Federal Law No. 3 OF 2022 Regulating Commercial Agencies (the “Commercial Agencies Law”), which came into effect on 15th June 2023 (the “Effective Date”), ushered in a period of change surrounding the termination and de-registration of registered commercial agencies in the UAE.
Pursuant to Article 9(1)(a) and (b) of the Commercial Agencies Law, a commercial agency, that has been registered with the UAE Ministry of Economy, will terminate (a) upon expiry and non-renewal of the term of the commercial agency agreement or (b) if either party elects to terminate the commercial agency agreement based on agreed terms of the underlying agency agreement.
However, the enforceability of Article 9(1)(a) and (b) of the Commercial Agencies Law, regarding the expiry/non-renewal and unilateral termination of commercial agency agreements, was expressly suspended, under Article 30 of the same law, for a period of two (2) years (the “Suspension Period”) in respect of registered commercial agencies that meet certain relevant criteria (each an “Affected Agency”).
Since the Effective Date fell on 15th June 2023, the Suspension Period expired on 15th June 2025.
In practical terms and as from 15th June 2025, parties under an Affected Agency will be able to freely deal with one another, under the provisions of Article 9(1)(a) and (b) of the Commercial Agencies Law, with the effect that each such Affected Agency may be terminated based on expiry/non-renewal or unilateral termination in accordance with the terms of the underlying agency agreement.
Given the expiry of the Suspension Period, we encourage all clients that are involved in registered commercial agencies in the UAE to evaluate their positions, promptly, in order to: (a) verify whether their agency can be classified as an Affected Agency and (b) assess their relative positions under such agencies with particular regard to Article 9(1)(a) and (b) of the Commercial Agencies Law.
Why This Matters
- Expiry of Suspension Period: Upon expiration of the Suspension Period, the statutory protections offered to a registered agent under an Affected Agency in respect of expiry/non-renewal and unilateral termination in accordance with the terms of the underlying agency agreement, simultaneously expired.
- Stakeholder Impact: Any party to an Affected Agency could be caught off-guard and unprepared if they do not act quickly.
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.
