UAE Overhauls Civil Law to Boost Commercial Competitiveness

The new legislation marks a departure from the previous reliance on the 1985 Civil Code, which had become increasingly fragmented due to piecemeal amendments. By replacing the old framework entirely, the UAE seeks to eliminate the overlap between general civil provisions and sector-specific laws, such as those governing bankruptcy or corporate entities. This shift aligns the UAE with broader regional legal reforms, including those recently seen in Saudi Arabia and Qatar, reinforcing its status as a sophisticated global business hub.

A central feature of the reform is the introduction of a clearer legal hierarchy. Courts are now explicitly instructed to prioritize specialized statutes over general provisions. Furthermore, the new law introduces objective tests for the "abuse of rights," requiring parties to act with proportionality and commercial reasonableness. It also formalizes pre-contractual duties, making bad-faith negotiations—including the deliberate withholding of material information—grounds for compensation. By recognizing framework agreements and modernizing rules on digital contract formation, the law provides a more stable environment for cross-border transactions. Legal experts advise businesses to audit existing templates and negotiation protocols to ensure compliance with these higher standards of disclosure and good faith.