The United Arab Emirates (UAE) has implemented significant reforms to its consumer protection framework. Federal Law No.15 of 2020 (the “CP Law”) (as recently amended) has now been supplemented by its long-awaited executive regulations (Cabinet Decision No. 66/2023 Concerning the Executive Regulation of the Federal Law No. 15/2020 Concerning the Consumer Protection) (the “Regulations”), which received official approval in July 2023 and which will come into effect on 14 October 2023. These legal reforms mark the replacement of the previous consumer protection law dating back to 2006 and highlight the UAE’s focus on enhancing consumer rights and promoting responsible supplier behaviours. The CP Law and Regulations (we will refer to both collectively as the “Law”) fit into a developing landscape of laws reflecting personal rights, such as the Personal Data Protection Law, which is pending its own implementing regulations having been published towards the end of 2021.
The Law operates around a broad definition of “Supplier”, which encompasses manufacturers, distributors, service providers and entities engaged in the produce or trade of products, including e-commerce service providers registered in the UAE.
In this article, we have reviewed the significant implications of this new legislation.
At a Glance……
The Law establishes the minimum content requirements for key transaction documents, tackles unfair practices and the dissemination of false or misleading information, and lays down comprehensive rules for warranties and remedies.
However, these Regulations also introduce unique provisions that may pose new challenges for merchants and marketplaces operating within the UAE.
Definition of Consumer
Slightly confusingly, the definition of consumer includes juristic persons so is broader than one usually expects for a consumer protection law. It would be useful for the authorities to clarify to what extent the Law is intended to govern business to business relationships. We are assuming that the primary focus of the law is business to consumer transactions.
Arabic Language Requirements
The Law mandates that most information provided to consumers must be presented in Arabic (including invoices, product information, advertisements, and contract and warranty terms). Suppliers retain the discretion to use other languages alongside Arabic.
The Law expressly disclaims responsibility for regulating e-commerce providers located outside the UAE. Although it therefore seems unlikely that the authorities would attempt to enforce the sanctions provided for under the law directly against such parties, it will still be important for those parties to be aware of the Law as we are aware of cases where platforms which have given rise to complaints being made to local authorities have been blocked from access by UAE IP addresses.
Significantly, E-commerce marketplaces will be considered liable for defective products offered by third parties on their platforms. The e-commerce provider shall be responsible for providing all documents that prove the product’s conformity in accordance with relevant laws and regulations and include the relevant conformity mark/certification on the website.
Promotions and Discounts
Suppliers are now obliged to inform consumers of scheduled discounts on products or services due to commence within one week from the date of purchase. Failure to adhere to this obligation grants consumers the right to claim a price difference refund within 30 days of purchase. This provision may pose significant challenges to some business models.
Additionally, suppliers must secure prior approval from regulatory authorities before promoting goods, services, or discounts.
The Law requires the supplier to warrant a service rendered to a consumer for a period that is commensurate with the nature of the service or the period agreed on with the consumer, whichever is longer. In other words, it seems that whilst there is no fixed minimum warranty period, one will be implied which is proportionate to the nature of the service in question if a specific warranty arrangement is not included in the consumer terms.
If a repair under warranty takes more than (7) seven days, the supplier shall provide an alternative product without charge until the repaired product is returned to the consumer. Alternatively, the consumer may agree to another form of compensation. Suppliers may therefore wish to address this point specifically in their warranty terms.
The law provides a framework for recall of defective products, which includes notification to the competent authority, publication of recall notices, maintenance of an incident file, and providing consumers with replacement products or fixes without charge.
Spare Parts and Periodical Maintenance
A number of provisions of the Law deal with provision of spare parts and periodical maintenance, including imposing an obligation on suppliers to maintain sufficient stocks of spare parts in line with typical consumer demand.
Suppliers must have a written policy/mechanism for the provision of spare parts and maintenance services, and provision of warranty repairs as per the terms set by the manufacturer, and abide by the same towards the consumer. The mechanism must clearly state in detail the obligations of the supplier and their scope, and the consumer’s rights. The mechanism must be contained in documents written in Arabic language (plus any other chosen language) in wording which can be understood by the consumer. The documents shall be placed in prominent places at sale points and centres of the supplier. The documents shall be accessible by the consumer and shall be published on the supplier’s website.
Advertisements which are considered to include any misleading claim which may directly or indirectly create false or misleading impression to the consumer are prohibited. Businesses should also note that advertisement content is subject to separate control under other laws of the UAE and should be respectful of public morality and standards.
Unfair Contract Terms and Monopolistic Practices
The Regulations expressly nullify any contractual terms that seek unreasonably to exclude or limit a supplier’s liability or obligations under the Law. For example, suppliers cannot unilaterally interpret, amend, terminate contracts without notifying consumers and providing compensation and cannot attempt to contract out of compensatory rights afforded to consumers under the Law. Additionally, suppliers are prohibited from altering product feature or service conditions for consumers without adequate notice or a valid reason beyond their control (provided that enhancements may be implemented). Monopolistic practices, such as discrimination against consumers or collaborating with competitors to manipulate prices, or control product supplies are expressly prohibited (the UAE also has a separate competition law which may be triggered by such activities).
Administrative Sanctions and Penalties
The competent authorities are empowered to impose various administrative sanctions and financial penalties on suppliers found in violation of the Law. The Regulations provide for sanctions to be applied on a graduated basis, from issuing notices, imposing administrative fines (fines ranging from AED 50,000 to AED 1 million), temporary administrative closures ranging from 24 hours to 90 days, suspension of activities (wholly or partially, also ranging from 24 hours to 90 days), to license revocation.
However, the CP Law includes a range of criminal sanctions as well for breach of various articles, which seems at odds with the approach taken in the Regulations. Some further clarity as to when the criminal sanctions would be applied instead of the graduated approach referred to in the Regulations would be welcomed.
The UAE’s new consumer protection Law and Regulations establish a comprehensive framework that holds suppliers accountable for product quality, transparent promotional practices, and adherence to language requirements. As these regulations come into effect, businesses operating in the UAE must remain vigilant in complying with their provisions, ensuring consumer trust and legal compliance in this evolving regulatory landscape and will need to consider their current processes and approach to contracting, provision of information, after sales service and more.