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Within the private sector, the relationship between a Kuwaiti commercial agent and a foreign principal is primarily regulated by two statutes: the Kuwait Commercial Law, Decree No. 68 of 1980 (the “Commercial Law”), which addresses the general legal relationship between a commercial agent and principal; and Law No. 36 of 1964 (the “Commercial Agencies Law”), which stipulates the prerequisites for acting as a commercial agent in Kuwait and sets forth the commercial agency registration procedures. Many foreign companies seek to conduct business in Kuwait through the use of commercial agents and/or distributors.
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The abovereferenced laws of Kuwait have evolved to protect local entities in their relationships with their foreign principals. In addition, other local pitfalls involving taxation and trademark issues may affect foreign principals wishing to do business here. Al Wagayan, Al Awadhi & Al Saif has extensive experience in advising these principals with respect to all of these matters. Our practice in this area includes drafting and negotiating the agency/ distributorship arrangements between the parties, minimizing the advantages that the Kuwaiti laws give to protect local entities, ensuring that little or no taxation results from the transactions and taking steps to protect the brand names of the foreign principals.
In addition, since the early 1990’s franchising has become quite popular in the State of Kuwait. While the laws here are still evolving to meet the demands of franchise arrangements, we can offer practical advice to structure franchise relationships based upon contemporary law. There is currently no specific legislation on franchise agreements in Kuwait. Instead, such agreements are interpreted along with any other commercial contracts within the broad framework of the Kuwaiti Civil Code and the Commercial Law, which allow the parties to contractually agree as they desire. There is a school of thought in Kuwait that classifies franchise agreements as agency agreements for purposes of Kuwaiti law. However, under the Commercial Law, the term agent is currently not defined to include franchisees. |
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Al Wagayan, Al Awadhi & Al Saif
Suad Commercial Complex, 9th Floor
P.O. Box 22833 – Safat 13089 Kuwait
TEL:+965 2472317 – FAX:+965 2472318
EMAIL: info@awaslegal.com
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