Iraq Update: Requirements for a valid commercial agency agreement in Iraq - Instructions 1 of 2020

Instructions No. 1 of 2020 (the "Instructions") facilitating the implementation of the provision of Article 23 of the Regulation of Commercial Agencies No. 79 of 2017 (the "Commercial Agency Law") was recently issued on 8 November 2020. The Instructions provide much needed clarification on Iraq’s Commercial Agency Law. The clarification sets out the requirements for a valid commercial agency agreement in Iraq.

The key changes introduced by the Instructions can be summarised as follows:

‘Commercial agencies’ under Iraqi law represent a broad variety of relationships. Under the Commercial Agency Law, no distinction was made between distributors, commission agents, sale representatives and franchisees. The Instructions, however, now provide definitions for the various types of commercial agencies that can be carried out in Iraq (Article 1). This is particularly significant with regards to franchise arrangements which were not common in Iraq.

Pursuant to Article 2 of the Instructions, the commercial agent is required to affix the trademark, brand number, commercial agency number and product name to all materials imported.

A third party who wishes to engage a commercial agent is required to ensure that the commercial agent is duly licensed in Iraq before both parties sign the agreement (Article 5).

Commercial agents must inform the Companies Registration Department of any amendments to the commercial agency agreement that is registered with the Commercial Registration Department no later than sixty [60] days from the occurrence date of any such amendment (Article 6)

Although the Instructions set out the requirements that will aid foreign entities when engaging an agent in Iraq, guidance is still required on a number of articles in the Agency Law such as the issue of termination of a commercial agent and what constitutes “good cause.”