Morocco

This web site aims to provide some useful legal information for those persons who are willing to enter into any kind of relationship with the Kingdom of Morocco – by focusing on some aspects related to the international law.
Therefore, this web site is not intended to exhaustively describe the international law, but simply to focus the attention on the most interesting and practical aspects for those persons who are willing to enter into relationship with the Country.
This web site has no political content: it is free and open to all persons who intend to give a contribution in the field of civil, commercial and administrative law. For every information, clarification or advice, please contact us at: mail@decapoa.com

Morocco

About Morocco

The Kingdom of Morocco is one of the most interesting countries of North Africa.
Thanks to an enviable political stability, to the economic liberalization policies adopted twenty years ago, as well as to the important structural reforms implemented by the Government in order to promote foreign direct investments, at present Morocco is benefiting from growth rates higher than those of almost all the African countries bordering the Mediterranean basin.
Today, the historic role played by Morocco as a crossroads and a meeting point between European culture and the Islamic world, merges with that of strategic hub for companies that wish to penetrate the market of the African continent. In fact, thanks to the fact that the Kingdom of Morocco concluded a number of free trade agreements with almost all African countries, foreign companies that have chosen to invest in the Kingdom will be able to use the country as a strategic base to be able to freely move their own goods within almost all the African continent.
Finally, thanks to the new legal and fiscal framework introduced to encourage foreign direct investments, foreign businessmen who invest in Morocco will enjoy not only an incentive system involving a significant reduction of investment costs, but also a total protection of the investment itself.
Then, starting from these assumptions that this website aims to provide some suggestions for foreign companies wishing to exploit the opportunities offered by the Kingdom of Morocco, so that they can better calibrate their business strategies. In this sense, the companies interested in the country will be able to find within the site not only a summary of the most widespread existing commercial contracts in Morocco, but, at the same time, even a few helpful tips that should necessarily be kept in mind before entering into any contract to be performed in the country.

Agency

Foreign companies wishing to take advantage of the numerous opportunities offered by the Moroccan market can decide to expand their sales network through the activity of a local agent.
From a general point of view, the discipline of the agency agreement contained within the Moroccan Commercial Code does not differ from the disciplines of the European countries or, more generally, from the legislation adopted by the community and the international practice. In fact, according to the Moroccan legislator, the commercial agency contract is a mandate by which a person is obliged to conclude purchases or sales on an ongoing basis, including all the other ancillary operations, in the name and on behalf of another person, who can be a manufacturer, a dealer or another agent (art. 393).
The commercial agent activity may also be conferred to both natural persons and legal persons, whether they are of Moroccan nationality or not.
In this regard, however, taking into account the importance of personal relationships in Morocco, it is recommended to choose an agent of Moroccan nationality or, at most, an agent who perfectly knows local customs and traditions.
While it is true that the Moroccan legislation does not provide for residency or Moroccan nationality requirements for the agent, the law itself prohibits subjecting the agency contract to foreign law. Consequently, when you enter into an agency contract having its effects on the Moroccan territory, it will be necessary to keep in mind that the relationship with the agent will be governed according to the following standards (indicated, as an example and not exhaustively):
An agency agreement may take the form of both fixed-term contract and open-ended contract, and, in the event that the fixed-term contract is executed even after its expiration, it is important to underline that it will automatically turn into an open-ended contract;
Furthermore, similarly to the international practice, if the principal and the agent sign an open-ended contract, the principal may terminate their contractual relationship at any time. However, it will be obliged to respect the following terms of notice:

  • a month, if the withdrawal occurs during the first contractual year;
  • two months, if the withdrawal occurs during the second contractual year;
  • three months, starting from the third year.
In the event of termination of the contract, the agent shall be entitled, notwithstanding any contrary clause, to a compensatory allowance for the prejudice suffered as a result of the dissolution of the relationship. The principal, however, may terminate the contract without notice in the case of serious commercial agent's fault.

Similarly to other regulations in other countries of the world, the commercial agent shall also have the right to a remuneration fixed by agreement between the parties and, in the event of no agreement, according to professional customs. This remuneration will usually be linked, in whole or in part, to a commission which is calculated on the basis of the number or value of negotiations concluded by the agent.
Finally, since Morocco has ratified the New York Convention of 1958 on International Arbitration, it is recommended to insert a clause in the contract which provides for the exclusive jurisdiction of an arbitrator to know and settle any potential dispute between the principal and the agent.
It is suggested, in particular, to use an administered arbitration, i.e. to subject the procedure to an arbitral regulation adopted by an independent body which can be a Moroccan or foreign Chamber of Commerce.
An administered arbitration, in fact, will be recognized - and thus performed - within Morocco faster than a non-administered arbitration.

Distribution

Like a number of countries in the world, Morocco has not adopted a specific legislation concerning distribution. This does not mean, however, that the Moroccan law does not provide for the possibility to establish legitimate and profitable trading relations with Moroccan distributors.
The absence of a specific legislation on the Moroccan territory involves, in fact, that the parties of a distribution agreement are free to regulate their own distribution relationship.
As a result, the latter will be free to provide for:

  • the granting of unilateral or mutual exclusivity;
  • the indication - more or less specific – of the obligations of the distributor (i.e. sales promotion and customer service, market monitoring, obligations to comply with the service standards set by the manufacturer, obligation to cooperate in the product recall procedures; non-competition obligations, etc.);
  • any warranty obligations assumed by the manufacturer;
  • the terms and conditions for the supply of products (i.e. prices and payment methods, prices’ adjustment modalities, orders and related modalities of supplies programming (forecasts), modalities and terms (approximate or mandatory) for delivery);
  • the protection of trademarks and patents;
  • any causes that give rise to an immediate termination of the contract;
  • the applicable law;
  • the relevant jurisdiction.
Given the fact that in some countries - including the European Union member states -, the law requires that the principal pays to the distributor – as if they were commercial agents - an allowance for the creation of goodwill in case of dissolution of the relationship, if the foreign contractor signs a distribution agreement with a person of Moroccan nationality, it should be carefully assessed whether to choose the Moroccan law as the one applicable to the relationship.
The absence of specific legislation concerning the distribution, in fact, implies that in case of dissolution of the relationship any allowance will be granted to the distributor.

Commission

If the foreign investor wishes to sell its products in Morocco, a valid alternative to the agency and distribution agreement could be the so-called Commission Agreement, which is a contract under which the foreign Principal grants to the Moroccan Commission agent the power to conclude a sales contract in its own name but on behalf of the principal.
From a general point of view, this agreement is particularly appealing to foreign investors, as the commission agent himself will remain personally committed to those with whom he has concluded the sales contract.
Third parties, in fact, will not have any direct action against the principal.
Moreover - but only if that is expressly provided for by the commission contract - the Moroccan commission agent will be jointly responsible with third parties for any non-fulfilment of the latter against the principal - for example, in the event that third parties have not paid the Principal -. That's why it is advisable to insert a clause in the commission contract providing for the responsibility of the Moroccan Commission Agent for the proper fulfillment in the execution of the contract by third parties.
At the same time, the Commercial Code provides for certain additional obligations of the Moroccan Commission agent.
Among these, the commission agent will have to fulfill all the formalities specifically required by the principal and he cannot be replaced in the execution of his work, unless expressly stated in the contract.

Franchising

This type of contract is very common in Morocco and it belongs to the business contracts category, in addition to the agency, distribution and commission contracts. The contract relates a franchisee and a franchisor. The franchisor gives the franchisee the right to use and distribute its own brand and label for commercial purposes as well as the right to manufacture the franchisor's products and the right to market them. In return, the franchisee agrees to pay a sum calculated on its turnover and to take a series of obligations, such as, for example, to comply with specific technical standards relating to the manufacture of the product, the prices charged, as well as with the regulations related to the staging of premises. In Morocco, the franchising agreement is not subject to specific legislation. Consequently, the contracting parties are largely free to draft the clauses according to their interest and to organize their reports according to their own needs.
In 2002, however, the FMF (Fédération Marocaine de la Franchise) was established to coordinate the activities of the entities operating as franchisor and franchisee; it has drafted a Code of Ethics for operators in the franchising.
That said, the generally common rules of the franchising contracts concern:

  • the remuneration due to the franchisor, who accepts that his brand is spread by a third party;
  • the list of existing obligations for the franchisee, including the one to spread the brand according to the franchisor’s will and standards.

Sale

The foreign entrepreneur who wants to sell their products in Morocco must keep in mind to promptly specify which law is applicable to the sales contract.
In fact, the Kingdom of Morocco did not ratify the Vienna Convention of 1980 on the International Sale of Goods (CISG) and, consequently, identifying the applicable law to the relationship might not be an easy task when the buyer defaults.
In fact, the Moroccan Civil Code does not expressly provide for the possibility for the seller to reserve the property of the goods sold until full payment of the price. This means, therefore, that any clause containing such provision may not be fully accepted by the Moroccan judicial authorities if the agreement is found to be governed by Moroccan law.
On the contrary, the Moroccan law fully recognizes the Incoterms, which, therefore, can be legitimately invoked upon conclusion of a sale agreement with a Moroccan partner.
Apart from that, the rules governing the sale do not differ from the internationally recognized customs and practices.

Import & Export

Imports and exports from and to Morocco are not subject to specific restrictions for investors residing in the European Union.
Indeed, the association agreement between the European Union and Morocco, which was signed on 26th February 1999, and which entered into force on 1st March 2000, has led to the gradual achievement of customs exemptions for products coming from the EU territory.
However some products are subject to import permit on Moroccan soil, e.g. powder for explosives, covered or used tires and whatnot, vehicles and frames of vehicles, tractors, trailers and semi-trailers.

Foreign investors who want to make the most of the opportunities offered by the Morocco Kingdom could also make use of the option to import and re-export free of customs duties. Nevertheless this will only be possible in the free export zones in the region of Tangeri.
Finally, Morocco has also signed many free-trade agreements with neighboring countries.
This especially means that, once goods are cleared through customs, they can be re-exported toward many African countries without paying duties.

Protection of the Mark

Foreign entrepreneurs who want to invest in Morocco will have to make sure to previously register their trademark in the Kingdom, so that they can fully benefit of the instruments recognized by the Moroccan law for the protection of intellectual property.
That said, Morocco is part of the Madrid agreement and of its related protocol about international registration of trademarks and, consequently, the registration (or the extension of a trademark) within Moroccan territory follows the usual rules internationally codified.
The period of validity of a trademark is ten years, starting from the date of request, renewable for equivalent open-ended periods.
Before registering a trademark, it is recommended to do a research on whether there is or not an identical – or too similar – trademark already registered in Morocco, and, at the same time, an accurate study on transliteration in Arabic of the trademark which is meant to register. Indeed it may be that a trademark which is considered appealing in a language could mean different things if blindly transliterated in Arabic.
Finally, before starting an activity in Morocco, it is also recommended to register the right domain name of the trademark/company with the extension “.ma”.

Disclaimer

Please note the following:
This web site and the information it contains have been developed and provided by Studio legale de Capoa e Associati for informational purposes only.
This web site is not intended to be, and is not a substitute for, legal advice. Please do not rely on any information in these pages as a source of legal advice.
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