AGENCY IN LIBYA

OVERVIEW

In1971, the Agency Law permitted the Libyan nationals to carry out activities of commercial agency

In 1975, the Libyan government prohibited the private entities from practicing agency activities

In 2004, the Commercial Agency Law No. 6 of 2004 was enacted regulating the activates of commercial agency

HISTORY

Agency in Libya is governed by the following: Civil Code (Article 89 to 163) Commercial Code of 1953 Commercial Agency Law no. 6 of 2004 GPC Decree no. 315 of 2008

LEGAL SOURCES

COMMERCIAL AGENT Supply of goods or provision of services by foreign supplier

must be channeled through a commercial agent. Accordingly, the supplier/service provider must appoint a commercial agent. (Exception: Food products and construction supplies)

The Agency Law did not recognize any differences between the various types of commercial intermediaries (contract agents, negotiating agents, commission agents, distributors and brokers). Therefore, All these types of commercial intermediaries are subject to the same legal requirements.

Commercial agent must be Libyan National or, in case of companies, fully owned by Libyans.

Commercial agent must be registered as an agent at the Agents Register

AGENCY AGREEMENT

The agency agreement must be made in

writing The agreement must explicitly specify the

following:1. Type of commercial intermediary

2. Term of the agreement (Fixed term-no automatic renewal)

3. Scope of Services

4. Commission payable to the commercial agent

The agency agreement has to be registered in the Companies Department.

EXCLUSIVITY

Exclusivity should be explicitly mentioned in the agency agreement.

Exclusivity can be made for a specific area or specific product

The commercial agent may appoint sub-agents unless otherwise agreed in the agency agreement

It should be noted that Article 5 of the Executive Regulation of the Agency Law limited the number of commercial agencies permitted to each commercial agent as follows:

(3 agencies for natural entities- 5 agencies for Tasharokiat (special type partnership fully owned by Libyans-10 agencies for public and private companies).

COMMISSION

Commission is due on transactions expressly agreed upon Commercial agent is entitled to commission for contracts

duly performed As per the Commercial Law, commission is payable for

transactions concluded by the principal without the participation of the commercial agent in the agent’s territory unless agreed otherwise

Commission is also payable If a contract is not fulfilled due to reasons for which the principal is responsible

TERMINATION

A fixed term agency agreement is terminated at the end of its term

Indefinite agency agreements can be terminated by serving upon the other party a three month notice. Such notice can be substituted by the way of compensation.

EARLY TERMINATION

The agency agreement may be terminated on the occurrence of any of the following events:

Breach of the agency agreement The commercial agent is bankrupt The commercial agent is De-registered as a reason of a

criminal act, or provision of false information or the commercial agent fails to keep one of the the requirements set by the law (i.e. company not fully owned by Libyans)

GOODWILL COMPENSATION

Goodwill compensation is not set under the Libyan laws

Damages for unjustified termination as well as the duration of the agency agreement are considered while calculating goodwill compensation

APPLICABLE LAW

As per Article 19 para. 1 of the Libyan Civil Code states that the parties to a contract may agree on the application of a specific law

The provisions of foreign law are applied by Libyan courts only to the extent that these provisions do not conflict with mandatory provisions of Libyan law.

DISPUTE RESOLUTION

The principal and the commercial agent are free to recorse to arbitration or litigation for dispute settlement (preferably arbitration).

However, under Article 3 of the Civil and Procedural Law, a Libyan court is likely to declare its competence to decide to settle an agency agreement performed in Libya. Accordingly, a clause contained in the agency agreement under which a foreign court has jurisdiction on disputes arising out of the agreement is not likely to be held as valid ground for Libyan courts to decline jurisdiction since the Libyan courts are likely to retain jurisdiction on the basis that the obligations arose in Libya or that the obligations were performed or should have been performed in Libya

A foreign award issued by a foreign court having jurisdiction under the contract may be enforced in Libya if it satisfies the required conditions for enforcement of foreign awards

ENFORCEMENT OF FOREIGN JUDGMENTS

Libya is not a member of the New York UN Convention on the Recognition and Enforcement of Foreign Arbitral Awards of June 10, 1958. Therefore, the recognition of foreign arbitral awards is exclusively governed by Libyan law

To enforce a foreign judgment in Libya, the judgment should be a final judgment and provided that the principle of reciprocity applies. Furthermore, the foreign judgment must not contradict with the Libyan courts decisions as well as the public order