TRW & Co · Corporate & Commercial
Cross-Border Contracting in the UAE
Cross-border contracts in the UAE sit across three legal systems: federal onshore law, the DIFC and ADGM. With the new Civil Transactions Law in force from 1 June 2026, choices on governing law, forum, signing authority and liability terms now decide whether a contract can actually be enforced where the counterparty holds assets.
Key pointPick the forum by where you will need to enforce, then align governing law and seat to it; since 1 June 2026, agreements to arbitrate also need signatories with specific, not general, authority.
At a glance
New civil code live
Federal Decree-Law No. 25 of 2025 replaced the 1985 Civil Transactions Law on 1 June 2026, without retroactive effect on earlier contracts.
Three legal systems
Onshore federal law, the DIFC's codified common-law-style regime and ADGM's directly applied English common law can each govern a UAE deal.
Five-year trader limitation
Claims between traders under the Commercial Transactions Law generally become time-barred five years after they fall due, down from ten years before 2023.
Specific authority required
Under the new code a general power of attorney covers management acts only; sales, settlements and arbitration agreements need a special power.
Arbitration travels furthest
As a New York Convention state since 2006, the UAE enforces foreign arbitral awards, and UAE-seated awards are enforceable across other member states.
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What cross-border contracts in the UAE cover
Cross-border contracts in the UAE are agreements where at least one party, the goods, the services, the money or the place of performance sits outside the country, or outside the onshore legal system. A Dubai distributor buying from a Chinese manufacturer, a Bangladeshi garment exporter selling to a Jebel Ali trader, an Indian software house servicing an Abu Dhabi bank, or a London fund investing through an ADGM vehicle all live in this space.
The legal questions are not the same as in a purely domestic deal. Which law governs? Which court or tribunal decides a dispute, and will its decision be enforced where the counterparty actually holds assets? Is the contract valid in the form it was signed, by the person who signed it? Which taxes and permits attach to the flow of goods, services and money?
These questions usually arise at three moments: when a term sheet turns into a draft, when a counterparty stops paying or performing, and when a regulator, customs officer or bank asks to see the paperwork. A contract designed with all three moments in mind is the cheapest risk control a business can buy.
The legal framework: three systems in one country
The UAE is not a single contract-law jurisdiction. Onshore, federal civil and commercial codes apply across all seven emirates, and are applied by the federal courts and the local courts of Dubai, Abu Dhabi and Ras Al Khaimah. Most free zones apply federal civil and commercial law to contracts, while running their own companies and licensing rules.
The two financial free zones are different. The Dubai International Financial Centre (DIFC) has its own codified contract law, modelled on common-law principles, and its own courts. Abu Dhabi Global Market (ADGM) applies English common law directly under the Application of English Law Regulations 2015, again with its own courts. A contract can therefore change character depending on where it is booked and which forum the parties choose.
The new Civil Transactions Law
The most important change for cross-border contracts in the UAE this year is the Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law. According to the official UAE Legislation portal, it entered into force on 1 June 2026, replacing Federal Law No. 5 of 1985. It does not apply retroactively, so contracts signed before that date remain largely governed by the old code, while new limitation rules apply from commencement with transitional protection for periods already running.
For international parties, three features stand out. The law codifies a duty to negotiate in good faith and to disclose information of decisive importance, which cannot be excluded by contract. It expressly recognises framework agreements whose terms flow into later orders. And it confirms that, for contractual obligations with a foreign element, the law chosen by the parties generally governs, subject to UAE public order and mandatory rules.
Commercial, consumer and sector rules
Business-to-business trade is also governed by the Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, in force since 2 January 2023. It recognises contracts concluded electronically, lets parties adopt the International Chamber of Commerce's general conditions for international contracts, caps interest at 9% where no rate is agreed, and sets a five-year limitation period for claims between traders.
Sector rules overlay the codes: the Commercial Agencies Law for registered agencies, the personal data regime for any contract that moves personal data, customs and export-control rules for physical goods, and Central Bank, DFSA or FSRA rules where a regulated firm is involved.
| Issue | Onshore and most free zones | DIFC | ADGM |
|---|---|---|---|
| General contract law | Civil Transactions Law (Federal Decree-Law No. 25 of 2025, from 1 June 2026) | DIFC Contract Law and Law of Obligations | English common law via the 2015 Application Regulations |
| Trade between businesses | Commercial Transactions Law (Federal Decree-Law No. 50 of 2022) | DIFC law, unless another law is chosen | English law, unless another law is chosen |
| Unfair or standard terms | Adhesion contract rules in the new civil code | Implied Terms in Contracts and Unfair Terms Law 2005 | English statutory and common-law controls as applied |
| Default forum | Onshore courts of the relevant emirate | DIFC Courts | ADGM Courts |
| Arbitration law | Federal Law No. 6 of 2018, as amended in 2023 | DIFC Arbitration Law | ADGM Arbitration Regulations |
Governing law and forum: the two decisions that matter most
A foreign governing law chosen in cross-border contracts in the UAE is generally respected by onshore courts, but it is not the whole answer. Onshore judges apply mandatory UAE rules regardless of the chosen law, and a party relying on foreign law must prove its content, usually through translated expert evidence. That makes foreign law slower and more expensive to run in a local court.
The real decision is forum. Governing law and forum should point in the same direction: English law with ADGM Courts or LCIA arbitration, UAE law with onshore courts or DIAC arbitration, DIFC law with the DIFC Courts. Mismatches are where cost and uncertainty creep in.
Courts or arbitration
Arbitration remains the default for most international deals because awards are enforceable in over 170 states under the New York Convention, which the UAE joined in 2006. Onshore arbitration is governed by Federal Law No. 6 of 2018, amended in 2023 to confirm confidentiality and remote hearings. The Dubai International Arbitration Centre administers most Dubai-seated cases under its 2022 Rules. Our page on international arbitration in the UAE compares seats and institutions.
Court litigation can be the better choice for smaller claims, debt recovery or where summary procedures matter. The DIFC Courts and ADGM Courts accept parties who opt in by written agreement, operate in English and publish their judgments. Onshore courts work in Arabic but offer fast payment-order procedures for clear debts.
English law + LCIA or DIAC, seat in DIFC
A common choice for international groups with assets in several countries. The award travels under the New York Convention and supervisory court work happens in English.
UAE law + onshore courts
Suits local suppliers and smaller contracts, especially where the counterparty's assets are onshore. Expect Arabic proceedings and certified translations of every document.
DIFC law + DIFC Courts
An opt-in route for parties wanting a common-law court in Dubai. DIFC judgments can be executed onshore through the established referral process.
ADGM / English law + ADGM Courts
Attractive for Abu Dhabi deals and finance documents. English law applies directly, and ADGM judgments can be executed in Abu Dhabi through established cooperation arrangements with the onshore courts.
Drafting priorities for cross-border contracts in the UAE
Most problems in cross-border contracts in the UAE come from a few clauses that were copied from a foreign template without adjustment. The following deserve real attention.
Capacity, authority and execution
Under the new civil code, a general power of attorney covers acts of management and preservation only. Sales, settlements, mortgages, acknowledgements and agreements to arbitrate require a special power that clearly identifies the act. Check who signs for a UAE entity, and ask for a board resolution or specific power where the signatory is not a registered manager.
Electronic signatures are valid under Federal Decree-Law No. 46 of 2021 on Electronic Transactions and Trust Services, but some documents still require notarisation or wet-ink signatures and legalisation for use abroad. See our guide to digital signatures and e-transactions in the UAE.
Language
Commercial parties may contract in English, but onshore courts will work from an Arabic translation, and some documents filed with authorities must be in Arabic. A bilingual contract should say which version prevails, and the translation should be checked by a lawyer, not only a translator. Our article on Arabic and English contracts in the UAE explains the practice.
Price, currency and payment
Specify currency, exchange-rate source, place of payment and the bank charges each side bears. Where an export is paid by letter of credit, align the contract with the documentary credit and the chosen Incoterms rule. The Commercial Transactions Law fills gaps on interest, but agreeing a contractual late-payment rate avoids arguments.
Liability, hardship and termination
Exclusion and limitation clauses need UAE-specific review. Clauses exempting liability for a harmful act are void under the new code, and the court may reduce an agreed damages sum it considers exaggerated. The hardship rule allowing a court to reduce an onerous obligation in exceptional, unforeseeable general circumstances cannot be excluded, though parties can set a renegotiation process. Termination clauses that operate automatically are recognised if clearly drafted.
From term sheet to signed contract: a practical sequence
- Map the transaction. Identify every party, where each is incorporated and licensed, where goods or services move, where money is paid and where assets sit. This decides which UAE system applies and where enforcement would happen.
- Check licence and regulatory fit. Confirm the UAE entity's licence covers the activity, whether a commercial agency, import permit, data transfer or financial-services rule is engaged, and whether sanctions or export controls apply to the counterparty or goods.
- Choose law and forum together. Agree governing law, forum and seat as a package based on enforcement, not habit. Draft the dispute clause precisely, naming the institution, rules, seat, language and number of arbitrators.
- Negotiate in good faith and record disclosures. Since 1 June 2026, negotiation conduct and disclosure of decisive information carry legal duties. Keep a record of what was disclosed and when, and use a negotiation-stage confidentiality agreement.
- Settle the operative terms. Fix scope, specifications, delivery, acceptance, price, payment security, liability, hardship, termination and assignment. Align framework agreements and purchase orders so the order of precedence is clear.
- Execute properly. Confirm signatory authority, use compliant electronic signatures or wet ink as required, and arrange notarisation, attestation and translation for documents to be used in court or abroad.
- Administer the contract. Diarise notice periods, renewal dates, limitation periods and price-review triggers. Keep correspondence, delivery notes and acceptance certificates in one place.
Documents and evidence to assemble
A well-run cross-border file makes both compliance checks and disputes cheaper. At signing, assemble:
- trade licences or certificates of incorporation for each party, with the registered activities;
- board resolutions or special powers of attorney for each signatory, notarised and legalised where needed;
- the signed contract in each language version, with all schedules, specifications and price lists;
- framework agreements, purchase orders, statements of work and any amendment letters, in a clear order of precedence;
- payment security: letters of credit, bank guarantees, parent company guarantees or standby credits;
- customs, origin and export-control documentation for goods, and data-transfer assessments where personal data moves;
- a negotiation record showing the material information each side disclosed.
If you may ever need to enforce in an onshore court, keep original signed documents and plan for certified Arabic translations. Courts can refuse to rely on photocopies and untranslated foreign-language evidence, and assembling them under deadline pressure is expensive.
Risks and common mistakes
Choosing a forum where the counterparty has no assets
A London judgment against a Dubai trading company with assets only in the UAE has to be recognised by a UAE court before it can be enforced. Enforcement of foreign judgments onshore depends on conditions including reciprocity, jurisdiction and finality, and outcomes vary. An arbitral award under the New York Convention, or a DIFC or ADGM judgment, is usually a more predictable route. Decide the forum by asking where you will need to enforce, then work backwards. Our page on foreign judgment enforcement explains the conditions in more detail.
Relying on a foreign template exclusion clause
Templates drafted for English or Singapore law often exclude all indirect loss, cap liability at a low figure and exclude liability for negligence. Under UAE onshore law some of these will not work as intended: clauses exempting liability for harmful acts are void, agreed damages can be adjusted, and fraud or gross fault defeats caps. In the DIFC, exclusions in standard terms must pass a reasonableness test. Rework the liability package for the law that will actually govern.
Ignoring the commercial agency regime
Distribution, agency and franchise arrangements with an onshore UAE party can fall under the Commercial Agencies Law if registered with the Ministry of Economy and Tourism. Registration affects exclusivity, termination and the forum for disputes. A cross-border supplier that wants flexibility should decide deliberately whether a registered agency is intended and draft accordingly.
Signing with the wrong person
Under the new civil code, an agent with only a general power cannot bind the principal to sales, settlements or arbitration. A signature from a manager whose authority does not extend to the transaction invites a later challenge. Verify authority against the commercial register or the company documents, and obtain a specific resolution for material contracts.
Forgetting limitation and notice periods
Commercial claims between traders generally become time-barred five years after they fall due under the Commercial Transactions Law, and the new civil code shortens several specific periods. Contract notice requirements can be even shorter. Diarise them at signing, and act early when a dispute looms: our guide to limitation periods in the UAE explains how they run.
The cross-border angle: key trading partners
TRW & Co's network shapes how we approach cross-border contracts in the UAE with the country's main counterparties. Each relationship has its own enforcement and documentation profile.
- Bangladesh. Large flows of garments, manpower and remittances. Bangladesh is a New York Convention state, so arbitration is usually the safer forum. Plan for currency controls on outward payments and document attestation for use in Dhaka.
- United Kingdom. English law remains the most common chosen law. In 2022 the UAE Ministry of Justice signalled reciprocity for English judgments, but arbitration or ADGM/DIFC forums remain more predictable.
- Singapore. Singapore-seated arbitration under SIAC Rules is common for Asia-linked deals and enforceable in the UAE under the New York Convention.
- China. China and the UAE have a judicial assistance treaty, and both are New York Convention parties. Watch export controls, payment routes and Chinese-language versions of supply contracts.
- Saudi Arabia and the GCC. GCC and Arab League conventions support enforcement of judgments between member states. Saudi counterparties often require Saudi-law review of local performance terms.
- India. India has designated the UAE as a reciprocating territory for decrees of specified UAE courts, which helps judgment enforcement. Consider Indian stamp duty and foreign exchange rules on the Indian leg.
Choose the forum by asking where you will need to enforce, then build the contract backwards from that answer.
For specific transaction types, see our pages on distribution and agency agreements in the UAE and customs and trade compliance in the UAE, and our article on governing law and jurisdiction clauses.
How TRW & Co helps with cross-border contracts in the UAE
We advise on structure, drafting and negotiation, and coordinate with counsel in each relevant jurisdiction. Where representation before UAE onshore courts or the DIFC/ADGM Courts is required, we work alongside locally licensed advocates and registered practitioners.
Deal structuring
We map parties, licences, flows and enforcement points before drafting, so the contract matches how the business actually operates.
Drafting and negotiation
We draft or review supply, distribution, services, licensing and framework agreements, adapting foreign templates to UAE onshore, DIFC or ADGM law.
Dispute-clause design
We design governing law, forum and arbitration clauses around enforcement in the UAE, Bangladesh, the UK, Singapore, China, the GCC and India.
Civil code transition review
We review existing contract portfolios against the Civil Transactions Law changes in force from 1 June 2026 and recommend targeted amendments.
Compliance overlays
We check commercial agency, data protection, sanctions, export control and tax points that attach to the deal.
Execution and records
We manage signing authority, electronic or wet-ink execution, notarisation, legalisation and translation so documents are usable when needed.
Read more about our wider commercial contracts practice in the UAE, browse all our practices, or contact TRW & Co to discuss a transaction.
Checklist for decision-makers
- Do we know which UAE legal system applies: onshore, free zone, DIFC or ADGM?
- Is the forum chosen by reference to where the counterparty has assets?
- Do governing law, forum and seat point in the same direction?
- Has each signatory got specific authority for this transaction, including any arbitration clause?
- Has the liability package been reworked for the governing law rather than copied?
- Does the contract address hardship, force majeure and automatic termination in terms UAE law will respect?
- Is there a prevailing-language clause and a checked Arabic translation where needed?
- Are commercial agency, data transfer, sanctions and customs points cleared?
- Are limitation and notice periods diarised?
- For contracts signed before 1 June 2026, have we decided whether amendments under the new civil code would trigger the new rules?
Frequently asked questions
01Can we choose English law for a contract with a Dubai mainland company?
Yes. Parties to a contract with a foreign element may generally choose its governing law, and the new Civil Transactions Law confirms the parties' express choice governs contractual obligations. Two limits apply. Onshore courts still apply UAE public order and mandatory rules, and a party relying on English law in an onshore court must prove its content through translated expert evidence. In practice, English law works best when paired with arbitration or with the DIFC or ADGM Courts, where English-language proceedings and common-law judges reduce cost and uncertainty.
02Does the new Civil Transactions Law apply to contracts signed before 1 June 2026?
The law states it is effective from its entry into force and does not apply retroactively, so the validity and effects of earlier contracts are generally assessed under the 1985 code. There are exceptions. New limitation provisions apply from 1 June 2026, with a transitional rule where an old period was already running. A significant amendment or renewal after that date may bring the new rules into play for the amended terms. Review long-term contracts before amending them, so you know which regime you are opting into.
03Is an arbitration clause signed by our regional manager valid?
It depends on the manager's authority. Under the new civil code, a general power of attorney authorises acts of management and preservation, while agreements to arbitrate, settlements and similar acts need a special agency that identifies the act. UAE courts have long treated authority to arbitrate strictly. For material contracts, confirm the signatory's authority in the commercial register or company documents and obtain a board resolution or specific power covering the agreement and its arbitration clause.
04Should we choose arbitration or the DIFC Courts?
Arbitration is usually better where enforcement may be needed outside the UAE, because awards travel under the New York Convention. The DIFC Courts can be faster and cheaper for UAE-focused disputes, offer summary procedures, publish reasoned judgments and work in English, and their judgments can be executed onshore through a referral process. Many groups choose arbitration for international supply and joint-venture contracts and the DIFC or ADGM Courts for finance documents and UAE-only relationships.
05Do cross-border contracts need to be in Arabic?
Business-to-business contracts may generally be written in English or another language. However, onshore courts work in Arabic and will require certified translations, and some filings with government authorities must be in Arabic. Consumer-facing terms are different: consumer protection rules require information and contracts to be available in Arabic. For bilingual contracts, include a prevailing-language clause and have the Arabic version reviewed by a lawyer, because translation errors are a common source of later disputes.
06How long do we have to bring a claim against a UAE trading partner?
For commercial obligations between traders, the Commercial Transactions Law generally sets a five-year period from when the obligation falls due. The Civil Transactions Law retains a longer general period for civil claims and sets shorter periods for specific claims, such as professional fees. Contract notice requirements may be shorter still. Because the right period depends on the nature of the claim and the parties, take advice early and diarise limitation dates at signing.
07Can a UAE court rewrite our price if costs rise sharply?
Under the new civil code, where exceptional, general and unforeseeable circumstances make performance excessively onerous, a court may reduce the burdened obligation to a reasonable level or, in serious cases, rescind the contract. Any agreement excluding this power is void. Parties can, however, agree a structured renegotiation or price-adjustment mechanism, which gives more certainty than leaving it to a judge. Ordinary market movements and risks a party accepted are unlikely to qualify.
Sources and official materials
- Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law — New civil code; in force 1 June 2026
- UAE Government issues Federal Decree-Law promulgating the Civil Transactions Law — Official summary of key changes
- Federal Decree-Law No. 50 of 2022 on the Commercial Transactions Law — Commercial obligations, interest, limitation
- Federal Decree-Law No. 46 of 2021 on Electronic Transactions and Trust Services — Electronic contracts and signatures
- Dubai International Arbitration Centre — DIAC Arbitration Rules 2022
- DIFC Courts — Opt-in jurisdiction and enforcement
- The ADGM Legal Framework — Application of English common law in ADGM
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.
