The usual sequence: a UK or US company sends its standard terms, the UAE counterparty signs with minor edits, everyone assumes the document works the way it does at home. It does not. UAE law is a civil-law system with its own rules on what a court will enforce, what it will rewrite and what it will ignore. The template is not wrong in itself; it is written for a different court. Below are the points where that difference costs money.
Penalty clauses are not what you think
Under English law a liquidated damages clause stands if it is a genuine pre-estimate. Under UAE law a court may revise an agreed penalty if it does not correspond to the actual loss, upwards or downwards. The practical consequence: a large fixed penalty in the template gives less certainty than it appears to, and the loss it is meant to cover should be documented and justifiable. The wording and the amount are a matter for counsel before signing, not after the breach.
Termination for convenience is not implied
Many templates assume a right to walk away on notice. In a UAE contract that right exists only if it is written in expressly, with the notice period and the consequences: return of advances, payment for work done, handover. Without it, termination needs a ground, a documented breach and a procedure: written notice in the agreed form, a cure period where the contract provides one, and only then the notice of termination. Stopping your own performance "in response" before formal termination hands the other side a counter-claim.
Notices are a formality that decides cases
A demand that was not served in the way the contract prescribes does not legally exist. The clause needs specific addresses, including email if email is to count, the method of service, and the moment a notice is deemed received. "Notice by email to the account manager" is how a strong claim is lost on a technicality.
The clause that decides where you sue
Three linked choices: governing law, forum and language.
- Governing law. The parties may often choose foreign law in a commercial contract, within limits. But a choice of English law with no agreed forum means an onshore UAE court applying English law through translated expert evidence.
- Forum. The onshore courts of the emirate, which work in Arabic; the DIFC Courts or ADGM Courts, which work in English under common-law-based systems; or arbitration, at DIAC or an international institution. One mechanism only. A jurisdiction clause and an arbitration clause in the same document produce a dispute about the clause itself.
- Language. A bilingual contract needs one line saying which text prevails. Onshore courts will require a sworn Arabic translation of the English text in any case.
If your template still names DIFC-LCIA, note that the centre was abolished by Decree No. 34 of 2021; such clauses remain valid and are administered by DIAC, while cases started before 20 March 2022 are administered by the LCIA under the DIAC-LCIA agreement of 27 March 2022. Outside the UAE the clauses have been challenged in court. New contracts should name an existing institution.
Force majeure and limitation of liability
Neither is implied in the way an English lawyer expects. Force majeure is defined in the contract, with a list, a notice procedure and the effect on obligations. A cap on liability and an exclusion of indirect loss must be agreed expressly. Both are then checked against the chosen law and forum: a clause that works before the DIFC Courts under English law may read differently before an onshore court.
Who signed, and with what authority
This is the most underrated check and the first thing challenged in a dispute. Confirm the counterparty's licence, its constitutional documents and the signatory's authority: a resolution, a power of attorney, the articles. Company stamps are still widely used and expected on signed documents. Foreign documents that will be used before a UAE court or registrar go through consular legalisation and an Arabic translation by a sworn translator, since the UAE is not a party to the Hague Apostille Convention.
Confidentiality and personal data
UAE law has its own requirements for personal data and confidentiality, and they are not implied. The clauses go in expressly, especially in contracts involving customer data, employees or cross-border transfers.
Before signing: the five-minute check
Governing law; forum; prevailing language; notice addresses and method; termination procedure. These five clauses decide the outcome of almost any dispute and are the five least read. Reviewing them before signature costs a fraction of any dispute afterwards.
If the contract is already signed and there is a problem
Re-read the whole document, not just the disputed clause. Document the breach and send the demand exactly as the contract prescribes, with proof of delivery. Keep performing until formal termination unless the contract says otherwise. Preserve correspondence in its original form. Locate the other side's assets before spending money on proceedings. Limitation periods depend on the governing law and the type of claim; we confirm them for your contract.
Frequently asked questions
Can we keep English law and English courts?
You can choose English law, within limits. English courts are a different question: a judgment from London has no treaty route into the UAE comparable to the New York Convention for arbitral awards. If the counterparty's assets are in the UAE, consider the DIFC Courts or arbitration instead.
Do we need the contract in Arabic?
Not for signature in most commercial cases. For the onshore courts, registrars and notaries, an Arabic text or a sworn translation will be required.
Is an electronic signature accepted?
Electronic signatures are used in commercial practice; whether a particular form is sufficient for a particular document or authority we confirm for your case rather than answer in general.
This is a general framework, not legal advice. UAE law changes, and procedures differ between emirates and free zones. We review each situation individually.