Category: inBriefs

Federal Decree-Law No. 25 of 2025, the UAE’s New Civil Code, came into force on 1 June 2026, replacing Federal Decree-Law 5 of 1985 Concerning the Issuance of the Civil Transactions Law (the Old Code).

 

This article forms part of a series examining the changes introduced by the New Code, and highlights some significant changes affecting sale contracts which seek to provide more commercial flexibility, clarify party obligations, and strengthen protection for purchasers.

 

What has Changed?

 

1. Expanded definition of sale

 

The New Code broadens the concept of a sale and adapts to modern commercial realities by recognizing that the subject matter of a sale may include transferable financial rights and intangible assets and rights, including intellectual property rights.

 

2. Greater flexibility in pricing mechanisms

 

One of the more practical changes is the increased flexibility in determining the purchase price. The New Code allows parties to agree on criteria by which the price will be determined at a later stage or to appoint a third party to determine the price. It also provides that a sale may remain valid even where the price is not expressly specified, provided it is clear that the parties intended to adopt the prevailing market price or a price previously applied in their dealings.

 

This development is particularly relevant for long-term supply arrangements and transactions where pricing depends on future market conditions.

 

3. Clarification of ownership transfer, delivery and risk

 

The New Code, for the first time, requires the Seller to take all necessary steps to transfer ownership and not to hinder that transfer.

 

It also clarifies the rules relating to delivery and risk. Delivery may occur even without actual physical possession where the seller has made the subject matter available to the purchaser and notified the purchaser accordingly.

 

The New Code also clarifies and consolidates the consequences where the sold property is damaged or destroyed before delivery. Where part of the sold property is damaged before delivery, the purchaser may rescind the contract or accept the remaining part for a proportionate reduction in the price. The purchaser may also, where applicable, maintain the contract in respect of the whole property at the agreed price and seek recourse against the person responsible for the damage portion of the property. While these remedies were also available under the Old Code, they were addressed under separate provisions depending on the cause of the loss or damage. The New Code brings them together within a single provision governing the consequences of damage or destruction of the sold property.

 

4. Enhanced protection in title disputes

 

The New Code introduces a more structured framework where a third-party claims ownership of, or rights over, the sold property.

 

A purchaser facing such a claim from a third party must notify the seller promptly. The seller is then required to intervene in the proceedings or assume conduct of the defence. Failure to do so may expose the seller to liability under the statutory warranty regime.

 

These provisions encourage early involvement by sellers and provide greater protection for purchasers facing third-party claims.

 

5. Expanded remedies for latent defects

 

The New Code significantly strengthens the purchaser’s remedies in cases involving latent defects.

 

Under the Old Code, where a latent defect existed in the sold property, the purchaser generally had to choose between returning the property or retaining it at the agreed price, and was expressly prevented from retaining the property while claiming a reduction in price. The New Code changes this position by allowing the purchaser to retain the property and assert a claim for a reduction in the price from the seller. The New Code also provides that a seller may avoid liability by providing a replacement.

 

The New Code also sets out more detailed standards governing the seller’s warranties. The seller is liable where, at the time of delivery, the sold property does not possess qualities which the seller guaranteed, or where the property has a defect diminishes its value or utility. The value or utility of the property is assessed by reference to the purpose stated in the contract, the nature of the property or the purpose for which it was prepared. The seller may be liable in these circumstances even if unaware of the defect.

 

In addition, the period for bringing a latent defect warranty claim has been extended from six months to one year from the day following delivery, unless the seller has undertaken a longer warranty period. These changes increase the importance of carefully drafted warranty, inspection, acceptance and remedy provisions in sale contracts.

 

6. New framework for the sale of disputed rights

 

For the first time, the New Code introduces a specific framework governing the sale of disputed rights. A right is considered disputed where proceedings have been commenced in respect of it or ‘a serious dispute’ (which is not defined in the New Code) has arisen concerning the right.

 

The New Code does not prohibit the sale of a right merely because it is disputed. However, where a disputed right is sold, the person disputing the right with the seller may extinguish the dispute by reimbursing the price paid by the purchaser and the expenses incurred. This right of recovery must be exercised within 60 days from the date on which that person becomes aware of the sale.

 

In practice, this mechanism may have significant consequences. For example, if a disputed claim with a nominal value of AED 10 million is sold for AED 3 million, the person disputing that claim may extinguish the claim by paying the purchaser of the disputed right a sum of AED 3 million purchase price together with the relevant expenses. The practical effect may therefore be to extinguish the underlying claim for an amount substantially below its nominal value.

 

This right of recovery does not apply in certain circumstances, including where the disputed right forms part of a group of properties sold for a single price, where a co-owner or heir sells their share in a jointly held right, where the right is transferred to a creditor in settlement of a debt, or where a right encumbering immovable property is sold to the possessor of that property.

 

The New Code also imposes conflict-related restrictions on the acquisition of disputed rights. In particular, judges, members of the Public Prosecution, experts and certain court officials may not acquire disputed rights falling within the jurisdiction of the court in which they perform their duties. Similar restrictions apply to arbitrators, conciliators and mediators in relation to matters assigned to them, while lawyers are prohibited from dealing with their clients in respect of disputed rights which they are engaged to defend. Transactions entered into in breach of these restrictions are void.

 

Why does this matter?

 

The New Code modernizes several aspects of UAE sale law and addresses areas that previously lacked sufficient legislative guidance. The changes provide greater contractual flexibility, clarify the allocation of obligations and risks between contracting parties, and strengthen purchaser protections in relation to title disputes and defective goods.

 

Businesses should not assume that existing sale contract templates adequately reflect the new legal framework.

 

Practical Takeaways

 

Parties entering into sale contracts should consider:

 

➢ clearly defining the subject matter of the sale, particularly where financial or intangible rights are involved;

 

➢ adopting a clear pricing mechanism, especially where the price will be determined in the future;

 

➢ specifying the procedures for delivery and transfer of ownership;

 

➢ establishing contractual procedures for dealing with third-party title claims; and

 

➢ reviewing warranty, inspection and defect provisions to ensure they align with the expanded remedies available under the New Code.

 

As businesses continue to update their contractual documentation following the introduction of the New Code, sale agreements should be reviewed carefully to ensure they are compliant with these important developments. ■

Federal Decree-Law 25/2025 Issuing the Civil Transactions Law (the New Code) came into force on 1 June 2026. It replaced Federal Law 5/1985 Concerning the Issuance of the Civil Transactions Law (the Old Code).

 

This inBrief forms part of a series examining the changes introduced by the New Code, and deals with the provisions governing force majeure and hardship.

 

Unlike common law jurisdictions, force majeure and hardship find statutory expression in the UAE. Force majeure refers to unforeseeable events beyond the parties’ control which renders performance impossible, while the doctrine of hardship refers to exceptional circumstances where performance remains possible but becomes more onerous or radically different than originally contemplated by the parties.

 

While these doctrines were recognised under the Old Code, the New Code makes the remedies clearer, more flexible, and more commercially usable.

 

1.  What was the position under the Old Code?

 

The Old Code contained a framework governing force majeure, including partial and temporary impossibility, and hardship in contractual and non-contractual obligations.

 

(i) Force majeure

 

Article 273 of the Old Code addressed the consequences of force majeure, including total, partial and temporary impossibility of performance.

 

➢ Total impossibility: If force majeure rendered performance impossible, the corresponding obligation ceased and the contract was automatically cancelled.

 

➢ Partial and temporary impossibility: Where performance became partially or temporarily impossible, the impossible part (i.e., the corresponding obligation) was extinguished. In both cases, the obligor (i.e., the party which owed performance) could cancel the contract, provided the party to whom performance was owed to was notified of the impossibility.

 

(ii) Hardship

 

Article 249 of the Old Code empowered a court to reduce or adjust a burdensome obligation to a reasonable level while having regard to the interests of both parties, where exceptional circumstances of a public nature arose that could not have been foreseen at the time of entering into the contract, which rendered performance burdensome and threatened the obligor with grave loss. Any agreement to the contrary was void.

 

2.  What are the changes introduced under the New Code?

 

The New Code retains the underlying principles of force majeure and hardship, and expands the reliefs that may be sought.

 

(i) Force majeure

 

Article 236 of the New Code retains the position under the Old Code in cases of total impossibility, i.e., if force majeure renders performance impossible, corresponding obligations cease, and the contract is cancelled automatically. The principal changes concern the treatment of partial and temporary impossibility.

 

➢ Partial impossibility: Where performance is partially impossible, either party, not just the obligor (as was the case under the Old Code), may seek discharge from the corresponding obligation(s), or apply to the court for recission of the contract.

 

➢ Temporary impossibility: Similar to the remedy for partial impossibility, where impossibility is temporary in a continuing contract, either party may seek discharge from the corresponding obligation(s), apply to the court for recission, and/or additionally, seek modification of the contract.

 

➢ Loans for specific things (العارية): The New Code also addresses circumstances in which a borrower may remain liable despite force majeure. Article 804(2) provides that a borrower may remain liable for the loss or destruction of a borrowed item where the loss could have been avoided by sacrificing the borrower’s own property, or where the borrower chose to save their own property instead (Article 804(2)).

 

(ii) Harship

 

The New Code more clearly articulates the range of remedies available to the court. Where the commercial bargain can sensibly be saved, the court may adjust it; and if it cannot, the court may order rescission. Under the Old Code, the court only modify the terms of the contract, and could not order recission.

 

3.  Why the change matters?

 

(i) Commercial and contractual impact

 

➢ Real disruption resulting from a force majeure or hardship event rarely fits neatly into legal boxes. A supply chain disruption, regulatory change, labour shortage or geopolitical event may affect contractual performance in different ways and to different degrees. The New Code recognises this reality and makes clear that both parties may seek relief, while granting the courts broader remedial powers that are no longer limited to cancellation, as was the position under the Old Code.

 

Force Majeure

 

➢ By way of example, where a force majeure event temporarily reduces a supplier’s production capacity, the New Code allows the contract to be preserved, through temporary adjustments to the parties’ obligations. This is commercially significant as the focus shifts from an all-or-nothing outcome towards preserving a commercially workable arrangement, where possible.

 

➢ The amendments are likely to be particularly significant in the context of long-term commercial relationships, including supply, infrastructure, logistics, outsourcing and distribution arrangements, where temporary disruption may not justify termination of the contractual relationship, but equally may require the parties’ obligations to be adjusted to reflect changed circumstances.

 

Hardship

 

➢ The New Code does not permit contracts to be revisited merely because a party has made an unfavorable bargain, which was also the case under the Old Code. However, where exceptional and unforeseeable circumstances render performance excessively onerous, the court is empowered to rescind the contract as well to adjust the obligations of the parties.

 

➢ This is significant because hardship cases often fall between two unsatisfactory outcomes. While strict enforcement of the contract may become excessively onerous, cancellation may be commercially wasteful. The New Code makes the middle ground easier to identify and ensures that parties will focus less on artificial labels and more on the remedy that best fits the disruption.

 

(ii) Litigation impact

 

➢ The practical shift under the New Code is that parties are likely to spend less time debating rigid classifications and more time addressing the consequences of the disruption itself. That is the practical shift: the New Code makes it plain that both parties can seek remedies, and that the court has a wider remedial toolkit. The emphasis therefore moves away from a narrow argument about classification and towards the practical question: what remedy fits the disruption?

 

➢ This may be particularly important in disputes where the parties agree that an external event has affected performance but disagree as to the appropriate response. The New Code provides clearer statutory mechanisms for preserving, modifying or terminating contractual relationships depending on the circumstances.

 

4.  Practical takeaways

 

Dos

➢ Address remedies and consequences at the drafting stage: Parties should decide in the contract what happens if performance becomes impossible, partially impossible, temporarily impossible or exceptionally onerous. The key question is not just whether a force majeure or hardship event has occurred, but what contractual consequences and remedies should follow.

 

➢ Use bespoke force majeure and hardship clauses and define assumed risks clearly: A generic force majeure or hardship clause may not be sufficient. If inflation, sanctions, war, shipping disruption, labour shortages, currency movement, material shortages or regulatory delay are intended to sit with one party, say so expressly.

 

➢ Decide in advance what follows from the disruption: The clause should also address notice requirements, mitigation measures, suspension rights, partial performance, temporary modification, extension of time, price adjustment, cost-sharing, renegotiation procedures, and termination rights.

 

➢ Build in a process for preserving the contract: Parties should consider including contractual mechanisms designed to preserve the relationship during periods of disruption, where disruption occurs but continuation of the contractual relationship remains commercially viable.

 

➢ Consider the wider range of judicial remedies available: The New Code provides clearer statutory mechanisms through which parties may seek judicial relief, including preservation, modification, or recission of contractual obligations where the statutory requirements are satisfied. A party resisting relief may still argue that the relevant risk was foreseeable, assumed, insured against or allocated by the contract.

 

➢ Comply strictly with any contractual notice requirements (where applicable): Delayed or inadequate notice may prejudice a party’s ability to rely on force majeure or hardship provisions.

 

Don’ts

 

➢ Do not confuse commercial difficulty with hardship: Every increase in cost, reduction in profitability or commercial inconvenience may not constitute hardship.

 

➢ Do not assume that force majeure automatically leads to termination: The appropriate remedy will depend on whether the impossibility is total, partial or temporary and the circumstances of the case. A party will not automatically be entitled to terminate the contract.

 

➢ Do not exclusively rely on the remedies contained in the New Code: Seek legal advice and incorporate contractual provisions to clearly allocate risk and prescribe the consequences of disruption.

 

➢ Do not wait for a dispute before exploring solutions: Parties should consider at an early stage whether contractual performance can be modified, suspended or otherwise preserved before a dispute arises. ■

Liquidated damages have long constituted a fundamental mechanism for allocating contractual risk, particularly in construction and commercial agreements, by allowing parties to predetermine compensation payable in the event of breach. While the concept was recognised under the previous Civil Transactions Act of 1985 (the “Old Code”) the New Civil Transactions Act of 2025 (the “New Code“) introduces a more structured framework governing judicial intervention in agreed compensation clauses. Unlike the former provision Article 390 which granted courts unfettered discretionary authority to amend agreed compensation to reflect the actual loss suffered, Article 340 of the New Code adopts a more detailed structure that expressly regulates when and how judicial intervention may occur.

 

The revised framework seeks to balance contractual freedom with the need to prevent disproportionate or unjust compensation. As consequence, the enforceability of liquidated damages clauses may increasingly depend on considerations of proportionality and fairness, rather than the singular issue of whether the liquidated damages agreed upon reflect the actual loss suffered.

 

These developments are likely to have significant practical implications for contractors, employers, commercial parties, and legal practitioners, particularly in relation to contractual drafting, evidentiary preparation, dispute management, and litigation strategy.

 

What Has Changed?

 

Article 390 of the Old Code permitted contracting parties to agree in advance on the amount of compensation payable upon breach of contract. However, the same provision granted the courts (and arbitrators, where applicable) broad discretionary power to amend the agreed compensation if it did not correspond to the actual loss suffered. Any contractual attempt to exclude the court’s power was considered void. Importantly, the Old Code contained no guidance as to how the court may exercise its power.

 

While the New Code continues to recognise the validity of liquidated damages clauses, it introduces a more structured framework for judicial intervention by setting out guidelines for the exercise of the court’s power to adjust the quantum of damages in both upwards and downwards directions, depending on the circumstances of the case.

 

Pursuant to Articles 340 (2) and 340 (3), a debtor is entitled to seek a reduction of the agreed compensation in the following circumstances:

 

➢ where the agreed liquidated damages are exaggerated or disproportionate to the actual harm suffered;

 

➢ where the original obligation has been partially performed; and

 

➢ where the creditor, through its own fault, contributed to the damage or aggravated its consequences.

 

On the other hand, Article 340 (4) grants the creditor the right to seek an increase in the agreed compensation in the following circumstances:

 

➢ where the creditor proves that the debtor committed fraud; and

 

➢ where the creditor proves that the debtor committed gross fault.

 

Importantly, Article 340(4) permits the court to determine that no compensation is payable at all where the creditor’s own fault has completely absorbed the debtor’s fault. This reflects a more nuanced approach to the allocation of contractual responsibility and the assessment of damages.

 

Under the New Code, the issue of actual loss suffered may come into play where a debtor seeks to argue that the agreed liquidated damages are exaggerated or disproportionate and therefore should be reduced. However, it appears that a creditor may no longer seek an increase in the amount payable as liquidated damages on the grounds that the creditor in fact suffered greater actual loss.

 

Cassation Courts and the Future Interpretation of Article 340:

 

The practical application of Article 340 is likely to give rise to several important questions that remain open for interpretation. One of the principal questions is whether the situations expressly mentioned by the legislature regarding the debtor’s right to seek reduction of liquidated damages, and the creditors seek an increase in agreed compensation, are exhaustive and restrictive in nature, or whether the courts may extend such intervention by way of analogy or broader equitable considerations.

 

Equally significant is the question of how the courts will define and distinguish “gross fault” from ordinary fault, particularly given that the new provision expressly permits increasing liquidated damages only in cases involving fraud or gross fault. This also raises the question of how the courts may approach situations where the debtor’s conduct constitutes fault, negligence, or breach, but does not reach the threshold of gross fault? Whether ordinary fault alone may justify any form of judicial intervention beyond the agreed compensation remains unclear under the statutory text.

 

Another key issue is likely to be whether the courts will permit damages in excess of the actual loss suffered by a creditor, if it is able to prove fraud or gross fault by a debtor. It appears unlikely, given that Article 339 (which addresses the position where the parties have not agreed liquidated damages) retains the concept of the judge awarding damages to reflect the actual loss suffered, and as the concept of punitive damages is contrary to Sharia law.

 

Practical Takeaways: Dos and Don’ts

 

Dos

 

➢ Do clearly define the triggering events for liquidated damages, including delay, non-performance, or partial breach.

 

➢ Do ensure proportionality between the agreed compensation and the anticipated commercial loss, especially if you are the party likely to be claiming liquidated damages, as disproportionality is a ground for downward revision, and not upward revision.

 

➢ Do draft precise and unambiguous clauses to avoid disputes concerning interpretation.

 

Don’ts

 

➢ Do not treat liquidated damages as punitive penalties, as the Civil Code recognises compensation rather than punishment.

 

➢ Do not ignore evidentiary requirements, especially when seeking upward revision of agreed compensation. ■

The UAE’s new Civil Transactions Law (the New Code), came into force on 1 June 2026. The New Code makes a number of important changes to the law governing legal capacity, minority, and judicial protection. In particular, it lowers the age of majority, clarifies the age of discernment, expands the court’s supervisory role in relation to management of property, and introduces clearer consequences for transactions entered into without court-ordered judicial assistance.

 

1. What has changed

 

The New Code refines the legal framework governing legal capacity and the protection of minors and persons requiring assistance. The New Code:

 

➢ reduces the age of majority to 18 Gregorian years (Article 84);

 

➢ clarifies that a person below seven Gregorian years lacks discernment, and expressly fixes the age of discernment by reference to the Gregorian calendar (Article 85);

 

➢ permits the court, after inquiry, to authorise a discerning minor who has completed 15 Gregorian years to manage all or part of his property, either absolutely or subject to conditions (Article 149); and

 

➢ expands the judicial assistance regime to cover not only certain sensory disabilities but also illness requiring assistance, and provides that a transaction requiring judicial assistance is voidable if concluded without such assistance after the assistance decision has been issued (Article 158).

 

2. What the position was before

 

The now repealed Civil Code (the Old Civil Code) contains the core rules on legal capacity, but in a less precise and coordinated manner.

 

Previously, the age of majority was 21 Hijri (lunar) years. Now, its 18 Gregorian years. While a Hijri year is approximately 10 to 11 days shorter than a Gregorian year, the substantive change is the reduction of the age of majority to 18 Gregorian years. The New Code also adopts Gregorian precision in relation to discernment: a child below seven was previously treated as lacking discernment, but the New Code now expressly fixes that threshold at seven Gregorian years.

 

Similarly, under the Old Civil Code, a minor who had completed 18 Hijri years could, with authorisation, take delivery of all or part of his property for management. The New Code lowers that threshold to 15 Gregorian years, but balances that reduction by requiring court inquiry, permitting partial or conditional authorisation, and expressly empowering the court to require accounts and revoke or restrict the authorisation where appropriate.

 

While contracts of management concerning a minor’s property were recognised previously, the earlier provision did little more than state that such contracts were valid in accordance with the conditions determined by law. The New Code now identifies, in non-exhaustive terms, the types of contracts that are valid.

 

Finally, judicial assistance existed under the Old Civil Code, but in narrower terms. The earlier provision applied to persons unable to express their will due to specified conditions, and did not expressly state the consequence of a transaction concluded without the judicial assistant once assistance had been ordered. The New Code widens the class of protected persons and expressly provides that such a transaction is voidable if concluded without the court-ordered judicial assistance after the assistance decision has been issued.

 

3. Why the change matters

 

i. Contradicting certainty

 

These changes are not merely technical. They affect the threshold question of who can bind themselves contractually, and from what age.

 

The reduction of the age of majority to 18 Gregorian years and the express adoption of Gregorian thresholds for discernment bring the Civil Code into closer alignment with modern commercial practice and remove unnecessary uncertainty associated with older lunar-year formulations. In disputes involving younger contracting parties, age and capacity will now be assessed against a clearer and more familiar standard.

 

ii. Court supervision and controlled autonomy

 

The New Code does not simply liberalise the position of minors. It does so on a controlled basis.

 

Under Article 149, a discerning minor who has completed 15 Gregorian years may be authorised to manage all or part of his property, but only after the court has made the necessary inquiries.^[1] The court may grant absolute or restricted authority, require accounts, and later revoke or restrict that authority if the circumstances warrant it. That is a more active supervisory model than before, and allows the court to make a determination on a case-by-case basis, rather than adopt a ‘one size fits all’ approach. It also allows minors to participate in financial decision-making from an early stage, but only within a judicially supervised framework.

 

4. Practical takeaways

 

i. Do’s

 

➢ verify age and capacity at the outset of the transaction, particularly where the contracting party is young or may be acting with limited authority;

 

➢ inquire, obtain, and review any guardianship, trusteeship, management authorisation, or judicial assistance orders before contracting;

 

➢ confirm that the transaction falls within the scope of any authority granted by the court or by law; and

 

➢ undertake a capacity analysis and document carefully the basis on which the transaction is being entered into.

 

ii. Dont’s

 

➢ assume that a minor or protected person has general authority to manage property without checking the terms of the relevant authorisation;

 

➢ treat transactions by persons of diminished or impaired capacity as immune from challenge merely because they were concluded formally; or

 

➢ overlook the possibility that a transaction may be voidable because judicial assistance was required but not obtained.

 

iii. Issues to watch in the courts

 

The following issues are likely to require clarification through case law:

 

➢ what factors and evidence the courts will consider in deciding whether to grant, restrict, or revoke a minor’s authority to manage property;

 

➢ how broadly the courts will interpret the scope of court-granted management authorisation under Article 149;

 

➢ how narrowly or broadly the courts will interpret the distinction between ordinary acts of management and transactions requiring additional scrutiny or approval; and

 

➢ how the courts will approach transactions concluded without the participation of a judicial assistant after an assistance order has been made, including in cases where the transaction is challenged solely by reference to the absence of judicial assistance.

 

For businesses and their advisers, the practical message is clear. The New Code modernises the law on legal capacity, but does so by combining lower age thresholds with greater court supervision and clearer routes to challenge. Parties should therefore verify capacity, authority, and court-imposed limits with greater care before contracting. ■

 

 

 

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[1] The New Code does not specify the nature of inquiries.

Laws ordinarily have prospective effect. This principle protects legal certainty and allows parties to organise their affairs based on the law applicable at the relevant time. Article 27 of the UAE Constitution enshrines this principle in relation to criminal laws, but not with respect to civil and commercial laws.

 

As will be evident immediately below, the legislature may enact civil and commercial laws with retrospective effect. It is therefore necessary to examine whether any provisions of the Civil Transactions Act of 2025 (“the New Code”) may have this effect. This inBrief examines Articles 4, 6 and 7 of the New Code governing limitation periods and transitional arrangements.

 

As a general rule, the New Code does not have retrospective effect:

 

Article 4 (1), effective from 1 June 2026, establishes the general rule:

 

“The Law shall come into force from the date of its effectiveness and shall not apply to facts and transactions preceding it, unless the Law stipulates otherwise.”

 

Consequently, the New Code applies only to facts and transactions arising after 1 June 2026. Facts and transactions that occurred prior to this date continue to be subject to the Civil Transactions Act of 1985 (the “Old Code”), unless there is express legislation to the contrary.

 

However, time limits are affected:

 

Article 6 provides as follows:

 

(1) New provisions relating to the statute of limitations (non-hearing of a case due to lapse of time) shall apply from the time they come into force to any period that has not yet been completed.

 

(2) Old provisions shall apply to matters concerning the commencement, suspension, and interruption of the limitation period regarding the time prior to the new provisions coming into force.

 

Article 7 provides as follows:

 

“If a new provision sets a limitation period shorter than that prescribed by the old provision, the new period shall apply from the time the new provision comes into force, even if the old period had already commenced.

 

If the remaining portion of the period prescribed by the old law is shorter than the period set by the new provision, the limitation period shall expire upon the lapse of that remaining portion.”

 

The practical effects of Articles 6 and 7 may be summarized as follows:

 

➢ To the extent that the New Code establishes new time-limitation periods, they will come into immediate effect with respect to causes of action that arose prior to the New Code coming into effect, even where the limitation period under the New Code is shorter.

 

➢ If the time period prescribed under the Old Code is due to expire before the time period under the New Code does, then the matter will become time-barred on the earlier date.

 

➢ If any events occurred prior to the New Code coming to effect which effect the application of the time bar (for example, an event that stops or suspends the clock), then those will be assessed under the provisions of the Old Code. Any such events that occur on or after 1 June 2026 will be assessed under the provisions of the New Code.

 

Consequently, this means that parties who intend to commence litigation find themselves with less time than was initially contemplated to do so. Fortunately, however, the New Code for the most part maintains the limitation periods provided for in the Old Code. An important exception is Article 431 of the New Code, on claims relating to the fees and expenses of doctors, pharmacists, lawyers, engineers, experts, professors, teachers, and brokers. These claims were subject to a five-year limitation period under the Old Code. Article 431 of the New Code reduces this to three years.

 

For example, where an engineer’s fees became due on 1 January 2025, the claim would ordinarily have expired on 1 January 2030 under the Old Code. However, because the limitation period remained incomplete on 1 June 2026, the new three-year period applies from that date, resulting in the claim becoming time-barred on 1 June 2029.

 

A separate question arises where the New Code prescribes a longer limitation period than the Old Code. Unlike situations involving shorter limitation periods, Article 7 does not expressly address this scenario. One example is found in Article 510 of the New Code, which provides that an action for warranty against defects shall not be heard after one year from the day following delivery of the sold item, whereas Article 551 of the Old Code prescribed a limitation period of only six months.

 

Where the six-month period had commenced before 1 June 2026 but had not yet expired by that date, there is a credible argument that Article 6 supports the application of the new one-year limitation period from the date the New Code entered into force, on the basis that the limitation period remained incomplete. However, the New Code does not expressly address this situation, and the extent to which longer limitation periods may apply to pre-existing claims remains open to judicial interpretation. Until judicial guidance emerges, caution should be exercised when assessing the impact of the New Code on claims affected by extended limitation periods.

 

Conclusion

 

The transitional provisions demonstrate an attempt to balance legal certainty with the effective implementation of the New Code. While the general rule remains that legislation does not operate retrospectively, Articles 6 and 7 provide an important framework for determining how ongoing limitation periods are treated following the entry into force of the New Code. Parties assessing existing claims should therefore carefully consider the transitional provisions when evaluating limitation-related issues after 1 June 2026. ■