Introduction

In September 2023, the United Arab Emirates introduced Federal Decree-Law No. 14/2023 on Trading by Modern Technological Means, marking a significant milestone in regulating the country’s digital economy. Now, two years since its implementation, this comprehensive legislation has shaped the landscape of e-commerce, digital commerce, and social commerce in the UAE.

As businesses have continued to operate through online platforms and digital technologies, this law has provided a robust framework that protects consumers, regulates digital merchants, and ensures the overall integrity of digital commerce in the UAE. This article examines the key provisions and impact of this legislation since its introduction in 2023.

Scope and Applicability

Since its enactment, the Decree-Law has applied to all trading activities conducted through modern technological means within the UAE. It covers any person engaging in commercial activities via modern technological means inside the UAE or receiving from outside. The legislation also extends to free zones in specific circumstances, particularly when goods and services are sold outside the geographical scope of the free zone. Financial free zones are included as well, with certain limitations.

The law has maintained its exclusions for several categories. Government procurement falls outside its purview, as do non-commercial platforms and digital currencies supervised by the Central Bank. Additionally, transactions carried out by licensed financial institutions and insurance companies under the Central Bank’s supervision remain exempt from this legislation.

Key Objectives

Since 2023, the legislation has worked toward several strategic objectives aligned with the UAE’s vision for a digital economy. Foremost among these has been advancing digital transformation in the UAE, a goal that has underpinned many recent legislative initiatives. The law has developed a robust regulatory environment for modern technological trading while encouraging the trade of goods and services through technological means.

A central focus of the Decree-Law over the past two years has been organizing the relationship between digital merchants and consumers to ensure fair and transparent interactions. This includes protecting consumer interests and data, safeguarding intellectual property rights, and providing secure technological protection measures. The legislation has emphasized the importance of secure payment methods, recognizing that payment security is essential for consumer confidence in digital commerce.

Ministry of Economy’s Role

Since the law’s implementation, the Ministry of Economy has exercised significant authority in executing this legislation. It has been tasked with developing general policy regarding trading through modern technological means, a responsibility that reflects the strategic importance of digital commerce to the UAE’s economic future. The Ministry has issued terms and conditions for consumer protection, establishing standards that digital merchants must meet.

In coordination with competent authorities over the past two years, the Ministry has had the power to block applications, websites, or platforms that violate the law. This enforcement mechanism has ensured that non-compliant digital merchants can be swiftly prevented from operating in the UAE market. The Ministry has also worked to ensure tax compliance and meet customs requirements, integrating digital commerce into the broader regulatory framework.

Standards for Digital Merchants

Since 2023, digital merchants operating in the UAE have had to adhere to specific standards under the law. They must possess legal capacity and obtain necessary approvals, permits, and licenses from relevant authorities. The law requires merchants to provide a technically secure environment for transactions, recognizing the importance of cybersecurity in digital commerce.

For the past two years, merchants have been permitted to sell only legally permissible goods and services, and they must clearly state terms, conditions, and pricing to consumers. The legislation prohibits misleading methods or incorrect product descriptions, promoting transparency in digital commerce. Digital merchants must provide detailed invoices, comply with competition protection terms, and develop business continuity plans to ensure consistent service. When requested, they must share information with authorities, facilitating regulatory oversight.

Consumer Rights and Protections

Since its implementation, the law has established substantial protections for consumers engaging in digital commerce. Consumers have the right to receive goods and services exactly as specified in their agreements with digital merchants. The legislation requires clear presentation of goods, services, and conditions so that consumers can make informed purchasing decisions.

Under the 2023 law, secure payment methods are mandated, protecting consumers from financial fraud. Consumers also have choice regarding marketing communications, allowing them to opt out of unwanted advertising. The law requires transparent rating systems, enabling consumers to share their experiences with digital merchants. Complaint mechanisms must be accessible, and merchants must provide clear identification and contact information, promoting accountability.

Return Policy

For the past two years, the Decree-Law has established comprehensive return rights for consumers. They may return goods or services when they violate UAE legislation or if items are defective, incomplete, or damaged upon receipt. Return rights also apply when delivery delays render the goods or services unusable, or if the terms and conditions of the agreement are violated.

However, the law continues to balance these rights with reasonable limitations. The right to return is forfeited if the consumer uses the product beyond verification purposes or exceeds the specified return period. Exceptions also exist for perishable goods and one-time-use digital products such as books, movies, or programs that may only be used, viewed, or listened to once.

Dispute Resolution

Since 2023, the law has established a comprehensive dispute resolution framework to address conflicts between digital merchants and consumers. UAE courts have primary jurisdiction over disputes arising from the application of this law. However, the Ministry may form specialized dispute resolution committees to provide alternative avenues for conflict resolution.

Under the law, arbitration is permitted, offering flexibility in dispute resolution. However, the legislation includes an important consumer protection provision: contracts valued under AED 50,000 may not include mandatory arbitration clauses. This ensures that consumers with relatively small claims can access court systems rather than potentially more costly arbitration proceedings.

Data Protection and Security

Over the past two years, the law has placed significant emphasis on data protection, recognizing the central role of consumer data in digital commerce. Digital merchants must comply with UAE data protection laws and meet professional, regulatory, and technical standards for data handling. The legislation requires ensuring data credibility, availability, and security throughout all digital commerce activities.

Since its implementation, consumer information must be protected, and merchants cannot share consumer data without obtaining explicit consent. This protection extends to all aspects of trading through modern technological means, creating a comprehensive data protection framework for digital commerce.

Digital Payments and Logistics

Since 2023, the legislation has addressed critical infrastructure elements necessary for successful digital commerce. Digital merchants may provide logistics services either directly or through licensed providers, ensuring flexibility in fulfillment options. Digital payment gateways must meet security standards and provide consumer-friendly services, facilitating smooth transactions.

Importantly, the law has prohibited imposing additional fees beyond those specified in contracts, protecting consumers from hidden charges. This transparency requirement applies to both logistics services and payment processing, creating a fair environment for digital commerce transactions.

Enforcement and Penalties

For the past two years, to ensure compliance, the law has established robust enforcement mechanisms. Judicial control officers are granted inspection authority, enabling them to investigate potential violations. Both digital merchants and consumers must cooperate with these officers and provide necessary information upon request.

The legislation created a coordinated ecosystem for supervision and enforcement, involving multiple regulatory authorities. Administrative penalties are imposed for violations, with specific penalties specified by Cabinet decision. This enforcement framework ensures that the law’s provisions are meaningfully implemented.

Conclusion

Federal Decree-Law No. 14/2023 has, over the past two years, represented a comprehensive approach to regulating the digital economy in the UAE. By establishing clear standards, protecting consumer rights, and creating enforcement mechanisms, the law has fostered trust in digital commerce while promoting innovation and growth.

Businesses operating in the UAE’s digital marketplace have had to review their practices to ensure compliance with this legislation. The law’s emphasis on consumer protection, data security, and transparent business practices aligns with global best practices while addressing the unique needs of the UAE’s evolving digital economy.

Businesses should remain informed about specific requirements and work closely with legal counsel to maintain compliance. The Decree-Law continues to provide a solid foundation for the development of digital commerce in the UAE, balancing regulatory oversight with the flexibility needed for innovation in this dynamic sector.

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