Why Commercial Contracts in the UAE Are Different
UAE contracts differ from most markets in the coexistence of systems. Onshore, the Civil Transactions Law (Federal Decree-Law No. 25 of 2025, which replaced the 1985 law in 2026) and the Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) govern formation, performance, and remedies under civil-law principles, and the onshore courts work in Arabic. Inside the DIFC and ADGM, contracts are governed by those centers’ own laws, which follow the common-law tradition, and their courts apply them in English. A contract can choose which system it lives under, and the choice determines what the same words mean.
Several onshore rules surprise common-law drafters. Agreed damages clauses are enforceable, but the court may adjust the agreed amount in light of the loss actually suffered; limitation and exclusion clauses operate within limits set by the law; the court may rebalance an obligation that exceptional, unforeseeable circumstances have made excessively onerous; and limitation periods vary by type of claim. Templates drafted for another legal system need to be checked against these rules before they are used.
Formality matters. Certain transactions and documents — share transfers in mainland companies, real estate transactions, and many powers of attorney — require notarization or registration; documents used before the onshore courts and authorities must be in Arabic or accompanied by a certified Arabic translation. Where a contract exists in both Arabic and English, the parties should say which text prevails — and keep in mind that the onshore courts will work from the Arabic.
Finally, the Commercial Agencies Law (Federal Law No. 3 of 2022) gives statutory protection to agencies registered with the Ministry of Economy and Tourism, including rules on exclusivity, termination, and compensation that the parties cannot simply contract out of. An unregistered distribution agreement is an ordinary contract; a registered agency is a regulated relationship. Knowing which one is being signed is the first drafting decision in any UAE distribution deal.
Contract Drafting in the UAE
Contract drafting in the UAE begins with the system: onshore law with the onshore courts or arbitration, or DIFC or ADGM law with their courts — and with the counterparty’s own regime, since a DIFC or ADGM company sits in a different system from a mainland or ordinary free-zone company. This applies to supply agreements, distribution contracts, joint-venture agreements, licensing agreements, NDAs, and service agreements alike, though the practical risks vary by type.
Common drafting pitfalls include importing foreign templates whose penalty, exclusion, and termination clauses do not operate onshore as written; unclear identification of the contracting entity (license name versus trade name, free-zone entity versus mainland affiliate); signatory authority not verified against the license and any power of attorney; and inadequate handling of the Arabic version. Legal review before signing is the most cost-effective way to avoid performance failures and enforcement disputes.
Contract Review & Risk Analysis in the UAE
Contract review in the UAE focuses on risk categories that recur in commercial transactions:
- Dispute resolution clauses — The choice among the onshore courts, the DIFC or ADGM courts, and arbitration decides enforceability, language, and interim relief. An arbitration agreement should be signed by a person with authority to agree to arbitration on the company’s behalf, or it may be challenged. A defective clause is one of the most common reasons contracts fail at enforcement.
- Governing law clauses — A choice of foreign law is not always given full effect by the onshore courts, particularly on matters such as real estate, registered agencies, and public policy; the DIFC and ADGM courts generally apply the law the parties have chosen. The clause should match the forum.
- IP and confidentiality clauses — Confidentiality obligations are enforceable on contractual terms; IP ownership and license provisions should be drafted against the UAE’s trademark, industrial-property, and copyright laws, and registered rights should be identified by their UAE registrations.
- Force majeure and liability limitation — The Civil Transactions Law deals with impossibility of performance and with exceptional circumstances that make performance excessively onerous, and a contractual force majeure clause should be drafted with those rules in mind. Liability caps are widely used, but they operate within limits set by the law, and agreed damages may be adjusted by the court.
Contract Compliance & Enforcement in the UAE
Contract enforcement in the UAE occurs through the onshore courts, the DIFC or ADGM courts, or arbitration.
- Onshore judgments are enforced through the execution judge
- DIFC and ADGM judgments can be enforced onshore through established mechanisms
- arbitral awards are ratified and enforced under the Federal Arbitration Law and, for foreign awards, the New York Convention.
A cheque returned for insufficient funds can be enforced directly as an execution instrument, which has made cheques a common form of contractual security.
Contracts often embed ongoing compliance obligations — data protection under the federal Personal Data Protection Law or the DIFC and ADGM regimes, the VAT and corporate tax treatment of the transaction, sanctions and AML representations, and, for goods, customs and conformity requirements. Monitoring these during performance is essential to avoid disputes.
Negotiation Dynamics in the UAE
Negotiation with UAE counterparties often follows patterns that can be anticipated in drafting. Relationship-driven dealing is common, and verbal understandings may not survive in the final document; term sheets may be revisited at the drafting stage; and personal guarantees and post-dated cheques are frequently requested as security. The effective response is disciplined drafting that locks commitments into the contract, separates negotiable from non-negotiable terms, and confirms signatories and execution mechanics — including who will attend the notary where notarization is required.
Sector-Specific Contract Considerations
Contract drafting in the UAE varies by sector.
- Manufacturing and supply-chain agreements — require clear specifications, quality standards, inspection rights, Incoterms aligned with free-zone or mainland delivery, and a clear allocation of customs responsibilities.
- Technology and IP agreements — must address licensing, software, IP ownership, and data handling under the applicable data protection regime, with attention to the onshore rules on the assignment and recordal of registered rights.
- Distribution and consumer-facing contracts — must take into account the Commercial Agencies Law, the Competition Law’s rules on restrictive agreements, and consumer protection legislation.
- Real estate and infrastructure contracts — require attention to lease and title registration, mandatory provisions of UAE law, and municipal and free-zone approvals.
Our Role as Commercial Contracts Law Firm in the UAE
As a commercial contracts law firm in the UAE, with a Dubai office, D’Andrea & Partners works with foreign companies on contracts that must operate effectively in the UAE. Our Dubai team handles drafting, review, and execution across the onshore, DIFC, and ADGM systems, working with licensed UAE advocates and certified translators where notarization or onshore proceedings require them, while our offices across Europe, Asia, and Africa coordinate cross-border, parent-company, and counterparty-jurisdiction issues.
Our contract services are integrated with our compliance, IP, and dispute-resolution work, so that agreements are built to be enforceable from signing through performance. For most clients, this means support from drafting, through performance, to enforcement from a single, coordinated team.
