Following the introduction of Federal Law No. 15 of 2020 on Consumer Protection (the "Consumer Protection Law"), which materially extended consumer's rights, Cabinet Resolution No. 66 of 2023 Concerning the Executive Regulations of Federal Law No. 15 of 2020 on Consumer Protection (the "Executive Regulations") came into force on 14 October 2023.

These long-awaited Executive Regulations provide vital clarification to the basic provisions of the Consumer Protection Law, defining the relationship between the consumer and supplier. In particular, they:

• set out the supplier's fundamental obligations and the consumer's essential rights;

• expand on the requirements for contracting between parties, detailing both mandatory and prohibited provisions in contracts with consumers;

• extend the application of the consumer protection regime to e-commerce providers; and

• set out the penalties for acting in breach of the requirements of the Consumer Protection Law and Executive Regulations (together, the "Consumer Protection Regime").

Why is this important?

The majority of the obligations (and penalties) stipulated under the Consumer Protection Regime did not exist under previous legislation, highlighting the UAE's increased focus on enhancing consumer rights and regulating fair trade practices.

Given the introduction of 46 separate stipulated financial penalties (in addition to administrative penalties), it is prudent that suppliers of goods and services in the UAE are aware of, and comply with, the obligations stipulated in the Executive Regulations. 

The scope of the Consumer Protection Regime is very broad. It aims at protecting the rights of every natural or corporate person who receives goods or services (i.e. the consumer) in the UAE.  It applies to all goods and services inside the UAE, including the freezones, and related operations carried out by the advertiser, commercial agent, or provider/supplier (which is broadly defined as including "any legal person who offers a service or manufactures, distributes, trades in, sells, supplies, exports, imports or plays a part in producing or trading or storing a good in order to provide the same to the consumer"). For ease, we refer to all forementioned parties as the "supplier".

As such, the provisions of the Consumer Protection Regime are intended to apply in all circumstances where a consumer based in the UAE obtains goods and services from a third party. Notably, this also includes the provision of goods and services through e-commerce, so long as the e-commerce provider is registered inside the UAE.

What are the key provisions?

The Supplier's Obligations

We set out below certain key provisions which a supplier should bear in mind while promoting, marketing and selling their goods and services in the UAE. For illustrative purposes, we have collated obligations that sellers should bear in mind prior to contracting, upon contracting, and after contracting with consumers in the UAE.

Prior to Contracting – Marketing, Packaging and Promotions:

• The supplier must "clearly and legibly display the essential information specified by laws, regulations, technical standards and approved specifications regarding the packaging of the product." There are certain minimum requirements for product labelling and packaging, obliging the supplier to set out (inter alia) the product's country of origin and export, the name of their producer or importer and their commercial address or trademark, and a warning of the dangers associated with wrong use of the product. 
• The supplier is also required to provide clear and explicit instructions on the use and installation of the product, and clearly and legibly indicate prices and discounts for the goods or services. The supplier is forbidden from charging a higher price than the price announced by any means of advertisement.
• The Consumer Protection Regime further sets out essential requirements for advertising goods and services. Besides the general prohibition not to "create an untrue or misleading impression on the consumer", goods and services must be advertised in Arabic. Suppliers retain the discretion to use other languages alongside Arabic.
• Before charging discounts, conducting sales or generally marketing goods or services, the supplier must obtain the prior license from the competent authority. The supplier must notify the consumer if the date specified for enforcement of these discounts is within a week from the date of the consumer purchase. If it does not, the consumer is entitled to recover the price difference within 30 days of purchase.

Upon Contracting – Warranties, Spare Parts and Maintenance:

• Every transaction within the scope of the Consumer Protection Regime requires the supplier to provide the consumer with a complaint invoice and/or warranty. The invoice must include the minimum requirements of the Consumer Protection Regulations, being (inter alia) the name, address and contact information of the supplier, the price of the good or service in local currency, and the serial number of goods. The invoice must also be in Arabic, but any other language can be included as well.
• As to the warranty, it must be a "document", but can be provided by means of the invoice. The Consumer Protection Regulations also prescribe minimum requirements for the warranty given to the consumer. In particular, it must include the name and data of the supplier, the date of purchasing the good or providing the service, the warranty period, and the name, model and serial number of the good. Any warranty exceptions must be clearly stated.
• The supplier is also obliged to draw up a mechanism for spare parts and maintenance and provide the consumer with a written copy, together with the invoice and warranty document. The details of such mechanism should be readily accessible by customers and be published on the supplier's website.

After Contracting – After-Sales Service, Warranty Periods and Product Recall:

• The obligations of the supplier after concluding a transaction with a consumer will depend on the nature of the good or service provided. However, generally under the Consumer Protection Regulations, the supplier is required to comply with the warranty provided to the consumer for the warranty period.
• The supplier will be required to provide maintenance and repair services in respect of goods, and reperform services provided to the consumer in the correct manner and to the contracted standard, if it is deemed that the supplier has failed to meet the warranted functionality of the goods provided or services rendered during this warranty period.
• The warranty period must be "for the duration specified by the manufacturer or commercial agent". In the event of a defect, the warranty shall commence from the date on which the consumer receives the original repaired or replacement good. The warranty period will be extended in proportion the duration in which the consumer does not have use of the good. For services, the warranty period must be "reasonable" and so "commensurate with the nature of the service or the duration agreed upon with the consumer, whichever is longer."
• If defects are discovered, the supplier is obliged to immediately liaise with the competent authority and may be required to withdraw the good from the market. The supplier is further required to notify the consumer, cease trading the goods and providing the services, and recover the defective and harmful goods and provide a full refund or alternative goods for the consumer to benefit from without charge, while the goods are repaired or replaced.
• Consumers are entitled to submit complaints to the competent authority, whereupon the complaints will be determined and administrative fines and penalties may be imposed on the supplier. The competent authority, furthermore, has the broad reserved right to test goods in laboratories to ensure their validity and may seize goods if they are deemed unsafe.

Harmful Contract Terms

The Executive Regulations further supplemented the broad prohibition which exists under the Consumer Protection Law in which any term included by a supplier in their consumer contracts (being any contract, invoice, or any other related document) which is "harmful" to the consumer would be deemed null and void.

The Executive Regulations clarify that "harmful terms" are "any condition that would exempt the provider [supplier] from its responsibility or any of its obligations stipulated in the law and herein towards the consumer."

In particular, the Executive Regulations provide a list of non-exhaustive examples which are considered to be harmful (and are therefore prohibited from any consumer contract provisions), some examples include:

• unilaterally terminating the contract without reference to the consumer and/or giving the consumer the right to compensation;

• cancelling or diminishing the right of the consumer to claim compensation when the provider breaches its obligations; and

• waiving any of the consumer's rights stipulated in the Consumer Protection Regime or any other legislation.

The supplier is also forbidden from directly or indirectly effecting monopolistic outcomes in their transactions with consumers, whether through practises, conduct, agreements or contracts.

What are the penalties for non-compliance?

Under the Executive Regulations, there are five administrative penalties which the Ministry of Economy may impose on the provider in the case of a violation of any of the provisions of the Consumer Protection Regime. These penalties are ranked in a graded manner as follows:

• notice;

• administrative fine in accordance with Annex 2 of the Executive Regulations, with the penalty being doubled in case of repetition;

• temporary administrative closure for at least a day and up to 90 days;

• whole or part suspension of practising the activity for at least a day and up to 90 days; and

• cancellation of the provider's license and striking off from the commercial register.

Annex 2 of the Executive Regulations set out the applicable penalties in case of 46 separate instances of violation of the Consumer Protection Regime. These range from AED 100,000 in respect of (e.g.) failing to issue the invoice in Arabic or providing the consumer with a warranty, to AED 1,000,000 for breaches of the procedure in reporting defective recovered goods to the competent authority.

Given the significant financial (and other) penalties for these numerous offences, the provider should especially ensure familiarity and compliance with the provisions in Annex 2 and set up best practises for consumer protection to avoid the imposition of large fines (and worse) by the Ministry of Economy.

How can we help?

The above is not intended to be an exhaustive summary of all obligations stipulated in the Consumer Protection Regime. Hogan Lovells is well-versed on the Consumer Protection Regime and have extensive experience advising on its impact in the region. Please contact us for more information on how we can help, or if you would like practical guidance for your organisation to ensure arrangements, policies and procedures, and agreements are in line with the Consumer Protection Regime.

Authored by Imtiaz Shah and Janelle Moussa.