Tag: Dispute Resolution

The New UAE Civil Code: Contract Formation, Consent, and Good Faith

The UAE’s new Civil Transactions Law (the New Code), coming into force on 1 June 2026, fundamentally changes the legal landscape for anyone doing business in the UAE — and the consequences of getting it wrong could be significant. For the first time, the law imposes express statutory obligations on parties engaged in pre-contractual negotiations: negotiate in bad faith, withhold information that is material to the other side’s decision, or misuse confidential information obtained during the process, and you may be liable even where no contract is signed. In short, contractual risk in the UAE now begins well before the contract is concluded, and businesses that continue to treat the negotiation phase as consequence-free do so at their peril.

 

1. What has changed

 

The New Code introduces, for the first time, an express statutory framework regulating party conduct at the pre-contractual stage. The New Code:

 

➢ requires that the proposal, conduct, and termination of negotiations be carried out in good faith (Article 121(1));

 

➢ imposes liability for negotiating, or terminating negotiations in bad faith (Articles 121(3) and 121(4));

 

➢ obliges the disclosure of information that is of “decisive importance to the other party’s consent” (Decisive Information) (Articles 122(1) and 122(2));

 

➢ allocates the burden of proof such that the party alleging concealment must prove it, while the other party must prove disclosure (Article 122(3));

 

➢ provides that clauses seeking to limit, waive, or exclude the obligation to disclose Decisive Information are null and void, and grants the aggrieved party the right to seek annulment of the contract (Article 122(4)); and

 

➢ imposes liability for the unauthorised use or disclosure of confidential information obtained during negotiations or through the contract (Article 123).

 

Significantly, the New Code also regulates circumstances where a contract is not formed. The New Code provides that:

 

➢ negotiations do not, in themselves, oblige the parties to conclude a contract (Article 121(2));

 

➢ a party acting in bad faith may be liable for the actual damage caused to the other party, but does not extend to lost opportunities or lost profits (Article 121(3)); and

 

➢ clauses seeking to limit, waive, or exclude the obligation to disclose Decisive Information are null and void (Article 122(4)).

 

2. What was the position before

 

The current (and soon to be replaced) Civil Code does not contain an equivalent express statutory regime dealing with pre-contractual negotiations. The issue therefore fell to be addressed through general principles and case precedent rather than by a dedicated legislative framework.

 

Previously, Dubai Court of Cassation case no. 267/2016 (Civil) treated negotiations as a factual act which did not, by itself, create legal obligations. A party was generally free to withdraw from negotiations. Liability could nevertheless arise where the withdrawal was accompanied by fault, in which case the liability was treated as tortious (i.e. an Act Causing Harm as defined in the Civil Code) rather than contractual.

 

Similarly, while concepts such as misrepresentation, deceit, and bad faith were not foreign to UAE law, the current Civil Code does not contain a statutory duty to disclose material information during negotiation. Nor does it expressly address the unauthorised use or disclosure of confidential information obtained during negotiations as part of a dedicated pre-contractual framework.

 

The prior position was therefore less structured. Pre-contractual conduct sat in a grey area governed by broad principles, with less certainty as to the source, content, and limits of liability.

 

3. Why the change matters

 

Litigation risk

 

Parties may no longer assume that, absent a signed contract, the negotiation phase is inconsequential. If a party negotiates without genuine intention, withdraws in bad faith, withholds information of decisive importance, or misuses confidential information obtained during negotiations, there is now a clearer statutory route by which liability may be advanced. This may be particularly relevant in failed transactions where one party has incurred material costs in reliance on negotiations that later collapse.

 

Article 122(3) is also likely to be important in practice. Once concealment is alleged, the other party will need to prove disclosure. This is likely to increase the significance of contemporaneous records of what was disclosed, when, and to whom.

 

Therefore, these provisions are likely to generate disputes regarding:

 

➢ what amounts to “bad faith” in the negotiation context;

 

➢ what information is sufficiently “decisive” to require disclosure;

 

➢ when ignorance or reliance may be presumed;

 

➢ how actual loss is to be proved and distinguished from non-recoverable expectation loss; and

 

➢ whether certain types of differently worded contractual clauses can be considered as limiting, waiving or excluding obligations to disclose material and decisive information; and

 

➢ the extent to which entire agreement clauses, non-reliance wording, or clauses providing that the contract supersedes prior negotiations may affect claims based on pre-contractual conduct, without excluding mandatory statutory duties under the New Code.

 

In high-value transactions, this is likely to become a live area of litigation. The negotiation process itself may now become part of the pleaded case, and part of the evidentiary battleground.

 

Contract drafting impact

 

As clause limiting, waiving, or excluding the duty to disclose material and decisive information are null and void under the New Code, parties will need to review how they use entire agreement clauses, non-reliance wording, disclaimers, and other standard boilerplate protections. Such clauses may still serve a legitimate function, but they cannot override mandatory obligations imposed by the New Code.

 

The same applies to confidentiality. Many commercial parties rely on stand-alone NDAs, confidentiality undertakings, or restricted circulation protocols. Article 123 appears to add a statutory layer to that position. That increases the importance of ensuring that confidential information is properly identified, access is controlled, and negotiation documents are prepared on the assumption that misuse of information may later attract legal consequences.

 

Judicial discretion

 

Concepts such as good faith, decisive information, presumed ignorance, justified reliance, and unauthorised use of confidential information are inherently fact-sensitive. Their practical content will depend on judicial interpretation. The courts will likely be required to decide where legitimate commercial behaviour ends and actionable bad faith begins.

 

This is especially so in cases involving partial disclosure, strategic silence, exploratory negotiations pursued for informational advantage, or withdrawals engineered at a late stage after one party has incurred material time and cost.

 

The availability of annulment as a remedy for breach of the disclosure obligation is also likely to add weight to these disputes, particularly where the allegedly undisclosed information materially affected the other party’s decision to enter into the contract.

 

The New Code therefore gives the courts a more explicit mandate to scrutinise the contracting process itself, not merely the final written agreement.

 

4. Practical takeaways

 

Do’s

 

➢ approach negotiations on the basis that the pre-contractual phase may now carry direct legal consequences, and that entire agreement clauses, non-reliance wording, disclaimers, and other standard boilerplate protections may not have the same effect that they previously did;

 

➢ consider carefully whether information in your possession is of material and decisive importance to the counterparty’s consent and document analysis made in this regard;

 

➢ document negotiation stages, assumptions, reservations, and qualifications clearly;

 

➢ use confidentiality agreements and internal access controls when sharing sensitive information; and

 

➢ consider using structured disclosure processes, including disclosure schedules, tracked Q&A processes, and maintain records of disclosed materials.

 

Don’ts

 

➢ assume that the absence of a signed contract eliminates legal risk;

 

➢ rely on broad disclaimers or non-reliance wording to exclude pre-contractual exposure;

 

➢ use negotiations to obtain confidential information without a genuine transaction purpose; or

 

➢ terminate negotiations in a manner that could later be characterised as abusive, misleading, or opportunistic.

 

For businesses and their advisers, the practical message is clear. Contractual risk may now arise well before signature. Parties should therefore negotiate, disclose, and document accordingly. ■

Conflict in the Gulf: Contractual Disruption, Force Majeure and Risk Allocation under UAE Law

The recent escalation of hostilities involving the United States, Israel, Iran and several Gulf States has increased security risks across key transport and energy routes in the region. Reports of attacks on commercial shipping, rising war-risk insurance premiums, and the potential disruption of navigation through the Strait of Hormuz have already begun affecting maritime and aviation activity.

 

For businesses operating in or through the Middle East, such developments can raise immediate questions regarding the performance of contractual obligations, particularly in sectors reliant on shipping, logistics, commodities, construction supply chains, and energy transport.

 

This inBrief outlines how these developments may affect contractual obligations under UAE law and highlights key issues businesses should consider when assessing contractual risk.

 

Regional disruption and supply chain impact

 

The Strait of Hormuz remains one of the most strategically important maritime corridors in the global energy market. A significant proportion of the world’s oil and liquefied natural gas exports transit the Strait, meaning that disruption to navigation in the region can quickly affect shipping availability, insurance markets, and global supply chains.

 

Recent reports indicate that some shipping operators have delayed voyages, altered routes, or reassessed operations in the Gulf in response to increased security risks. At the same time, war-risk insurance premiums have reportedly risen sharply, and in some cases, cover has been restricted or withdrawn. Airspace restrictions and operational changes have also affected certain aviation routes across the region.

 

These developments may affect contractual performance in several ways, including:

 

– delays in shipment or delivery of goods;
– reduced availability of vessels or aircraft;
– withdrawal or significant increases in insurance costs;
– increased freight and logistics expenses; and
– disruption to energy supply or raw material availability.

 

Where such issues arise, parties will often first examine whether the relevant contract provides relief through force majeure or other contractual risk-allocation mechanisms.

 

Force majeure under UAE law

 

Although the UAE Civil Code does not contain a single comprehensive definition of force majeure, the concept is recognised in several provisions.

 

Article 273 of the Civil Code provides that if a force majeure event renders the performance of a contract impossible, the corresponding obligation ceases and the contract may be automatically cancelled. UAE courts have historically interpreted this principle strictly. The key requirement is impossibility of performance, rather than mere inconvenience or increased cost.

 

Accordingly, the fact that performance has become more expensive or commercially unattractive will not ordinarily be sufficient to establish force majeure.

 

Where a contract contains a force majeure clause, the availability of relief will depend primarily on the wording of the clause. Provisions referring to events such as war, hostilities, blockades, governmental restrictions, or disruptions to transport routes may be particularly relevant in the present circumstances.

 

Parties seeking to rely on force majeure should also ensure that any contractual procedures—particularly notice requirements—are carefully followed.

 

Exceptional circumstances and contractual hardship

 

Where performance remains possible but has become significantly more onerous, a party may seek relief under Article 249 of the Civil Code.

 

Article 249 provides that if exceptional events of a general nature occur which could not reasonably have been foreseen and which render performance oppressive so as to threaten the obligor with serious loss, a court may adjust the obligation to a reasonable level after balancing the interests of both parties.

 

Unlike force majeure, this provision does not terminate the contractual obligation. Instead, it allows a court to rebalance the contract where circumstances have fundamentally altered its economic equilibrium.

 

In situations involving sustained geopolitical disruption, significant increases in shipping costs, or systemic constraints affecting transport or energy markets, parties may seek to rely on Article 249 where strict force majeure arguments cannot be established.

 

Liability and extraneous causes

 

Article 287 of the Civil Code may also be relevant in certain circumstances. This provision states that a party may avoid liability if it can demonstrate that the harm arose from an extraneous cause in which it played no part, such as force majeure, a sudden incident, or the act of a third party.

 

Where contractual non-performance results directly from external events such as conflict-related disruptions to shipping routes or government restrictions affecting transport operations, parties may seek to rely on this principle in defending claims for damages.

 

Insurance and contractual risk allocation

 

Another practical issue concerns contractual insurance obligations.

 

Many commercial arrangements—including charterparties, commodity sale agreements, financing arrangements, and shipping contracts—require vessels or cargo to maintain specified levels of insurance coverage. If war-risk insurance becomes unavailable or prohibitively expensive, parties may encounter difficulties complying with these contractual requirements.

 

Disputes may arise as to whether the inability to obtain insurance constitutes a contractual breach or whether the underlying circumstances justify suspension or renegotiation of contractual obligations.

 

Similarly, increases in freight costs or the imposition of war-risk surcharges may raise questions regarding cost allocation where contracts do not expressly address such contingencies.

 

Practical steps for businesses

 

Businesses with exposure to regional transport routes or energy supply chains may wish to consider the following steps:

 

– review key commercial contracts to identify force majeure provisions, delivery obligations, insurance requirements, and cost-allocation mechanisms;

– confirm the scope of marine, cargo, and political risk insurance coverage;

– monitor potential supply chain disruptions that may affect contractual performance; and

– ensure timely communication with contractual counterparties and compliance with any contractual notice requirements.

 

Conclusion

 

Periods of geopolitical instability frequently give rise to contractual disputes concerning delay, non-performance, and increased costs. Under UAE law, parties seeking relief must carefully assess whether the circumstances amount to force majeure, exceptional hardship, or simply commercial difficulty.

 

The outcome in any particular case will depend on the facts, the contractual wording, and the applicable legal framework. Businesses affected by regional disruption should therefore review their contractual position at an early stage in order to manage risk and preserve available remedies. ■

Modernising the Backbone of UAE Private Law: The New UAE Civil Code

Introduction

The Civil Transactions Act, commonly referred to as the Civil Code, is arguably the single most important piece of civil legislation in the UAE.

 

While there are extensive laws regulating specific subject matter such as labour relations, real estate and leasing, companies, banking, and other commercial activities, the fundamental principles which form part of those laws are rooted in the Civil Code. This includes concepts such as good faith, abuse of rights, party autonomy, fault, harm, causation, unjust enrichment, and nullity.

 

The importance of the New UAE Civil Transactions Act of 2025 (“the New Code”), which comes into effect on 1 June 2026, is therefore impossible to overstate. The New Code replaces the Civil Transactions Act of 1985 (the “Old Code”), and constitutes both an overhaul of the law, and a legislative response to four decades of economic, social, and technological developments which has seen the UAE become a global centre for investment, digital innovation, and complex transactions. The New Code addresses these developments by modernising language, refining legal concepts, and introducing solutions aligned with contemporary realities, while preserving fundamental values such as justice and legal certainty.

 

In this inBrief, the first of a series examining the nature and consequences of the changes introduced by the New Code, we offer, as an important introduction, a conceptual analysis of select key features of the New Code, including its role in bridging legislative gaps, clarifying terminology, introducing new regulatory areas, and expanding judicial discretion.

 

From Silence to Structure: How the New Code Addresses Longstanding Omissions

 

One of the most prominent legislative objectives of the New Code is to fill substantive gaps that existed in the Old Code. One such example is the law regulating assignments. The Old Code confined itself to the issues around the assignment of debts, while being silent on the assignment of rights. In the absence of legislative provision, the courts developed clear principles on the assignment of rights. However, as UAE’s legal system does not recognise the concept of binding precedent, these principles were considered guiding practice. The New Code at Articles 405 to 424 codifies these principles into law, thus providing welcome certainty.

 

The New Code now contains provisions on pre-contractual negotiations, which was not an area that was previously covered by legislation, and has already understandably garnered wide interest.

 

Articles 121, 122, and 123 of the New Code now govern negotiations and the conduct of parties leading up to the formation of a contract. The New Code imposes specific obligations on the parties where pre-contractual negotiations are concerned, which, most notably, include duties to negotiate in good faith and disclose relevant information. Furthermore, the New Code stipulates that abusive termination of negotiations may give rise to liability, granting the aggrieved party the right to claim compensation even in the absence of an executed contract. Such compensation is a statutory or tortious liability rather than a contractual liability, which are considered distinct sources of obligation under Article 121 of the New Code.

 

Notwithstanding these advances, it is noteworthy that the new provisions do not expressly address the legal status of admissions made by parties during the negotiation process. In particular, uncertainty remains as to whether such admissions may be relied upon in subsequent legal proceedings if negotiations fail and no contract is formed. Previously, at least one judgment of the Dubai Court of Cassation held that such admissions are not admissible as evidence. Article 123 of the New Code provides that anyone who uses or discloses, without authorisation, confidential information obtained during negotiations or the contract, shall be held liable in accordance with the general rules. Whether this provision encompasses inadmissibility of admissions made during negotiations, or only extends to safeguarding confidential information exchanged during negotiations, remains to be clarified through judicial interpretation.

 

On the flip side of the coin, the New Code omits altogether matters from the Old Code which have since been addressed in specific legislation. Examples include the burden of proof, previously set out in Article 112 to Article 123 of the Old Code, which is now set out in the Federal Decree-Law No. 35 of 2022 Promulgating the Law of Evidence in Civil and Commercial Transactions. Similarly, rules governing bankruptcy and insolvency which were previously contained in Articles 401 to 413 of the Old Code, have been omitted in light of the enactment of Federal Decree-Law No. 51 of 2023 on Financial Reorganization and Bankruptcy Law and Federal Decree-Law No. 19 of 2019 on Insolvency. This streamlining of legislation is a welcome development.

 

The Expansion of Judicial Reasoning and the Reconfiguration of Legal Sources

 

Article 1 of the New Code significantly broadens the discretionary power that may be exercised by the UAE Courts in the absence of applicable statutory provisions. Under the Old Code, the judges were directed to refer to the Islamic Sharia in such circumstances. However, their discretion was restricted by a hierarchical methodology that required judges to consult the Maliki and Hanbali schools of Islamic jurisprudence first, and if no guidance was found, to then look to the Shafi and Hanafi schools. This formulation imposed not only a restrictive waterfall methodology of reference, but also an implicit confining of judicial reasoning to those specific schools of Islamic jurisprudence.

 

The New Code removed this fetter from the courts and empowers judges with discretion to refer to, interpret and apply Islamic Sharia more broadly as the circumstances warrant. This development reflects a conscious legislative choice to replace methodological rigidity with principled flexibility. At the same time, it raises a practical question as to the contours of “Sharia” as a source of law, given its breadth and conceptual diversity. This places a heightened responsibility on higher courts, particularly the Court of Cassation, to articulate guiding principles that can ensure coherence and consistency over time.

 

The New Code also introduces natural law and rules of justice as additional subsidiary sources to which the court may resort if no solution is found in statutory provisions, Sharia, or customary principles. This underscores the legislator’s expectation that judges will exercise active intellectual effort in seeking fair solutions in the absence of legislative provision. However, the absence of a codified definition or criteria for what constitutes natural law and rules of justice may pose interpretative challenges and uncertainty, particularly in complex commercial disputes.

 

Precision of Terminology and Structure in the New Code

 

Beyond substantive reform, the New Code reflects a deliberate drafting philosophy centered on precision, structure, and accessibility. This plays a central role in ensuring consistent interpretation, predictable application, and effective compliance.

 

For example, under the Old Code (Article 890), a subcontractor (i.e. a person or entity engaged by a main (or prime) contractor to perform part of the contractor’s obligations to a third party) was described as Second Contractor. The New Code, at Article (832) replaces Second Contractor with Subcontractor which is linguistically and conceptually precise, immediately conveying the legal nature of the relationship as one derived from and dependent upon a primary contract.

 

Through such refinements, the New Code demonstrates a commitment to simplifying language, improving organisation, and aligning statutory terminology with established legal usage, thereby enhancing both the intelligibility and practical effectiveness of the law.

 

Conclusion

 

The promulgation of the New Code marks a decisive moment in the evolution of private law in the UAE, and showcases the UAE’s legal system as one that is attentive to its historical foundations while being responsive to the demands of a rapidly transforming society.

 

As is the case with all legislation, the true impact of the New Code will ultimately depend on the courts’ interpretation and application of its provisions, particularly the level of guidance flowing from the superior courts in the initial years. In this sense, the New Code should be viewed, not as the final word but, as the beginning of a renewed dialogue between the legislators and the judiciary. ■

Real Estate Dispute: Dubai Court of Cassation Clarifies Conditional Contracts and Manager Liability

The Dubai Court of Cassation (DCC) recently issued an important judgment in a real estate dispute, providing clarity on two key legal issues: the effect of suspensive conditions in conditional contracts and the personal liability of managers of limited liability companies (LLCs) in cases of fraud or misconduct.

 

Afridi & Angell acted for the buyer in this case.

 

Facts

 

– The buyer entered into a sale and purchase agreement (SPA) with a Dubai-based LLC (the seller) to purchase an off-plan property in the secondary market.

 

– The terms of the SPA required the buyer to pay nearly half the purchase price as a deposit, and the balance to be paid after the developer hands over the property.

 

– The contract contained additional terms – departing from the standard conditions of the Dubai Real Estate Regulatory Authority (RERA) – allowing the seller to encash the deposit cheques before completion. At the seller’s request, the cheques were addressed in the name of the manager of the seller entity (who was also the sole shareholder).

 

– The developer failed to hand over the property on time. While the buyer remained willing to proceed, the seller withdrew from the transaction and refused to return the deposit paid. Relying on the additional terms, the seller argued it was entitled to withdraw from the transaction and retain the deposit because the buyer was in breach of the contractual payment deadline.

 

– The buyer filed a claim against the seller and its manager, while the seller counterclaimed for damages.

 

Court Findings

 

Conditional Contracts

 

– The court found that completion of the sale was made conditional upon the developer’s handover of the project by a certain date. The court agreed with the buyer’s argument that this condition was a ‘suspensive condition’, and since it was not fulfilled within the contractual deadline, the seller was ordered to return the deposit to the buyer with interest.

 

 

– In appeal, the seller argued that in the context of an off-plan sale of property, delivery or handover of the project does not mean “actual” delivery of the property by the developer, but rather “constructive” delivery (i.e., transfer of title), which meant that the seller was ready to transfer the title to the buyer at all times. The DCC dismissed this ground and confirmed that pursuant to Articles 420 and 425 of the Civil Code, a conditional obligation is one that depends on the occurrence of a future or uncertain event, upon the happening of which, an obligation will either arise or cease. Where the obligation is subject to a suspending condition, it remains unenforceable until the relevant condition materialises or is fulfilled.

 

 

– On that basis, the DCC upheld the finding that the obligations of both parties (buyer to pay the balance and seller to transfer title) fell away as the suspending condition did not occur (i.e., handover of the project by the developer) without attributing a breach to either party. Accordingly, the lower court’s finding was upheld insofar as the deposit ought to be repaid to the buyer with interest. In this respect, the DCC opined that:

 

“A conditional obligation is one that depends upon a future and uncertain event, upon which the obligation either arises or is extinguished. If the condition is suspensive, it has the effect of suspending the enforceability of the obligation until the occurrence of that event upon which it depends.”

 

– The DCC held that the suspensive condition in the SPA has the effect of suspending “the enforceability of the plaintiffs’ obligation to pay the balance of the price until the occurrence of the event upon which it depends, namely the developer’s handover of the unit to the seller. The obligation to pay the balance of the price is deemed to exist during the suspension period but remains unenforceable, as it becomes operative only upon the occurrence of the condition.”

 

Liability of Manager

 

– The buyer sought to hold the seller’s manager personally liable on the basis of fraudulent conduct. The court upheld the buyer’s claim, finding that the manager had acted fraudulently by:

 

– depositing the buyer’s funds into his personal account,

 

– cancelling the seller entity’s trade license and concealing its liquidation during the court proceedings, and

 

– selling the property to a third party.

 

 

– The DCC confirmed that managers of an LLC are not personally liable for the company’s debts, except where fraudulent conduct, deceit, or bad faith is established. On the facts of this case, the DCC found that the manager had acted fraudulently and accordingly upheld the finding of personal liability.

 

Key Takeaways

 

– Suspensive conditions: This case illustrates the Dubai Courts’ approach to the interpretation of conditional contracts and obligations, ensuring that where a suspensive condition is not fulfilled, contracting parties are restored to their original positions. Where a contract is tied to a future event (e.g., project handover), and the event does not occur within the contractual deadline, the contract terminates automatically and any payments made must be returned.

 

– Manager liability: The judgment underscores the courts’ readiness to hold managers personally liable where fraud or misconduct is established. The DCC reaffirmed that, in exceptional cases, company managers can be held personally liable if they act dishonestly or misuse their position. ■

Legal Inclusivity in the UAE: Examining Abu Dhabi’s Civil Marriage Law and Jurisdictional Evolution

The United Arab Emirates (“UAE”), known for its openness and diversity, is home to a population that includes a wide range of nationalities and cultures. In recognition of this demographic reality, the UAE has shown a clear commitment to ensuring that its legal framework reflects inclusivity and safeguards the rights of all residents, regardless of nationality or religion. A notable example of this approach is the enactment of Law No. 14 of 2021 Regarding Civil Marriage and Its Effects (as amended) in the Emirate of Abu Dhabi (“CMEAD”).

 

This law represents a significant shift in the regulation of personal status matters, particularly for non-Muslim residents, and positions the UAE as a legal pioneer within GCC and the Arab world. The CMEAD adopts a progressive stance on civil marriage, divorce, and succession issues, setting a new standard in family law legislation. This inBrief examines the core objectives of the CMEAD, analyses the impact of its amendments on jurisdictional scope, and highlights selected judicial applications that reflect its evolving interpretation.

 

Core Objectives of the CMEAD

 

The CMEAD was enacted with several strategic aims:

 

> To establish a modern judicial framework for adjudicating personal status disputes involving foreigners.

 

> To position Abu Dhabi as a regional legal innovator, being among the first jurisdictions in the Arab world to adopt civil legislation regulating family matters in line with international best practices.

 

> To provide culturally and linguistically accessible procedures, allowing individuals to engage with a legal system aligned with their backgrounds and expectations.

 

> To promote the best interests of children, especially in divorce proceedings, by emphasizing shared parental responsibility and equal treatment.

 

These objectives are particularly significant given the prior legal landscape, where foreigners were typically subject to the Muslim personal status law unless they proactively requested the application of their national law – a burdensome process involving translations, legalizations, and complex procedures. The CMEAD thus offers a practical, accessible, and inclusive alternative not only for non-Muslim residents but potentially for Muslim residents as well, as discussed below.

 

Expanding the Scope: Amendments to the CMEAD

 

While legislative amendments often arise in response to implementation challenges, the CMEAD underwent substantial revisions prior to its effective date, reflecting a proactive legislative vision.

 

One of the key amendments involved renaming the legislation from the “Law on Personal Status for Non-Muslim Foreigners” to the more inclusive “Law on Civil Marriage and Its Effects.” Furthermore, references to “non-Muslim foreigners” were replaced by the term “persons addressed by the provisions of this law,” defined to include “citizens or foreigners, non-Muslim, male or female.” This expanded language suggests an intentional broadening of the law’s applicability.

 

The 2022 Executive Regulations provide further clarity. Article 5 outlines the categories of persons covered by the CMEAD, which include:

 

> Non-Muslim citizens;

 

> Foreigners whose home countries do not primarily apply Islamic Sharia in personal status matters;

 

> Special cases determined by administrative decision.

 

This amendment indicates that the CMEAD is no longer limited to non-Muslim foreigners but may also extend to Muslim foreigners from countries where Sharia is not the dominant legal framework for personal status. This distinguishes it from Federal Law No. 41 of 2022 on Civil Personal Status, which remains limited to non-Muslims and applies across other Emirates.

 

Judicial Application of the CMEAD

 

The practical application of the CMEAD has been shaped significantly by judicial interpretation, with Abu Dhabi courts demonstrating flexibility and a commitment to the inclusive spirit of the law.

 

One notable area of application is wills and succession. Courts have confirmed that both non-Muslim citizens and foreigners from non-Sharia-based jurisdictions may freely dispose of their estates under the CMEAD, provided the will is valid and officially registered. Where no Will exists, and no heir requests the application of a foreign law, the default CMEAD rules apply. These include:

 

> Equal division of the estate among heirs, regardless of gender;

 

> The surviving spouse receives half of the estate;

 

> The remaining half is divided equally among children;

 

> In the absence of children, the estate passes equally to parents, or to siblings if the parents are deceased.

 

Additionally, the courts have acknowledged the right of Muslim foreigners, in certain cases, to opt into the CMEAD’s provisions, including in the drafting of Wills and adjudication of family law matters. This represents a significant step away from a rigid application of Sharia-based inheritance rules and underscores the judiciary’s role in supporting legislative reform.

 

Conclusion

 

The CMEAD reflects the UAE’s broader commitment to building a legal system that embraces diversity and protects individual rights irrespective of nationality or religion. Through its inclusive objectives, broadened jurisdictional scope, and progressive judicial interpretation, the law marks a transformative shift in the regulation of family matters.

 

By providing a civil legal framework that is accessible, culturally sensitive, and internationally aligned, the CMEAD positions Abu Dhabi – and the UAE more broadly – as a leader in legal modernization within the region. It stands as a model for how jurisdictions can reform family law to reflect the realities of globalized, multicultural societies while maintaining legal clarity and social cohesion. ■

DIFC Courts awards rare ‘additional damages’ for the loss suffered due to the defendant’s failure to pay

The DIFC Court, in an immediate judgment issued on 11 July 2025 by Justice Sir Jeremy Cooke in 7Ci Technologies V Liberty Steel Group Holdings EMEA Ltd [2025] DIFC CFI 003, granted the claimant ‘additional damages’ for non-payment, in addition to statutory interest on the basis that the foreseeability standard was met, and that the non-payment caused a greater loss. The general remedy for non-payment, as set out in Articles 17(1) and (2) of the DIFC Law of Damages[1], is for the aggrieved party to be awarded interest at the average bank short-term lending rate available to prime borrowers:

 

Article 17 Interest for failure to pay Money

 

(1) If a party does not pay a sum of Money when it due, the aggrieved party is entitled to interest upon that sum from the time when payment is due to the time of payment, whether or not the nonpayment is excused.

 

(2) The rate of interest shall be the average bank short-term lending rate to prime borrowers prevailing for the currency of payment at the place for of payment.

 

However, Article 17(3) also allows the aggrieved party to be awarded “additional damages if the non-payment caused it a greater loss”, subject to the foreseeability standard of Article 12 of the same law. Article 12 codifies the English law test of foreseeability, as set out in Hadley v Baxendale [1854] EWHC Exch J70:

 

Article 12:

 

The non-performing party is liable only for loss which it foresaw or could reasonably have foreseen at the time of its non-performance as being likely to result therefrom.

 

In a rare instance, the DIFC Courts awarded the claimant additional damages under Article 17(3) for losses arising purely from non-payment of money.

 

HE Justice Sir Jeremy Cooke held that the Claimant in this case demonstrated that the additional damages it suffered, in the form of legal costs incurred as a result of a claim brought by a third-party supplier, were reasonable and foreseeable, and therefore payable by the Defendant:

 

[17]. An examination of the evidence and the exchanges between the parties shows that the Defendant was well aware of the Claimant’s liquidity difficulties and the need for it to pay the Sentinel providers with funds provided by the Defendant. The Claimant, as revealed by the WhatsApp messages, made its position clear and the fear that the absence of payment by the Defendant might cause the Claimant itself to go into insolvency. Its inability to borrow funds and to pay the supplier, and the risk of suit by the supplier, was clearly foreseeable by the Defendant. […]. I conclude that the requirement of foreseeability is met in respect of the costs incurred in settling the supplier’s claim and that, therefore, in addition to interest payable on the sums due, the sum of [legal costs] is recoverable as damages in respect of those legal costs.

 

This case demonstrates the DIFC Courts’ willingness to uphold contractual terms between parties and to ensure that an aggrieved party is put in the same position as it would have been if not for a breach of those terms.

 

Afridi & Angell acted for the successful claimant and instructed Mark Rainsford KC for the hearing. ■

 

[1] DIFC law 7 of 2005.

UAE Increases Regulation of Influencers and Finfluencers: New Rules for Violations and Penalties of Media Content

The influencer and digital content creation industry has witnessed significant growth in the UAE, prompting the introduction of new regulations by UAE authorities. A key piece of legislation in this space is the Media Law (Federal Decree-Law 55/2023), which came into force on 1 December 2023, and its implementing regulations (Cabinet Resolution 68 of 2024), which expand the legal framework beyond traditional media to include content creators, influencers, advertising agencies, and digital platforms. To supplement the Media Law, two new regulations have been issued recently: (i) Cabinet Decision 41/2025 updating the fee structure for media services; and (ii) Cabinet Decision 42/2025 establishing the list of violations and penalties for breaches of the Media Law, both of which came into effect on 29 May 2025.

 

This represents a wider move by the regulators to push for structure and accountability across digital content creation platforms, including the recent regulation of “finfluencers” (i.e., financial influencers) by the Securities and Commodities Authority (SCA) under Decision 10/RM/2025.

 

This inBrief focuses on media content violations and penalties, and the regulation of “finfluencers.”

 

Media Content Violations and Penalties under Cabinet Decision 42 of 2025

 

Notably, this decision applies not only to content creators based in the UAE but to all individuals and entities engaged in media activities across both mainland UAE and its free zones. This includes content creators on social media platforms, influencers, and advertisers. The decision outlines the violations of the Media Law and corresponding penalties across two schedules:

 

1. Schedule 1 targets violations related to the licensing of media activities. For example, advertising without a permit, providing false or misleading information to obtain a license or permit, and violating the conditions of advertising content through social media platforms. Penalties for violations under Schedule 1 range from written warnings to fines up to AED 100,000, with higher penalties applicable for repeat offences.

 

2. Schedule 2 targets a wider list of violations of the “media content standards.” Those violations are classified into three categories and are ranked by severity from first to fourth degree.

 

(i) Category (a): covers eight violations with penalties ranging from AED 30,000 to AED 1,000,000, which include:

 

– disrespecting God, Islam or other religions, the UAE’s regime, its institutions and policies;

 

– publishing content that may harm the foreign relations of the UAE;

 

– publishing content that offends the UAE’s national unity, including the UAE’s legal, economic and judiciary systems; and

 

– inciting sectarian or regional strife, violence, hatred and terrorist acts, or spreading discord and animosity within society.

 

(ii) Category (b): covers five violations with penalties ranging from AED 20,000 to AED 150,000, which includes, among others:

 

– disrespecting the UAE’s culture and heritage, offending community values, or infringing on the privacy and private life of individuals;

 

– publishing content that incites the commission of crimes, including rape, murder, and use of narcotic drugs; and

 

– publishing content that offends the UAE’s national currency or economic status.

 

(iii) Category (c): covers seven violations with penalties ranging from AED 5,000 to AED 100,000, including:

 

– broadcasting, publishing or sharing fake news or rumours, or content/opinions that breach public morals, corrupt the morals of the youth or promote destructive thoughts;

 

– failing to host appropriate individuals for interviews in media outlets;

 

– disrespecting the UAE’s culture, identity or values in advertisements; and

 

– failing to adhere to the age classification requirements for artistic works, and respect children’s rights under UAE legislation.

 

New Committee for Content Oversight

 

A permanent ‘Committee for the Violations of the Media Content Standards’ (the Committee) has been established under the UAE Media Council to oversee and assess violations and penalties. The Committee is responsible for identifying violations of media content standards within the UAE and for enforcing the administrative penalties. Content creators, influencers, or advertisers will be formally notified by the Committee of any violation, and will be given a timeframe to modify or remove the offending content.

 

For violations listed in Schedule 2, the Committee will take into account the impact of the violation when determining the severity of the penalty. A mechanism is available to contest the penalties imposed by the Committee, which may be filed with the UAE Media Council or the competent authority (i.e., local government entity concerned with the licensing of media activities).

 

Regulation of Finfluencers under the SCA Decision 10/RM/2025 (SCA Decision)

 

In parallel, the SCA issued a decision for the regulation of finfluencers’ activities, which came into effect on 21 May 2025. The regulations mandate that finfluencers must register with the SCA before advertising for or conducting any of the financial activities which are covered by the regulations, subject to the conditions outlined under Article 3, which include, among others: to be an independent financial analyst accredited by the SCA, or to hold a CFA certificate and to be an influencer among market traders subject to a specific criterion set out under Article 3(2). Engaging in activities that fall within the scope of the regulations without registration may result in fines or blacklisting by the SCA.

 

The regulations apply to any person registered with the SCA in mainland UAE who provides a financial recommendation to the public, related to domestic or foreign issuers[1], financial products, virtual assets, or financial services inside or outside the UAE. The regulations also apply to issuers and entities licensed by the SCA if they enter into a contract with a finfluencer.

 

In addition to obtaining registration with the SCA, finfluencers’ obligations include disclosure of financial interests and paid partnerships, avoiding misleading or biased content, and distinguishing between facts, opinions, and promotional material. Issuers of financial products and licensed entities are also under an obligation to vet any such content before publication by a finfluencer. The regulations do not apply to the publication of information previously approved by the SCA or persons providing financial recommendations within a UAE financial free zone.

 

Why this matters to content creators, influencers and finfluencers?

 

The message is clear. The UAE expects greater professionalism and accountability from digital content creators as well as finfluencers. These recent changes not only broaden the applicability of the regulations to include digital platforms, social media content creation, and advertising agencies, but also impose strict guidelines and penalties for non-compliance. Influencers, finfluencers, marketing and advertisement teams and digital platforms should seek legal guidance regarding their exposure to liability under the newly implemented regulations. With regulators monitoring and overseeing what is said and how it is said, compliance with applicable regulations is the strongest safeguard. ■

 

[1] Article 1 of the SCA Decision, defines an ‘Issuer’ as “a legal person established inside or outside the State, or within a financial free zone in the State, that offers, issues, or lists financial products within the State or on the market.”

Building a Mediation Culture in the UAE: Key Legal Reforms

The UAE continued its efforts to promote mediation as a form of dispute resolution through Cabinet Decision No. 56 of 2025, which regulates the establishment of private mediation centres and branches of foreign mediation institutions in the UAE. This follows the enactment of Federal Decree Law No. 40 of 2023, the UAE’s first standalone legislation on mediation and conciliation in civil and commercial disputes, and the UAE’s accession to the United Nations Convention on International Settlement Agreements Resulting from Mediation (the Singapore Convention on Mediation) in May 2024.

 

The Law

 

Federal Decree Law No. 40 of 2023:

 

– applies to civil and commercial disputes, unless excluded by law;

 

– does not apply within the UAE’s financial free zones (the DIFC and the ADGM), unless a mediator or mediation centre based in the financial free zone is mediating a dispute that relates to the UAE mainland;

 

– allows for mediation to deal with the subject matter of the dispute as a whole or a part thereof;

 

– allows for mediation to be either voluntary (by agreement) or court-directed during litigation;

 

– encourages frank discourse and good faith attempts at settlement by ensuring that the statements, proposals, admissions, documents, and information disclosed or exchanged during the mediation process are strictly confidential and cannot be disclosed in any subsequent contested proceedings, except in limited circumstances; and

 

– provides that settlement agreements reached through mediation, once ratified by a court, are enforceable as judgments of the court.

 

Criminal, labour, rental, and personal status disputes, urgent or interim orders and matters of public order cannot be the subject of mediation conducted under the mediation and conciliation centres established under the law. However, it preserves the parties’ right to seek urgent or interim judicial relief from the competent court.

 

The Cabinet Decision

 

Cabinet Decision No. 56 of 2025 regulates the licensing of private mediation centres and branches of foreign mediation centres in the UAE, but does not apply to private mediation centres and foreign branches that are licensed to operate in the financial free zones, unless they conduct their activities outside the financial free zone. Key requirements for licensing include:

 

– obtaining prior approval from a committee within the Ministry of Justice or local judicial authority;

 

– obtaining a license from the Competent Authority in each Emirate;

 

– establishing an independent office with adequate IT systems and insurance cover;

 

– appointing a qualified Director with legal or mediation experience; and

 

– maintaining both a public register of mediators and an internal electronic register.

 

Additionally, a foreign mediation centre wishing to establish a branch in the UAE must also provide proof that it has provided mediation services for at least five years at the time of submitting the application to open a branch in the UAE.

 

Why it matters to businesses

 

Mediation is increasingly recognised as an effective means of dispute resolution, not only due to its cost-efficiency, but also in terms of preserving relationships between commercial parties, which often deteriorate in the course of contentious litigation or arbitration proceedings. Until recently, the absence of a legal framework supporting mediation deterred certain parties from opting for mediation, particularly due to the lack of legal safeguards regarding confidentiality of information submitted in the course of mediation and its use in subsequent legal proceedings, should mediation fail. Following the legislative developments set out above, the UAE now has a robust legal framework for mediation, and with the Cabinet Decision clarifying the requirements to establish mediation centres (and branches of foreign mediation centres) in the UAE, one hopes that parties will soon have access to experienced mediators in the UAE.

 

However, it is important for parties to bear in mind that mediation is not appropriate for the resolution of all disputes, and contracts providing for alternative dispute resolution mechanisms such as mediation must be carefully drafted. For example, mandatory mediation may not be effective where the relationship between the parties has irretrievably eroded, and having a provision for mandatory mediation may only serve to delay the parties in getting to a final resolution of their dispute. Provision for optional mediation (bearing in mind that parties may voluntarily agree to mediation during the course of most adversarial proceedings), on balance, appears to be a better approach. ■

Reform of Dispute Settlement in Dubai: Decision No. (4) of 2025 on the Jurisdiction of the Centre for Amicable Settlement of Disputes

Advancing Dispute Resolution in Dubai: Strengthening ADR for a More
Inclusive Legal Future:

 

Alternative Dispute Resolution (“ADR”) has become a cornerstone of
modern legal systems, offering faster, more cost-effective, and flexible
pathways for resolving disputes outside traditional court structures. In
keeping with this global trend, Dubai established the Centre for Amicable
Settlement of Disputes (the “Centre”) under Law No. 16 of 2009, aiming to
promote consensual dispute resolution and reduce the burden on the
judiciary.

 

Reflecting the rising significance of ADR and a continued drive for
procedural reform, the President of Dubai Courts issued Decision No. (4) of
2025 (the “Decision”), published on 26 March 2025. This Decision repeals
and replaces Decision No. (8) of 2022 and introduces a more refined
jurisdictional framework for the Centre. It also signals a broader legislative
intent to promote social justice by enhancing access to dispute resolution
mechanisms for people of determination, senior citizens, and economically
vulnerable groups.

 

This inBrief outlines the main features of Decision No. (4) of 2025, with
particular focus on the jurisdictional reallocation of estate-related property
disputes, the harmonisation of legal terminology across related legislative
instruments, the introduction of new restrictions on expert appointment
applications prior to litigation, the enhancement of procedural safeguards
for vulnerable groups, and the implications of limiting party autonomy in
selecting alternative dispute resolution pathways.

 

Key Highlights of Decision No. (4) of 2025

 

1. Jurisdictional Shift in Estate-Related Property Disputes

 

A major development under the Decision is the removal of the Centre’s
jurisdiction over estate-related property disputes. Specifically, Article 1(1)
excludes disputes involving the subdivision of co-owned undivided property
where such issues are tied to estate matters. This adjustment aligns with
Decree No. (25) of 2023, which established the Probate Court and granted it
exclusive authority over estate-related claims, including those concerning
co-owned property.

 

This jurisdictional transfer consolidates estate litigation within a specialised
forum that is better equipped to handle the sensitive nature of family and inheritance disputes. The Probate Court’s innovative procedural tools and
focused mandate are intended to preserve familial harmony while resolving
complex legal issues efficiently.

 

2. Harmonisation of Legal Terminology

 

The Decision reaffirms the Centre’s authority to ratify conciliation
agreements, regardless of the claim’s value—a principle retained from the
previous 2022 Decision. However, the language has been updated to reflect
terminology used in Law No. (18) of 2021 Regulating Conciliation in the
Emirate of Dubai. This alignment promotes greater legal consistency and
clarity, particularly in defining a “Conciliation Agreement” as one reached
under the guidance of a Conciliator following the procedures laid out by
law.

 

This terminological harmonisation ensures coherence across legislative
instruments, facilitating smoother legal interpretation and application.

 

3. Narrowing the Scope of Expert Appointment Applications

 

The Decision introduces clearer conditions for the Centre’s jurisdiction over
expert appointment requests prior to litigation. Now, such applications are
only accepted if:

 

– The dispute falls within the jurisdiction of Dubai Courts

– The matter is not already pending before a court

– The issue has not been previously adjudicated

 

These restrictions are a departure from the broader scope under the 2022
Decision, which permitted expert appointments without such limitations.
The Centre previously rejected jurisdictional objections, such as those
based on arbitration clauses, on the grounds that applications for the
appointment of an expert do not constitute formal substantive claims. As
such, these applications were considered not to affect jurisdictional
objections, which could instead be raised once a substantive case was
formally filed before the court.

 

Based on the Decision, the Centre can no longer entertain expert requests
for disputes subject to arbitration clauses or those already before the
courts. While the goal is to streamline case flow and eliminate duplication,
this change may limit access to neutral, pre-litigation expert assessments—
often crucial for parties seeking early clarity. We will have to wait and see
how the Centre will practically address this situation in order to have a
definitive answer.

 

4. Expanded Jurisdiction to Protect Vulnerable Groups

 

The Decision expands the Centre’s jurisdiction to include specific categories
of vulnerable individuals. These include disputes involving Emirati citizens
aged 60 and above, provided the claim value does not exceed AED 1,000,000;
cases where one of the parties is a person with a disability; and matters
involving female beneficiaries of financial assistance under Law No. (7) of
2012.

 

These reforms signal a clear legislative intent to enhance access to justice
for communities that may face legal and procedural barriers. By explicitly
prioritising the needs of the elderly, people of determination, and
economically disadvantaged women, the law promotes inclusivity, fairness,
and social equity in legal processes.

 

5. Restriction of Party Autonomy in Referring Disputes

 

One of the more notable changes in the 2025 Decision is the removal of the parties’ ability to jointly refer disputes to the Centre, even if the dispute fell outside its formal jurisdiction. This flexibility, previously allowed under Decision No. (8) of 2022, is no longer available.

 

Now, access to the Centre is limited to cases where a conciliation agreement already exists and is submitted for ratification. While it may be aimed at procedural clarity, it restricts parties’ autonomy to voluntarily opt for ADR through the Centre, potentially narrowing the avenues for early dispute resolution.

 

Conclusion

 

Decision No. (4) of 2025 reflects Dubai’s continued efforts to modernise and strengthen its dispute resolution infrastructure. By refining jurisdictional boundaries, unifying legal terminology, and offering increased protections for vulnerable groups, the Emirate demonstrates a forward-looking commitment to justice that is both efficient and inclusive.

 

While some changes, such as restrictions on expert appointments and the removal of mutual referral flexibility, may limit certain procedural options, they also aim to streamline access to the appropriate forums and promote clarity in ADR processes. Overall, the Decision signifies a new chapter in the evolution of ADR in Dubai, reinforcing the Emirate’s role as a progressive legal hub in the region. ■

Arbitration (UAE chapter), Lexology Panoramic

This Q&A provides a multi-jurisdictional in-depth understanding of Arbitration. This particular chapter explores the UAE process and challenges faced when considering Arbitration as a course of action. The chapter covers a broad spectrum of truths, a sample of topics covered are as follows; laws and institutions, arbitral proceedings, jurisdiction and competence of arbitral tribunal, interim measures and sanctioning powers and updates and trends.