Morocco

Foreign companies wishing to take advantage of the countless opportunities offered by the Moroccan market may decide to expand their commercial network through the activity of a local agent.

From a general point of view, the regulation of the agency contract contained within the Moroccan Commercial Code does not deviate from the disciplines of European countries or, more generally, from the regulations adopted by the international community and practice. In fact, according to the Moroccan Legislature, the commercial agency contract è a mandate by which a person undertakes to conclude on a continuous basis purchases or sales, including all other ancillary transactions, in the name and on behalf of another person, whether producer, trader or other agent (Art. 393).

The activity of commercial agent can, moreover, be entrusted to both natural persons and legal persons, whether they are Moroccan nationals or not. In this regard, however, bearing in mind the importance of personal relations in Morocco, when appointing an agent, it is advisable to make one's choice fall on persons of Moroccan nationality or who, all the more, are perfectly familiar with local customs and traditions.

While it is true that Moroccan law does not provide for residency or Moroccan nationality requirements pertaining to the agent, however, the law itself provides for the prohibition of subjecting the agency contract to foreign law. Consequently, when concluding an agency contract having its effects in the Moroccan territory, it will always be necessary to bear in mind that the relationship with the agent will be governed according to the following dictates (indicated, by way of example and without any claim to exhaustiveness):

The contractual form and standard clauses of the agency contract

An agency contract mayà take the form of both a fixed-term contract and a contract of indefinite duration, and, in the event that the fixed-term contract is also executed after its expiration, è it is important to emphasize that the same will transformà automatically into a contract of indefinite duration; Similar to what happens internationally, moreover, in case the principal and the agent are bound by a contract of indefinite duration, the principal will be able to terminate his contractual relationship with the agent at any time. However, the same will be required to comply with the following notice periods:

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• one month, if the termination occurs during the first contractual year;
• two months, if the same is exercised during the second contractual year;
• three months, beginning with the third year

In the event of termination of the agency contract, the agent will be entitled, notwithstanding any clause to the contrary, to an indemnity as compensation for the prejudice suffered due to the termination of the relationship. The principal, however, may terminate the contract without notice in the case of the commercial agent’s gross negligence. Similar to other regulations in force in other countries around the world, the commercial agent will also be entitled to remuneration fixed by agreement between the parties and, in case of lack of agreement, according to the customs of the profession. Such remuneration will’usually be tied, in whole or in part, to a commission, calculated on the basis of the number or value of business negotiated by the agent.

Finally, in view of the fact that Morocco has ratified the 1958 New York Convention on International Arbitration, it will be convenient to include in the contract a clause providing for the exclusive jurisdiction of an arbitral tribunal to hear and decide any dispute arising between the principal and the agent.

It is suggested, in particular, to resort to an administered arbitration, that is, to have the proceedings subjected to an arbitration regulation adopted by an independent body such as may be a Chamber of Commerce or Moroccan or third country.

An administered arbitration, in fact, will be – recognized – and therefore executed – within Morocco faster than a non-administered arbitration.

Imports and exports to and from Morocco are not subject to special restrictions for investors residing within the European Union. In fact, the Association Agreement between the European Union and Morocco, signed on February 26, 1996, and entered into force on March 1, 2000, has resulted in the gradual implementation of customs exemptions for products coming from EU territory.

Some products, however, are subject to import licensing on Moroccan soil, such as powder for explosives, coated or used tires and of the trinkets, vehicles and vehicle chassis, tractors, trailers, semi-trailers.

The foreign investor who wishes to take full advantage of the possibilities offered by the Kingdom of Morocco could, in addition, decide to take advantage of the possibility of duty-free import and re-export. However, this will only be possible in the free export zones in the Tangier region.

Morocco has, finally, at the same time signed a large number of free trade agreements with neighboring countries. This means, in particular, that once goods have been cleared through customs in Morocco, they can be re-exported to a great many African countries without the need to pay duty.

The Moroccan government has also signed a number of free trade agreements with neighboring countries.

Should the foreign investor wish to sell his products in Morocco, a viable alternative to the agency and distribution contract could be the so-called Commission Contract, i.e., the contract whereby the foreign Principal gives the Moroccan Commissionaire the power to conclude a purchase and sale contract in his own name, but on behalf of the principal.

From a general point of view, such a contract è particularly attractive to the foreign investor, as it will be the commissioner himself who will remain personally committed to those with whom he has entered into the contract of sale.

The third parties, in fact, will have no direct action against the commissioner. Moreover, but only if this is expressly provided for in the commission contract, the Moroccan commission agent will be jointly and severally liable with the third parties for any default of the latter towards the principal – for example, in the event that the third parties have failed to pay the principal -. That is whyé it is advisable to include a clause in the commission contract providing for the Moroccan Commissioning Officer's responsibility for the proper performance in the execution of the contract by third parties.

At the same time, the Commercial Code provides for some additional obligations on the Moroccan Commissionaire. These include the fact that the commissionaire must comply with all formalities expressly required of him by the principal and may not be replaced in the performance of his work unless expressly provided for in the contract.

The Moroccan Commissionaire must comply with all formalities expressly required of him by the principal and may not be replaced in the performance of his work unless expressly provided for in the contract.

The Moroccan Commissionaire must comply with all formalities expressly required of him by the principal.

The foreign entrepreneur wishing to invest in Morocco will first have to make sure that he or she has taken steps to register his or her trademark in the Kingdom, so that he or she can fully enjoy the tools recognized by the Moroccan legal system to protect intellectual property.

Therefore, Morocco è is a party to the Madrid Agreement and its protocol on the international registration of trademarks and, consequently, the registration (or extension of one's trademark) in the Moroccan territory will take place according to the usual internationally codified rules.

The period of validity of a trademark è of 10 years, starting from the date of application, renewable for similar periods indefinitely. Before registering one's trademark, è however, it is advisable to carry out not only a prior search on the existence, or non-existence, of an identical – or too similar – trademark already registered in Morocco, but, at the same time, also a careful study on the transliteration into Arabic of the trademark one intends to register. Indeed, it could be the case that a trademark considered to have particular appeal in one's own language could take on an entirely different meaning if it is slavishly reproduced in Arabic.

Finally, before starting your own business in Morocco, it is also advisable to register the’appropriate domain name of your brand/company with the’extension “.ma”.

This type of contract è highly developed in Morocco and is part of the category of business contracts, joining the agency, distribution and commission contract. The contract relates a franchisee and a franchisor. The franchisor grants the franchisee the right to use and disseminate for commercial purposes its brand and label, as well as the right to produce the franchisor's products and the right to market them. As a quid pro quo, the franchisee agrees to pay an amount calculated on its turnover and to submit to a list of obligations, such as, for example, complying with specific standards of a technical nature having to do with the manufacture of the product, the prices charged, as well as the standards related to the’fitting out of the business premises. In Morocco, the franchise contract is not è subject to specific legislation. Consequently, the parties to the contract have a wide scope to draft the clauses according to their convenience and organize their relations according to their need.

In 2002, however, è the FMF (Fédération Marocaine de la Franchise) was established for the purpose of coordinating the’activities of entities operating as franchisors and franchisees; it has drafted a Code of Ethics for operators in franchising. Thereò place, the rules generally common to franchise contracts concern:

- the remuneration due to the franchisor, who accepts that his brand is disseminated by a third party;

- the list of existing obligations incumbent on the franchisee, including that the trademark be disseminated in accordance with the franchisor's will and rules;

The foreign entrepreneur who intends to sell his products in Morocco will always have to have in mind to specify punctually which law is applicable to the purchase and sale contract.

In fact, the Kingdom of Morocco has not ratified the 1980 Vienna Convention on Contracts for the International Sale of Goods (CISG) and, consequently, identifying the law applicable to the relationship may not be an easy task when the buyer has defaulted.

In fact, the Moroccan Civil Code does not expressly provide for the possibility for the seller to reserve ownership of the property sold until the price is paid in full. This means, therefore, that any clauses containing such a provision might not be fully accepted by the Moroccan judicial authorities if the contract turns out to be governed by Moroccan law.

Moroccan law.

On the contrary, Moroccan law fully recognizes Incoterms terms, to which, therefore, one may legitimately refer when concluding a contract of sale and purchase with a Moroccan interlocutor.

For the rest, the regulation of the sale does not deviate from internationally recognized customs and practice.

Like a multiplicityà of countries around the world, Morocco has not adopted specific legislation on distribution. This does not mean, however, that the Moroccan legal system does not provide for the possibility of establishing legitimate and profitable business relationships with Moroccan distributors.

The’absence of specific legislation in force on Moroccan territory implies, in fact, that the parties to a distribution contract remain free to regulate their own distribution relationship.

As a result, it will be left to the mere will of the latter:

• the granting, or not, of the’exclusive/unilateral or reciprocal;
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• the indication, more or less specific, of the distributor's obligations (i.e. sales promotion and customer service, market monitoring, obligations to comply with service standards set by the manufacturer, obligation to cooperate in product recall procedures; non-compete obligations, etc.);
• any warranty obligations assumed by the manufacturer;
• the terms and conditions for the supply of the products (i.e. prices and terms and conditions of payment, terms and conditions of price adjustment, orders and related terms and conditions of supply scheduling (forecasts), terms and conditions (indicative or mandatory) of delivery);
• the protection of trademarks and patents;
• any causes giving rise to an immediate termination of the contract;
• the applicable law;
• the place of jurisdiction.

Taking into account the fact that, in some countries – including the member countries of the European Union -, the law and Jurisprudence impose on the principal house the obligation to pay the distributor, in the same way as a commercial agent, an’indemnity for creation of goodwill in case of termination of the relationship, in case the foreign entrepreneur signs a distribution contract with a person of Moroccan nationality converrà carefully consider the’advisabilityà of subjecting the relationship to Moroccan law.

The’absence of specific legislation on distribution, in fact, implies that in case of dissolution of the relationship there will be no indemnityà in the head of the distributor.