UAE Court's Jurisdiction in Commercial Agency Agreements

Analysis

When it comes to Arbitration in the UAE, the general rule and practice of UAE Courts is that courts would not entertain any action related to a dispute arising from the execution of an agreement in which the parties have agreed to arbitrate.

However, if either party decided to proceed in court despite the presence of the arbitration clause and the other party does not object at the first hearing, the action may be heard, and the arbitration clause shall be deemed inoperative. The UAE Legislator applied certain restrictions on the parties' freedom to agree to arbitrate when entering into Commercial Agency Agreements.

We will address this exception below in light of a judgment rendered by Dubai Court of Cassation; the highest court in the Emirate of Dubai, whose judgments interprets the application of the law to lower courts.

SUMMARY OF FACTS:

The Claimant (a commercial agent registered with the UAE commercial agents register) entered into an agency agreement with the Respondent. The parties agreed that the Claimant will market, distribute and sell the Respondent's products within the UAE.