Empowering E-Commerce in the UAE: A Deep Dive into Federal Decree-Law No. 14/2023

February 20, 2024by Aparna T Nambissan0

UAE’s commitment to fostering a robust and dynamic e-commerce sector by setting clear guidelines and standards for online trade. 

Drafted to streamline operations, reduce bureaucratic hurdles, encourage innovation and provide conducive environment for e-commerce businesses.  

The law applies to those free zones that lack specific legislation to regulate trading through technological means. 

Delineates the rights of consumers in electronic transactions, providing a safety net that encourages more individuals to embrace online shopping. 

 In a significant stride towards digital transformation, the United Arab Emirates (UAE) has, on 04 September 2023, enacted the Federal Decree-Law No. 14/2023, a comprehensive legislative framework designed to regulate and strengthen e-commerce activities across the nation. This landmark legislation, titled “On Trading by Modern Technological Means,” marks a pivotal movement in the UAE’s ongoing journey towards becoming a leading digital economy. This article delves into the intricacies of the decree, exploring its implications for businesses, consumers, and the broader digital landscape in the UAE.  

Facilitating E-Commerce Growth 

At the heart of Decree-Law No. 14/2023 (the Law) is the UAE’s commitment to fostering a robust and dynamic e-commerce sector. By setting clear guidelines and standards for online trade, the law aims to create a conducive environment for e-commerce businesses, ranging from burgeoning startups to established online retailers and electronic service providers. The decree’s provisions are meticulously crafted to streamline operations, reduce bureaucratic hurdles, and encourage innovation within the digital marketplace. 

 The provisions of the Law shall apply to those who are trading through modern technological means, its activities, and modern technological means used in relation thereto. It also applies to any person who engages in commercial activities inside the UAE or from outside it, including modern technological means, logistics services, and digital payment gateways. This Law also applies to free zone companies that purchase or sell goods and services through modern technological means outside the geographical scope of the free zone. It also applies to those free zones, where there is the absence of specific legislation to regulate trading through technological means.  

 However, this Law does not apply to any government procurement, data, platforms, and smart applications that are used for non-commercial purposes through modern technological means. Digital currencies designated for payment and trading purposes, and all transactions that are carried out by licensed financial institutions and insurance companies that are subject to the licensing and supervision of the Central Bank are exempt from the application of this Law. 

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Ensuring Consumer Protection in Digital Payments  

Consumer confidence is crucial in the digital age, and the Law places a strong emphasis on safeguarding consumer rights. By establishing transparent regulations around online transactions, the Law aims to build trust between consumers and e-commerce platforms. This includes clear guidelines on advertisement practices, ensuring that consumers receive accurate and honest information about products and services offered online. The decree also delineates the rights of consumers in electronic transactions, providing a safety net that encourages more individuals to embrace online shopping. The Law thereby sets a standard and criteria for businesses that trade using modern technological means. 

 Further, a consumer must adhere to the payment terms of the goods and services that are utilized by them. In this regard, the consumer must be diligent in making adequate payments to the service provider. It is also the responsibility of a service provider or the person using modern means to trade, to provide the services to the consumers in an easy manner consistent with the nature and flow of trading through modern means, refraining from imposing additional charges on consumers regarding the digital payment in contrary to what is expressly given to them in the digital payment terms.  

Licensing and Regulatory Compliance 

One of the key aspects of the Law is the introduction of specific licensing requirements for e-commerce entities. This measure is intended to regulate the online marketplace, ensuring that all players adhere to the highest standards of operation. The licensing process is designed to be straightforward, promoting ease of doing business while ensuring that e-commerce platforms comply with UAE laws and regulations, including data privacy and cybersecurity. 

Data Privacy and Cybersecurity 

In an era where data is king, the Law underscores the importance of data privacy and cybersecurity. E-commerce businesses must implement robust measures to protect consumer data and ensure secure online transactions. This not only protects consumers but also reinforces the credibility and reliability of online platforms, fostering a secure e-commerce ecosystem that is resilient to cyber threats. 

The Law also sets standards and requirements regarding data and information, whether issued or approved by the competent authority.  

The Role of Electronic Signatures and Records 

Recognizing the digital nature of e-commerce, the decree acknowledges the validity and legal standing of electronic signatures and records. This provision modernizes the legal framework for online transactions, making it easier and more efficient for businesses and consumers to enter into binding agreements electronically. The move aligns with global best practices and supports the seamless execution of online contracts and transactions. All activities and businesses pertaining to trading through modern technological means shall have the same binding force as traditional trading, and the Law sets certain conditions to meet the veracity of the contract.  

Government Oversight and Enforcement 

To ensure the effective implementation of the Law, it outlines the role of government authorities in overseeing and enforcing its provisions. This includes monitoring compliance, investigating violations, and imposing penalties where necessary. The involvement of government authorities is crucial in maintaining order in the online marketplace and ensuring that e-commerce businesses operate within the legal framework established by the decree. The Ministry of Economy (MOE) and the Competent Authority (Federal or local entity concerned with the issuance of the approvals, licenses, and permits by 

virtue of the applicable legislation) shall supervise and control the implementation of the provisions of the Law and take legal measures regarding the violation of its provisions. 

Enhancing the Digital Economy 

By regulating e-commerce and transactions conducted through modern technological means, the Law plays a vital role in enhancing the UAE’s digital economy. The law provides a solid legal foundation for online trade and boosts consumer confidence in digital transactions. This, in turn, stimulates economic activity, drives innovation, and attracts investment in the digital sector. 

Supporting Innovation 

Innovation is the lifeblood of the digital economy, and the Law is crafted to foster an innovative e-commerce landscape. By providing clear guidelines and reducing regulatory barriers, the Law encourages businesses to explore new technologies, business models, and online services. This supportive environment is conducive to innovation, enabling the UAE to remain at the forefront of digital advancements. 

 To achieve their obligations pertaining to trading through modern technological means, the digital merchant may provide logistics services such as shipping, transport, and delivery to the end consumer directly through them or through any third-party service providers as licensed in the State.  

Dispute Resolution and Administrative Penalties 

In case of any disputes that arise between the parties, the courts of UAE in each Emirate shall have the jurisdiction to resolve the dispute, in accordance with the applicable legislation in this regard. Furthermore, the MOE or the Competent Authority in the Emirate, as may be applicable, reserves the right to constitute a committee tasked with the amicable resolution of conflicts stemming from the enforcement or interpretation of the Law and determine the dispute resolution mechanism.  

 However, the Law does not prevent the parties from referring any dispute to arbitration in order to settle any dispute that arises between them. However, a digital contract whose value is less than AED 50,000 may not include a condition to refer disputes to arbitration.In case where arbitration recourse is pursued subsequent to the decision by the Committee, then such arbitral recourse shall be valid making the decisions of the Committee null and void.

 Furthermore, the MOE shall prepare a list of violations and administrative penalties regarding the acts committed in contravention of the Law and shall impose appropriate penalties each according to its competencies.  

The Federal Decree-Law No. 14/2023 represents a significant milestone in the UAE’s digital transformation journey. By regulating e-commerce activities and ensuring a secure, transparent, and consumer-friendly online trading environment, the law paves the way for sustained growth and innovation in the digital economy. As the UAE continues to embrace digitalization, this decree stands as a testament to the nation’s commitment to becoming a global leader in the digital age. Businesses, consumers, and the government alike stand to benefit from the opportunities and protections offered by this comprehensive legislative framework, heralding a new era of prosperity and innovation in the UAE’s digital landscape. 

About ATB Legal

ATB Legal is a full-service legal consultancy in the UAE providing services in dispute resolution (DIFC Courts, ADGM Courts, mainland litigation management and Arbitrations), corporate and commercial matters, IP, business set up and UAE taxation. We also have a personal law department providing advice on marriage, divorce and wills & estate planning for expats. Please feel free to reach out to us at office@atblegal.com for a non-obligatory initial consultation.

by Aparna T Nambissan

Aparna is a legal consultant at ATB legal. She holds a Bachelor’s degree in Law and Commerce from Karnataka State Law University. She is enrolled with the Bar Council of Karnataka.

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