Common Pre-Dispute Management Mistakes to Avoid in Dubai

Clients usually call about a dispute at the point where the decisions that will determine how it goes have already been made. The contract was signed two years ago. The variation was agreed on a call. The first stiff email has gone out. What is left to advise on is how to make the best of a position set before anyone thought a lawyer was needed. The mistakes below are the ones we see most often in Dubai, and each is made long before there is anything to argue about.

Mistake 1: a dispute clause that does not match the deal

Dispute resolution clauses get copied between contracts more than any other provision, and they travel badly. Three versions cause repeated trouble here.

Clauses that still name DIFC-LCIA. That institution was abolished by Dubai Decree No. 34 of 2021 and its caseload moved to the Dubai International Arbitration Centre. Contracts naming it are still being signed. The reference is not necessarily fatal, but it is an argument the other side will run before anything is heard on the merits, and it is entirely avoidable at drafting.

Clauses that confuse the seat with the venue and the institution. The seat determines which court supervises the arbitration and which law governs the procedure; the institution administers it; the venue is merely where hearings are held. Onshore arbitration is governed by Federal Law No. 6 of 2018 as amended, while the DIFC is available as a seat with the DIFC Courts supervising. A clause that names a DIFC seat, an onshore institution and a governing law from somewhere else can be made to work, but it invites a fight about which court has supervisory jurisdiction.

Clauses that ignore where enforcement will happen. A well-drafted forum choice is worth little if the counterparty's assets sit somewhere the resulting judgment or award cannot practically be enforced. Enforcement is a drafting question, not a post-judgment one, and it belongs in the conversation when the clause is chosen.

Leases deserve separate thought. A dispute clause lifted out of a commercial contract and dropped into a tenancy agreement should be checked against how landlord and tenant disputes are actually dealt with in the emirate concerned, and checked before the lease is signed rather than when the rent stops arriving. Our rental disputes team advises on those.

Mistake 2: escalation clauses nobody can actually follow

Multi-tier clauses — negotiate, then mediate, then arbitrate — are sensible in principle and are frequently drafted in a way that creates problems rather than solving them.

The vague version says the parties will "meet in good faith to resolve any dispute amicably" and stops there. No one knows who must meet, at what level of seniority, within what period of being asked, or when the obligation is spent. It gives an unwilling party nothing to comply with and a willing party nothing to insist on.

The over-specified version is worse. Where the clause makes each step a strict precondition to the next, a party who goes to arbitration having skipped or mistimed a step hands the other side a jurisdictional objection that has nothing to do with the merits of the claim.

A clause that works says who serves the notice and on whom, what it must contain, who attends the negotiation and at what level, how a mediator gets appointed if the parties cannot agree on one, and — most importantly — the precise event that exhausts each tier and permits the next. Then it is capable of being complied with, and capable of being proved. Our pre-dispute management practice reviews these clauses across contract portfolios.

Mistake 3: not knowing who you have actually contracted with

The UAE has mainland companies, free zone companies, DIFC and ADGM entities operating under common law with their own courts and regulators, and branches of foreign companies. These are different things with different consequences, and the trade name on the letterhead does not tell you which one you are dealing with.

Before signing, three checks pay for themselves. Confirm the exact legal entity and its licensing authority — not the group, the entity. Confirm the signatory is authorised to bind it, from the constitutional documents or a power of attorney rather than a job title in an email footer. And check whether the entity that will actually perform the contract, hold the assets and receive the money is the same one that is signing it. A claim against a licensing shell with no assets is a claim in name only.

Where a check produces something uncomfortable, the answer is usually not to walk away but to adjust the deal: a parent guarantee, security, payment terms that reduce exposure, a shorter initial term. Due diligence only works if what it finds is fed back into the contract.

Mistake 4: letting the paperwork drift away from the contract

Most commercial claims here are won or lost on the documents, and the documents most often tell a different story from the signed agreement. Scope was expanded verbally. A variation was agreed on WhatsApp and never signed. Invoices went out on terms nobody had approved. Notices required by the contract were sent by email to someone who had left, when the contract called for a different method entirely.

Two disciplines prevent most of this. Confirm in writing anything agreed in a meeting or a call, in the form the contract requires and to the address it specifies. And when performance starts diverging from the signed terms, either document the change or stop and address it, rather than letting a course of dealing develop that the contract does not support.

The same applies to employment matters, where the documentation problem is usually a performance issue that was never recorded, addressed informally for a long time, and then relied on when the relationship ended. The Employment Law, Federal Decree-Law No. 33 of 2021, sets out the grounds and procedures that apply on termination, and a contemporaneous record is what allows an employer to show it followed them. Our employment disputes team advises before a termination as well as after one.

Mistake 5: treating the first letter as an administrative step

The opening letter of a dispute is often written internally, in a hurry, by someone who is annoyed. It regularly does damage: it addresses the wrong entity, states a figure that will later have to be revised downwards, concedes a point in an attempt to sound reasonable, threatens something the sender has no intention of doing, or misses a contractual deadline that was running.

Any letter written once a dispute is on the horizon should assume a tribunal will read it. That does not mean writing something hostile — measured and precise is the stronger document. It does mean checking the contract's notice provisions and any time limits before it goes out, not after. Our commercial disputes team can review correspondence at that stage.

Where to start

Reviewing an existing contract portfolio, take them in this order: dispute clauses naming a defunct institution or a mismatched seat; escalation tiers nobody can comply with; counterparties whose legal identity was never verified; and contracts where practice has moved away from the written terms. A short list, and cheaper to work through than one contested claim.

Disclaimer: this article is for general information only and does not constitute legal advice. Readers should take advice on their own circumstances before acting on anything set out here.

Further reading

• Common tenancy dispute resolution mistakes to avoid in Dubai
• Common litigation and dispute financing mistakes to avoid in Dubai
• Common property management power of attorney mistakes to avoid in Dubai
• Common arbitration mistakes to avoid in Dubai