Article 26 of the Commercial Agencies Law, Federal Law No. 3 of 2022, permits arbitration in registered commercial agency disputes for the first time. Before it took effect on 15 June 2023, the old law gave the Commercial Agencies Committee and the UAE courts exclusive jurisdiction. An arbitration clause in a registered agency agreement was void. That changed the drafting calculus for every principal appointing a UAE agent or distributor. It did not remove the agency law's other protections, and it left open questions the courts are still testing.
Whether an arbitration clause works depends on one fact decided before any dispute arises. Is the agency registered with the Ministry of Economy? For arbitration lawyers in the UAE, that single fact changes which forum controls and which deadlines apply. It decides whether the clause has any effect at all.
What Article 26 permits
Article 26(1) of Federal Law No. 3 of 2022 provides that the law does not prejudice any agreement between the agent and the principal to refer a dispute to arbitration. That is a narrow but real change. The old law's exclusive jurisdiction rule is gone for agreements the new law governs. The parties may now agree to arbitrate, including at a seat outside the UAE.
The default matters if the clause is silent. Where the parties have not specified a seat, the seat is inside the UAE. A principal that wants a foreign seat, London, Paris, or Singapore, for example, has to say so expressly in the clause. Leaving the seat unstated does not produce a neutral outcome. It produces a UAE seat by operation of law.
Article 5(2) still gives the UAE courts jurisdiction over registered agency disputes. Unlike the old law, the new law does not declare a contrary agreement void, which is what makes room for arbitration. The courts remain a live alternative. A badly drafted clause can leave both routes open to dispute rather than closing off the courts cleanly.
Registered versus unregistered agencies
The Commercial Agencies Law applies only to agencies entered on the Commercial Agencies Register at the Ministry of Economy. An unregistered distribution or agency arrangement sits outside the statute entirely. It is governed instead by the Civil Code and the Commercial Transactions Law, as an ordinary commercial contract. Arbitration in an unregistered agreement is available without restriction, on the same footing as any other UAE commercial contract.
That is why many international principals structure their UAE arrangements to avoid registration. Registration brings the exclusivity presumption, the termination protections, and the Committee's first-instance jurisdiction. It also brings the arbitration questions this article addresses. An unregistered distributor agreement avoids all of it. The cost is losing the statutory protections a registered agent would otherwise hold. Our guide on franchise agreements in the UAE covers the same registration choice from the franchisor's side, and the reasoning transfers directly to distribution agreements.
Does a registered agency dispute have to go through the Committee first?
For a registered agency, no action may reach the courts before the dispute has been referred to the Commercial Agencies Committee. That much is settled. The Committee must issue a decision within 120 days of the case being recorded. If it does not, either party may take the matter to court within 60 days of that deadline lapsing.
What remains unsettled is whether an arbitration clause has to follow the same route. The statute does not say so expressly, and practitioner views differ. The cautious reading, and the one most UAE arbitration practitioners currently apply, treats Committee referral as the first step. Arbitration becomes available once the Committee has ruled or the 120-day period has lapsed, even where the parties agreed to arbitrate. A principal relying on the clause to bypass the Committee entirely is relying on an interpretation the courts have not confirmed.
Because this point is unresolved, treat the Committee stage as a procedural gate rather than an obstacle to route around. Filing with the Committee protects the position on either interpretation, and skipping it risks a jurisdictional challenge that could unwind months of arbitration.
Do arbitration clauses in legacy agency agreements apply retroactively?
Many agency agreements signed before 15 June 2023 contain arbitration clauses. Some were included by international principals unfamiliar with the old law's prohibition. Others were deliberate, intended to complicate enforcement of a UAE court judgment abroad. Under the old law those clauses were void. Whether the new law revives them is now being tested in the courts.
In a case reported by Clyde & Co, a principal relied on an arbitration clause in an agency agreement registered in the 1980s. It used the clause to challenge the Committee's jurisdiction over a termination dispute. The agent argued the clause was void from the outset and could not be revived retroactively. At first instance, the court sided with the principal and upheld the arbitration clause. The case has since gone to appeal, and the outcome will be one of the first appellate rulings on the question.
The theoretical basis for reviving a legacy clause rests on a procedural law principle. The law in force at the time of the hearing generally governs procedure, distinct from the substantive contract terms fixed at signing. An arbitration clause is procedural in this sense. The argument runs that a clause void under the old law can take effect once the new law applies to the dispute. The statute does provide one clear boundary. It does not apply to a dispute that had already arisen, or was already before the Committee or the courts, before 15 June 2023. A pending dispute stays put.
A principal holding a legacy agency agreement with an arbitration clause should not assume the clause is dead. Nor should it assume the clause is live. The safer course treats the position as contested and plans for either forum until the appellate courts settle it.
Comparing registered agency and unregistered distribution
Drafting an arbitration clause that holds up
A handful of drafting choices decide whether the clause achieves what the principal intended.
- State the seat expressly. Silence defaults to a UAE seat under Article 26, which may not be what an international principal wants.
- Reference the Commercial Agencies Committee stage in the clause itself, rather than leaving the sequencing to be argued later.
- Confirm registration status before relying on either the arbitration clause or the statutory protections, since the two are linked but not identical questions.
- For an unregistered arrangement, draft the arbitration clause as for any ordinary UAE commercial contract, without the agency law overlay.
Our 2026 guide to UAE arbitration clauses covers institution and seat selection in more detail, and applies directly once the agency-specific questions above are resolved. Our guide on how to terminate a commercial agency in the UAE covers the compensation and notice requirements on the termination side of the relationship.
How should principals approach arbitration clauses in UAE agency agreements in 2026?
The Commercial Agencies Law opened the door to arbitration in registered agency disputes. It did not close the questions that decide whether a clause works in practice. Registration status, the Committee-first sequencing, and the treatment of legacy clauses all remain live issues. A well-drafted clause has to anticipate them rather than assume them away.
The most time-sensitive step comes at the drafting stage, before registration, well before any dispute starts. A principal negotiating a new UAE agency or distribution relationship should decide registration strategy and arbitration clause wording together, because the two choices interact directly.
Where a dispute has already started, under a newly registered agreement or a legacy arrangement from before 2023, the jurisdiction question needs an answer now. It should not wait until the first filing. Our arbitration lawyers in the UAE advise principals and agents on registration strategy, Committee proceedings, and arbitration under registered and unregistered agency and distribution agreements.
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