The UAE recently issued the ecommerce law (Federal Decree Law 14 of 2023) which was published in Gazette 759 (supplement) dated September 15, 2023.
The law, which came into force the day after publication in the federal Gazette, regulates the relationship between buyers and sellers of goods sold through ecommerce transactions; combat piracy and false sites; and protect the interests of the consumer, intellectual property rights and other rights.
The term ‘ecommerce’ is defined broadly to encompass more traditional ecommerce activities such as commercial transactions across websites, platforms and smart apps. as well as other forms of digital trade captured by the term ‘modern technological means’.
This term includes any technology used for ecommerce, be it electronic, digital. biometric, AI or blockchain, or within technical environments, whether on electronic websites or apps. In this respect, the law intended to be technology neutral, and, looking forward, future-proofing the UAE’s legal framework for e-commerce transactions.
Scope for arbitration
The aim of the law is to achieve UAE's strategic directions regarding digital transformation, develop modern technology-based trade, attract investments and skills, develop the regulatory environment regarding modern technology-based trade, and stimulate ecommerce.
The provisions governing contracts in the UAE Civil Code and Commercial Transactions law will still apply to modern technology-based trade in addition to other laws dealing with e-signatures, electronic transactions, protection from piracy and data protection.
The UAE Consumer Protection Law will continue to apply to ecommerce operators registered within the UAE. Importantly, the ecommerce law applies to foreign operators from whom UAE residents procure goods and services.
While the law provides that the UAE courts have jurisdiction in any dispute concerning modern technology-based trade, it provides for a dispute resolution committee to be set up at the Ministry of Economy. A new regulation to regulate this committee will be issued.
The law recognises the choice of the parties to agree to arbitration. However, the arbitration agreement will not be valid if the terms and conditions were agreed electronically and the value of the transaction is under Dh50,000.
Foreign ecommerce sites
It is unclear at this stage how the law will apply to ecommerce sites not based in the UAE. The Ministry is empowered to work with competent authorities to block access to foreign ecommerce sites. It is possible that UAE law may conflict with the laws that govern these sites in other jurisdictions.
It is important to note the law does not apply to government procurement, data, platforms and smart apps used for purposes other than modern technology-based trade, digital currencies designated for payment and trading purposes supervised by UAE Central Bank, and all transactions conducted by licensed financial institutions and insurance companies subject to the Bank’s licensing and supervision.
The law will apply in free zones if there is no regulation within the free zone. It provides that one of its aims is to regulate and oversee that ecommerce trade is compliant with the tax law applicable in the UAE.
There is a lot of emphasis on the need to ensure security and protect consumers from cyber-attacks through ecommerce business. It also intends to protect brands, their copyright and technology, and enhance the recognition of e-contacts.
The law empowers the Ministry by giving it the authority to coordinate with other authorities to block sites that are in violation of the law or public morals.
It clarifies that consumer information, data and their description and ownership shall be governed by data protection legislation in force, making it clear that this law is not intended to usurp or overlap with the existing Federal Personal Data Protection Law, DIFC or ADGM data protection laws.
No out of turn charges
The law further aims to protect consumers from any illegal consumer promotion sites or unnecessary charges. It prohibits the payment of extra charges for delivery or logistics other than the ones agreed in the contract. The consumer has the right to return or request the replacement of goods and services purchased in a number of cases.
The digital trader or entity that will handle the logistics and digital payment may provide insurance coverage for obligations arising out of modern technology-based trade, including logistics, digital payment methods, electronic fraud, hacking and other risks.
An essential feature of this law is that employees of the Ministry or of the relevant competent authority shall have the capacity of ‘judicial enforcement officers’. They will investigate crimes and work with other security authorities in the UAE to combat piracy and fraud.
What is interesting is that they have the right to review documents, request information to investigate any crime that may fall under this law.
The law further provides that the Ministry will establish a technical process to carry out the supervision, monitoring, and enforcement of police power, which this law is empowered to do. It is unclear how wide this power is, and how it will work in practice.
We await further clarification and details in the cabinet of ministers' regulation.
The writer is Managing Partner at Al Tamimi & Co.