Agreements & Contracts Disputes in the UAE: What You Need to Know

Introduction

In a fast-growing commercial hub like the United Arab Emirates (UAE), agreements and contracts are the lifeblood of business relationships. From multinational corporations to local startups, everyone relies on clearly defined contractual terms to protect their interests. However, when a dispute arises, it can disrupt operations, strain partnerships, and lead to costly legal battles. In this article, we explore the legal landscape of contract disputes in the UAE and what businesses and individuals should know when facing such challenges.

Understanding Contract Law in the UAE

Contract law in the UAE is governed primarily by Federal Law No. 5 of 1985 (UAE Civil Code). This law outlines the essential elements of a valid contract:

• Mutual consent of the parties

• A lawful and possible subject matter

• A legitimate cause or purpose

• In addition, specific regulations apply to commercial contracts, especially under Federal Law No. 18 of 1993 (Commercial Transactions Law).

  
  

Common Causes of Contract Disputes

Disputes may arise for various reasons, including:

• Breach of contract terms (e.g., late delivery, non-payment)

• Ambiguity or misinterpretation of contract clauses

• Force majeure events (especially after COVID-19)

• Unenforceable terms or lack of proper documentation

• Fraud or misrepresentation

How Contract Disputes Are Resolved in the UAE

The UAE offers several avenues for resolving contract disputes:

1.⁠ ⁠Negotiation & Amicable Settlement

Many disputes are resolved through informal discussions or mediation. This is often the fastest and most cost-effective option.

2.⁠ ⁠Litigation

If settlement fails, parties may turn to the UAE courts. Depending on the case, proceedings may take place in:

• Federal Courts (for disputes in most Emirates)

• Local Judicial Authorities, such as Dubai Courts

• Litigation is conducted in Arabic and requires documents to be legally translated.

3.⁠ ⁠Arbitration

Arbitration is commonly used in high-value commercial contracts, especially those involving international parties. Institutions like:

Dubai International Arbitration Centre (DIAC)

Abu Dhabi Commercial Conciliation and Arbitration Center (ADCCAC)

International Chamber of Commerce (ICC – UAE cases)

offer neutral, efficient alternatives to court litigation.

Key Considerations for Businesses and Individuals

Always have contracts reviewed by a qualified UAE legal advisor, especially if you are a foreign investor or working under a free zone jurisdiction.

Ensure all agreements are clearly written, with dispute resolution clauses included.

Keep detailed records of all correspondence and transactions, as they may be critical in the event of a dispute.

Time limits apply: UAE law imposes statutes of limitation for filing claims (typically 15 years for civil matters, shorter for commercial disputes).

Final Thoughts

Contractual disputes can be stressful and financially damaging, but with the right legal support, they can be navigated effectively. Whether you are seeking to enforce your rights, recover damages, or protect your business reputation, a clear understanding of UAE contract law and a proactive legal strategy are essential.

If you are currently facing a contract dispute or need assistance drafting or reviewing an agreement, do not hesitate to seek expert legal counsel.

About the Author

Nada Elabasy, lawyer based in Dubai, I assist businesses and individuals in resolving contractual disputes in the United Arab Emirates. I make it a point of honor to defend your interests with rigor, transparency, and efficiency.