Identifier
Created
Classification
Origin
06ABUDHABI2561
2006-06-21 11:27:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Abu Dhabi
Cable title:  

UAE AMENDS COMMERCIAL AGENCY LAW

Tags:  ETRD EINV ECON AE 
pdf how-to read a cable
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RR RUEHWEB

DE RUEHAD #2561 1721127
ZNR UUUUU ZZH
R 211127Z JUN 06
FM AMEMBASSY ABU DHABI
TO RUEHC/SECSTATE WASHDC 5785
INFO RUEHZM/GULF COOPERATION COUNCIL COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
UNCLAS ABU DHABI 002561 

SIPDIS

SENSITIVE
SIPDIS

NEA/ARP
STATE PLEASE PASS TO USTR FOR AUSTR SDONNELLY, DBELL AND
FHUEGEL

E.O. 12958: N/A
TAGS: ETRD EINV ECON AE
SUBJECT: UAE AMENDS COMMERCIAL AGENCY LAW

REF: ABU DHABI 2455

UNCLAS ABU DHABI 002561

SIPDIS

SENSITIVE
SIPDIS

NEA/ARP
STATE PLEASE PASS TO USTR FOR AUSTR SDONNELLY, DBELL AND
FHUEGEL

E.O. 12958: N/A
TAGS: ETRD EINV ECON AE
SUBJECT: UAE AMENDS COMMERCIAL AGENCY LAW

REF: ABU DHABI 2455


1. (SBU) Summary: On June 18, the Gulf News reported that UAE
President Sheikh Khalifa bin Zayed Al Nahyan amended several
provisions of the Commercial Agencies Law. These amendments
include: (1) limiting an agency contract to a fixed time
period, (2) requiring mutual consent to renew an agency
agreement, (3)allowing either party to file for damages, (4)
eliminating the Ministry of Economy's Trade Agencies
Committee (which handles agency disputes),and (5) allowing
the import of "liberalized goods" without the agent's
approval. Sheikha Lubna Al Qasimi told Gulf News, "The new
amendments will certainly boost the competitive economic
climate in the UAE. The law will also ensure the delivery of
high quality services to the customer." The law will provide
for a one year "grace period" for agents with existing or
expired agency contracts to obtain the concurrence of the
principal, before the Ministry of Economy cancels the
agreement. Any agency agreements without a fixed end date
can only be abrogated through court action. End Summary.


2. (U) The amended Agency Law limits the term of the agency
agreement to the term of the contract and requires both
parties to agree to extend an agreement at least a year
before the contract expires. A principal can rescind an
agency agreement before the contract term expires only if
there is a "justified" reason for the termination. If an
agreement is rescinded before the contract's term expires, a
new agent cannot be listed in the Commercial Agent's Registry
unless both parties agree to terminate the contract early or
the Court removes the first agent's name from the Registry.
Sheikha Lubna Al Qasimi told Gulf News, "The new amendments
will certainly boost the competitive economic climate in the
UAE. The law will also ensure the delivery of high quality
services to the customer."


3. (U) Under the amended law, if either the principal or the
agent has caused damage to the other party, the injured party
may claim compensation for losses incurred. The new law also
abolishes the Trade Agencies Committee. Agency disputes will
now go directly to court. On several occasions, the local
Arabic media have reported that some businessmen in the UAE
worry that courts may take years to decide a case.


4. (U) Furthermore, under the amended law, no product of the
same brand shall be allowed into the country without the
agent's approval unless such importation is approved by the
Ministry of Economy or the agent or is listed as a
"liberalized" good. The Cabinet has already approved the
unconditional import of 15 main foodstuffs. Previous press
reports quoted Minister of Economy Sheikha Lubna Al Qasimi as
saying, "This amendment is in conformity with the
government's plan to liberalize any product seen as
over-priced by its sole agents." (Reftel)


5. (SBU) Under Secretary at the Ministry of Economy Abdullah
al-Saleh told Econchief that the Ministry of Economy will
send a letter to all registered agents whose agency
agreements are about to expire or have expired instructing
them to provide the Ministry with a letter from the principal
authorizing the renewal of the agency agreement. The agent
has one year to provide the principal's authorization before
the agent's name is struck from the Ministry's Agent
Registry. According to Al-Saleh, the Ministry will not
cancel any agency agreements that do not specify an end date
(i.e., which are indefinite). A principal will need to go to
court to abrogate these agreements.


6. (SBU) Comment: These amendments will certainly solve some
of the problems facing U.S. companies by preventing an agent
from unilaterally extending the agreement, even after a
contract's expiration. It remains to be seen, however,
whether companies will be able to more effectively cancel
agency agreements through court action or will be forced to
wait for their agency agreements to expire. End comment.
SISON