Many commercial transactions begin with an introduction. A buyer looking for a reliable source of supply, or a seller seeking access to a new market, often benefits from an intermediary who understands both sides and can bring them together efficiently. That is the role of a commercial broker.
In the UAE, commercial brokerage is a recognised and regulated commercial activity. Understanding how it works — and where its boundaries lie — helps businesses use brokers effectively and avoid misunderstandings over roles, fees and responsibilities.
What a commercial broker does
A commercial broker acts as an intermediary who brings parties together to negotiate and conclude a contract, typically for the sale or supply of goods or services. In practice, a broker's work may include:
- Identifying potential buyers, sellers or suppliers that match a client's requirements.
- Facilitating introductions and initial communications.
- Helping the parties clarify specifications, volumes and commercial terms.
- Coordinating information flows during negotiation.
- Supporting basic due diligence on prospective counterparties.
A broker is generally not a party to the underlying contract. The buyer and seller contract directly with each other, and each remains responsible for performing its own obligations.
The legal framework
The UAE's Commercial Transactions Law — Federal Decree-Law No. 50 of 2022, in force since January 2023 — treats brokerage as a commercial activity when carried on professionally and contains specific provisions on brokerage contracts. The official u.ae portal describes the law as an integrated framework of regulatory tools for modern businesses, and the law emphasises that commercial dealings are governed primarily by the parties' agreement, unless that agreement conflicts with a mandatory provision.
Several principles in the brokerage provisions are particularly relevant, as reflected in the English text published by the Ministry of Economy:
- Fees follow results. A broker is generally entitled to a fee only where its mediation led to the conclusion of the contract between the parties.
- Conclusion, not performance. A contract is treated as concluded once the parties agree on its essential terms. The broker's entitlement attaches to that conclusion, even if the contract is not subsequently performed, unless the agreement or custom provides otherwise.
- Conditional contracts. Where the contract is subject to a suspensive condition, the fee is generally not due until the condition is satisfied.
- Determining the fee. Where neither the law nor the agreement fixes the fee, custom applies, and failing that, the court may determine it. Courts may also reduce a fee that is disproportionate to the transaction.
These rules underline why a clear, written brokerage agreement matters.
Brokerage versus commercial agency
Brokerage is often confused with commercial agency, but the two are distinct. Commercial agencies in the UAE are governed by a separate law — Federal Law No. 3 of 2022 Regulating Commercial Agencies — which establishes its own framework for agency relationships, including registration and eligibility requirements.
In simple terms, a broker brings parties together for particular transactions, while a commercial agent typically represents a principal on a continuing basis in a defined territory. The structure chosen has legal consequences, so parties should be clear from the outset about which relationship they are entering into.
Licensing matters
Brokerage must be carried out by a properly licensed entity within the scope of its licensed activities. Free zone authorities, including the Ajman Free Zone, require licensees to operate only within the activities stated on their licence. The UAE government portal also notes that free zone companies wishing to sell goods or services in the local market generally need to work through a licensed mainland distributor or establish an appropriate mainland presence.
Licensing has practical consequences for fee claims. Commentary from Al Tamimi & Co on a 2026 Dubai Court of Cassation decision reports that the court rejected brokerage claims built on preliminary agreements and on unlicensed brokerage activity, treating licensing as a matter of public order. For businesses engaging an intermediary, confirming the broker's licence and licensed activities is a sensible first step.
Structuring a brokerage agreement
A well-drafted brokerage agreement typically addresses:
- Scope. The goods, services, markets and counterparties covered.
- Exclusivity. Whether the mandate is exclusive, and for how long.
- Fee basis. A fixed fee, a percentage, or a combination — and precisely when it becomes payable.
- Trigger events. Whether the fee is earned on signature, on fulfilment of conditions or on payment by the buyer.
- Protected introductions. How introduced parties are recorded and for what period the broker is protected.
- Confidentiality and non-circumvention. Protection of commercial information and introductions.
- Compliance obligations. Each party's responsibilities for KYC, sanctions screening and permits.
- Governing law and dispute resolution.
Clarity on these points reduces the risk of later disagreement over whether a fee is due.
Due diligence and compliance
A responsible broker does not simply connect parties; it helps ensure the connection is appropriate. Sound practice includes:
- Identity and ownership checks on counterparties, including beneficial owners.
- Sanctions screening against applicable lists, including the UAE Local Terrorist List and the UN Consolidated List published by the Executive Office for Control & Non-Proliferation (EOCN).
- Export-control awareness for dual-use or strategic goods.
- Permit checks, since some goods require import or export permits or approvals from the competent authorities.
- Red-flag awareness, such as unusual payment routes, pressure to bypass documentation, or terms that make little commercial sense.
These steps protect all legitimate parties, including the broker.
Realistic expectations
Brokerage can shorten the path to a suitable counterparty, but it cannot remove commercial risk. No reputable broker can guarantee that a transaction will close, that a counterparty will perform, or that a particular price will be achieved. Each party should conduct its own assessment, take independent advice where appropriate, and contract on terms it understands.
Discuss your requirements
SOMAK Global Solutions is licensed in the Ajman Free Zone for commercial brokerage, trading agencies and wholesale on a fee or contract basis. If you are seeking introductions or support in structuring a transaction, we would be pleased to discuss your requirements, with due diligence and screening as part of our process. We do not guarantee counterparties or outcomes.
This article provides general information only and does not constitute legal advice; specific matters should be reviewed with appropriately qualified advisers.
