Contracts, Negotiations and Enforcement in the United Arab Emirates: Overview
Formation of contracts
Authority and capacity
- What are the authority/capacity rules for entering contracts?
UAE Federal Law Number 5 of 1985 on Civil Transactions Law (Civil Code) allows all individuals to enter into agreements unless they are minors, who do not have the right to deal with property and are prohibited from entering into a contract. However, Article 159 of the Civil Code allows minors to handle financial dealings that are for their own benefit and not to their detriment. The Civil Code also allows guardians or tutors to make dispositions on behalf of minors and mentally disabled and insane adults.
Commercial Companies Law Number 2 of 2015 and Commercial Transaction Law Number 18 of 1993 apply to all contracts between two companies. A corporate entity, whether it is a private or public joint stock company, can enter into a contract in its own name, subject to the provisions of its articles of association and the requirements of the Civil Code, the Commercial Companies Law and the Commercial Transactions Law.
Foreign companies established in the UAE can enter into a contract with other companies or individuals in the same way as other public or private companies. A contract entered into by a foreign company is governed by the Civil Code, the Commercial Companies Law and the Commercial Transactions Law. The contract must be in accordance with the provisions of Civil Code unless the context of the agreement suggests otherwise.
A partnership company can enter into a contract as a legal person immediately after its formation. Part III of the Civil Code sets out provisions governing contracts entered into by a partnership company, including the rights and obligations of the partners under the contract.
Limited liability partnerships (LLPs)
LLPs are capable of entering into contracts as they have legal personality. The LLP partners are liable under the contract up to the value of their shares in the partnership.
UAE civil law does not recognise the concept of trust and does not explicitly recognise the right for a trustee to enter into a contract in relation to trust property or the trust beneficiary. Foreign trust arrangements will be analysed according to UAE law principles.
UAE law places stringent requirements on the establishment of charities, which requires prior approval by the government. The government must be made aware of all the activities of the charity, including the money it raises. When a charity enters into a new contract, this requires approval of the contract by the government.
Public bodies and local authorities
Public institutions and local authorities are subject to the same rules as any other entity in the UAE when entering into a contract with individuals or companies. UAE government entities follow a transparent and fair system for awarding and tendering contracts. Invitations to bid are made public and are accompanied by a set of rules and guidelines that the bidders must follow.
An agent under a principal-agent contract can enter into a contract with a third party. The provisions of the contract and the rights and obligations arising out of that contract then devolve to the principal. However, the agent must accurately disclose to the third party their relationship with the principal, unless the third party was already aware of it or it is irrelevant to the third party. If this is not done, the principal is not bound by the contract entered into by the agent.
Formal legal requirements
- What are the essential requirements to create a legally enforceable contract?
The Civil Code governs contracts entered into by two contracting parties in the UAE. Article 125 of the Civil Code defines "contract" as an offer made by one of the contracting party that is accepted by the other, along with an agreement from both parties on the subject matter of the contract, from which results obligations for both parties.
Under the Civil Code, the first step in forming a contract is the first meeting between the parties, known as an "open session" (Khiyar Al-Majlis), where the parties negotiate and can decide whether to enter into an agreement. Until the end of the first meeting, either party has an option to accept or reject the offer (Article 136, Civil Code). A contract is formed when there is an offer and an acceptance, which are two essential elements for creating a contract under the Civil Code. An expression of intent can be made orally or in writing, or by an act demonstrating the mutual consent of the parties (Article 132, Civil Code). If there is a repetition of the offer before acceptance, the last offer made is the final and valid offer.
The following are the necessary elements required for making a contract:
- The parties must agree to the essential elements of the contract.
- The subject matter of the contract must be:
- defined or capable of being defined;
- possible; and
- permissible under the law, and not against sharia law or public order.
- There must a lawful purpose for the rights and obligations arising out of the contract.
- There must be offer and acceptance.
- There must be consideration.
A further essential requirement for a valid contract is a place of agreement. Article 142 of the Civil Code suggests that if a contract is made by the parties not in each other's presence, it is deemed to have been made at the place where the offeror learns of the acceptance. However, if the contract was made over the telephone, the contract will be considered to have been made at the time of the Majlis when both the parties were present.
A contract need only contain the essential elements and the legal conditions and obligations of the parties (Article 141, Civil Code). After completion of the Majlis, the parties can later insert additional details into the contract. Where the parties agree on the essential elements of the contract leaving further conditions to be determined at a later date, and a dispute arises as to those matters, the court will adjudicate in accordance with the nature of the transaction and conduct of the parties throughout the term of the contract (Article 141(2), Civil Code).
The final and the most important requirement of the contract is the payment of earnest money, which is considered to be the evidence that the contract has become final and irrevocable (unless the agreement is contrary to any provision of the law or any custom) (Article 148, Civil Code).
- When are written contracts legally required? Can oral contracts be valid and enforceable?
There are several types of contracts that must be in writing to be valid under the Civil Code, including contracts relating to:
- The sale and purchase of immovable property.
- The sale and purchase of ships.
- Payments for individuals' support, including medical treatment and education.
The Tenancy Law Number 26 of 2007 provided that the rights of a tenant or landlord would not be enforceable unless the contract was in writing and registered with the Real Estate and Regulatory Agency (RERA). However, following amendment by Law Number 33 of 2008, the parties now only need to register the contract with RERA.
A written contract may also be required as evidence to prove a right in court. Specifically, in a sale of property or when a sale is rescinded for a defect, the party must prove that they did not consent to the defect either verbally or by way of written contract (Article 120, Civil Code). For that reason, commercial parties typically require some form of contractual documentation.
Article 656 of the Civil Code requires contracts entered into by companies to be in writing. However, if such a contract is not written, that does not affect the rights of third parties (see Question 11).
Oral contracts are permitted under the Civil Code, as long as there is an agreement and acceptance of an offer. However, there are specific rules that a contracting party must consider before entering into an oral contract. For example, a contract can be entered into through certain actions that signify acceptance. Silence of one party can be considered in some situations as acceptance of an offer (Article 135, Civil Code). Similarly, repeated offers before acceptance annul the earlier offers.
- Are there language requirements for the validity of contracts? Is translation into the language of your jurisdiction required?
There is no language requirement for the validity of a contract in UAE. While Arabic is the sole official language of the UAE, English language is the most common and accepted language in international business relations. However, translation into Arabic is recommended. A certified translation of the contract is required by the UAE courts and will prevail in the event of discrepancies between the two versions.
- Can contract terms be inferred by the conduct of the parties or incorporated by reference?
The terms of the contract can be explicitly expressed or can be implied or inferred by the conduct of the parties. For example, a contract for the sale of goods may state that every time the buyer sends a purchase order the seller must acknowledge receipt and then send the goods. However, in practice, if the seller has always sent the goods without acknowledging receipt and the buyer has never opposed this, even though the parties agreed to a different procedure, the usual conduct of parties will be inferred to be the contract terms.
Therefore, if the parties agree on the essential elements of the contract and leave practicalities to be determined at a later stage, the court will adjudicate any related dispute in accordance with the nature of transaction and conduct of parties throughout the term of the contract (Article 141(2), Civil Code).
- What mandatory terms can be implied into a contract by law?
A duty to act in good faith is implied into all contracts subject to UAE law, as sharia law emphasises the principles of justice and fairness. A contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith (Article 246, Civil Code). This mandatory provision prevents the parties from abusing their contractual rights and requires them to act reasonably.
Under UAE laws, the law completes the contract. That is, in the absence of a certain disputed clause, the prevalent UAE laws will apply. Therefore, when entering into a contract, it is essential to stipulate key provisions, such as the purpose of the contract, well defined obligations, and any monetary amounts involved.
- Are contracts in electronic form (email, web-based or otherwise) legally enforceable?
Electronic contracts are enforceable in the UAE, provided the essential elements of a contract (such as offer, acceptance and consent) can be expressed through electronic communications. Federal Law Number 1 of 2006 concerning Electronic Transactions and Commerce Law (ETCL) regulates all electronic transactions and contracts in the UAE, and allows the use of electronic documents in court. Federal Law Number 36 of 2006 amending the Law of Evidence in Civil and Commercial transactions provides that electronic signatures, records, and documents have similar effects as physical documents (see also Question 12).
- How are preliminary agreements used in your jurisdiction?
Memorandums of understanding (MOUs) are used in the UAE. An MOU is generally subject to time constraints. If the purpose of the MOU is not fulfilled within the specified time, the MOU will terminate automatically. Any agreement is valid under the Civil Code if it meets all the relevant requirements (see Question 2).
An MOU will be legally binding unless it provides otherwise. The parties generally wish that certain provisions of an MOU, but not all, be legally binding. Therefore, the parties must clearly specify which terms of the MOU are binding, and which are not.
- Can negotiations become legally binding in any circumstances? What are the principles and rules (if any) on pre-contractual liability?
Parties can walk away from any negotiations without incurring liability. Liability only arises once there is offer and acceptance at the end of the Majlis (see Question 2). Negotiations become legally binding on the signing of a contract by all parties.
- Is the concept of "good faith" in negotiations recognised and applied? If so, how?
Good faith is implied into all contracts under the Civil Code. A contract must be performed in accordance with its contents, and in a manner consistent with the requirements of good faith (Article 246, Civil Code). Even if the contract does not expressly provide for reasonable standards of good faith, the parties must perform their obligations in accordance with the law and in good faith.
In principle, the duty of good faith applies at the negotiation stage. When a party makes a fraudulent statement during negotiations, this will likely render the contract void for lack of mutual consent under Article 246 of the Civil Code. The wronged party can apply to the court for the contract to be cancelled and seek damages. However, in practice, the UAE courts have limited the application of the duty of good faith to the performance of the contract, except when the duty to act in good faith at the negotiation stage is expressly set out in the law applicable to the specific type of contract. For example, in insurance contracts, the insured must disclose all information material to the insurer's evaluation of the risk (Article 1032, Civil Code).
Formalities for execution
- What are the formalities for a validly executed contract?
Partnership contracts must be in writing (Article 656, Civil Code), although failure to draft the contract in writing will not affect the rights of third parties. A written contract must be signed by all parties and be marked with a company's seal or stamp.
Notarisation provides proof of authenticity of the document. Certain contracts must be made in writing and be notarised to be effective. For example, commercial agency agreements must be registered with the Ministry of Economy.
Agents or representatives of a company can enter into a contract on behalf of the company provided that they have a legalised and certified power of attorney (POA). The POA must be notarised by a public notary in UAE (Article 149 to 156, Civil Code).
A POA given by a foreign entity to their agents must:
- Be initially notarised by a public notary in the foreign country.
- Bear the stamp of the Ministry of Foreign Affairs and UAE Embassy in the country concerned.
- Be translated into Arabic.
- Bear the stamp of the Ministry of Foreign Affairs in the UAE.
See Question 1, Individuals and Question 3.
- Can contracts and deeds (or equivalent) be validly executed with an electronic signature in your jurisdiction?
The ETCL governs the use and admissibility of electronic signatures in the UAE courts. The ETCL provides that nothing prevents the use of electronic signatures as evidence in court under the Evidence Law (Federal Law Number 10 of 1992).
Under the ETCL, the use of and reliance on an electronic signature must be reasonable, which is based on numerous factors including:
- The nature of the transaction.
- The existence of previous transactions between the parties using e-signatures.
- Any evidence of prior breaches involving e-signatures.
The Federal E-Commerce Authority has set up a secure e-signature platform used to compare the reliability of e-signatures.
- When are deeds (or equivalent) required?
A notarised written contract is required for specific types of contracts, including marriage contracts, wills, and contracts for the transfer of immovable property.
Additionally, a deed is also required when a pledgee assigns their rights, by way of security, to another person. The deed of assignment must be registered with the Land Registry (Article 1418, Civil Code).
A power of attorney can only be granted by a deed of agency issued by the principal, which specifies the powers of the agent (Article 150, Civil Code) (see Question 16).
- What are the legal formalities for a valid deed (or equivalent)?
The formalities for a valid notarised contract/document in the UAE are as follows:
- The parties must present the original document.
- The document must be translated into Arabic before being notarised.
- The signatories or their legal representatives must have legal capacity.
- The documents presented must not be contrary to UAE laws and must not fall under the notary prohibitions.
- All the parties to the agreement must be present.
- The documents must be certified by the relevant foreign authorities of the country of notarisation (if applicable).
- What are the legal requirements and formalities for the execution of deeds (or equivalent)?
See Question 14.
The agents or the representatives of the company can enter into a contract on behalf of a company if they have a legalised and certified POA. The formalities for a POA vary depending on the type of POA (see Question 19).
Powers of attorney
- What are the main types of powers of attorney in your jurisdiction?
There are two main types of POA in the UAE:
- General POA. This gives very wide powers to the authorised person acting on behalf of the principal.
- Specific POA. This is often used when an individual provides only limited powers (for a specific matter) to the agent rather than a broad range of powers.
There are many more specific types of POAs recognised in the UAE that fall under these general types. These include restricted, absolute and conditional powers of attorney.
- What are the main transactions when powers of attorney are used?
There are numerous transactions for which a POA can be used in the UAE, including business dealings and transactions, legal representation, real estate transactions, financial matters and so on. The type of POA used depends on the type of transaction. For example, POAs are used to authorise lawyers for legal representation in the courts or for specific organisations to act on behalf of an individual.
To enter into contracts on behalf of a corporate body, an individual must have a legalised and certified POA.
- What are the key provisions in a power of attorney?
One of the key provisions in a POA is the inclusion of the complete details of the principal and the agent, including their passport number and other information.
The provisions in a POA vary depending on whether it is either general or specific. A general POA includes a broad list of powers granted to the agent, such as managing financial matters, legal representation in courts, managing real estate, entering into contracts and so on.
The provisions in a specific POA are limited to a particular matter. A specific POA should explicitly specify the acts that the agent is allowed to perform under the POA.
- What are the legal requirements and formalities for the execution of a power of attorney?
The following requirements apply to the execution of a POA:
- The POA must be in Arabic, or legally translated into Arabic if necessary.
- The principal must sign the POA before a public notary and have it stamped.
- If the POA is drafted in a foreign country, it must be notarised in that country and attested by the UAE Embassy and Ministry of Foreign Affairs in the country. It must then be attested by the UAE Ministry of Foreign Affairs.
- If the POA is for legal representation in court, it must be attested by the Ministry of Justice in the relevant Emirate.
- Are foreign powers of attorney recognised in your jurisdiction? If so, must a foreign power of attorney comply with legal requirements and formalities to be effective?
To be recognised in the UAE, a foreign POA must:
- Be signed before a public notary in the foreign country.
- Certified (legalised) by the UAE embassy in the foreign country.
- Stamped by the UAE Ministry of Foreign Affairs.
- Translated into Arabic and stamped by the UAE Ministry of Justice to certify the translation.
- When is notarisation required for contracts in your jurisdiction?
Notarisation is required for several types of contracts, including marriage contracts, wills, local agency agreements, and contracts for the transfer of immovable property. Notarisation can be obtained from any public notary, including abroad. A document notarised abroad must be certified by the Ministry of Foreign Affairs and the UAE embassy in the relevant country.
Electronic/online notarisation is allowed in the UAE. Electronic notary services are available in Dubai and Abu Dhabi.
- When is apostilling or legalisation required for contracts in your jurisdiction and how is it carried out?
Documents and contracts notarised outside the UAE must be approved by the Ministry of Foreign Affairs or the UAE embassy in the country concerned. The documents must then be certified by the Ministry of Foreign Affairs and by the Ministry of Justice in the UAE.
The UAE is not party to the HCCH Convention Abolishing the Requirement of Legalisation for Foreign Public Documents 1961 (Apostille Convention).
Virtual closing and completion
- Is virtual closing used and valid in your jurisdiction?
Virtual closing is not used and is not valid under the Civil Code.
- What are the key issues in the conduct of completion meetings?
There are no legal requirements relating to the conduct of completion meeting. The parties will sign the preliminary agreement or final agreement. The signatories must submit the necessary identity documents (copy of passport or identification document) and any document proving that they are authorised to sign the agreement.
Content of contracts
- What are the different types of contractual terms in your jurisdiction? What liability arises for breach of those terms?
All contractual terms and clauses have legal effect, provided that all the parties are aware of the terms and have agreed to them (Article 257, Civil Code).
As a general practice in the UAE, contracts have a representations and warranties clause that allows either party to file a claim if there is any element of misrepresentation during the initial negotiations. In addition, either party can file a civil case for breach of contract and a criminal case for criminal breach of trust under Federal Law Number 3 of 1987 regarding the UAE Penal Code.
A warranty is a promise from an individual providing a good or service that it will perform the service or supply goods as described in the contract. Under UAE law, every transaction involving the sale of goods carries a warranty that the products are free from defects. A seller must also warrant that goods are free from any encumbrances and charges, and not subject to third-party claims (Article 534, Civil Code). Therefore, the seller must disclose any claim made by a third party.
The seller's warranty against defects does not apply if the:
- Seller informed the buyer about the defect before the sale.
- Buyer bought the goods after becoming aware the defect and agreeing to it.
- Parties agreed the seller would not be responsible for the defect.
- Sale was at a public auction.
(Article 545, Civil Code.)
Variation, assignment and waiver
- How can the parties vary the contract terms agreed between them?
Consent of the parties is a vital element to any contract under the Civil Code. A contract clause is only valid if both parties have provided mutual consent to the clause (Article 257, Civil Code).
The parties are not allowed to withdraw from a valid and binding contract or to vary its terms unless they mutually agree to do so or if the court orders this (Article 267, Civil Code). Therefore, the parties can only modify the terms of a contract by mutual consent.
- What are the main ways to transfer contractual rights to a third party?
Either or both of the contracting parties can opt for a transfer of rights to a successor in the event of death.
For an assignment of debt to be valid, there must be consent of the transferor, transferee and creditor (Article 1109(1), Civil Code). For an assignment of contractual rights to be valid and enforceable, the type and quantity of the assigned rights must be certain and identifiable (for example, payment obligations or receivables). Where the assigned right is a sum of money, the amount must be fixed at the time of execution of the assignment agreement.
The rights under construction contracts can be assigned to a third party, but not the obligations unless the parties expressly agree. The contractor can appoint a subcontractor for the execution of the works (in whole or in part), unless the main contract prohibits subcontracting or the nature of the works requires that they perform the contract in person (Article 890, Civil Code). The subcontractor does not have a direct claim against the employer for anything due to them by the main contractor, unless the contractor refers them to the employer (Article 891, Civil Code).
- What are the rules relating to waiver of contractual rights?
Typically, parties have the right to waive their rights under a contract. Contractual rights can be waived under certain circumstances, for example, if the parties mutually terminate the contract. However, there are rights that cannot be waived, such as the legal limitation period to bring a claim (Article 487, Civil Code).
Enforcement and remedies
- What makes a contract invalid? What are the consequences of misrepresentation and mistake on the enforceability of a contract?
The direct purpose of a contract must exist, be valid and permitted, and not be contrary to public morals (Article 207, Civil Code). A contract is considered invalid if it:
- Does not contain a lawful benefit for both parties.
- Lacks any of the essential elements of a contract (Article 210, Civil Code) (see Question 2).
If only some of the terms of a contract are void, the entire contract will be void unless the remainder of the contract is severable.
There is misrepresentation when either of the contracting parties deceives the other by any means, causing that party to provide consent that they would have otherwise not given. Deliberately suppressing a fact is considered misrepresentation under Article 186 of the Civil Code. A deceived party has the right to cancel the contract if the contract was concluded by fraud. The right to cancel a contract due to misrepresentation lapses on the death of the person with the authority to apply for cancellation (Article 192, Civil Code).
A mistake does not render a contract void unless it relates to the nature of the contract, one of the conditions of its formation, or its object (Articles 193 to 195, Civil Code). A contracting party has the right to rescind the contract if they have made a mistake on a matter of substance (for example, in relation to the object of the contract, the person of the other contracting party or one of their characteristics). However, a mere mistake in an account or in writing the contract will not have any effect on the contract, as such a mistake can be easily rectified when identified.
- How can the parties be discharged from performing the contract? On what basis does a party have the right to terminate the contract?
Contracts in the UAE often include clauses on termination, dispute resolution, force majeure, and similar matters. These clauses define the rights and obligations of the parties if they fail to perform the contract or cannot do so due to unwanted and unforeseen events. For example, in the case of force majeure (that is, the occurrence of an unforeseeable event), the general position is that the contracting parties are allowed some leniency in the performance of their contractual obligations, such as delays for delivery, particularly in the construction industry. In the case of impossibility to perform contractual obligations, non-performance can be excused and consideration will not be due for the performance of those obligations (Article 273, Civil Code). Damages for non-performance must be paid by the debtor unless they can show that the impossibility arose from circumstances that are beyond their control (Article 386 of Civil Code).
The parties can agree that the contract will be terminated in the event of non-performance of a party's contractual obligations.
In the absence of a termination clause, a contract can be terminated by mutual consent of the parties, by the order of a court, or by the operation of law (Article 267, Civil Code). If one party is not willing to terminate the contract and the other party wishes to terminate, they must compensate the other party for the loss incurred and the loss of opportunity. The Civil Code specifically provides for the procedure for termination of various types of contract as follows:
- Articles 892 to 896: termination of contracts for work.
- Articles 919 to 923: termination of employment contracts.
- Articles 954 to 961: termination of agency contracts.
- What are the key rules on privity of contract and third party rights?
Under the principle of privity of contract, only parties to a contract can be obliged to perform the contract under it and sue under the contract.
However, there are a few exceptions to privity of contract. Under the Civil Code, contracting parties can add clauses to give specific rights to third parties. If the clauses grant third parties specific powers, these third parties will have contractual rights. However, third parties cannot be held liable for any legal consequences or non-performance of the contract.
- What are the main rules relating to excluding and limiting contractual liability?
The parties are free to agree on and exclude/limit contractual remedies. However, contracting parties cannot exclude liability for a harmful act (Article 296, Civil Code).
- What are the main remedies available for breach of contract?
The court will decide whether to:
- Order specific performance.
- Order that the costs for the object of the contract to be performed by a third party be paid by the breaching party.
- Cancel the contract and order the breaching party to pay compensation.
The judge must be satisfied that specific performance is impossible before assessing compensation (Article 386, Civil Code).
The UAE recognises different forms of damages, including direct damages, loss of profits and loss of opportunities. The contract can specify the amount of compensation/damages payable for breach of contract, although the court has discretion over the amount of damages awarded (see Question 34).
If the contract is cancelled, the court must ensure that the parties are restored to the position they would have been in had the contract been properly performed (Article 274, Civil Code).
There are also a few self-help contractual remedies available under the Civil Code, including the following:
- If the work of a contractor produces a beneficial effect on a property, the contractor has the right to retain the property until full consideration is paid. However, if the work does not produce any benefit, they do not have the right to retain the property pending payment, and if they do so, their right in the property is lost, and they are liable for compensation (Article 879, Civil Code).
- Amounts due to contractors or engineers who are undertaking the work of constructing, reconstructing or repairing a building have priority rights over the building during a sale. The priority right must be registered at the time of registration of the sale (Article 1527, Civil Code).
A contracting party must compensate the other for any direct or consequential harm they cause (Article 282, Civil Code). A party that proves that the loss was caused by an external cause such as natural disaster or an unavoidable accident, must compensate the other party in the absence of any contractual provision to the contrary (Articles 292 and 878, Civil Code).
Further rules on contractual liability include:
- If several persons have caused a harm, each of them is liable in proportion to the harm caused (Article 291).
- Compensation is assessed based on the harm suffered by the victim (Article 292).
- Compensation is given in money, unless the court expressly orders otherwise (Article 295).
- Any contractual condition excluding liability for a harmful act is void (Article 296).
- No claim for reimbursement can be heard after the expiration of three years from the date on which the victim became aware of the claim (Article 298).
- Compensation is payable as diya (blood money) or arsh (damages for personal injury) for harm caused to an individual (Article 299).
- Are clauses setting out a fixed or ascertainable amount of compensation/damages valid in your jurisdiction? Are these clauses subject to any limitation?
Parties can agree on the amount of compensation payable under certain circumstances or for breach of contractual terms (Article 390, Civil Code). The court has the power to alter such clauses if it considers that they are not proportional to the loss suffered.
Enforcement and cross-border issues
Choice of law
- Is a choice of foreign law in a contract upheld by the local courts?
The Civil Code recognises choice of foreign law clauses. A foreign law will not be applied if its principles are contrary to sharia law or public morals (Article 23, Civil Code). If it is established that a foreign law is applicable, its provisions will apply except for private international law rules. UAE law will apply if the foreign governing law refers to UAE law as the governing law of the contract.
However, the UAE courts ordinarily apply UAE law despite any reference to a foreign law in the contract. In a recent judgment, the Abu Dhabi Court of Appeal applied UAE law, on the basis of public order, to an agreement that was to be governed by English law.
- Is a choice of foreign jurisdiction in a contract upheld by the local courts?
Article 257 of the Civil Code suggests that if all parties agree to a foreign jurisdiction, the court of that jurisdiction will have the authority to resolve disputes between the parties.
The UAE courts have jurisdiction to hear actions filed against both:
- UAE nationals.
- Foreign persons having a domicile or a place of residence in the UAE.
Enforcement of foreign judgments
- How are foreign judgments recognised and enforced in your jurisdiction?
The following requirements must be met for a foreign judgment be recognised in the UAE:
- The UAE courts must not have jurisdiction over the substantive dispute in relation to which the foreign judgment was obtained.
- The judgment must have been issued by a competent court under the law of the foreign country.
- The parties must have been properly represented and attended the hearings, or have assigned their representative to attend the hearing.
- The order or the decision must be final.
- The order or decision must not conflict with a decision or an order issued by an UAE court, and not contrary to UAE rules of morality or public.
The UAE is a signatory to bilateral legal and judicial co-operation treaties with several countries (for example, India, France, Afghanistan, Pakistan, Egypt, Jordan, Nigeria, Morocco, Iran, and the UK). The conditions and procedure to enforce foreign judgments are specified in these treaties. For example:
- Under the Riyadh Arab Agreement for Judicial Cooperation 1983, the judgment creditor must make a formal request to the competent court where enforcement is sought. The enforcement process starts after approval of the request.
- Under the GCC Convention for the Execution of Judgments, Delegations and Judicial Notifications 1996, the enforcement procedure is governed by the law of the country where the judgment is executed. The judgment creditor must produce the judgment, a certificate declaring the judgment to be final, and other documents confirming that the defendant was properly notified (for ex parte judgments).
- Under the Convention on Judicial Assistance, Recognition and Enforcement of Judgments in Civil and Commercial Matters between the UAE and France 1992, an application for the recognition and enforcement of a foreign judgment must be submitted to the competent court of first instance in accordance with Article 235 of the UAE Civil Procedures Code.
In the absence of a treaty, the UAE Civil Procedures Code will apply. The UAE courts take into consideration the principle of reciprocity to enforce a foreign judgment. The applicant must request an execution order from the court of first instance, which will assess whether the conditions listed above are met.