TRW & Co · Commercial contracts
Governing Law and Jurisdiction Clauses in UAE Contracts
A governing law clause UAE contracts depend on must be chosen together with the forum. This guide compares UAE, DIFC, ADGM and foreign law, explains the new choice-of-law rules in force since June 2026 and the onshore courts' jurisdiction rules, and shows how to avoid the cross-border traps that derail enforcement.
Key pointOnshore courts may hear a case despite an exclusive foreign court clause where the obligation is performed in the UAE, yet two foreign parties cannot confer jurisdiction on them by agreement alone, so the forum choice often matters more than the governing law.
At a glance
Party choice comes first
Under the Civil Transactions Law in force since 1 June 2026, contractual obligations are governed by the law the parties expressly choose.
Silence often means UAE law
Without a choice, the default is common domicile, then the place where the principal obligation is performed, which frequently points to the UAE.
Ouster agreements void
The Civil Procedure Law makes agreements contrary to its international jurisdiction rules void, so onshore courts may hear cases despite foreign court clauses.
DIFC and ADGM opt-in
Parties may agree in writing, before or after a dispute, to submit to the DIFC Courts or the ADGM Courts without any other connection.
Arbitration formalities
Under Federal Law No. 6 of 2018, an arbitration agreement must be in writing and signed by someone with authority to agree to arbitration.
Swipe or scroll →
The short answer: choosing a governing law clause UAE parties can rely on
A governing law clause UAE businesses sign decides which legal system will interpret the contract; the jurisdiction or arbitration clause decides who will hear disputes. The two must be chosen together. A well-chosen law paired with the wrong forum is one of the most common, and most expensive, drafting errors in the region.
In outline there are four families of options: onshore UAE law with the onshore courts; DIFC or ADGM law and courts, which apply common-law principles inside the UAE; a foreign law such as English law, usually with arbitration; and hybrid structures that combine one law with a different forum. Each has a different enforcement profile.
The right answer depends on three practical questions. Where will the contract be performed? Where are the counterparty's assets? And where would a judgment or award need to be enforced? Start from enforcement and work backwards.
The legal framework for choice of law and forum
Choice of law under the Civil Transactions Law
For contracts that come before onshore courts, conflict-of-laws questions are governed by the Civil Transactions Law, Federal Decree-Law No. 25 of 2025, in force since 1 June 2026. Under the new code, contractual obligations are governed by the law the parties expressly choose. Commentators have noted that this puts party autonomy at the centre, in contrast to the 1985 code, which treated it more as an exception to objective connecting factors.
Where there is no express choice, the default is the law of the parties' common domicile and, failing that, the law of the place where the principal obligation is to be performed. Under the 1985 code the place of conclusion of the contract was a connecting factor; the new code drops it. Because the principal obligation in many contracts with a UAE party is performed in the UAE, silence will often lead to UAE law. Foreign law will also not be applied where it conflicts with UAE public order.
Jurisdiction of the onshore courts
The Civil Procedure Law, Federal Decree-Law No. 42 of 2022, gives onshore courts jurisdiction over claims against UAE nationals and against foreigners domiciled or resident in the UAE, and over claims against non-resident foreigners in listed cases, including where the obligation arose, was performed or was required to be performed in the UAE. The same chapter provides that any agreement contrary to these rules is void.
That provision has two consequences. Onshore courts have historically been prepared to hear a case despite an exclusive foreign court clause where they have jurisdiction under the statute. Conversely, two foreign parties with no UAE connection cannot simply confer jurisdiction on the onshore courts by agreement. A governing law clause UAE counterparties offer that points to 'the courts of Dubai' therefore needs checking against the parties' actual connections.
The DIFC and ADGM Courts
The DIFC Courts can hear civil and commercial disputes where the parties agree in writing to submit to them, before or after a dispute arises, following Dubai Law No. 16 of 2011, which removed the need for any other connection to the DIFC. The ADGM Courts have a similar opt-in confirmed by 2020 amendments to Abu Dhabi Law No. 4 of 2013, which also codified mutual enforcement with the onshore Abu Dhabi courts. See our guides on DIFC Courts jurisdiction and opt-in and ADGM Courts jurisdiction.
Arbitration
Arbitration seated onshore is governed by the Federal Arbitration Law, Federal Law No. 6 of 2018, as amended in 2023. An arbitration agreement must be in writing or it is void, and it may only be concluded by a person with capacity or by a representative of a legal entity authorised to agree to arbitration. The UAE is a party to the New York Convention, which supports enforcement of foreign awards. The Dubai International Arbitration Centre is the main institution in Dubai; ADGM and DIFC seats are also widely used.
Governing law and forum options compared
| Combination | Strengths | Watch-outs | Typical use |
|---|---|---|---|
| UAE law + onshore courts | Direct enforcement against onshore assets; familiar to local counterparties | Proceedings in Arabic; civil-law approach to damages and interpretation | Onshore supply, construction, leases, local services |
| DIFC or ADGM law + courts | Common-law principles; English-language courts; enforceable onshore through statutory routes | Opt-in must be clear and in writing; onshore execution steps still required | Finance, investment, technology and cross-border deals with UAE parties |
| English law + arbitration (DIAC, DIFC or ADGM seat, or abroad) | Neutral forum; New York Convention enforcement; confidentiality | Mandatory UAE rules may still apply; arbitration authority must be checked | International trade, M&A, energy and projects |
| English law + English courts | Familiar to UK-based parties | Onshore enforcement of foreign judgments subject to statutory conditions; onshore courts may assert jurisdiction | Where assets and enforcement are outside the UAE |
| UAE law + arbitration | Local law with neutral process | Tribunal must apply UAE mandatory rules; award enforced onshore | Construction, joint ventures, government-related contracts |
No combination is best in every case. For enforcement detail, see our articles on enforcing foreign judgments in the UAE and arbitration in the UAE.
Where a governing law clause UAE parties agree has limited effect
Party autonomy is the starting point, but several categories of contract are shaped by mandatory rules whatever the clause says. Identifying them early prevents a false sense of security.
Real estate
Rights over land in the UAE depend on local registration: registration with the relevant land department is often what creates or transfers the right. A foreign law clause in a sale or lease of onshore property will not change registration requirements, tenancy legislation or the jurisdiction of the specialist rental dispute bodies.
Commercial agencies and distribution
A registered commercial agency is subject to the federal commercial agencies law, including its rules on notice, compensation and the Commercial Agencies Committee, and disputes under such agencies are linked to the UAE by statute. Unregistered distribution agreements have more flexibility. See our guide to commercial agency law in the UAE before relying on a foreign law clause in a distribution deal.
Employment and consumer contracts
Employment relationships onshore are governed by the federal labour law, and employees cannot be deprived of minimum statutory rights by choosing another law. Consumer protection rules similarly apply to sales to UAE consumers. A governing law clause UAE employers or retailers insert will not dilute those protections, although it may still govern matters the statute does not address.
Government and semi-government counterparties
Contracts with federal or emirate-level government entities frequently require UAE law and local courts or a specified arbitral institution, and procurement rules may limit what can be negotiated. Some entities also need specific internal approvals before agreeing to arbitration. Raise these points before bid submission rather than at signing.
How to draft the clause: a step-by-step process
- Map enforcement first. Identify where the counterparty holds assets and where you would need to enforce. That points to the forum, and the forum points to the most practical law.
- Choose the law expressly. Name the legal system precisely, for example 'the laws of the Emirate of Dubai and the applicable federal laws of the UAE' or 'the laws of the Dubai International Financial Centre'.
- Match the forum. Pick courts or arbitration and state whether jurisdiction is exclusive. For DIFC or ADGM courts, use a clear written opt-in.
- Check authority to arbitrate. If you choose arbitration, confirm the signatory has specific authority to agree to it, and keep the evidence.
- Align related documents. Guarantees, security documents, side letters and purchase orders should carry consistent law and forum clauses or expressly cross-refer.
- Address language and service. State the prevailing language, the seat and language of any arbitration, and an address for service, ideally in the UAE.
What good wording looks like
Precision matters more than length. A clause that says only 'UAE law' leaves open whether DIFC or ADGM law is meant, because both are part of the UAE legal landscape. Refer instead to the laws of a named emirate and the applicable federal laws, or to the laws of the DIFC or of ADGM by name.
For forum, avoid hybrid formulations such as 'the courts of Dubai or arbitration at the option of the claimant' unless they are carefully drafted, because asymmetric or optional clauses invite threshold disputes. If you choose arbitration, name the institution, the seat, the number of arbitrators and the language. If you choose the DIFC or ADGM Courts, adopt the court's model wording and state that the submission is exclusive.
Finally, think about interim relief. Even with arbitration, a party may need urgent orders from a court to preserve assets. Make sure the clause does not inadvertently exclude access to the courts for interim measures where that would be useful.
Illustrative scenario: a Singapore supplier and a Dubai buyer
Illustrative only. A Singapore technology supplier contracts with a Dubai mainland distributor. The supplier's template chooses Singapore law and the exclusive jurisdiction of the Singapore courts. The distributor's only assets are in Dubai.
If the distributor stops paying, a Singapore judgment would need to be enforced in Dubai through the onshore courts, which assess foreign judgments against statutory conditions. Meanwhile the distributor could sue in Dubai, and because the contract is performed in the UAE, the onshore court may accept jurisdiction notwithstanding the Singapore clause.
The supplier would also face the cost of running parallel proceedings, translation of the record into Arabic, and arguments about whether Singapore law was properly proved as a matter of fact before the onshore court. A more robust structure would choose DIFC law and the DIFC Courts, or English or Singapore law with arbitration seated in the DIFC, ADGM or Singapore. Either gives a neutral forum and a clearer enforcement path. The governing law clause UAE distributors negotiate is often less important than this forum choice, so supplier teams should focus their negotiating capital on the dispute resolution clause.
Common traps in cross-border contracting
Silence on governing law
Leaving the contract silent hands the question to the court. Under the new code's default rules, a contract with a UAE party performing in the UAE will often end up governed by UAE law, which may not be what either party expected. Always include an express choice, even in short purchase orders and framework agreements, and make sure later documents do not inadvertently change it.
Exclusive foreign court clause with onshore assets
Choosing a foreign court may not stop proceedings in the UAE, and winning abroad does not guarantee easy enforcement onshore. If the counterparty's assets are in the UAE, consider arbitration or the DIFC or ADGM Courts, which offer clearer routes to onshore enforcement. Do not assume that a judgment from your home courts will be enforced as a matter of course.
Ambiguous DIFC or ADGM opt-ins
Clauses that refer loosely to 'the courts of Dubai' or 'the UAE courts' do not opt into the DIFC Courts. Use the court's recommended model clause, name the court expressly and say whether the submission is exclusive. Inconsistent clauses across a contract suite are a frequent source of jurisdictional disputes that delay the merits by months.
Unauthorised signature of arbitration agreements
Under the Federal Arbitration Law, an arbitration agreement concluded by someone without authority to agree to arbitration is vulnerable. General managers' powers under company documents may or may not extend to arbitration. Obtain a board resolution or specific power of attorney, especially when contracting with onshore companies, and keep a copy with the signed contract.
Foreign law with UAE mandatory rules
Even where foreign law governs, certain UAE rules will apply if a dispute reaches onshore courts, including those regarded as public order, and sector laws on real estate, commercial agencies or employment. A governing law clause UAE courts may otherwise respect will not displace those rules. Identify them at drafting stage.
Draft the dispute resolution clause first, around where you would need to enforce, and then choose the governing law that fits it. A consistent clause across the main contract, guarantees and security documents matters more than any single word.
Cross-border angle: the UK, Singapore, India and Bangladesh
Counterparties from the UK and Singapore frequently propose their home law and courts. English law remains a common choice for international deals, but parties should consider whether arbitration, or the DIFC or ADGM Courts, give a better enforcement route against UAE assets.
Parties from India and Bangladesh often contract through UAE trading entities. Enforcement of UAE judgments or awards in those countries depends on their own rules on foreign judgments and on the New York Convention for awards, so arbitration is often the more portable option. For group structuring and wider issues, see our page on cross-border contracting in the UAE and our guide to contract law in the UAE.
Start from where you would enforce, then choose the forum, then the law. Most clause failures happen when that order is reversed.
Checklist: reviewing a governing law clause UAE counterparties propose
- Is the governing law named precisely, including the emirate or free zone?
- Does the forum match the law and the location of the counterparty's assets?
- Is any DIFC or ADGM opt-in in writing, express and consistent across documents?
- Has the signatory authority to agree to arbitration been confirmed?
- Are guarantees, security and side letters aligned?
- Are the language, seat and service address specified?
- Have UAE mandatory rules been identified for the subject matter?
TRW & Co drafts and reviews dispute resolution and governing law clauses for UAE and cross-border contracts, working with locally licensed advocates and registered practitioners where court representation is needed. Contact our Dubai team at info@trw.co.
Frequently asked questions
01Can I choose English law for a contract with a UAE company?
Yes. Under the Civil Transactions Law, contractual obligations are governed by the law the parties expressly choose. Onshore courts will not apply foreign law that conflicts with UAE public order, and some mandatory UAE rules apply regardless. In practice, English law is usually paired with arbitration or with the DIFC or ADGM Courts so that the forum is comfortable applying it and the outcome can be enforced against UAE assets.
02Will UAE courts respect an exclusive foreign jurisdiction clause?
Not necessarily. The Civil Procedure Law gives onshore courts jurisdiction in listed situations, including where the obligation arose, was performed or was required to be performed in the UAE, and declares agreements contrary to those rules void. Onshore courts have historically been willing to hear cases in those circumstances despite a foreign court clause. If enforcement in the UAE matters, arbitration or the DIFC or ADGM Courts usually give more certainty.
03How do I opt into the DIFC Courts or ADGM Courts?
Include a clear written agreement to submit disputes to the named court. Under Dubai Law No. 16 of 2011 for the DIFC, and amendments made in 2020 to Abu Dhabi Law No. 4 of 2013 for ADGM, parties may opt in before or after a dispute arises, even without another connection to the free zone. Use the court's model clause, state whether jurisdiction is exclusive and keep the clause consistent across related documents.
04What happens if my contract has no governing law clause?
The court will apply default conflict-of-laws rules. Under the new Civil Transactions Law, the law of the parties' common domicile applies first, then the law of the place where the principal obligation is to be performed. For many contracts with a UAE party performing in the UAE, that will lead to UAE law. Silence therefore creates uncertainty and often an outcome neither party intended.
05Is arbitration better than court litigation for UAE contracts?
Often, for cross-border deals. Arbitration offers a neutral forum, flexible procedure, confidentiality and enforcement under the New York Convention in many countries. It does require careful drafting, including written form and confirmation that the signatory has authority to agree to arbitration. For purely domestic disputes with onshore assets, onshore courts may be faster and cheaper, so the choice depends on the deal.
06Does the new Civil Transactions Law change existing governing law clauses?
Existing express choices remain effective. The new law, in force since 1 June 2026, mainly changes the default rules where there is no choice, dropping the place of conclusion as a connecting factor and introducing the place of performance of the principal obligation. Review contracts that are silent on governing law, and check renewals and amendments concluded after June 2026.
Sources and official materials
- Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law — Choice-of-law rules for contractual obligations
- Federal Decree-Law No. 42 of 2022 on Civil Procedure (Ministry of Justice) — International jurisdiction of onshore courts and void ouster agreements
- Federal Law No. 6 of 2018 on Arbitration (Ministry of Justice) — Capacity and written form of arbitration agreements
- DIFC Courts — Opt-in jurisdiction and model clauses
- ADGM Courts — Opt-in jurisdiction and enforcement
- Dubai International Arbitration Centre — Arbitration rules and model clause
General information only, current as at 27 October 2026. It is not legal advice and does not create a lawyer–client relationship. UAE law differs between the onshore jurisdiction, the DIFC, ADGM and the free zones, and changes frequently; check current official sources and take advice on the facts of your matter.
