UAE Introduces Major Civil Law Overhaul Affecting Contracts and Property

Abu Dhabi, UAE: The United Arab Emirates has issued a Federal Decree Law promulgating a new Civil Transactions Law, establishing a comprehensive and integrated legal framework designed to modernise the regulation of civil relations across the country.

The legislation marks a pivotal milestone in the UAE’s legal evolution, introducing a balanced and contemporary approach that reorganises the general foundations of rights and obligations while enhancing legal clarity and facilitating practical application.

A modernised and unified legislative framework

The new Civil Transactions Law forms part of an ongoing national legislative trajectory aimed at modernising the UAE’s legal system. It adopts a practical methodology that simplifies the understanding of legal provisions, unifies legal references, and removes duplication with recently enacted special laws.

By streamlining legislative content and consolidating applicable rules, the law enhances efficiency, reduces procedural complexity, and contributes to a more coherent and harmonious legislative environment. This approach supports the federal government’s broader development agenda, which is firmly grounded in the rule of law.

Expanded judicial discretion and Sharia principles

From a judicial perspective, the law broadens the scope of judicial reasoning by granting courts greater discretion to refer to the principles of Islamic Sharia where no applicable legislative provision exists. In such cases, judges may select the solution that best achieves justice and public interest based on the circumstances of each case, without being bound by a specific school of jurisprudence or a single Sharia doctrine.

This framework strengthens the judiciary’s ability to respond to evolving societal needs and the changing nature of modern transactions. The law also provides for the application of Sharia principles in the absence of special legislation governing matters related to persons of unknown parentage, missing persons, and absentees.

Legislative integration and federal-local harmony

Substantive amendments introduced under the Decree Law aim to reinforce legislative integration and coherence between general legal principles and specialised regulatory frameworks. The comprehensive review process took into account practical challenges faced by the judiciary, while respecting the competencies of local authorities in regulating specific matters, issuing licences, and supervising activities within their respective jurisdictions.

The law affirms the continued applicability of local legislation within each emirate’s authority, preserving the unity and integrity of the federal legislative framework and ensuring effective harmonisation between federal and local roles.

Read more: Dubai Issues New Law to Regulate Public Land Allocation

Property rights, assignments, and legal protections

To prevent duplication, provisions overlapping with other legislation were removed. In relation to proprietary rights, the law reorganises rules governing usufructuary construction rights, requiring registration of contracts with the competent authority and providing for nullity in the absence of registration. It also clarifies the obligations of right holders and allows parties to determine the duration of such rights.

The law further provides that financial assets located in the UAE belonging to a foreigner with no heirs shall be designated as a charitable endowment, subject to supervision by the competent authority to ensure proper management and allocation.

A new framework governing assignment has also been introduced, including the assignment of rights, alongside enhanced provisions protecting possession through preventive actions aimed at stopping new acts of encroachment before damage occurs.

Capacity, age of majority, and personal protection

The legislation adopts clearer legal concepts aligned with contemporary transactional realities, reinforcing individual legal capacity and safeguarding free will in legal acts and contracts. A key reform reduces the age of majority from twenty one lunar years to eighteen Gregorian years, aligning with prevailing comparative legal systems and ensuring consistency with national legislation such as juvenile and labour laws.

In support of youth participation in economic activity, the law lowers the age at which a minor may seek judicial authorisation to manage their assets from eighteen Hijri years to fifteen Gregorian years. It also introduces provisions addressing persons who require assistance due to incapacity to express their will, enabling courts to appoint a judicial assistant to support such individuals in acts serving their best interests.

Read more: Dubai Ruling: Buyers Must Pay Service Fees Before Taking Possession

Contractual reforms and enhanced legal certainty

The new Civil Transactions Law establishes an advanced framework governing pre-contractual negotiations, imposing an obligation to disclose fundamental information to ensure informed contractual decision-making. It also introduces the concept of a framework agreement to regulate recurring or long-term contractual relationships by predefining essential terms, reducing time and cost, and providing legal certainty for subsequent contracts.

Regarding contractual capacity, financial acts of a discerning minor involving both benefit and detriment are deemed voidable in the minor’s interest rather than suspended, granting guardians and minors defined rights to seek annulment within specified timeframes.

The law further permits the combination of blood money or assessed compensation with additional damages where death or injury results in material or moral harm not fully covered by such compensation, affirming the principle of full reparation.

Sales, corporate structures, and professional activity

Updated provisions governing sale contracts introduce clearer regulation of sale by sample and by model, enhanced protection for persons lacking full capacity in cases of gross inadequacy in real estate sales, and strengthened rules addressing latent defects. Buyers are granted expanded options, including rejection, acceptance with price reduction, or replacement, with the limitation period for latent defect claims extended from six months to one year from delivery unless otherwise agreed.

Corporate provisions have been modernised to align civil law with commercial legislation, distinguishing between civil and commercial companies, permitting single-person companies, regulating partner withdrawal and company continuation, and updating liquidation procedures. A dedicated legal framework for nonprofit companies has also been introduced, requiring reinvestment of profits into their objectives to support sustainable development.

The law further establishes a modern regime for professional companies, regulates ownership and liability, and introduces independent regulation of mudaraba contracts outside the scope of company law.

A forward-looking legislative milestone

Provisions governing contracts of works, insurance, takaful, and guarantees were refined to clarify responsibilities, address unforeseen circumstances, protect guarantors, and ensure equitable enforcement. Taken together, the new Civil Transactions Law reflects a modern legislative approach that balances legal authenticity with contemporary needs, reinforces legal certainty and trust, supports individuals and institutions, and contributes to the long-term sustainability of economic and social development in the UAE.