Iraq: Enforcement Scenarios For Iraq's New Commercial Agency Law

Iraq's new Commercial Agency Law ("the New CAL") comes into force on 13 November 2018.1 The New CAL could substantially disrupt existing foreign investment for Iraqi import businesses, if it is fully enforced, but how its provisions will be implemented remains to be seen. Our original Client Alert summarizing the New CAL was published on 6th December 2017 and is available here. This Client Alert outlines six possible enforcement scenarios and how foreign investors should plan mitigation.

New Restrictions on Foreign-Investment Importers

Prior to the New CAL, Iraqi companies wholly-owned by foreign investors could freely import products and services into Iraq, subject to holding the required approvals and licenses. However, two articles in the New CAL may drastically change Iraq's import business landscape:

  • Article 4(2): If the applicant for a [Commercial Agency] license is a company [...] this company must be an Iraqi company and its capital should be one hundred percent (100%) owned by Iraqi citizens [...].
  • Article 13: It is prohibited to import commodities, goods, products or to provide foreign companies services by the Ministry of Trade – The Iraqi General Company for Exhibitions & Commercial Services and the Ministry of Finance – General Customs Authority, except through an authorized Commercial Agent, for which the commercial agency contract is registered in his name on behalf of that company for the Commercial Agent territory in Iraq.

If implemented as written, the practical implications are twofold:

  1. Any existing Iraqi company with any non-Iraqi shareholders that currently imports and distributes goods and services into Iraq may have to restructure its shareholding; and
  2. Foreign companies will be required to engage a registered commercial agent that is either an Iraqi national or a company wholly-owned by Iraqi nationals.

Possible Enforcement Scenarios

Whilst monitoring the New CAL's implementation, we have seen no clear move towards enforcement. Some government agencies or state-owned companies have sporadically stated that importers must register, but these statements have often been expressly or quietly withdrawn once the practical ramifications of enforcing the requirement are understood.

Going forward, we believe that there are six reasonably foreseeable scenarios pertaining to how the New CAL's Article 4(2) and Article 13 may be implemented.

Scenario 1: No change in actual import and customs clearing practice.

It is possible that the New CAL will not be enforced. At present, this approach appears to be a reasonable possibility, given the Iraqi government's other priorities and the inevitable practical challenges that arise with enforcing commercial agency registration or approval of all imports (as explained below).

Scenario 2: A commercial agent is required, and only one registered commercial agent is permitted.

The New CAL makes no mention of exclusivity. If Article 13 is applied literally, then only registered commercial agents will be allowed to import products into Iraq, and that only one agent will be allowed to be registered, as is the case in many other Arab countries.

In this scenario, any company that is not a registered commercial agency will be prohibited from importing products, while potentially complicates business and may require existing foreign investment import businesses to structure their business through an Iraqi nominee shareholder. However, while initially challenging, this change could be beneficial in the long-term for companies that seek to block parallel importers and other unauthorized distributors.

This scenario seems unlikely, at least in the short term, because it would involve the complete overhaul of the Iraqi import market. It is, however, not inconceivable in the long term, and is comparable to Iran's recently implemented importer registration system.

Scenario 3: A commercial agent is required, but multiple registered commercial agents are permitted.

Because the New CAL does not mention exclusivity, it is possible that the literal application of Article 13 will result is a situation where a registered commercial agent will be required to import goods, but the authorities will allow multiple commercial agents to be registered.

Scenario 4: Any party can import, but approval (or "non-objection") is required by a registered commercial agent for a non-agent to import (e.g., "Passive Blocking").

Previously, in many Arab countries that have implemented commercial agency laws, the approval (or "non-objection") of a registered commercial agent was required for the importation of goods by an importer that was not a commercial agent. When these countries gained membership to the World Trade Organization (WTO), this Passive Blocking system was abolished. Unlike these countries, Iraq is not a member of the WTO, and if it adopted Passive Blocking, it would not violate the organisation's rules regarding import restrictions.

Countries in the region that changed their laws include:

  • Oman: Article 5 of the Oman Commercial Agency Law (Royal Decree No. 26 of 1977) read in part that: "The Minister of Commerce & Industry may ban the import of goods that are the subject of an agency if the principal cancels the agency from his side without acceptable grounds." After joining the WTO in November 2000, Oman did not enforce this provision, and it repealed this part of Article 5 with the amendment to the Commercial Agency Law in 2014 (Royal Decree No. 34 of 2014).
  • Qatar: Article 17(A) of the Qatar Commercial Agency Law (Law No. 8 of 2002) provides that: "If the principal terminates the agency or rejects to renew it without any good reason, the Competent Department may resolve to prevent the import of the commodities or services, the subject matter of the agency." Qatar passed this provision after joining the WTO in 1996, and it was intermittently enforced until Law No. 2 of 2016 amended the law and removed Article 17(A).
  • Kuwait: The new Commercial Agency Law in Kuwait (Law No. 13 of 2016) expressly states that commercial agents cannot block the import of goods by parallel importers. This provision appears to be a result of the WTO's requirements regarding trade rules.

Scenario 5: No change in the import of unregistered goods, but a commercial agent can petition authorities to block unauthorized imports or demand commission from unauthorized importers (e.g., "Proactive Blocking").

Another possible scenario is that the authorities will not take action against unauthorized imports, but where a commercial agent is registered, that commercial agent can seek to enforce Article 13 by petitioning the authorities to block imports or demand a commission.

Under a Proactive Blocking system, existing importers with ties to foreign investment businesses would not have to take any action, but restructuring and formalizing their Iraqi business would be desirable in order to block competitors and unauthorized importers.

Scenario 6: Inconsistent enforcement.

It is very likely that the customs authority will apply the applicable provisions of the New CAL inconsistently and that implementation will evolve over time. Determining a countermeasure to this approach would prove challenging.

Kurdistan Region

The Iraqi Kurdistan Parliament is not currently reviewing the New CAL, and no immediate action is required for businesses operating in the Kurdistan Region and importing into Kurdistan directly, such as from Turkey. However, this may change, since while the management of customs is a local issue, customs law itself is subject to federal law. Companies operating only in Kurdistan should be aware of the issues raised by the New CAL and be cognizant of the possible need to comply with some of its restrictions.

An English translation of the New CAL is available upon request.


1. The Iraqi Parliament approved Law No. 79 of 2017 in August 2017. The President of the Republic of Iraq confirmed the Law on 1 November 2017, and the Gazette published it on 13 November 2017.

Originally published 7 November 2018

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions