Commercial Agencies Committee of the Ministry of Economy and Commerce. In the absence of any justifiable reason, the failure to renew an agreement may entail compensation to the former agent. Clearly, therefore, great care should be taken in the initial selection of an agent.
In certain cases, an agent with rights to the entire UAE appoints distributors in the other emirates or enters a joint venture or partnership with a national of a neighbouring emirate.