Regulatory & Compliance

Commercial Agency Law (UAE)

قانون الوكالات التجارية

Loi sur les agences commerciales

Definition

Federal Law No. 18 of 1981 (as amended) governing the appointment of commercial agents to distribute products or services in the UAE. Under this law, only UAE nationals or companies wholly owned by UAE nationals can serve as registered commercial agents. Registration with the Ministry of Economy creates a protected exclusive agency that is extremely difficult to terminate — even if the agency agreement has a fixed term or termination clause. The agent is entitled to compensation upon termination (often substantial, equivalent to years of commission), and the principal cannot import the same products through another channel while the registration subsists. This law is one of the most significant commercial risks for foreign companies entering the UAE market and requires careful structuring to avoid lock-in.

Key Points

Only UAE nationals or 100% Emirati-owned companies can be registered agents
Registration with Ministry of Economy creates a quasi-permanent, exclusive appointment
Termination requires proving agent's material breach or court order — extremely difficult
Agent entitled to compensation even if agreement has expired by its own terms
Alternative structures: service agent, distributor (unregistered), or free zone entity
Non-registration avoids the harshest protections but creates enforceability risks