AGENCY LAW IN QATAR
Law No. (8) of 2002 regulating Commercial Agents’ Business (Commercial Agents Law) governs commercial agency agreements and registration of the same with the Ministry of Business and Trade in Qatar. Generally the Commercial Agents law in conjunction with other statutes such as Law (13) of 2000 governing Foreign Capital Investment (Foreign Investment Law) regulates the management of a commercial agency and supervision of its activities and provides restrictions on the business of commercial agents to Qataris or companies wholly owned by Qataris. Other types of agency arrangements such as distributors and the like are governed by Law Law No. (27) of 2006 establishing the Commercial Law (Commercial Code)
There are two types of Commercial Agents; one is with a limited duration where a fixed term is applied in the agreement and the other is with unlimited duration which cannot be terminated without the agreement of both parties.
Any person who is exclusively licensed to distribute or offer for sale or circulate goods and product or render specific services in the context of an agency on behalf of a principal for profit or commission shall be considered a commercial agent In order to be treated as a Commercial Agent under the Commercial Agents Law, the following conditions must be met:-
• License to distribute/sell goods or services
• Acting on behalf of a principal
• Consideration in the form of profit or commission
If the conditions set out above do not apply then the agency arrangement is not registrable and does not fall within the ambit of the Commercial Agents Law, but will be governed by provisions of the Commercial Code.
Only limited duration agreements may be lawfully terminated. Notwithstanding the termination and regardless of any provisions to the contrary in a registered agency agreement, registered agents will be entitled to claim compensation in the event of termination, even if such termination occurs in accordance within the terms of the agreement itself. Entitlement at law to compensation upon the expiration or termination of the agency agreement is governed by Articles 8 and 9 of the Commercial Agents Law and is subject to an apparent success in marketing the principal’s products or an increase in customers. .
Under the Commercial Code, distributors can also may a claim for compensation after termination of an agreement even if terminating within the scope of the agreement, but this is subject to the distributor being responsible for a “remarkable” success in promoting the principal’s products or services.
The court will usually appoint experts are usually to determine compensation amounts.
The commission for goods and services imported by commercial agents can be determined by the agency agreement. Under Article 273 of Commercial Code if there is no specific provision in the agency agreement for compensation it will be up to a judge to determine a commission based upon evidence of commercial custom. If a third party imports goods and services which are within the scope of the agency agreement and do not originally come from the principal, the agent is entitled to a commission from that third party. Such amount shall be determined by the Minister of Business and Trade and shall not exceed 5% of the value of the commodities and goods imported by the third party.
Choice of Law and Jurisdiction
In principal, agreeing on foreign law is valid for any contract. However, it is likely that the Qatari courts would consider the agency provisions of the Commercial Agents Law and Commercial Code, as related to “public order” since they aim to protect the local agent. In such eventuality, a choice of the law of another jurisdiction would not be enforceable and the provisions of the Qatari laws would be applicable.
If the agreement provides for arbitration, Qatar is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitration Awards and, as such, the Qatari courts are likely to allow such disputes to be determined by arbitration.
Restraint of trade clauses are allowed, both with regard to the period during any agency arrangement after the termination of any such agreement. Generally the courts of Qatar do not grant injunctive relief and any action for a breach of such clause would need to be an action for damages resulting from such a breach.
Fox Williams LLP would like to thank Al Tamimi & Company in Doha for its contribution to this page.