Most business disputes in the UAE start with a contract: a supply deal that goes wrong, an agent who is terminated, or an invoice that is never paid. The UAE has modernised its commercial and civil codes in the past few years. Contracts drafted under the old rules should be reviewed.
The key laws
- The Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) replaced the 1993 code. It defines who is a merchant, what counts as a commercial activity (now including virtual assets and digital services), and the rules for commercial papers such as cheques and bills of exchange.
- The Civil Transactions Law (Federal Decree-Law No. 25 of 2025) sets the general rules for forming, performing and ending contracts, and for compensation when they are breached.
- The Commercial Agencies Law (Federal Law No. 3 of 2022) governs registered agency and distribution relationships.
Drafting contracts that hold up
- Choose the governing law. Parties can choose the law that governs their contract. If they don’t, the law generally follows their common domicile or the place of performance. Real estate contracts always follow the law of the property’s location.
- Set out payment terms and remedies clearly. State the price, due dates, late-payment consequences and termination rights. UAE courts look closely at what the parties actually agreed.
- Agree on how disputes are resolved. Choose onshore courts, arbitration, or the DIFC or ADGM courts. A clear clause saves months of argument about jurisdiction.
- Bilingual contracts. Onshore courts work in Arabic. Say which language version prevails, and use a certified legal translation.
Commercial agencies: special protection
A commercial agency registered with the Ministry of Economy gives the agent strong protection:
- Registered agents must generally be UAE nationals or companies wholly owned by UAE nationals. In limited cases the Cabinet can approve a foreign company acting as agent for its own products.
- An agency ends on expiry, by mutual agreement, by court judgment, or by termination under the contract, with proper notice.
- Disputes go first to the Commercial Agencies Committee, which must decide within 120 days. After that, either party has 60 days to go to court, or the parties can refer the dispute to arbitration.
Principals planning to change distributors should take advice early. Getting the process wrong can block imports or lead to compensation claims.
Getting paid: cheques and debt recovery
- A bounced cheque can be enforced directly at the execution court, without filing a full claim. Since 2022, bouncing a cheque for insufficient funds is generally no longer treated as a crime.
- An undisputed written debt can be recovered through a fast-track payment order.
- Courts can order precautionary attachment of a debtor’s assets where there is a real risk they will be moved.
Online trade
Businesses selling online must also comply with UAE rules on e-commerce and consumer protection. These include clear pricing, returns policies and data protection. Website terms and checkout flows deserve the same legal attention as paper contracts.
A quick contract health check
- Does the contract reflect the 2022 Commercial Transactions Law and the 2025 Civil Transactions Law?
- Are governing law and dispute resolution clearly stated?
- Are termination rights and notice periods realistic and lawful?
- If you use agents or distributors, is the relationship registered and does the contract match the registration?
- Do you take security, such as cheques, guarantees or retention of title, for large orders?
How we can help
Our commercial law team drafts and reviews contracts, handles agency and distribution matters, and recovers debts through the courts and arbitration. Contact us to review your agreements or discuss a dispute.
