The UAE has introduced a new Federal Decree-Law amending the long-standing Civil Transactions Law originally enacted under Federal Law No. 5 of 1985. The amendments constitute a structural refinement of the civil law framework, responding to the expansion of specialist legislation and the increasing sophistication of commercial and private transactions in the UAE.
At its core, the reform seeks to streamline civil law provisions, reduce overlap with sector-specific laws, and provide clearer guidance on issues that have traditionally generated interpretative uncertainty before the courts.
Introduction of a Pre-Contractual Framework
One of the most consequential changes lies at the pre-contractual stage. For the first time, the law articulates an express obligation on negotiating parties to disclose essential information necessary for informed and conscious consent. This marks a shift away from a purely formal understanding of agreement and reinforces the principle that contractual autonomy must be grounded in transparency and good faith from the outset.
Provisions Governing Framework Agreements
The law also recognises the concept of framework agreements. These are intended to govern ongoing or repeat transactions by setting out core terms in advance, leaving operational details to be agreed at a later stage. From a practical perspective, this development supports efficiency, reduces renegotiation risk, and offers a stable contractual foundation for long-term commercial relationships.
Revised Regulatory Regime Governing Contracts of Sale
The reforms further modernise the rules governing sale agreements. More precise guidance is now provided for transactions based on samples or models, reducing uncertainty in assessing conformity and contractual compliance.
Judicial Interpretation and Islamic Sharia
From the standpoint of judicial interpretation, the amendments bring meaningful clarification. In the absence of an explicit or implicit legislative rule, courts are empowered to draw upon the principles of Islamic Sharia and select the approach that most appropriately delivers justice and aligns with the public interest, having regard to the specific facts of the case. In doing so, judges are afforded discretion and are not bound to adhere to any single school of jurisprudence or doctrinal framework.
Property Rights and Mandatory Registration
Contracts granting usufructuary construction rights must now be registered with the competent authority, failing which they will be rendered void. The law clarifies the obligations attached to these rights and expressly allows the parties to determine their duration contractually, providing greater certainty for developers and investors alike.
Foreign Ownership of Property in the UAE and Associated Rights
The revised law also addresses the treatment of property owned by foreign individuals who die without legal heirs. In such cases, financial assets situated within the UAE are to be converted into a charitable endowment and administered under the supervision of the competent authority.
Alongside this, the amendments establish a more structured regime for assignments, including the transfer of rights, while strengthening the legal safeguards attached to possession. The law now expressly provides for preventive remedies, enabling parties to approach the courts to halt unlawful interference at an early stage, before actual damage occurs.
Shift in the Age of Majority
Rules on legal capacity have also been modernised. The age of majority has been aligned with international standards by shifting from 21 Hijri years to 18 Gregorian years. In parallel, minors may now seek judicial authorisation to manage their assets from the age of 15 Gregorian years, subject to court approval.
Reorganised Structure of Compensation in Certain Cases
In the sphere of civil liability, courts are now permitted to award additional damages alongside blood money or assessed compensation where death or injury results in material or moral harm that is not fully compensated by blood money alone. This enables a more holistic and equitable approach to compensation in appropriate cases.
Developments in the Corporate Realm
Finally, the Civil Transactions Law has undergone notable revisions in its corporate framework. The amendments draw a clearer distinction between civil and commercial companies, allow for the establishment of single-person entities, and set out more detailed rules governing partner withdrawal, business continuity, and liquidation procedures. In addition, distinct regulatory frameworks have been introduced for non-profit and professional companies, aligning the law with the increasingly diverse forms of corporate activity in the UAE.
Taken as a whole, these amendments represent a deliberate recalibration of the UAE’s civil law landscape. They reinforce contractual discipline, strengthen protections for vulnerable parties, and align foundational civil law principles with contemporary legal and commercial realities.
Key Amendments at a Glance
- Introduction of express disclosure obligations during pre-contractual negotiations
- Statutory recognition of framework agreements for ongoing or repeat contractual relationships
- Clearer rules governing sale by sample and sale by model
- Enhanced protection for persons lacking full legal capacity, particularly in real estate transactions
- Expanded judicial discretion to apply Islamic Sharia principles where no statutory rule exists
- Mandatory registration of usufructuary construction rights, with nullity due to non-registration
- Clarification of rights, obligations, and duration of usufructuary construction arrangements
- Treatment of UAE-based assets of foreigners with no legal heirs as charitable endowments
- Introduction of a comprehensive framework governing the assignment of rights
- Strengthened legal protection of possession through preventive actions
- Alignment of the age of majority with international standards at 18 Gregorian years
- Lowering of the minimum age for judicial authorisation to manage assets to 15 Gregorian years
- Ability to combine blood money with additional damages where harm is not fully compensated
- Modernisation of corporate provisions, including single-person companies, partner withdrawal, continuation, liquidation, and dedicated regimes for non-profit and professional companies
For practical insights on the 2026 Civil Transactions Law refinements and their impact on contracts, obligations, and risk management in the UAE, please contact Merline Dsouza at merline@alsuwaidi.ae