Power of Attorney in the UAE
A power of attorney used in business in the UAE is treated as an agency, and Federal Decree-Law No. 50 of 2022 supplies its default terms. Two of those defaults surprise drafters: a general power of attorney granted commercially reaches only commercial business unless the parties say otherwise, and restrictions on the agent's authority do not bind a third party unless that party knew about them when contracting. Notarisation itself is regulated federally by Federal Decree-Law No. 20 of 2022 Regulating the Notary Public Profession.
Governing law
Where the authority is commercial, Part Two of Federal Decree-Law No. 50 of 2022 promulgating the Commercial Transactions Law governs the agency, and the Decree-Law is issued against Federal Decree-Law No. 20 of 2022 Regulating the Notary Public Profession, which regulates notarisation.
What a power of attorney has to contain in the UAE
An agency is commercial when it relates to commercial activities, and the provisions of this part apply only so far as they do not contradict the Law of Commercial Agencies.
A commercial agency, even where it takes the form of a general power of attorney, applies only to commercial business unless the parties agree otherwise.
Where the agency is granted for a specific commercial transaction, the agent may carry out all actions required to execute that transaction without obtaining a further authorisation from the principal.
A third party dealing with the agent may ask to see the agency contract, correspondence and other documents establishing the agent's authority, and restrictions on that authority are not valid against third parties unless it is established that they knew of the restrictions when the contract was concluded.
The agent may delegate a third party to implement the agency only if the principal has authorised him to do so.
A commercial agency is presumed to be paid unless otherwise agreed, and where the remuneration is not fixed by the agreement or the law it is fixed by custom or, in the absence of custom, estimated by the court.
What catches drafters out
Authority granted by a merchant does not lapse on death. Orders and authorisations issued by a merchant for matters related to his commercial activities survive his death, and his heirs may cancel them only if they decide to discontinue the trade, without owing compensation where they notify the contracting party in good time.
Revocation is not always cost free. Either party may terminate a commercial agency contract at any time, but compensation is due where the termination happens without prior notice or at an inconvenient time, and a fixed-term agency may be terminated only for a serious and acceptable reason.
Power of Attorney in the UAE: common questions
- Does a general power of attorney cover everything in the UAE?
- Not in a commercial context. Article 198 of Federal Decree-Law No. 50 of 2022 provides that a commercial agency, even though it has a general power of attorney, applies only to commercial business unless the parties agree otherwise. Where the agency is granted for a specific transaction, Article 199 lets the agent do everything needed to execute it without further authorisation.
- Are limits written into a UAE power of attorney binding on the other side?
- Only if the other side knew about them. Article 208 of Federal Decree-Law No. 50 of 2022 entitles a third party dealing with the agent to inspect the agency contract, correspondence and other documents establishing authority, and states that restrictions on the agent's authority are not valid against third parties unless it is established that they were aware of those restrictions when the contract was concluded.
- Does a UAE power of attorney end when the principal dies?
- Not automatically where the principal is a merchant. Article 76 of Federal Decree-Law No. 50 of 2022 provides that orders and authorisations issued by a merchant for matters related to his commercial activities do not lapse on his death, although his heirs may cancel them if they decide to discontinue the trade, and owe no compensation if they notify the counterparty in good time.
Sources
Every statement on this page is drawn from one of these. All were fetched on .
- Federal Decree-Law No. 50 of 2022 promulgating the Commercial Transactions Law, Arts. 195 to 214 and preamble citing Federal Decree-Law No. 20 of 2022 Regulating the Notary Public Profession
- Federal Decree-Law No. 50 of 2022, Art. 195
- Federal Decree-Law No. 50 of 2022, Art. 198
- Federal Decree-Law No. 50 of 2022, Art. 199
- Federal Decree-Law No. 50 of 2022, Art. 208
- Federal Decree-Law No. 50 of 2022, Art. 200(3)
- Federal Decree-Law No. 50 of 2022, Art. 196
- Federal Decree-Law No. 50 of 2022, Art. 76
- Federal Decree-Law No. 50 of 2022, Art. 212
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