E-commerce is one of the fastest growing methods of doing business in the UAE. In this article, we discuss some of the important considerations related to electronic transactions in the UAE.
In the UAE, electronic transactions are regulated under the Federal Decree-Law No. 46 of 2021 On Electronic Transactions and Trust Services (Electronic Transactions Law), which abrogated the previous Federal Law No. 1 of 2006 on E-Commerce and Transactions.
Licensing Requirements
Any person proposing to conduct e-commerce activities in the UAE requires appropriate license. The Emirates may have their own rules regarding the procedures to be followed for obtaining a license. For example, in Dubai, the DED trader license allows businesses in Dubai to conduct business activities online and across social media accounts. This has been done to increase the ease of doing business electronically.
In Abu Dhabi, the Abu Dhabi Department of Economic Development allows entrepreneurs to obtain a new license to conduct business through websites and social media networks or add to their existing license.
Electronic Transactions under the UAE Law
In this connection, it is worth noting that the Electronic Transactions Law provides for an electronic document (such as emails, electronic records) to not lose its legal validity or enforceability even if it is in electronic form.
Article 10 of the Electronic Transactions Law further confirms that a contract may be expressed electronically and the contract will not lose its validity simply because it was made by means of one or more electronic documents.
In respect of online sale, Article 11 of the Electronic Transactions Law may be relevant. Article 11 states that a contract may be made between an automated electronic media which has been prepared and programmed in advance to do so. The contract will continue to be valid, enforceable and legally effective even in the absence of personal or direct interference by any physical person in the process of conducting a contract.
Article 11/2 further states that if the person knew or was supposed to know that the system will conclude or implement automatically, then contract with the electronic system and such person may be concluded.
Other Considerations
Operating e-commerce business, while lucrative, requires compliance with all the laws in the UAE. The websites undertaking e-commerce must adhere to the marketing or advertisement rules issued by the UAE federal and the concerned Emirates. For example, under Article 48 of the Federal Decree-Law No. 34/2021 Concerning the Fight Against Rumors and Cybercrime, promotion of goods or services through misleading advertisements or misstatements online will be liable to punishments in the form of imprisonment and / or fines between AED 20,000 to AED 500,000.
Entities and users of social media, additionally, must also comply with social media rules, including rules related to content creation criteria, adherence to public morality, amongst others.
All in all, e-commerce business would overall should maintain the highest standards of integrity, follow the rules applicable to them and ensure compliance of the law.
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.