Countries › Dominican Republic › Guide › 16. What is normal abroad but not here › Ending a distributor: Ley 173 of 1966

Ending a distributor: Ley 173 of 1966

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Last verified: 2026-10-30 · Status: Stable

Abroad a supplier can usually let a distribution contract lapse or end it on notice; under Ley 173 of 1966 a grantor cannot end or refuse to renew a registered concession except for just cause, whatever the contract says. The law is public order, the Banco Central keeps the register, and the protected party can claim full compensation. United States suppliers sit under a carve out: for contracts signed after DR-CAFTA, Ley 173 applies only if the contract says so.

Key facts

Just cause needed to end or not renew a protected concession	Yes Ley 173 of 1966 art. 2, as of 2026-10-30 · in force
Protection can be waived by contract	No, public order Ley 173 of 1966 art. 8, as of 2026-10-30 · in force
Register of concessions	Banco Central Ley 173 of 1966 art. 10, as of 2026-10-30 · in force
Ley 173 applies to new contracts with US suppliers	Only if the contract expressly says so Ley 424-06 art. 68, as of 2026-10-30 · in force

The rule

1. The Supreme Court describes Ley 173 as protecting those who promote or manage the import, distribution, sale, lease or other use of goods, whether foreign or made locally, acting as agents or under any other name, against the harm of an unjust unilateral ending, and as aiming at fair and complete repair of the loss.Ley 173 of 1966, recital, as quoted in Suprema Corte de Justicia, Primera Cámara, sentencia núm. 14, recital; ruling of 27 September 2006, 2006-09-27 official text · verified 2026-10-30

2. Even if a contract lets the parties end the relationship unilaterally, the grantor cannot terminate it or refuse to renew it at its normal expiry except for just cause.Ley 173 of 1966, as quoted in Suprema Corte de Justicia, sentencia núm. 14, art. 2, 2006-09-27 official text · verified 2026-10-30

3. Protection and repair depend on the unilateral ending being unjust. That is decided by the trial judge, and alleging a breach of the law is not enough to support an attachment. The law gives no general right to precautionary seizures beyond ordinary procedure.Suprema Corte de Justicia, Primera Cámara, sentencia núm. 14, ruling of 27 September 2006, 2006-09-27 official text · verified 2026-10-30

4. The law is public order and private agreements cannot override it, but actions under it follow ordinary law on jurisdiction, procedure and limitation. On that basis the Supreme Court upheld a court of appeal that declined jurisdiction because the contract chose the courts of Barcelona.Ley 173 of 1966, as quoted in Suprema Corte de Justicia, Sala Civil y Comercial, sentencia núm. 9, art. 7 and art. 8; ruling of 4 April 2012, 2012-04-04 official text · verified 2026-10-30

5. The Banco Central administers Ley 173, and registering the contracts, certificates or other documents that support the relationship is indispensable to be protected. Foreign companies can also register as concessionaires.Banco Central, Marco jurídico y sector externo, chapter 15, on Ley 173, Article published 17 May 2014, 2014-05-17 official text · verified 2026-10-30

6. For contracts to which a United States supplier of goods or services, or a company it controls, is a party (covered contracts), Ley 173 does not apply if signed after DR-CAFTA took effect, unless the contract expressly provides for it. Paragraph 1 of Annex 11.13 applies in its place, and an agreed indemnity can still be claimed.Ley 424-06 de implementación del DR-CAFTA, art. 67 and art. 68, 2006-11-20 official text · verified 2026-10-30

7. Where Ley 173 does apply to a covered contract registered with the Banco Central, it applies in line with Annex 11.13 paragraph 2. Under that paragraph an indemnity based on the art. 3 factors cannot exceed what the claimant could get under the Civil Code. The Constitutional Court rejected the challenge to this rule.Ley 424-06 art. 69; DR-CAFTA Annex 11.13 section B(2)(a); Sentencia TC/0495/15, art. 69; Second ruling, 2015 official text · verified 2026-10-30

8. For all covered contracts, no damages are owed for ending a contract, or letting it lapse, for just cause, and a contract is exclusive only if it expressly says the distributor has exclusive rights.Ley 424-06 de implementación del DR-CAFTA, art. 70, 2006-11-20 official text · verified 2026-10-30

9. For relationships outside Annex 11.13 paragraph 1, the duty to seek a negotiated settlement through conciliation and all other parts of Ley 173 keep full force.Ley 424-06 de implementación del DR-CAFTA, art. 71, 2006-11-20 official text · verified 2026-10-30

10. In the 9 April 2004 draft of the schedule published by USTR, the termination date counts as just cause, a contract with no end date can be ended on six months notice, and the principal honors warranties and compensates unsold inventory. The final text was not retrieved, so check it before relying on this wording.DR-CAFTA Annex 11.13, schedule of the Dominican Republic, USTR draft, paragraph 1 (c), (d) and (e), 2004-04-09 official text · verified 2026-10-30

11. Without exclusivity, and absent fraud or bad faith, a concessionaire has no claim for the damages in the law merely because the grantor deals with another concessionaire. The law cannot obstruct the free market in that case.Suprema Corte de Justicia, Sala Civil y Comercial, ruling of 1 August 2012, 2012-08-01 official text · verified 2026-10-30

Worked example

A European maker appoints a Dominican importer in 2026 on a two year contract with a right not to renew. If the concession is protected, the non renewal needs just cause despite that clause, and any claim goes to a Dominican court or the forum that ordinary rules allow.
A United States maker signs the same contract with no reference to Ley 173. Ley 173 does not apply. A written indemnity clause, including one that says none is due, is the place to set the exit price.

Step by step

Before appointing anyone, decide if the relationship is one of supply only or a concession, and write the exclusivity position in plain terms.
Ask whether the counterparty has registered, or will register, the relationship at the Banco Central.
For a United States supplier, state in the contract whether Ley 173 applies, and include an end date and an indemnity clause.
Keep a written record of breaches that could support just cause before any termination.
Before ending a relationship, take local counsel advice on art. 3 of the law and on conciliation.

Common traps

A termination clause does not settle the matter for a protected concession, because art. 2 overrides it.
Law firm commentary (secondary source) warns that an unregistered distributor may still sue on a de facto relationship, so missing paper does not mean no risk.
Companies controlled by a United States supplier fall in the covered contract rule. A non US sister company signing the contract may not.
The Barcelona ruling turned on old facts and ordinary jurisdiction rules. It does not show that a foreign forum clause always works.
This page gives no compensation formula. Read art. 3 itself in an official copy of the law before pricing an exit.
Abrupt cuts to a distributor can also raise abuse of dominance questions if the supplier has market power.

Sources

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