Agency plays a vital role in the lives of individuals and companies in the UAE. It allows a principal to delegate another person (agent) to perform legal or procedural acts on their behalf efficiently and swiftly.
What is Agency in Legal Terms?
Agency is a delegation from a natural or legal person (company/institution) to another person, authorizing them to perform specific acts or a set of tasks. The agency ends either when the tasks are completed or the agency period expires.
It may be oral or written, not necessarily notarized, and proof can be established via written communication or even electronic messages such as WhatsApp.
Types of Agencies under UAE Law
- General Agency: Broad delegation covering management tasks such as signing official documents, managing bank accounts, company administration, contract execution, employment matters, and more.
- Special Agency: Limited to a clearly defined act or purpose, such as selling a specific property or representing in a particular legal case.
Difference Between General and Special Agency
- General agency grants extensive powers covering most administrative and financial acts.
- Special agency is limited and specific, with no room for ambiguity or expansion.
Can an Agent Delegate to Others?
Agents may delegate their authority only if explicitly authorized in the agency contract. Otherwise, they are legally responsible for acts by any sub-agent. In special agencies, delegation to assist is allowed but not for independent decision-making.
Advantages of Agency
- Speeds up legal and commercial transactions.
- Relieves the principal from burdensome tasks.
- Saves time and effort.
- Utilizes agent’s expertise.
Risks and Negative Aspects
- Agent exceeding delegated powers.
- Misuse of authority for personal gain at the expense of the principal.
- Unauthorized acts with the principal’s funds entitle the principal to compensation.
The Danger of General Agency
General agencies are the riskiest due to broad powers, including ownership transfer. Notaries must carefully explain powers and ensure the principal fully understands them.
Recommendations for Investors and Business Owners
- Precisely define agent’s powers.
- Restrict the agent’s right to delegate unless clearly stated.
- Set appropriate time limits.
Duration and Termination of Agency
- Duration varies with task nature; sales agencies may be limited to 1-2 months, administrative agencies up to one year, renewable.
- Maximum continuous period is three years.
- Termination requires notifying the agent through legally recognized means (in-person, fax, email, newspaper notice).
- Without notification, termination is ineffective and the agent remains liable for acts after the principal’s intention to terminate.
Attorney’s Agency and Litigation Powers
Two main types of attorney agencies:
- General Power of Attorney: Broad powers to represent, negotiate, sign, and appear before courts and authorities.
- Special Power of Attorney: Limited to specific cases or acts.
Litigation Power of Attorney
- Represent the client before all court levels.
- Sign legal documents.
- Negotiate settlements.
- Present evidence.
- Receive funds on client’s behalf when authorized.
Abu Dhabi Judiciary’s Circular on Litigation Powers of Attorney
Circular No. (11) of 2024 mandates that litigation powers of attorney before Abu Dhabi courts must be notarized by the notary public of Abu Dhabi Judiciary. The system enables electronic linking of powers to case management for efficient monitoring and processing.
Consequences of Non-Notarized Powers of Attorney in Abu Dhabi Courts
- Powers not issued by Abu Dhabi notaries or from other Emirates are rejected before Abu Dhabi courts, except for foreign powers for non-residents.
- Parties must submit notarized powers when filing or attending court proceedings.
