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We are excited to share the latest edition of the Law Update, beautifully and appropriately titled “Sustainable Horizons: The Saudi Arabian Vision.” Giving special honor to the Kingdom’s 2030 vision, this update focuses on a collection of both informative and inspiring articles.
For those in construction, you can learn about how the tendering environment impacts risk-pricing for contractors, the updates on the legal framework of the construction industry and how contractors can protect themselves against financial difficulties.
There is good news too from the kingdom’s banking sector, from which the practice of “Open Banking” is being pushed for! But what is open banking? We’re answering that too.
Also . . . Are there any women trail blazers in Saudi Arabia you can name? We’ll help you with that. We cover how the Middle East has been making strides in empowering women in the entrepreneurial space,most notably in STEM fields.Read the full edition
The UAE Government has enacted a new Commercial Agencies Law no. 3 of 2022 which will come into force on 15 June 2023. The new law replaces the previous commercial agency law which dates back some 40 years and which faced criticism from principals who argued that it was too heavily in favour of local agents. The new law demonstrates the new approach of the UAE, in general, to relax the rules and the regulations between agents and principals, and to open the UAE economy further to foreign investments. In particular, it gives parties, both principals and agents greater control and flexibility on the term of a registered agency and also how an agency may be terminated.
Previously, commercial agency was generally considered to be the domain of UAE nationals but under the new law, international companies may now be permitted by the UAE cabinet perform commercial agency activities, subject to certain conditions being fulfilled. This will certainly lead to an increase in the UAE’s attractiveness and competitiveness as a place to do business. The new law, which will take effect from 15 June 2023, allows companies more control over how long registered agency agreements will last and when an agency agreement can be terminated
The most significant changes introduced by the new law include:
The previous commercial agencies law had become problematic in practice and whilst the new agency law is yet to come into force, it does clearly show the legislator’s intention to create a balance between the interests of principals, local agents and end consumers in the UAE. Over the last four or so decades, at every attempt of dialogue or change, the challenge of legacy issues reared up vis a vis agents that had been registered many years ago or who had made large investments into the agency.
And so the enactment of the new commercial agencies law is a significant step forward. It opens the doors for new commercial agencies to be more independent and flexible; enabling principals and agents to have more freedom to agree on suitable contractual terms between themselves, including events of expiry or termination.
The passing of the new agency law shows the overall direction in which the UAE is travelling, being increasingly open for international business and foreign direct investments. Some of the old rules are simply no longer suitable for the UAE’s current ambitions as an international business hub. Given the significant changes made by the new law, stakeholders, whether agents, principals or end consumers, should be happy with the outcome.
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