A Huge Step Forward to Ease Business in the UAE – New Agency Law

By: Vijendra Vikram Singh Paul
Senior Legal Counsel

The United Arab Emirates (UAE) has recently passed a new Agency Law that is set to have a significant impact on businesses operating in the country. The new law replaces the previous Commercial Agency Law and introduces a range of new provisions designed to improve transparency, protect the rights of both parties, and promote fair competition in the UAE market. 

Another important change is the introduction of a mandatory notice period for termination of agency contracts. Under the previous law, principals could terminate contracts without notice, which often left agents with little recourse. The new law requires that principals provide agents with notice of termination, and also provides for compensation for agents in certain circumstances.

One of the key changes to the Commercial Agency Law is the provision that allows public joint-stock companies with at least 51% UAE national shareholding to act as  commercial agents. Prior to this change, only individuals or UAE national-owned companies could act as commercial agents in the country.

This change is significant for several reasons. Firstly, it provides public joint-stock companies with a new opportunity to expand their operations in the UAE. By acting as  commercial agents, these companies can leverage their existing networks and expertise to represent international brands in the UAE market.

Secondly, it enhances the competitiveness of the UAE market by allowing for a greater diversity of commercial agents. By enabling public joint-stock companies to act as commercial agents, the UAE government is providing businesses with more options and flexibility when it comes to selecting a representative in the country.

The New Agency Law also introduces new provisions relating to the termination of agency agreements. Under the new law, an agency agreement can be terminated by either party, subject to certain conditions. 
Article 9 of the New Agency Law, sets out the ways in which a registered commercial agency agreement can be terminated.

One of the key ways in which a commercial agency agreement can be terminated is upon the expiry of the agreement, unless the parties agree to renew the agreement. In such cases, notice of at least one year or one half of the contract's term (whichever is less) must be given to terminate the agreement, unless the parties have agreed otherwise.

The New Agency Law applies to all agency relationships, including distribution, franchising, and licensing agreements. This expansion is expected to provide greater clarity and certainty for businesses operating in the UAE and strengthen the legal framework for agency relationships.
One of the most substantial amendments introduced by the New Agency Law is the dispute resolution mechanism. The parties can specify a method of dispute resolution, such as arbitration, mediation, or conciliation, in their agreement. This provision is expected to promote faster and more efficient resolution of disputes between the parties. The new law also establishes a mechanism for resolving disputes between principals and agents. Under the new law, the parties can opt for arbitration as a dispute resolution process apart from the statutory committee instituted by the Agency Law, which is a welcoming step. 


This provision is significant for many reasons, as it provides precision and certainty for businesses operating in the UAE. By setting out clear rules for terminating a commercial agency agreement, businesses can more easily plan for the future and make informed decisions about their operations in the country.

Additionally, the notice period requirement provides a level of protection for both parties to the agreement. By requiring a minimum notice period, the law ensures that both the commercial agent and the principal have sufficient time to prepare for the termination of the agreement and make any necessary arrangements. It is important to note that the notice period requirement applies unless the parties have agreed otherwise.

Overall, the new Agency Law in the UAE represents a significant step forward for businesses operating in the country. It provides greater clarity and transparency in agency relationships, and helps to protect the rights of both principals and agents. By promoting fair competition and providing a mechanism for resolving disputes, the new Agency Law is likely to have a positive impact on the business environment in the UAE.