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, 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