A Comprehensive Overview Of The 2023 Commercial Fraud Law

Introduction:

UAE introduces Federal Decree-Law No. 42/2023 to Combat Commercial Fraud, repealing Federal Law No. 19/2016, and emphasizing a comprehensive legal framework. The new law aims to protect consumers, preserve goods' integrity, and promote fair trade practices in the UAE.

Article 1 of the Federal Decree-Law No. 42/2023, describes the term Adulterated Goods, Spoiled Goods, and Counterfeit Goods.

• Adulterated Goods: Goods that have changed, resulting in a loss of material or moral value, either through addition, reduction, or alteration in various aspects.
• Spoiled Goods: Goods that are no longer suitable for exploitation, use, or consumption, either in whole or in part.
• Counterfeit Goods: Goods that bear a trademark without authorization, and such trademark is identical or similar to a legally registered trademark.

Focus of the Commercial Fraud Law: The law concentrates on destroying counterfeiting and addressing various forms of commercial fraud. Additionally, it establishes procedures to prevent and control the trade of counterfeit, adulterated, and spoiled goods, creating a legal commercial environment that safeguards intellectual property rights.

Prohibited Actions and Violations: Article 4 establishes a comprehensive framework, imposing various measures against those involved in or attempting prohibited activities related to Adulterated, Spoiled, or Counterfeit Goods.

• Importing, exporting, producing, displaying, selling, storing, transporting, marketing, trading, promoting, merchandising, or possessing with the intent to sell Adulterated, Spoiled, or Counterfeit Goods is prohibited.
• Attempts to engage in any of these actions are forbidden.
• Violations include importing with fraudulent intent, misleading or counterfeiting information, possession or trading of such goods, using tools for fraudulent preparation, modifying goods, and engaging in prohibited packaging, distribution, storage, or transportation.
• False or misleading descriptions, advertisements, or displays of these goods are also considered violations.

Withdrawal and Destruction of Goods (Article 5):

• Suppliers and Competent Authorities are authorized to initiate the withdrawal of adulterated, spoiled, or counterfeit goods from the market and stores.
• Suppliers are obliged to dispose of or return such goods and bear associated costs to safeguard public health and safety.

Supreme Committee for Combating Commercial Fraud: The law establishes the Supreme Committee for Combating Commercial Fraud, reporting to the Minister and responsible for formulating rules of procedure and competencies.

Consumer Protections (Articles 6 and 7):

• Suppliers are obligated to refund the value of adulterated, spoiled, or counterfeit goods or exchange them based on the customer's preference.
• Suppliers may not escape penalties by claiming consumer awareness of the fraudulent nature of goods, emphasizing accountability for product quality.

Obligations of Suppliers (Article 8):

• Suppliers are required to submit mandatory commercial books and related documents upon request, promoting transparency in business operations.
• Labelling goods per UAE laws is mandated, ensuring consumers receive accurate information about products.

Enforcement and Inspection (Articles 9 and 10):

• Authorized employees have law enforcement capacity, with the right to inspect business establishments, warehouses, and other relevant locations.
• Provisions for preventive measures during inspections are in place, ensuring occupational health and safety, and emphasizing the commitment to maintaining standards in commercial practices.

Penalties and Legal Consequences:

• Violations of Articles (4), (5), (8), and (11) may result in imprisonment of up to 2 years and fines ranging from AED 5,000 to AED 1,000,000.
• Aggravated offences may lead to imprisonment and fines between AED 100,000 and AED 2,000,000, along with mandatory confiscation or destruction of illegal goods.
• Personal accountability extends to managerial roles, facing similar penalties if awareness or breach of duties contributes to the offence.
• Repeated offenders may face doubled penalties, and the offending establishment may be closed for up to 1 year, strengthening prevention against repeated violations.

Judicial Procedures, Appeals, and Conciliation (Articles 12, 22, and 23):

• Suppliers may have the right to petition the Competent Court for the release of seized or detained Goods.
• The Court may order release within 24 hours if the Supplier presents evidence of the Goods' perishable nature, samples for testing, and ensures no risk to public health.
• If no order upholding detention is issued within 45 days (20 days for perishable Goods), the Goods may be released.
• The Ministry or Competent Authority may initiate conciliation for violations, with specific procedures outlined in the Implementing Regulation.
• Article 23 outlines grievance and appeal procedures, allowing interested parties to file written grievances within 15 days of a decision, with a final decision expected within 30 days.
• An appeal to the Competent Court may be allowed within 30 days of being notified of the decision or the delay of the grievance period.

Conclusion:

Federal Decree-Law No. 42/2023 on Combating Commercial Fraud marks a significant step in fortifying the UAE's commercial landscape against dishonest practices. By defining and prohibiting actions, establishing consumer protections, and implementing robust enforcement mechanisms, the legislation sets an example for protecting the integrity of commercial transactions.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.