Discusses distribution network from how products enter to final destination, including reliability of distribution systems, distribution centers, ports, etc.
The UAE has over Fortune 500 companies (including all of the top 10).
- The 30th largest economy in the world.
- Ranked 11th out of 183 countries in 2019 for the overall ‘Ease of Doing Business’.
- The most attractive market in the region for retailers, a sector that is projected to grow at a compounded rate of 5.2% over the 2018-2023 period.
- Majority of the population (around 86%) lives in urban areas.
- Major retail groups in the UAE include: Lulu Group, Carrefour, Spinneys, etc.
In the UAE, companies have a variety of options to sell their products, from direct sales to e-Commerce. However, the most common way for foreign companies to market and sell in the UAE has been through local commercial partners on the ground who can actively promote their products. Such partners could be for the entire country (seven Emirates) or for a specified geographical territory.
eCommerce channels are growing rapidly in the UAE and opening the doors of opportunity to countless entrepreneurs. The UAE is the most advanced eCommerce market in the Middle East and North Africa (MENA) region. This is primarily due to widespread internet accessibility, mobile device proliferation, and social media as a sales channel. UAE consumers are increasingly shopping for day-to-day needs online, including clothing, household goods, and furniture. It is estimated that eCommerce transactions in the country will cross $16 billion in 2020 and grow 23% on average annually to 2022, and over 95% of purchases are predicted to be made online by 2040.
New FDI Laws
Foreign company sales opportunities in the UAE are expected to be enhanced by the government’s approval of 100% foreign ownership for 122 categories in the mainland under the Foreign Direct Investment (FDI) Law (Cabinet Resolution #16 of 2020). The list covers sectors including: information technology, warehousing, transport, education, construction, manufacturing, healthcare, hospitality, science and technology, art and entertainment, food services, agriculture, etc.
Under this law, examples of the minimum investment stipulated include: $545,000 for manufacturing; $817,000 for manufacturing of sports and toy industries; $5.5 million for manufacturing activities of automobiles, metal and medical equipment; and $27 million for healthcare.
Using an Agent or Distributor
To sell in the UAE without opening an office or a subsidiary, many companies choose to appoint local agents or distributors (companies, groups, or individuals) who have the potential and resources to sell and distribute their products. That enables foreign companies to leverage domestic expertise and avoid some of the costs associated with establishing a physical presence in the UAE.
The UAE Commercial Agencies Law is regulated by Federal Law No. 18 of 1981 which stipulates that agents must be UAE nationals or companies incorporated in the UAE and owned by UAE nationals.
The agreement includes any arrangement whereby a foreign company is represented by an agent in the UAE to distribute, sell, offer, or provide goods or services in an Emirate, with a specified territory of distributorship and duration of the relationship. These arrangements are generally entered into specifying payment, sales commission, or profit structures.
The agreement may or may not be registered with the UAE Ministry of Economy (MoE). However, under registered MoE agreements, the agent can obtain various protections afforded to agents under the UAE Commercial Agencies Law, including terms covering:
- Exclusivity – exclusive right to import goods covered under agency agreement.
- Commission – Entitled to receive commission as agreed upon.
- Termination – Agreed mutually (amicably) or with UAE MoE approval.
Agency agreements recognized by UAE MoE are protected under the law.
- Commercial Agency agreements must be registered in the commercial agencies register maintained by the Ministry of Economy in the relevant emirate or, if for the entire UAE, with the Ministry of Economy in the federal capital, Abu Dhabi.
- In order to register an agreement, an agent must have a presence and be licensed to operate in each emirate in which it conducts business, because there is no blanket license for the entire UAE.
- Agreements must be signed before a notary public and must be written in Arabic only or in Arabic and English.
- The agreement can be exclusive with respect to a defined territory, which can be one Emirate, or several, or the entire UAE.
A foreign company cannot re-register the commercial agency in the name of another agent even if the previous agency was for a fixed term unless: (i) it is amicably terminated by the principal and the agent; (ii) termination or non-renewal is for justifiable reasons that are satisfactory to the Commercial Agencies Committee; or (iii) a final judicial judgment is issued ordering the cancellation of the agency.
UAE Federal Law No. 2 of 2010 prevents termination, or non-renewal, of commercial agencies unless the principal has a material reason to justify the termination or non-renewal and re-introduced the specialized Commercial Agencies Committee designed to deal with disputes relating to commercial agencies.
Under the current legislation, the Committee has full authority of investigation, including the ability to appoint experts and the ability to apportion the costs of a hearing between the parties. The Committee has 60 days from the receipt of a complaint to provide a verdict and share findings.
Parties can also appeal the decisions of the Committee before the UAE courts.
UAE Distribution Agreements are governed by UAE Federal Law #18 of 1993, the Commercial Transactions Law. Such agreements may be implied or expressed (in writing), exclusive or non-exclusive, or non-specific in nature. They do not require a UAE national or a company fully owned by a UAE national to be their partner and such agreements do not have to be registered with the UAE’s MoE. An international or local free zone company can be appointed a distributor.
Exclusive Distribution Agreements may be signed by foreign companies giving rights to local partners to sell their goods within a specified geographical area. Such agreements fall under the UAE Commercial Transactions Law.
On the other hand, within the UAE Commercial Agency framework, companies with exclusive agency rights may sign distributor contracts locally which are treated as contractual agencies.
Foreign companies can also appoint several distributors in the same area.
Establishing an Office
Ownership restrictions may pose a challenge for American companies wishing to do business in the UAE.
Companies that are seeking to open an office and operate from the UAE with a physical presence and employees are required to obtain a company license, either 1) in a Free Trade Zone with 100% business ownership, requiring the appointment of a local service agent to sell products in the UAE; or, 2) open an office within the UAE mainland, requiring 51% local UAE shareholder or investment in one of the 122 approved categories and do business anywhere in the country.
Finding a Distributor
American companies looking to do business in the UAE without establishing an office can do so through a local agent or distributor who will act as their representative. However, finding the right distributor might be time-consuming and tedious especially due to UAE Commercial Agency and Transaction Law intricacies and related dispute resolution mechanisms.
Federal Laws and Individual Emirate Rules
Each emirate retains certain local regulatory powers. This includes commercial activities such as the issuance of trade licenses and the incorporation of corporate entities, where the activity is not already regulated under federal legislation. The interaction of federal laws, individual emirate laws, and free zone laws can be complex and confusing. U.S. companies are advised to seek experienced professional advice before embarking on any significant business venture.
Business and government contracts must be in Arabic or Arabic and English. In cases of inconsistency or ambiguity in terms contained in English documents, the Arabic document would prevail. This may be challenging for foreign companies as they are dependent upon local support for translation work and documentation.
Work week and time difference:
The UAE follows a Sunday to Thursday work week, providing a 3-day (Tuesday-Thursday) timeframe to work with American counterparts based in the United States.
Comply with UAE Safety Law
The Emirates Authority for Standardization and Metrology (ESMA) is responsible for implementation of the Product Safety Law, in coordination with UAE customs authorities. The law is applicable to all products sold in the UAE market, both manufactured locally or imported into the country, including free zones.
This may put pressure on foreign companies as they need to ensure that their products comply with any applicable standards issued by ESMA, or by a foreign regulator that has been approved by ESMA. Companies not meeting the criteria must file with ESMA for a risk assessment for their product.
Foreign companies can establish a formal presence in the UAE using different methods as listed below.
- Incorporating a Limited Liability Company (LLC).
- Establishing a branch office of a foreign company.
- Establishing a company or office in a free trade zone.
- Establishing a civil company.
Incorporating a Limited Liability Company (LLC)
A foreign company can conduct business through an LLC. This is a common method of operating a business in the UAE across all sectors. An LLC is required to have a UAE national as a shareholder with a minimum of 51% of the shares. Therefore, a foreign company can own up to a maximum of 49%. However, the UAE Foreign Direct Investment Law came into effect in 2018 that provides an increased level of foreign ownership for certain industries. In March 2020, the UAE Cabinet passed a resolution approving a list of activities comprising 122 economic activities across three broad sectors: services (52 activities), manufacturing (51 activities), and agriculture (19 activities) that are eligible for 100% ownership.
Establishing a Branch Office of a Foreign Company
Unlike the case with a local Limited Liability Company, a branch office can be established with 100% non-UAE national ownership and has the same legal identity as its parent company and conducts business under the name of its parent company. While each emirate has its own licensing rules for branch offices, this type of entity can carry out a variety of activities, as approved by the Department of Economic Development of the relevant emirate, although branches are more apt to be licensed for services rather than trading activities. Branch offices are regarded as fully-fledged businesses permitted to perform contracts or conduct other activities as specified in its license. The general characteristics of a branch office are as follows:
- Although the branch can be completely foreign owned, there is a requirement that a UAE national party be appointed to act as the branch’s local service agent.
- The local service agent must be a UAE national or a company wholly owned by UAE nationals. The arrangement between the company wishing to set up a branch and the local service agent will be set out in an agency agreement prepared in Arabic and English and signed before a local notary public.
- A branch office does not have limited liability. Its exposure to liability extends generally to the company that established it.
- There are no minimum capital requirements for a branch, although the foreign company is required to provide a standard form bank guarantee from a local bank in the amount of AED 50,000 ($13,600) and to provide details of its own capitalization and good standing, together with its two most recent sets of annual audited accounts.
A representative office is another option available to foreign companies. The function of a representative office is limited to promoting its parent company’s activities. This means that a representative office is only permitted to perform such activities as gathering information, soliciting orders, and marketing projects to be performed by the company’s head office. This type of office is also limited in the number of employees that it sponsors (usually three to four employees). As with branch offices, representative offices require the appointment of a service agent who is a UAE national and who provides the parent company with services such as obtaining permits and licenses. Also, like branch offices, representative offices are required to submit a bank guarantee as part of their registration process.
Establishing a Company or Office in a Free Trade Zone
Foreign companies can also establish a formal presence in one or more of the UAE’s free zones. A free zone is an economic area created in one of the seven UAE emirates, established to be governed by rules and regulations that are generally different from those governing “onshore” UAE. More precisely, federal criminal law applies to the free zones while federal civil law (such as the Commercial Companies Law and the Commercial Transactions Law) applies only to the extent the free zone has not developed its own laws or regulations on the matter. In many respects, the free zones are almost like foreign countries, territorially located within the UAE.
Free zones allow for up to 100% foreign ownership and may be subject to reduced or different trade barriers, tariffs, and quotas. Free zone companies may only operate within the boundaries of the free zone in which they are formed and licensed or outside the UAE and are limited to performing solely those activities listed in their license(s). Generally, free zones are designated by the government to cover a specific commercial sector. Different types of licenses that can be issued in a free zone include: General Trading License, Trading License, Industrial License, Service License, and National Industrial License. A non-comprehensive list of UAE free trade zones is provided at the end of this section.
The UAE also has specialized economic zones, such as those established by ZonesCorp in Abu Dhabi, which offer investment incentives such as certain reductions on infrastructure costs, administrative support, simplified approvals processes, and residential cities for workers. Companies situated in specialized economic zones are subject to the requirements of the UAE Commercial Companies Law, including the requirement for 51% UAE ownership.
Following the introduction of the Regulations for Jebel Ali Free Zone (JAFZA) Offshore Companies in 2003, foreign companies can establish JAFZA offshore companies, with benefits similar to other international offshore jurisdictions. Ras Al Khaimah has allowed the establishment of offshore companies since 2006.
UAE free zones include:
- Abu Dhabi
- Abu Dhabi Global Market (ADGM)
- wofour54 Media Free Zone
- Masdar City Free Zone
- Abu Dhabi Airport Free Zone
- Khalifa Port and Industrial Zone (KIZAD)
- Jebel Ali Free Zone (JAFZ)
- Dubai Airport Free Zone (DAFZ)
- Dubai Internet City (DIC)
- Dubai Media City (DMC)
- Dubai Gold and Diamond Park (DGDP)
- Dubai Cars & Automotive Zone
- Dubai Health Care City (DHCC)
- Dubai International Financial Centre (DIFC)
- Dubai Maritime City
- Dubai Logistics City
- Dubai Knowledge Village
- Dubai Outsource Zone (DOZ)
- Dubai Techno Park (DTP)
- Dubai Silicon Oasis Authority (DSOA)
- Dubai Studio City (DSC)
- Dubai Textile City (DTC)
- Dubai Flower Centre (DFC)
- Dubai Carpet Free Zone
- Jumeirah Lakes Towers Free Zone (JLT)
- Sharjah Airport Free Zone (SAIF Zone)
- Hamriyah Free Zone (HFZ)
Ras Al Khaimah
- Ras Al Khaimah Free Trade Zone (RAKFTZ)
- Ras Al Khaimah Media Free Zone
- Ras Al Khaimah Investment Authority (RAKIA)
- RAK Maritime City
- Fujairah Free Zone (FFZ)
- Fujairah Creative City
- Ajman Free Zone (AFZ)
Umm Al Quwain
- Ahmed Bin Rashid Free Zone
Establishing a Civil Company
In the case of professional bodies, it may be possible depending upon the circumstances and location of the business, to establish a formal presence in the UAE through the establishment of a “civil company” under the provisions of Federal Law No. 5 of 1985, as amended (the Civil Code). These entities are establishments which are sole traders operating under a license. Civil companies are usually not intended to trade (e.g., engage in the purchase and sale of goods, contracting, transport, banking and finance, and other similar transactions) and are in practice used only by certain professions. Civil companies are not companies in the traditional commercial sense since they do not have limited liability – liability for their operation devolves to the individual constituent professional members.
Franchise brands expanded in the UAE across a variety of sectors in recent years, including restaurants, food and beverage, fashion retail, convenience stores, beauty, healthcare, education. A combination of factors has spurred this growth, including: low-tax environment, world-class infrastructure, improved intellectual property legislation, UAE government efforts to diversify the economy, a growing population with a sizeable proportion of expatriates, changing consumption patterns, increasing penetration of international franchise and retail players, a large number of high net-worth individuals with a propensity for leisure and consumer spending, an increasing number of business and leisure visitors, and the country’s positioning as a popular shopping destination.
COVID-19 is having significant implications on retail franchising. The UAE closed hotel facilities, shopping malls, dine-in facilities at restaurants, and sport facilities from March until June or July 2020 depending on the Emirate’s specific policies in place. Governments in many of the Emirates (and some of the UAE free zones) implemented policies to support businesses, such as halting rental property evictions and granting concessions in terms of visa fees and municipality fees. Some of the larger institutional landlords established rent “relief funds” to support retailers within their shopping malls.
Lower oil prices and geopolitical tensions also triggered an economic slowdown in the region impacting the franchising sector. Franchisors tended to take a more conservative approach to the market. As an example, luxury department stores Macy’s and Bloomingdale’s decided to pull out of Al Maryah’s Central Mall. The Macy’s store – scheduled to be spread across four floors – was going to be the brand’s first store outside the United States. The Bloomingdale’s store was also expected to be bigger than the one on Dubai Mall.
In addition, Dubai Entertainments PJSC indicated in February 2019 that the Six Flags theme park in Dubai had been put on hold as the financing for the project was no longer available.
The Abu Dhabi Chamber of Commerce and Industry established Emirates Development in 2017 in a bid to boost franchising and also offer franchisers the opportunity to look at new promising sectors beyond the traditional food and beverage sector (i.e. healthcare, banking, household equipment, pet services, play care, etc.). The Abu Dhabi Chamber periodically hosts free-of-charge awareness workshops for franchisees and Emiratis looking to invest in international franchises.
Previously, the government only permitted UAE nationals or corporations wholly owned by UAE nationals or those with a UAE partner or sponsor to carry out operations. With hopes of attracting additional investors, the government is now permitting investors to establish their own businesses in the Emirates, without the need to have an Emirati partner or sponsor. However, the UAE government has published a list of company types that are not allowed to form under a 100% foreign ownership. This includes companies in the domains of: oil exploration and production, investigation, security, military, banking and financing, insurance, medical retail, pharmacies, pilgrimage and umrah services, certain recruitment activities, water and electricity provision, fishing and related services, post, telecommunication and other audio-visual services, road and air transport, printing, and publishing.
In addition to those changes, each of the UAE’s seven emirates have different regulations regarding franchising and establishing a business. For example, Ajman has its own free trade zone, low electricity and leasing prices, and allows 100% foreign ownership of a business. Sometimes foreign companies explore options to launch in other emirates as a first step to take advantage of such benefits.
Aside from the key provisions that are normally incorporated into franchising agreements, companies should pay particular attention to the period, area specification, third-party transfer rule, dispute resolution mechanisms, and termination mechanisms. Companies should ensure agreements adequately protect intellectual property rights (IPR). In addition, companies must be sure to understand and pay special attention to Islamic dietary laws (halal meat/cosmetic products, prohibition of pork and alcohol content, etc.) as well as local dress and customs. Finally, companies must be aware of relevant trade barriers, such as the Arab League boycott of Israel which bans any goods originating from Israel. A partner could potentially also request the company to sign a declaration that it has not and will not trade with Israel - however Section 999 of the U.S. Internal Revenue Code makes it unlawful for American companies to comply with such agreements.
Regarding protection of trademarks and other IP, it is recommended that companies register all trademarks with the Ministry of Economy in advance of entering the UAE market. Registration will provide first-to-file priority, establish registered user rights, and ensure that franchisees are preempted from registering the trademark in their own name. For more information about trademark registration, visit the websites of the governments of Abu Dhabi and Dubai.
The UAE has no laws specifically governing franchising. As a result, general contract and commercial law are applicable to franchise agreements in the UAE. In addition, Sharia law applies to commercial transactions. All franchise agreements must be registered before a UAE court.
There are multiple laws which can apply to franchising relationships including the following:
- Federal Decree-Law No. (19) of 2018.
- Federal Law No. 18 of 1981 commercial agency law.
- Agencies (as amended by Law No. 14 of 1998) and Law No. 13 of 2006.
- Federal Law No. 5 of 1985 on Civil Transactions.
- Federal Law No. 18 of 1993 on Commercial Transactions.
- UAE intellectual property laws for trademarks, copyright and patents.
- Labor laws.
- Local Municipality rules in relation to names and signage.
- UAE general principles dealing with restraint of trade and assignment of the franchise back to the franchisor in the event of default.
For the Agency Law to apply, the following must be considered:
- The agent must be a UAE national or a company wholly owned by UAE nationals.
- The relationship must be exclusive.
- The relationship between the agent and principal must be registered with the UAE Ministry of Economy.
Helpful Tips for New-to-Market Franchisors:
- Conduct thorough due diligence to select the proper franchisee.
- Understand the UAE Commercial Agencies Law and other relevant laws.
- Consult with a local legal franchise expert.
- Carefully draft the franchise contract and operations manual for the franchisee specifying the manner in which the franchise is to be operated.
- Ensure the franchise agreement is prepared by a legal franchise expert, explicitly spells out the terms and operations of the franchise, and clearly states the rights and duties of the franchisor as well as the franchisee.
- Take steps to protect IP by registering it with the Ministry of Economy, including logos, trademarks, and business processes.
International Franchise Exhibition (IFE)
Date: October 2021
Venue: Abu Dhabi National Exhibition Center (ADNEC)
The Global Franchise Market (TGFM)
Date: March 9-10, 2021
Venue: Dubai International Convention and Exhibition Center
A leading online marketplace for franchisors aiming to promote brands to prospective franchisees.
Direct selling in the UAE has existed for many years as a traditional model, catering to remote and desert areas, where water and other necessary items were directly supplied to consumers. In recent years, the financial sector and insurance companies have seen a boom in direct marketing for their services. The one-on-one contact sales sector has grown exponentially since the 2008 financial crisis, especially with stay-at-home mothers entering the direct selling workforce.
In prior years, direct marketing in the UAE largely occurred through one-on-one engagements and other personal contact arrangements. However, with the rapid adoption of the internet and mobile technologies in the UAE, computer-aided retailing and home-shopping have become increasingly popular. Also, with increased push for multimarket models, direct marketing companies are slowly seeing increased group engagements and “peer/buddy support”. A recent trend is that many companies, specifically in the consumer goods sector, have opted to market their products online by placing advertisements on social media platforms like Facebook, Instagram, Twitter, and YouTube reaching approximately 8.4 million social media users, which represents 96% of the total population in the UAE.
In order to cater to the many shoppers who prefer online shopping, major UAE retail groups such as, Carrefour, IKEA, Landmark, Lulu, and Sharaf DG have strengthened their connections with targeted consumers via direct marketing, using mobile messaging, promotional emails, interactive consumer websites, and online advertising for increased consumer awareness and retention.
The Department of Economic Development (DED) consented to the formation of the Direct Selling Association in UAE (DSA), an official member of the World Federation of Direct Selling Associations, in order to promote transparency and to regulate the sector. The Direct Selling Association represents 14 direct selling companies operating in the region.
Foreign companies are expected to conduct direct transactions only with importers and agents who are already established in the UAE market. Direct marketing by international companies is not encouraged by the UAE government even though many companies tend to lure UAE consumers through direct marketing from overseas. Such activities are not common and are mostly restricted to well reputed brands from verified sources. It is worth mentioning that such activities may be subject to UAE import levies and customs regulations. Also, in many cases, products imported from non-verified outside sources have resulted in unscrupulous suppliers with little or no control over product quality and uncertain service warranties.
Joint Ventures and Licensing
A Joint Venture (JV) is a popular choice for foreign companies wanting to enter the UAE market or develop their existing operation beyond an agency or distribution arrangement. The JV agreement or contract of establishment regulates the obligations and respective entitlements of each of the JV partners. JVs are very common where it is impossible for a single contracting entity to execute the project alone, such as large projects where a local contractor and international contractor partner. JVs are one of the options available for foreign defense companies to fulfill their offset obligations. A JV is commonly formed either contractually or through the formation of a limited liability company under Federal Law No. 2 of 2015, the Commercial Companies Law.
Under the Commercial Companies Law foreigners cannot own more than 49% of a limited liability in the UAE outside any of the various free zones, unless the activity is listed on the UAE-approved positive list. A JV does not need a license. However, if a limited liability company is used to affect the JV, it may require licensing. Similarly, there is no need to publish the underlying JV agreement. The foreign partner deals with third parties under the name of the local partner who, unless the agreement is publicized, bears all liability. In practice, JVs are a suitable structure for companies working together on specific projects.
Choosing the right JV partners is key to the venture’s ultimate success. The structures available to establish a JV in the UAE in which foreign equity participation is permitted are: public and private joint stock companies (JSC), a limited liability company (LLC), a limited partnership company (LPC), a share partnership company (SPC), and a joint venture company (JVC – also known as a contractual venture or consortium company).
The main considerations when choosing the structure of a JV entity, apart from tax considerations, are the designation of liability, management and governance structure, requirements for formation, and the distribution of profits and losses. The structure of the JV entity may restrict the positions foreign nationals can hold. In a JSC, the chairman, the vice chairman, and most of the board of directors must be UAE nationals. In the case of an SPC or an LPC, all general partners must be UAE nationals.
The chosen structure also impacts the required time to set up the JV entity. For an LLC, the registration and incorporation process will determine the time required for formation. In particular, the LLC must obtain approvals issued by other UAE government authorities depending on the activity of the LLC, and if one of the partners is a foreign entity, certain documents must be attested, legalized, and translated into Arabic. The registration and incorporation process is twofold for an LLC: a submission of documents to receive initial approval, followed by a subsequent submission of documents to receive final approval.
When contracting with a partner to form a JV, it is important to understand that unless the existence of the JV is disclosed, the only legal recourse that a foreign enterprise may have is against the partner with whom they have had dealings. The partner who actively conducts the business enters its name into the Commercial Register to obtain a trade license and is liable to the third party. If the existence of the JV is disclosed to the third party, the non-active partners also become liable, in which case the partnership is deemed a general partnership.
Licensing of manufacturing processes is also a growing market, especially considering the UAE’s desire to increase the quality and diversity of local manufacturing. The total market for industrial licenses remains relatively small due to the limited manufacturing done in the UAE where industrial zones such as Jebel Ali and Khalifa Industrial Zone Abu Dhabi (KIZAD) hope to attract manufacturers by offering a range of incentives from free-zone status to the ability to use foreign nationals for 100% of their workforce, as well as some of the region’s cheapest utility costs.
Recently the UAE approved a positive list setting out the economic sectors in which more than 49% ownership will be permitted. The positive list includes 122 economic activities across 13 sectors.
Express delivery shipping rates from the United States to the UAE depend on a few factors:
- Package weight.
- Delivery options (overnight, urgent, etc.).
- Carrier (FedEx, UPS, USPS, DHL, etc.).
- Package content (some restricted or regulated items may require additional paperwork to clear customs).
- Delivery address.
Packages can be delivered to the UAE in as little as 2-4 business days. Before shipment from the United States to the UAE, the shipper must confirm the products are legally allowed to be transported. Additional information can be found at the Government of Dubai’s customs website or the UAE’s Federal Customs Authority website.
The Federal Customs Authority implements customs policies, executes customs related laws and legislation, and represents the UAE in and out of the country. Local customs departments do the executive work and draw the customs policies for each Emirate in compliance with the Common Customs Law. Customs clearance is conducted by the Customs Authority in the individual Emirate where the package is received.
Before signing any commercial agreements or commencing business activities in the UAE, U.S. companies should conduct in-depth research and due diligence. U.S. companies should seek competent professional legal advice on how to structure any agreement document. Depending on the agreement, the contract should specify such items as the performance measures for the local agent, the length of the contract, and listing of projects and other detailed matters covered by the contract.
The U.S. Commercial Service in the UAE can assist companies with performing due diligence through its International Company Profile (ICP) service, which comes in two forms; partial and full. The ICP helps U.S. companies evaluate potential business partners by offering a detailed report on UAE companies. A full ICP provides the most in-depth information related to a local entity’s ownership and management structure, business activities, foreign companies represented, reputation in the local market, and a specialist’s opinion on the relative strength of a local firm and its reliability.
The UAE is home to over 45 free trade zones, and more are under construction. For foreign companies, free trade zones may pose challenges with the enforcement of IP rights since control procedures and administrative authority may differ from one to another. Also, free zones may provide space for storage of goods confiscated in the mainland for breach of IP rights, instead of destruction, further complicating jurisdictional oversight.
Consequently, any action for infringement in a free trade zone would require verification of the enforcement authority within that free zone in question and then identification to determine if processes are in place for logging complaints. American companies entering the UAE market are therefore advised to seek IPR registration guidance to avoid ambiguities and complications.