United Arab Emirates E-Commerce Legislations and Comparative European Union and Turkey Legislations Review

As we mentioned in our latest Article United Arab Emirates is an appealing advantage for e- commerce initiatives. In this Article we will examine this country regulation within scope of the consumer rights, data protection, license requirements and other related issues in comparison with EU and TR legislation.

 

Federal Law No. 1 of 2006 on Electronic Commerce and Transactions aims to facilitate and eliminate barriers arising from uncertainties over the writing and signature requirements of electronic commerce and other electronic transactions and promote the development of the necessary legal and commercial infrastructure for the implementation of secure Electronic Commerce. The law deals with the preservation of electronic commercial messages, the aspects of electronic communication, and the validity of contracts established through electronic communication (Art.11,12). In this part we will examine the regulations on consumer rights (according to the New Consumer Protection Law), data protection, and license requirements in UAE.

 

Consumer Rights in UAE

 

The consumer rights are regulated under the Chapter 5 of the Federal Law Number 24 of 2006 , UAE consumers are granted the following rights:

  • The Right to Safety: to be protected from products, production processes and services that may cause harm to health and safety
  • The Right to Return: to return or exchange the goods in the event of any defect discovered by the consumer
  • The Right to Informed: to informed the accurate information concerning the goods and services (ex: origin of products, expiry date and ingredients of food items, price of the product including taxes etc.) the suppliers should inform that placing an order is to conclude a binding contract between the parties.
  • The Right to Choose: to have multiple options of items and services at competitive prices and quality
  • The Right to Representation: to express opinions to develop the goods, services, prices and availability

On 10 November 2020, The UAE Cabinet issued Federal Law No. (15) of 2020 on Consumer Protection which repealed Federal Law No. (24) of 2006 on Consumer Protection. The new Law is in line with the Unified Law on Consumer Protection of the Gulf Cooperation Council Countries (GCC). According to the new Federal Law on Consumer Protection, the main three key provisions are listed below:

Consumer Privacy

According to Article 4 of the Consumer Protection Law, suppliers and businesses now have an obligation to safeguard their consumers’ data. As such, suppliers and businesses are prohibited from using consumer data and information for marketing and promotional purposes. Furthermore, the consumers’ religious views, customs, and traditions must be protected when providing a commodity or receiving any service.

E-Commerce

E-commerce service providers that are registered within the UAE are required to provide consumers and competent authorities with their names, legal status, address, details of licencing authority and other sufficient information in Arabic. There is also a requirement to provide details of specifications, terms of contracting, payment and warranty (Article (25)). Moreover, according to the provisions stipulated in Article 8, all the information made available to consumers, data, advertisements, contracts and invoices must be in Arabic. It is worth noting that other languages may also be used alongside the main language, which as stated above is Arabic, at the supplier’s discretion.

Penalties

The applicable penalties for breach of the Consumer Protection Law have increased from those outlined in the Old Consumer Protection Law. For example, the following may result in imprisonment of up to two years and a fine not exceeding AED 2 million (Article (29)):

  • failure to abide with clear and legible labelling (including how to use and install a particular good);
  • providing misleading prices for goods and services;
  • failure to repair or replace a defective product without charge; and
  • falsely advertising goods or services (or providing false data).

Penalties may be doubled in the event of a re-offence.[1]

Pursuant to Article 36 of the Law on Consumer Protection, it is envisaged that the Regulations in Force will enter into force by 15 May 2021 and further clarification of the Law on Consumer Protection is envisaged.[2]

License Requirements

Steps to obtain license in Dubai [3]:

  1. Decide a legal structure of your business (Inc., LLC)
  2. Choose a location ( There are two types of zones in Dubai: Mainland and Free Zone. In the Mainland you need a local sponsor with a 51% stake in the Company, whereas in the the FreeZone foreigners can own a 100% stake in the Company.)
  3. Register a trade name ( You must reserve your trade name and obtain an initial approval certificate from The Department of Economic Development. Trade name can not include any offensive or blasphemous language)
  4. Apply for a license (E commerce license application in Mainland you should apply to the municipality or the Department of Economic Development in the emirate you wish to set up in, if you are opting for Freezone the license is issued by relevant Freezone authority. For a company set up in the Mainland, you have to pay around AED 10,000 to the DED for trade name registration, initial approval, and issuance of the license. In case you are looking to set up within a free zone, the license will have to be acquired from the relevant Freezone authorities. The type of license issued depends upon the nature of your online business[4].)
  5. Apply for your visas ( residence visas etc.)
  6. Open your corporate bank account

 

Dubai CommerCity (DCC) free zone

As we mentioned in our latest Article, Dubai CommerCity  is a joint venture between Dubai Airport Free zone Authority (DAFZA) and Wasl Asset Management Group. . It provides a unique eCommerce ecosystem to global and regional brands to help them set up and operate their eCommerce business in the MENA region. The free zone is divided into three clusters designed in a modern and innovative way to strategically achieve environmental and investment sustainability. The clusters are: the business cluster, the logistics cluster and the social cluster.[5]

Business incentives include:

  • 100 per cent foreign company ownership
  •  no corporate tax or income tax
  • 100 per cent repatriation of capital and profits.

 

The eCommerce licence (Tajer Abu Dhabi)

 

The eCommerce licence from Abu Dhabi Department of Economic Development (ADDED) allows entrepreneurs to add their online trade activities to their existing licences, or obtain a new licence to conduct business through websites and social media networks. In 2017, Tajer Abu Dhabi was restricted only to UAE nationals but in 2018, ADDED expanded the licence package to include all GCC nationals and UAE residents under three legal forms:

  • establishment for Emiratis and GCC nationals
  • one-person company for Emiratis and GCC nationals
  • limited liability company for residents in partnership with Emiratis.

It also raised the number of eligible activities covered by the licence to 1057. All are exempt from having a physical presence or an office.[6]

DED Trader Licence from Dubai

The eTrader licence from Dubai Economy (DED) allows UAE nationals and GCC nationals residing in Dubai to practise business activities through various social media networks.The eTrader licence can be registered under the name of a single owner only. The eTrader cannot open a shop or issue visas and in case of a legal dispute, the licensee alone will be held responsible.[7]

Required Documents for the License Application:[8]

  • Passport/visa copies of the shareholders
  • Copy of sponsors passport/Emirates ID ( if you establish your company in Mainland)
  • Local Service Agreement
  • No-objection Certificate from the relevant authority
  • Draft a memorandum of Association

If your online business involves physical products to sell or trade it is mandatory to have proper warehousing to store your goods and establish a reliable logistic system you can opt for a third party logistics or build your own.

UAE Regulations on Data Protection Law

Federal Law No. 5 of 2012 on Combatting Cybercrimes and its amendment by the Federal Law No. 12 of 2016 makes it illegal to disclose any information obtained by electronic means, if such information was obtained in an unauthorised manner.Article 21 of the law makes one liable if he uses an electronic information system or any information technology means for offending another person or for attacking or invading his privacy.

Article 22 of the same law makes one liable if uses without authorisation, any computer network, website or information technology means to disclose confidential information which he has obtained in the course of or because of his work.

Internet Access Management (IAM) policy

Telecommunications and Digital Government Regulatory Authority (TDRA) implements the Internet Access Management (IAM) policy in the UAE, in coordination with National Media Council and Etisalat and Du, the licensed internet service providers in the UAE. Under this policy, online content that is used for impersonation, fraud and phishing and/or invades privacy can be reported to Etisalat and Du to be taken down.

Electronic Transactions

Federal Law No. 1 of 2006 on Electronic Commerce and Transactions provides security measures of electronic transactions and ensures that electronic data is authentic and reliable.

[1] https://www.natlawreview.com/article/consumer-protection-law-uae

[2] https://www.natlawreview.com/article/consumer-protection-law-uae

[3] https://www.rizmona.com/blog/step-by-step-guide-for-obtaining-an-e-commerce-license-in-uae/

 

[4] https://www.commitbiz.com/ecommerce-license-dubai-uae#about

[5] https://www.dubaicommercity.ae

[6] https://u.ae/en/information-and-services/business/ecommerce

 

[7] https://u.ae/en/information-and-services/business/ecommerce

[8] https://www.rizmona.com/blog/step-by-step-guide-for-obtaining-an-e-commerce-license-in-uae/