- Agency And Distribution

Many investors, when entering the Dominican market, do not take into consideration local legislation on agency relationship and proceed to grant product distribution rights to local representatives without investigating the consequences of their consent to local distribution.

Law 173 on Protection of Import Agents protects the rights of local distributors and agents by mandating payment of substantial indemnities in case of unilateral termination of contracts by foreign licensors. Although Law 173 has been severely criticized because of its overprotective nature, foreign licensors may take certain steps to avoid its reach.

Jiménez Cruz Peña routinely assists foreign companies with mitigating the extremely protective nature of Law 173. JCP successfully represented foreign grantors in entering into and terminating distribution contracts governed by Law 173, opting out of Law 173 for DR-CAFTA governed contracts, negotiating settlement agreements, opposing registrations with the Central Bank, setting up subsidiaries with the right to grant distribution licenses locally, as well as employing other strategies to avoid effect of Law 173 and handling any arising litigation.

Services

• Setting up new distributorship relationships with local distributors:
  • Negotiation of a distributorship contract
  • Setting up local distribution subsidiaries
  • Registration of distributorship contract at the Central Bank
  • Opting out of Law 173 for U.S. based companies
• Modifying or terminating existing distributorship relationships:
  • Negotiating settlement agreements
  • Cancelation of registrations with the Central Bank
• Litigation arising out of distributorship relationships:
  • Opposing registrations of distributorship contracts at the Central Bank
  • Defense of foreign grantors in termination of distributorship agreements
• Industries:
  • Consumer goods
  • Food and beverage products
  • Pharmaceutical products and medical supplies

Key Representations

• Representation of one of the largest Japanese distributors of canned products and other consumer goods in connection with termination of a distributorship contract with a local producer and setting up a local distribution subsidiary
• Represented an international alcoholic beverages producer in connection with entering into local distributorship agreements and their registration with the Central Bank