do business in the Dominican Republic - Pellerano & Herrera

DOING BUSINESS INTHE DOMINICAN REPUBLIC90with the essential obligations of the agreement, or any action or omission on thepart of the licensee that might adversely and substantially affect the businessinterests of the licenser.If the event of unjust termination, the licensee will be entitled to sue the licenserfor the following compensation:Material losses suffered as a result of the unjust termination by the licenser;Investments made by the licensee; andLosses of eventual profits calculated on the basis of the last five years of trading.The effect of these provisions is to prevent the licenser from offering its productsor services in the Dominican market, neither directly nor through anotherdistributor, until he terminates the relation according to Law 173.The effectiveness of this prohibition is reinforced by the following factors:The right that may have the agent of blocking at customs the entry of goodscoming from that company.The imposition of sanctions to any new agent, who might be jointly liablewith the licenser for the payment of the indemnity due to the previous agent.The long duration of an eventual procedure before Dominican courts which,together with their tendency to favor the local party, makes litigation a riskyand expensive option.Usually foreign firms have thus no other course of action than to pay the compensation,trying to reach an agreement with the agent in order to reduce theamount of the indemnity.Law 173 does not distinguish between exclusive and non-exclusive relations. Inboth cases the licenser will be bound to comply with the provisions of Law 173vis-à-vis its single or various distributors, but in the case of nonexclusive agreementsthe licenser may avoid the risk of not being able to participate in the market.In other words,the foreign company is still obliged to pay the indemnity or provethat a just cause of termination exists, but it will not have to await the outcomeof the litigation or negotiations in order to continue selling the goods through itsother agents.Implications of Law 16-95Law 16-95 entails significant implications for foreign companies interested to distributeproducts or services in the Dominican market.Registration of foreign persons as agents. Law 16-95 extended the scope of applicationof Law 173 by eliminating its Article 12.This article established that neitherforeigners having resided less than four years in the country nor Dominican companieswith more than 66% foreign capital could benefit from the protectiongranted by Law 173.Therefore now all local agents, regardless of their nationality,may register their agreements and enjoy the rights granted under Law 173.Registration of technology transfer agreements. Law 16-95 allows technologytransfer agreements such as licenses, franchises, know-how, technical assistance,