The Article 1 of the Amendment Act enables the traders and companies vis-a-vis a binding Agency Agreement to promote or distribute commodities or products or services in his or her capacity as the agent, distributor or owner of the franchise, or owner of the product license or the original importer in exchange for profit or commission in the State.
Whilst the Article 2 of the Act heralds sweeping changes. It has enabled the clients and companies to have more than one agents or distributors in Kuwait. As per Article 2 the agent or dealer in Kuwait must be a citizen or a non-Kuwaiti entity provided that share of the Kuwait partner in such an entity must be 51% of its capital. The Article further envisages registration of agencies in the Commercial Records and the agents to acquire permits from the Ministry of Commerce. Imported products must bear the accredited GCC and international specifications along with express guarantee by the manufacturers concerned.
The Article 4 though reiterating the laws laid down in the preceding Article 2, states specifically that the import or distribution of commodities or products shall not be exclusive to its existing dealer or distributor even if he or she is the exclusive dealer of said commodity or product in Kuwait. The Amendment Act have yet another drastic facets too that its Article 5 envisages that the Agents must provide maintenance and repairing of products imported by third parties even. The imported products and goods must be free of any defects and the imported materials or products must be in full compliance with the standards specified or set by the laws. Along with the maintenance the Agents must provide spare parts of the products as well. Therefore all the product-based agencies will be bound to set up necessary workshops and service centers in the wake of new amendments.
The Article 12 states that the Kuwait courts have jurisdiction over all disputes. However, Arbitration can be initiated by the parties as well for settling their disputes.
The new laws will be in force once the Government of Kuwait sets up the necessary rules and regulations and once the new Act and Rules published in the official gazette .
Signaling the herald of new era of the commercial sectors the Kuwait Parliament Speaker Mr. Marzouq Ali AlGhanem has said in a statement that “what the Assembly endorsed today is first blow to monopolization of the trade agencies since 1965,” In fact the amendment came in the backdrop of a series of parliamentary measures and State-schemes that are intended to cope with economic problems in the wake of declining oil prices.
Khalifah Al Yaqout, Al Yaqout Legal Group, IDI member