UAE Commercial Agency Law: What Federal Law 3 of 2022 Changed

When Federal Law No. 3 of 2022 replaced the forty-year-old commercial agencies regime, the story that
travelled was that the UAE had opened agency arrangements to foreign companies.

Read the law and that is not what it says. Article 2(1) still restricts agency practice to UAE
citizens and entities wholly owned by them. What the law created were two narrow gateways — and one of
them is a Cabinet discretion, not a right.

Here is what the UAE commercial agency law actually changed, taken from the Ministry’s
own published English text rather than from summaries of it.

The ownership rule did not go away

Article 2(1) reserves agency practice to individual citizens, and to companies and institutions wholly
owned by a UAE-citizen natural person, a public legal person, a private legal person owned by public
legal persons, or a private legal person wholly owned by citizen natural persons.

That is the rule, and it is intact. Two exceptions sit beside it.

Article 2(2) — a Cabinet discretion. The Cabinet “may, based on a recommendation of the
Minister, allow any international company, even if it is not owned by citizens, to practice the Commercial
Agency business for the products it owns” — and only where both conditions hold:
the agency “does not have a commercial Agent inside the State”, and the agency “is new and not previously
registered in the State”.

So this reaches a foreign principal distributing its own products in a market where no UAE agent
already exists. It does not let a foreign company take over an existing agency, and it is permissive
rather than automatic.

Article 2(3) — the PJSC carve-out. Public joint stock companies incorporated in the UAE
in which citizen shareholding is not less than 51% are excluded from Article 2(1). Note
what that is: a relaxation from “wholly owned” to “majority Emirati”. It is not an opening to foreign
control. The procedures come from Cabinet Decision No. 83 of 2023.

Anyone telling you the law “removed the requirement for a UAE national agent” has not read Article 2.

The transition is two-track, not two years

This is the correction that matters most to incumbent agents, because the widely reported “two-year
transition” is wrong for exactly the agents most exposed.

Article 30(1) defers the new expiry provisions in Article 9(1)(a) and (b) for agency contracts in force
at the law’s issuance, until two years after entry into force. But Article 30(2) extends that to
ten years where the agency has “been registered for the same Agent for more than ten
years” or where “the volume of the Agent’s investment exceeds one hundred million
(100,000,000) dirhams”.

The Minister sets the valuation standards for that investment test, under Ministerial Decision No. 215
of 2023. A long-established or heavily invested agent has a decade, not two years.

Arbitration is now expressly allowed

Under the 1981 regime, UAE court jurisdiction over agency disputes was treated as effectively
exclusive. Article 26(1) of the new law states that its provisions “do not prejudice any agreement between
the Agent and the Principal to refer any dispute … to arbitration”, with Article 26(2) requiring that
arbitration take place within the UAE unless the parties agree otherwise.

That is a genuine break from the old regime and it is under-reported relative to the ownership story.
Our explainer on arbitration in
the UAE covers the institutions that would hear such a case.

The committee you must go through first

Article 23 establishes the Commercial Agencies Committee, constituted by Cabinet
Decision No. 82 of 2023.

Article 24(1) makes it a mandatory pre-litigation gateway for disputes between parties to an agency
registered with the Ministry: “no case may be admitted before courts in this regard before referral to the
Committee”. It runs on a clock.

The Committee is a filter with time limits, not a replacement for the courts — court access revives if
it does not deliver.

What happens when an agency ends

Article 9(1) sets out how a contract expires: on expiry of its term unless renewed by agreement; by the
will of either party under the contract’s terms; by agreement before term end; by final court judgment; or
in any other case in the law. The first two are the clauses the transition defers.

Article 9(2) is the commercially significant one. On expiry, unless agreed otherwise, the old agent’s
assets transfer to the principal or the new agent at fair value, where those assets are
subject to the agency contract, are agreed, are in the old agent’s possession at expiry and are free of
transfer restrictions. Either party may ask the court to value them under Article 9(4).

Article 10(1)(a) requires a terminating party to give notice “not less than one year prior to the date
set for termination or prior to the lapse of one half of the contract term, whichever is less, unless the
two parties agree otherwise”.

And during a dispute, Article 9(3) allows goods or services to be brought into the UAE from exclusive
sources temporarily, with Ministry approval, while leaving the principal liable to the old agent for any
compensation a court finally awards — the mechanism that stops a supply line dying while lawyers argue.

Registration is validity

Article 3 provides that agency business may not be practised except by those listed in the Commercial
Agencies Register at the Ministry, and that “any Commercial Agency that is not listed in this Register
shall not be valid”. Article 4 requires the agent to be engaged by the original principal under a written
and documented contract, plus registration.

Enforcement has teeth: Article 27 gives designated Ministry and local-authority employees the capacity
of judicial enforcement officers, with powers of access, inspection and referral, and the ability to call
on security agencies. Cabinet Decision No. 89 of 2023 sets the schedule of violations and administrative
penalties.

Two practical notes

The 1981 law is gone. Article 28(1) repeals Federal Law No. 18 of 1981 outright, along with every
conflicting provision. Content describing the old regime is describing a repealed statute.

And the ministry has moved. The Ministry of Economy is now the Ministry of Economy and
Tourism; the old economy.gov.ae domain no longer responds, and moec.gov.ae redirects to
moet.gov.ae. Any guide still pointing readers to the old address for the agency register sends them
nowhere. The law’s own text still refers to “the Ministry of Economy”, because the rename came after the
law was passed.

On dates: the law was issued on 13 December 2022 at the Presidential Palace in Abu
Dhabi. Article 31 provides that it comes into force six months from publication in the Official Gazette,
which puts entry into force in June 2023. Commentary splits between the 15th and 16th of that month; we
are not picking a day, because we verified the issuance date from the primary text and not the gazette
date.

No amendments to the law itself have been published. The implementing framework was completed by six
Cabinet and Ministerial decisions during 2023.

Businesses structuring distribution here should read this alongside our guides to
free zone versus mainland
setup, UAE trade licence types,
the Dubai instant
licence and
trademark
registration — because an agency relationship and the brand rights behind it are usually negotiated
together.

Primary sources: the Ministry of Economy and Tourism’s published English text of
Federal
Law No. 3 of 2022 Regulating Commercial Agencies — every article quoted above was read from that file
— and the Ministry’s
commercial
agency legislations page, which lists the law and its six 2023 implementing decisions. This article is
general information, not legal advice.