UAE SETS THE STANDARD: PIONEERING E-COMMERCE LEGISLATION FOR THE DIGITAL AGE

05 April 2024

Glory Sony

The UAE has accepted the digital age by abrogating the Electronic Transactions and E-Commerce Law (Federal Law No 1 of 2006) and enacting Federal Decree-Law No. 14/2023 on Trading by Modern Technological Means (as the “E-Commerce Law”), issued in December 2023. This E-Commerce Law reforms online buying and selling, making it easier for businesses to trade digitally. Retailers must follow the rules set by this law when selling things online to customers in the UAE.

Dubai: This E-Commerce Law not only recognizes the importance of the digital world in today’s economy but seeks to protect consumers and deepen their confidence in online transactions above all. The United Arab Emirates (UAE) stands as a beacon of digital innovation and economic growth in the Middle East, with e-commerce playing a pivotal role in shaping its business landscape.

E-Commerce Growth Trajectory

The UAE's e-commerce sector has witnessed exponential growth over the past few years, driven by high internet penetration rates, a tech-savvy population, and robust digital infrastructure. According to recent studies, the UAE's e-commerce market is expected to reach significant milestones in revenue, with an annual growth rate projecting a bright future for online trade.

Scope and Regulation

This E-Commerce Law places a strong emphasis on safeguarding consumer interests, ensuring that intellectual property rights are preserved for transactions conducted via modern technology. Additionally, it implements strong technological security measures to guarantee secure transactions and oversees the processes for refunds and exchanges of goods and services. Essentially, it legalizes trade conducted through modern technology means, making it similar to traditional trade methods.

The E-Commerce Law covers the sale and purchase of goods, services, and relevant data through technological platforms such as websites, e-platforms, social media, and apps. It applies to both digital and physical goods and services obtained through modern technology or platforms.

1.      Criteria for E-Commerce Traders:

In accordance with Article 5 of the E-Commerce Law, E-Commerce Traders have to meet the following standards and criteria:

·        Possess legal capacity.

·        Complying with all legal, regulatory, professional, and technical requirements.

·        Obtaining necessary approvals, permits, and licenses from competent authorities for conducting business via modern technology means.

·        Maintaining a secure technology infrastructure to support e-commerce services.

·        Adhering to cybersecurity requirements and standards specified by the competent authority to ensure secure browsing and purchasing for consumers.

2.      Goods and Services:

Articles 6 to Articles 10 of the E-commerce Law sets out the privileges afforded to consumers during online transactions, such as the entitlement to safe purchases, transparent advertising, and accessible avenues for grievance resolution.

Article 7 specifies the circumstances under which consumers can request returns of goods or services, thereby ensuring clarity regarding consumer rights and facilitating the resolution of disputes. This provision strives to create a just and safe space for consumers engaged in e-commerce endeavors.

To make the process more transparent for the consumer, the E-Commerce Law states that the businesses must comply with conditions and requirements regarding promotional and marketing campaigns. They are obligated to provide customers with detailed digital invoices for purchases made through technological means. It is important to note that deceptive practices or false information regarding the goods or services sold on these platforms are strictly prohibited.

Furthermore, Digital traders are permitted to sell only goods and services that are legally approved for trade in the UAE. They must refrain from selling any goods or services that require special approval from the competent authority until such approvals are obtained.

3.      Obligations of thew E-commerce Trader :

Articles 11 to 15 of the E-Commerce Law provides for obligations of an e-commerce trader include providing insurance coverage for trading-related risks, adhering to recommended terms and conditions, complying with legal liabilities, ensuring contracts have the same binding force as traditional trading, offering logistics services according to specified requirements, and facilitating digital payments in accordance with legal standards and without imposing unauthorized fees on consumers.

4.      Other Provisions:

Articles 16 to 20 of the E-Commerce Law establishes supervision and control mechanisms, assigning responsibilities to the Ministry and the Competent Authority to oversee implementation and address violations.

5.      Article 19 provides for imposition of administrative penalties for violations, which shall be jointly prepared by the Ministry and the Competent Authority.

Article 20 authorizes the Cabinet, in coordination with the Minister, to issue necessary regulatory decisions for implementing the law.

This new E-Commerce Law aligns with the UAE’s strategic direction for digital transformation and aims to foster a robust e-commerce ecosystem in the country. If you’re planning to establish an online business in the UAE’s mainland, you’ll need to apply through the Department of Economic Development (DED) in the respective emirate.

Driving Factors Behind the Surge

There are multiple reasons behind the rapid growth and expansion of e-commerce in the UAE. These reasons could include:

·        Digital Infrastructure: The UAE boasts a world-class digital infrastructure, facilitating seamless online transactions and robust cybersecurity measures.

·        Government Initiatives: Government-led initiatives aimed at digital transformation and smart governance have significantly boosted the e-commerce sector.

·        Consumer Preferences: A shift in consumer preferences towards online shopping, fueled by convenience, variety, and competitive pricing, has played a crucial role.

Consumer Protection: A Cornerstone of E-Commerce Success

This emphasizes on the importance of safeguarding consumer rights and interest in the realm of e-commerce are below mentioned:

·        Consumer protection measures in the UAE have been instrumental in building trust between consumers and online merchants. The emphasis on transparent transactions, data privacy, and consumer rights ensures a safe and reliable e-commerce environment.

·        Transparency and Trust: Regulations mandating clear product descriptions, fair pricing, and honest advertising practices have bolstered consumer confidence in online shopping.

·        Data Privacy Laws: Stringent data protection laws safeguard consumer information, a critical aspect considering the rise in cyber threats.

Challenges and Solutions

While the e-commerce sector in the UAE is on an upward trajectory, it faces challenges such as logistical hurdles, cross-border trade regulations, and the need for continuous digital innovation. The UAE government and private sector are collaboratively addressing these issues by improving logistics networks, simplifying trade laws, and investing in technology.

The Future of E-Commerce in the UAE

The future of e-commerce in the UAE looks promising, with ongoing investments in digital infrastructure, AI, and blockchain technology poised to further revolutionize the sector. Additionally, the focus on sustainable and eco-friendly business practices is expected to shape the next phase of e-commerce growth in the region.

In Conclusion

The UAE's e-commerce sector is a testament to the country's vision for a digital-first economy. With a solid legal framework for consumer protection, state-of-the-art digital infrastructure, and a forward-looking approach to challenges, the UAE is setting a global benchmark in e-commerce. As the sector continues to evolve, keeping abreast of changes in consumer behavior, technology, and regulatory landscapes will be crucial for businesses aiming to succeed in the UAE's dynamic digital marketplace.

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