International Distribution Agreements in the United Arab Emirates

国家指南

更改国家/地区

The common feature of distribution agreements is that distributors purchase products from their suppliers on a lasting basis and re-sell them in their own name and at their own risk to customers. Distributors are often obliged to carry out marketing and promotion activities and to comply with minimum purchase or sales quantities. When it comes to the details, however, distribution agreements can differ in countless aspects. For example, suppliers may or may not grant exclusivity rights to distributors, lawfully prohibit sales by distributors to non-authorized resellers or compete with their own distributors for certain customer groups or in certain distribution channels (online sales etc.).

In most jurisdictions, distribution agreement are not specifically governed by statutory provisions, although certain provisions addressing other kinds of agreements, for example the entitlement to a goodwill indemnity under agency laws, may apply to distribution agreements by analogy. Due to the lack of specific statutory provisions and often long-term commitments undertaken in distribution agreements, carefully drafted agreements are of utmost importance for suppliers and distributors. Even though it might be unpopular to discuss about the end of a promising future distribution partnership already when an agreement is negotiated, it is crucial that the distribution agreements also contain appropriate provisions governing the consequences of a termination. After all, the termination of distribution agreements is a frequent source of disputes.

In this Guide, experienced distribution law experts from different countries provide practical advice to (future) parties to distribution agreements.

阿拉伯联合酋长国Last update: 25 2 月 2026

How are distribution agreements governed in the United Arab Emirates (UAE)?

In the United Arab Emirates (hereinafter the “UAE”), a distributor is an independent entity that purchases and resells products of a principal within the territory on its own account.

However, the distinction between an agent and a distributor  often blurs, as they are subject to the same applicable law. 

Indeed,  an agent is defined as the person “entering into a contract of commercial agency for the representation of the principal in the distribution, sale, display or offer of merchandise or service inside the state in return for a commission or profit” and, altought there is not a definition of distributor, it is understood in commercial practices that also the distributor is a commercial agent who does not receive a commission from the principal, but who makes his earnings through a mark-up of the sale price of the products.

This has also been confirmed by the UAE courts, which have clarified that the contract between a producer and a distributor of a product against a certain commission or profit is considered a commercial agency contract.

Accordingly, both agency and distribution contracts are ruled by the Federal Law No. 3/2022 Regulating Commercial Agencies, which has superseded the Federal Law No. 18/1981 as amended (hereinafter referred respectively to as the “New Law” and the “Old Law” and, together, the “Commercial Agency Law”) in case of commercial agency contracts (or distribution agreements for the reasons explained above) subject to registration/registered with the Agency Department of the Ministry of Economy.

Existing registered contracts executed under the validity of the Old Law will continue to be regulated under the same, unless for certain provisions of the New Law, which will also be applicable to such contracts, subject to certain terms and conditions.

In particular, to be highlighted that as per the Old Law, the principal is not entitled to terminate or to refuse the renewal of a contract, unless in case of an agreement with the agent/distributor or the existence of fundamental reasons justifying such termination or the refusal and to be proven by the principal. Also, the party suffering damages because of the termination or the non-renewal is entitled to a compensation.

However, in the absence of indications by the law in this regard, the indication of “fundamental reasons” as well as the determination of the elements and conditions for granting and calculating compensation, these have been provided from time to time by the authority having jurisdiction in case of disputes.

The New Law has instead inserted provisions according to which the contract shall be considered expired upon the expiry of the term (unless renewed by the agreement between the parties), by the decision of each of the party according to the terms and conditions set forth in the contract, by the agreement between the parties before the expiry of the contract term, upon the issuance of a final judgment. 

Further, the New Law has specified that (i) the agent may claim compensation for the damages incurred as a result of termination in case of not renewal, unless the parties had differently agreed and that (ii) if the principal has terminated the contract according to the provisions of the same contract, the agent may claim – and be entitled to - a compensation if it proves certain elements such as that its activity has contributed to the visible and significant success of the products of the principal.   

The New Law however has specified that the same new provisions in point of termination and compensation will be applied to existing contracts after 2 years from the entry in force of the same law (and therefore from 15/06/2025) or after the lapse of 10 years in the event of contracts that have been registered for more than 10 years and in which the agent or distributor proves that it has made an investments exceeding 100,000,000 AED. 

Provisions related to such matters are also included in the Federal Decree Law No. 50/2022 Issuing the Commercial Transactions Law (hereinafter referred to as the “Commercial Code”) and in the Federal Law No. 5/1985 On the Civil Transactions Law as amended (hereinafter referred to as the “Civil Code”), which however may be applied in case of non-registered contracts.

In case of non-registered contracts also a foreign law can be applied[RLC1] [RLC2] [as3] .[RLC4] [as5] 

In fact, it is noted that local companies have been accepting to act as agents/distributors for foreign investors if the contracts related thereof were subject to registration in order to have the protection granted by the Old Law. Also, registration may be required when contracts are related to products involving certain sectors such as oil and gas in order to participate in tenders.

 [RLC1]+ specificherei quando un contratto di agenzia o distribuzione è soggetto a registrazione e cosa cambia se si registra o meno (può essere la risposta ad una domanda ad hoc del questionario)

 [RLC2]+ quali sono le principali differenze tra Old e New law dal punto di vista pratico

[as3]Ok qui si apre altra parentesi. Di fatto storicamente agenti e distributori erano (e sono) gruppi locali e alla fine tutti volevano che il contratto fosse registrato perchè più tutelante vista la vecchia legge. Inoltre, da tenere  presente che non si potevano costituire societá locali in mainland senza il 51% detenuto da locali e con societá in free zone (detenuta al 100% da socio straniero) non potevo e diciamo non posso ancora vendere in mainland senza agente registrato in mainland... oggi diciamo che questo agente registrato in mainland potrebbe anche essere una societá di trading non detenuta dal socio locale neppure in parte, ma non posso peró fare una societá di trading al 100% straniera in mainland per certi settori, per esempio quello dell'oil&gas.. inoltre, se vendo prodotti in quel settore potrebbe essere l'autoritá competente - che potrebbe essere per esempio Abu Dhabi National Oil Company - a chiedermi che il mio agente sia local ed a volte non solo local, ma anche registrato e con contratto registrato.. diciamo che c'é anche poca chiarezza e poco coordinamento, per cui di fatto spesso le societá/le persone locali chiedono la registrazione perché sanno che - almeno in passato - c'erano piú tutele.

Per esempio una societá italiana che vende motori ha una societá ad Abu Dhabi con un socio locale che e' attivo anche nel settore oil&gas e per partecipare ad appalti come fornitori si sono iscritti con la competente autoritá che ti ho citato prima locale "grazie a questo socio". Oggi secondo l'autoritá che rilascia la licenza, la societá italiana potrebbe detenere la societá locale al 100%: sentita invece "l'autoritá dell'oil&gas" mi hanno risposto che di fatto non lo sanno se senza il socio locale la societá italiana potrebbe comunque essere nell'elenco dei loro fornitori... quindi di fatto la societá italiana si tiene il socio locale per evitare sorprese

[RLC4]questo non mi è chiaro, spiegherei quale legge si applica ratione temporis (Old - New) e quali norme della new law si applicano anche a contratti regolati dalla Old Law

[as5]Qui in realtà si apre una parentesi che é più che altro pratica e storica e che va dal 1981, quando é entrata in vigore la vecchia legge. Altresí va tenuto conto che non esiste disponibilitá di decisioni del committee e delle corti come siamo abituati in Italia. Tra l'altro tutto é in arabo ed esiste fondamentalmente una banca dati che traduce - specificando che qualche errore ci può essere come poi mi é anche capitato di vedere- in inglese qualche legge e qualche pronuncia più rilevante.

La vecchia legge per esempio diceva che il preponente non poteva impedire il rinnovo o risolvere il contratto se non per giustificato motivo e che l'agente aveva diritto ad una indennitá alla fine del rapporto.

La stessa legge però non diceva quali erano i gravi motivi, né indicava se il dirtto dell'agente era soggetto al sussistere dell'assenza di gravi motivi e di fatto come l'indennitá andava calcolata.

Dal 1981 quindi sono stati il committee competente per le controversie e le corti a dire quali fossero caso per caso i giustificati motivi e i criteri per il calcolo dell'indennitá. Per esempio,  giustificato motivo é stato ritenuto il mancato raggiungimento dei minimi e l'indennitá si é ritenuta spettare quando l'agente di fatto aveva contribuito ad incrementare il business del preponente e aveva per esempio fatto certi investimenti per poter operare a favore del preponente. Circa come calcolare l'indennitá per esempio si decideva per una certa percentuale di quelli che erano stati i profitti che il preponente aveva realizzato negli anni grazie all'agente.

La nuova legge ha di fatto invece inserito delle previsioni più "chiare e meno a tutela degli agenti", anche un pó recependo quello che le corti o il committee negli anni hanno detto. In particoalre, oggi la nuova legge dice per esempio che le parti possono inserire nel contratto il diritto al non rinnovo del contratto, anche negando in questi casi il diritto dell'agente all'indennitá, che le parti possono regolare nel contratto il diritto del preponente alla risoluzione con diritto peró in questi casi per l'agente alla indennitá se prova che per esempio ha contribuito al succcesso del preponente e avrá delle perdite a fronte della mancata continuazione del rapporto.

La stessa legge prevede che queste nuove previsioni siano applicabili dopo 2 anni dalla sua entrata in visore (e quindi dal 15/06/2025) e per i contratti "più lunghi" dopo 10 anni.

Essendo "tutto nuovo" sará poi da vedere come coordineranno in pratica il contentuo "di un vecchio contratto" con le nuove disposizioni.

Are there any formalities required to establish a distribution agreement in the UAE?

It depends if the contract is subject to registration – and therefore to the Old Law and the New Law – or not.

In the case of registration under the Old Law, agents or distributors shall be UAE nationals or, in the case of companies, companies fully owned by UAE nationals.

Further, they shall be registered with the Ministry of Economy – Commercial Agency Register.

The New Law includes the possibility that foreign companies are granted the right to operate without the need to appoint an agent or a distributor, [RLC1] [as2] subject to certain terms and conditions such as the fact that the foreign company does not already have an appointed registered agent or distributor in the territory. However, it shall be verified how in practise this new provision will be implemented.

Also, contracts subject to registration shall be in writing, duly legalized and attested as well as translated into Arabic. 

 [RLC1]significa che la società straniera può agire come agente o distributore negli UAE? lo spiegherei meglio

 [as2]Corretto. Il "problema" é che nessuno sa di fatto come faranno ad applicare questa previsione, che prevede che il consiglio dei ministri sulla base di una raccomandazione ricevuta dal ministero dell'economia possa consentire a societá straniere di oeprare direttamente... purtroppo qui a volte si fanno le leggi "per modernizzare", ma le persone che poi lavorano nelle autoritá non conoscono la legge o non sanno come procedere da un punto di vista pratico... da un certo punto di vista per fortuna non ho ancora avuto la necessitá di andare all'autoritá a chiedere chiarimenti ma lo farò e ti faró poi sapere.. per ora mi limiterei ad indicare la novitá.

When are distribution agreements considered exclusive under UAE laws?

In case of registered contract, the distributor is appointed on an exclusive basis. However, it is possible to appoint the distributor for example for a single Emirate rather then for the whole territory of the UAE.

In case of non registered contract, the matter can be ruled by the parties (usually distributor are requesting the appointment on a exclusivity basis at least for part of the territory).


How are resale price maintenance and suggested resale pricing handled in the UAE?

The Commercial Agency Law does not provide indications in this regards. Accordingly, both in case of registered and not registered contracts, it is possible for the parties to rule the matter.

Contracts generally include a resale price maintenance clause whereby a principal and its distributor agree that the distributor will sell the principal’s products at certain prices, or at or above a price or at or below a certain price.


Are reservation of title clauses enforceable in the UAE?

There are no indications in the local laws in this regard.

Accordingly, both in case of registered and non-registered contracts, the parties may govern this matter by inserting such provisions.

Also payments terms and conditions can taken into account in order to rule this matter (e.g. it can be preferable to insert provisions according to which the payment shall be made in advance/upon confirmation of the order/before the delivery).

Can a distributor be restricted by non-compete obligations during or after termination under the laws of the UAE?

As per the Commercial Agency Law the distributor is appointed on an exclusive basis. However, the laws do not provide indications on non-competition. Accordingly, the parties can insert in the contracts provisions in this regards and it is not uncommon that the principal inserts provisions including the non-competition for the distributor.

To be noted that the UAE Federal Competition Law prohibits ‘restrictive agreements’, such as those that have the effect of limiting the flow of commodities and services to the market, or conversely flooding the market with such items. Also, agreements that divide markets or assign clients based on geographical area, and those that hinder the entrance of businesses to the market, are banned.

However, the Competition Law does expressly state that this aspect is subject to the provisions of Federal Law No. 18 of 1981 (as amended) (the Commercial Agency Law). Accordingly, registered distribution agreements fall outside the scope of the prohibition on restrictive agreements.

Under what notice and conditions can a distribution agreement be terminated for convenience?

In case of registered contract, the Old Law does not provide for the inclusion of such provisions, since the principal is not entitled to terminate or to refuse the renewal of a contract, unless in case of an agreement with the agent/distributor or the existence of fundamental reasons justifying such termination or the refusal, and to be proven by the principal. Also, the distributor suffering damages because of the termination or the non-renewal is entitled to a compensation.

However, in absense of indications by the law in this regards, the indication of “fundamental reasons” as well as the determination of the elements and conditions for granting and calculating a compensation have been provided from time to time by the authority having jurisdiction in case of disputes. For example, it has been considered as “fundamental reason” justiyfing the contract termination the breach of the minimum purchases orders by the distributor and as criteria for the determination of the compensation the term of the relationship, the turnover reached by the distributor over the years, the success reached by the preponent becuase of the activity made by the distributor in the territory.

The New Law has instead inserted provisions according to which the contract shall be considered expired upon the expiry of the term (unless renewed by the agreement between the parties), by the decision of each of the party according to the terms and conditions set forth in the contract, or by the agreement between the parties before the expiry of the contract term, or upon the issuance of a final judgment.

Therefore, a provision granting the principal the right to terminate for convenience can now be inserted. However, the New Law also specifies that in such cases, the agent/distributor can claim—and therefore be entitled to—compensation. See below in this regard.

Under what conditions can a distribution agreement be terminated for breach with immediate effect in the UAE?

It can be convenient to include in the contract provisions according to which the principal is entitled to terminate the contract in case of the occurance of certain breaches by the distributor and to list also the events to be considered as material breaches e.g. to insert minimum purchase clauses and to specify that the breach of the same shall be consider as a breach justifying the termination of the contract by the principal and that no compensation is due in such cases to the distributor.

However, to be noted that in particular in case of registered contract it cannot be excluded that the distributor claims – and be then recognized as entitled to - a compensation because of the investments made, the termination-related losses and considering for example the increase of the affairs/customers reached by the principal thanks to his activity.

Is the distributor entitled to indemnity, goodwill compensation, or damages upon termination?

Under the New Law, the parties can expressly provide for the termination of the contract upon expiry of the term with no right of compensation for the distributor in such a case.

In the case of open-ended contracts, there is the risk that the distributor may be entitled to compensation.

In case of non-registered contract, the Commercial Code provides that (i) either party can terminate the contract at any time and no compensation shall be due except if the termination occurs without prior notice or at an undue time or (ii) in the event of fixed term agreements, the termination is subject to the occurrence of serious and acceptable reasons, otherwise compensation is due.

It can also be governed by a foreign law, and therefore, no compensation might be due to the distributor. However, in this regards, it shall be noted that (i) agents or distributors have been awarded compensations by local courts even in presence of non-registered contracts, (ii) the foreign law shall comply with Shari’a and the public policy or morals of the UAE, (iii) there have been certain areas of commercial dealing in which the local courts have not upheld a foreign choice of law, (iv) in some cases, foreign jurisdiction clauses have been ignored by UAE courts, (v) foreign judgments or awards are enforceable in the UAE only if not related to matters considered as public policy in the UAE (such as have been considered agency and distribution matters) and in any case following the mandatory procedures in this regard.

Is the distributor entitled to reimbursement for unsold stock, investments, or other termination-related losses?

The New Law states that agents (and therefor also distributors for the reasons stated above) shall return the products in their possession, unless the parties agree otherwise.

What are recommended dispute resolution methods in distribution agreements in the UAE?

In case of registered contracts, under the Old Law, the parties refer disputes to the Commercial Agency Committee and, after that, to the local courts.

It was specified that the local courts shall be competent to adjudicate any dispute arising from the execution of contracts, while any agreement to the contrary is null, and in particular, it is not possible to include an arbitration clause in the agreements.

The New Law allows the parties to agree to resolve disputes through arbitration in the UAE unless they agree otherwise. In this regard, it should be noted that the prerequisite of submitting the dispute to the Commercial Agencies Committee before resorting to the courts also appears to apply when the parties have agreed on arbitration as the method of dispute resolution. Additionally, the option to specify arbitration as the dispute resolution mechanism is recent, and it will need to be verified how arbitration clauses are applied, especially in cases where awards are issued abroad.

In regards to non-registered contracts, the parties can provide for the application of a foreign law and for the competence of foreign courts or arbitration as dispute resolutions methods.

However, it shall be noted that (i) the foreign law shall comply with Shari’a and the public policy or morals of the UAE, (ii) there have been certain areas of commercial dealing in which the local courts have not upheld a foreign choice of law, (iii) foreign jurisdiction clauses have been ignored by UAE courts, (iv) foreign judgments or awards are enforceable in the UAE only if not related to matters considered as public policy in the UAE (such as have been considered agency and distribution matters) and in any case following the mandatory procedures in this regard.

For the recognition and execution of foreign judgments, first of all, it is verified if bilateral treaties for the enforcement of judgments exist between the UAE and the country in which the judgment is given. Also, there are further conditions that must be complied with, including for example the fact that the UAE courts must not have jurisdiction over the substantive dispute in relation to which the foreign judgment was obtained, the judgment must have been issued by a competent court under the law of that country, the judgment has the force of res judiciata under the law of the country in which it was given, the judgment must not contrary to UAE principles of morality and public order.

In practise, beside the fact that the commercial agency and distribution matters have been locally considered as matters of public order, the requirement that the UAE courts must not have jurisdiction over the substantive dispute may cause difficulties when enforcing a judgment against a defendant resident or domiciled in the UAE and the requirement of reciprocity may present difficulties as enforcement can be denied if the foreign country does not recognise UAE judgments.

According to and considering the above, it can be said as general consideration that in order to evaluate if to apply a foreign law and indicate the competence of foreign courts instead of having the applicability of UAE laws and the competence of UAE courts, elements such as the entitlements provided by the foreign law to an agent upon the termination of the contract or the place where the agent/distributor is having is assets can be taken into account. Indeed, for example, it might be convenient to insert the jurisdiction of the UAE courts rather than of a foreign court because the agent/distributor has assets in the UAE and locally the procedure for the recovery of outstanding amount can be expedited faster than in other countries.

选择国家