To be on the security side It is advisable that parties to trade agreements expose their rights and obligations in writing, whether through distribution or agency agreement, to avoid unnecessary and unexpected misunderstandings and controversies. Under Kuwaiti law, all agency agreements must be registered with the Agency Department at the Ministry of Commerce and Industry to be valid. However, in practice, not all agency contracts are registered. Local courts have argued that even if an agency agreement is not registered, the local representative can still benefit from the protection and benefits of such an agreement. Some government authorities require proof of the registered agency and this agency must also be registered with that government agency. The registration of such agreements is generally beneficial to the local representative, as it provides a registration of the Agency and, in particular, prevents other representatives from acting with the foreign client for the same services as those provided in the agreement without their prior consent. To change local agents, the foreign principle must first unsubscribe the current agent and then register the new agent. Such a opt-out must be approved by the current representative. Kuwaiti Act protects an agent with respect to the unfair termination of their services by the client. The awarding entity does not have the right to terminate the contract without a substantial breach of the agent. However, the principal is obliged to pay substantial compensation to the representative if the representative has terminated the agency contract. In addition, the new law also provided that if an agency contract was automatically renewed, if the contracting parties did not expressly terminate.
In addition, the representative has the right to seek appropriate compensation if the client has refused to renew an agency contract at the end of his term. However, the court only authorizes compensation if the agent is not negligent in carrying out his duties under the agency contract. It is important to note that the new Trade Agencies Act No. 13/2016 (CAL) sets out the general rules governing the creation of commercial agencies, where the CAL requires that the trade agency agreement be concluded in writing and that it completes certain formalities that must be registered with the Ministry of Commerce and Industry in order for a legal action to be tried and validated by the Kuwaiti courts under Article 6 of the CAL, it also contains no other guidance or expressly requires that the distribution agreement be established in writing, whereas the new definition of the Commercial Agency contains the right of distribution, which means that Article 6 should also cover the distribution agreement.