Law 173 of 1966 aims to protect local import agents in their relationship with foreign manufacturers and grantors. For over 40 years, it has been a fundamental tool of the national commercial sector. In practice, this law has prevented foreign manufacturers and grantors from selling or distributing their products directly in the Dominican Republic, imposing high sums for compensation to local dealers in cases of contract termination or refusal to renew it. To date, the aforementioned law remains fully valid, except for the exceptions explained later.
Through Resolution No. 357-05 dated September 6, 2005, the Dominican Republic ratified the Free Trade Agreement with Central America and the United States known by its Spanish acronym TLC or by its English acronym DR-CAFTA. This agreement entered into force in the Dominican Republic on January 1, 2007. Annex 11.3 of the aforementioned agreement modifies some aspects of Law 173-66. In this regard, paragraph 1 of the said text states: The Dominican Republic shall not apply Law No. 173 to any covered contract signed after the date of entry into force of this Treaty unless it explicitly provides for the application of Law No. 173... (our emphasis). Paragraph 5 of the same text offers us the definition of a covered contract by establishing the following: (a) covered contract means a concession contract, as defined by Law No. 173, of which a supplier of goods and services from the United States or any company controlled by such supplier is a part... (our emphasis).
In order to specify and adapt the provisions of DR-CAFTA to Dominican legal regulations, Law 424-06 was promulgated on November 20, 2006. Article 68 of the said law establishes the following:
Art. 68.- Law 173 shall not be applied to any covered contract signed after the entry into force of this Treaty, unless it explicitly provides for the application of Law 173., and instead of Law 173, what is established in items a), b), c), d), e), e)i, e) ii, e) iii, e) IV, f), and g) of Paragraph I of Annex 11.3 shall apply with respect to covered contracts. (our emphasis)
It is worth noting that Article 67 defines the concept of a Covered Contract, indicating the following:
Art.67.- For the purposes of this regime, the following shall be understood: a) Covered Contract. It means a concession contract, as defined by Law 173 of April 6, 1966, and its amendments on Merchandise and Product Agents, hereinafter ""Law 173"", of which a supplier of goods and services from the United States or any company controlled by such supplier is a part. (our emphasis)
From the combined reading of Annex 1.3 of DR-CAFTA and Articles 67 and 68 of Law 424-06, we can affirm that the limitations on the meaning and scope of Law 173 of 1966 only apply to covered contracts, that is, those in which companies supplying goods and services incorporated in the United States of America or companies of other nationalities controlled by a company from the United States of America are involved. For companies supplying goods and services incorporated in other countries and not controlled by a company from the United States, Law 173 of 1966 remains fully valid, and its provisions may be applied to their relations with a Dominican dealer.