The United Arab Emirates’ Federal Law Number 19 of 2016 on Combating Commercial Fraud (the Anti-Fraud Law), which went into effect in May 2018, amends the Old Anti-Fraud Law, which was enacted in 1979.

Since its creation in 2013, the Anti-Fraud Law has been the subject of a lot of debate. The United Arab Emirates has emerged as a commercial center for trade and commerce between various nations, requiring more stringent rules and regulations to safeguard and protect the marketplace from fraudulent and counterfeit items. The Anti-Fraud Law is designed to provide a legal system that can combat fraudulent commercial activities while also allowing us to tackle IP infringement and other illicit activities.

The Implementation and Enforcement of the New Law

The penalty for committing an act of commercial fraud is set out in Article 2 of the New Law, which states that “any individual who commits a commercial fraud will be subject to the provisions of this legislation. “For the first time, we now have anti-fraud laws that specifically mention free zones. Given the uncertainty and complicated processes involved in enforcing IP rights in free zones, these economic zones have concerned IP right holders significantly.”

Any sale, advertising, and ownership of counterfeit items is classified as commercial fraud under the New Law. The importation, exportation, re-exportation, production, storage, leasing, and selling of goods are all considered commercial fraud under the New Law. This is another crucial stage in the process of outrightly controlling possession. This is especially true for free zones, as well as general re-export firms that may store fraudulent goods in their warehouses. These regulations are critical to the UAE’s export and re-exports sector, particularly in Dubai, since they guarantee that only genuine items are handled, protecting the country’s and emirate’s reputation.

The Anti-Commercial Fraud Higher Committee

The Higher Committee for Anti-Commercial Fraud, established by the New Law, is a specialized commission with extensive legal and administrative clout to combat commercial fraud in the United Arab Emirates. The Emirate Level Sub-Committee is in charge of carrying out the responsibilities of the Higher Committee. Because it gives a federal level authority to carry out enforcement, the Higher Committee is a major step forward in IP regulation in the UAE. Previously, enforcement of IP rights was handled by various authorities in each Emirate, but the passage of this bill has given the Higher Committee authority to suggest national policies to combat commercial fraud and other common issues that brand owners face.

The Higher Committee’s responsibilities include: 1, To devise methods and rules for preventing commercial fraud. 2, To examine reports of commercial fraud referred to it by the competent authority and make decisions as required. 3, To study law enforcement’s difficulties and suggest new legal processes as necessary.

Article 6 sets forth the responsibilities of the sub-committees at emirate level. Accepting claims for conciliation from individuals who break the law; putting offenders on notice; ordering facility closure for a limited period of time; overseeing waste management activities; and recycling or re-exporting infringing items are all examples of these efforts.

Counterfeit Goods

The original bill was opposed by the IP industry, which fought it throughout 2013 and 2014. One of the proposed solutions in the first draft of the legislation was to re-export counterfeit items as a form of punishment, which provoked considerable anxiety. This was a worry raised by IP attorneys, who argued that some offenders would see it as a reward rather than a penalty. The UAE’s legislation has been changed to remove this provision, and the New Law explicitly states that counterfeit items should be destroyed as a remedy. The new Law of the Game, Article 3, states: “Without prejudice to criminal responsibility, the competent authority may order the importer to return fraudulent or ruined products to their source for a set period of time. All of this is subject to the rules set out in this law’s implementing regulation. “The difference between genuine and spoilt products vs. counterfeit items is explained in this essay. The UAE’s intense interest in fighting fraud demonstrates just how essential the UAE’s role is on a worldwide scale in preventing counterfeit items from spreading across nations.

Information related to goods

Existing rules did not call for the sharing of information. A trader must, however, provide all commercial books and records, as well as documentation on value and any supporting papers and invoices when requested by a competent authority under the New Law (article 4). This is critical for all brand owners who wish to delve deeper into the counterfeit business’ supply chain in order to expose it and help with civil suits against infringers. Because there was no proof to back up the claim for compensation, civil lawsuits are rarely pursued because of this new right to obtain information.

Penalties imposed by the Law

The Law’s requirement that severe penalties be imposed on offenders, which is a significant improvement over the Old Anti-Fraud Law, is intended to deter criminals and prevent commercial fraud. The Anti-Fraud Act of 1991 set a penalty of two years in jail and an AED10,000 (UAE Dirham ten thousand) fine for fraud against a consumer by providing items that are not as advertised. In contrast, Article 12 of the Legal Code prescribes a more severe penalty for offenders, such as two years in prison or a fine ranging from UAE Dirham 50,000 to UAE Dirham 250,000 or both. Anyone who attempts to engage in a fraudulent company activity as prohibited by the Law will be sentenced to one year in jail or fined between AED10,000 and AED100,000, or both.

Article 14 is the lone exception, imposing a jail sentence of up to two years or a fine of AED 250,000 to AED 1,000,000 or both if the fraud or crime has to do with foods for humans, animals, pharmaceuticals for human use, agricultural crops or organic products. Furthermore, in the event of a conviction for any of the offenses covered in Article 14 above, the court shall impose a six-month closure on the accused and issue appropriate fines. The court also has the discretion to increase or terminate the license in the event of a recurrence of such violations. According to Article 16 of the Law, the offender/violator is under a heavy responsibility, since he or she is not permitted to be excused from any penalty prescribed by the Law even if the buyer is aware that the goods are fraudulent, unethical, or counterfeit.

Bottom line

The Anti-Fraud Law is another significant change that strengthens the UAE’s more recent legal framework. This legislation has made strides toward establishing a solid legal foundation for brand owners and genuine enterprises to protect and safeguard their rights. While the Anti-Fraud Law is a positive development, it is still in its infancy, and the Higher Committee’s and sub-committee’s effectiveness in carrying out administrative procedures will play an important role in how successful the framework proves to be. Importantly, once the implementing rules become effective, the regulatory framework and policies will be more apparent. Anyhow, the harsh penalties given for will act as a deterrent to commercial frauds and felonies, and they will fill in the gap left by the Old Anti-Fraud Law, which was an ineffective means of combating intellectual property crimes and other commercial frauds.