Contract Drafting Protocol in Dubai Mainland: Step-by-Step Guide

The contract will be read by a court that did not draft it

A great many contracts signed by Dubai mainland companies were written somewhere else. They arrive as an English-language template built on English or US assumptions, get a party name changed and a Dubai address inserted, and are signed. They then have to work in a system that reads them differently: a civil law system, in a language that is not the language of the drafting, with rules on good faith, on agreed compensation and on termination that do not match the assumptions the template was built on.

This is not an argument for rewriting everything from scratch. It is an argument for knowing which clauses behave differently here, because those are the ones that decide the outcome when the relationship breaks down.

Which law is actually applying

Contracts between businesses on the mainland sit under the Civil Transactions Law for questions of formation, interpretation and performance, and under Federal Decree-Law No. 50 of 2022 on commercial transactions — which replaced Federal Law No. 18 of 1993 — for commercial obligations and instruments. Certain relationships have their own regimes on top: employment, commercial agency, real estate, and regulated financial activity. If your transaction falls into one of those, the special regime overrides what the parties agreed, and drafting around it does not work.

Choosing a foreign governing law is possible in many cross-border contracts, but it does not remove UAE mandatory rules, and it adds a real cost: if the case is heard in the Dubai Courts, foreign law must be pleaded and proved. Choosing it because the template came with it is not a reason.

Parties, capacity and authority

Start with who is signing and whether they can. Name each party by its full registered name, its licence or registration number, and its registered address, and check the trade licence rather than the letterhead. A contract signed by someone without authority is a live risk in a system where the signature and the company stamp both carry weight, and where authority is evidenced by the licence, the constitutional documents and any power of attorney.

Two points recur. Authority to enter into a commercial contract is not automatically authority to agree to arbitration. And where the counterparty is a branch or a group company, the entity that signs is the entity you can sue — the parent's balance sheet is not available to you unless it has given a guarantee.

Scope, price and payment

Most commercial disputes are not about clever legal points. They are about what was supposed to be delivered, when, to what standard, and what triggers payment. Define the deliverables specifically enough that a stranger could tell whether they were provided. Tie payment to identified milestones or events, state the currency, state the invoicing and payment mechanics, and say what happens on late payment.

Deal with VAT expressly. Value added tax at 5% applies under Federal Decree-Law No. 8 of 2017, as amended by Federal Decree-Law No. 18 of 2022, and a price stated without saying whether it is inclusive or exclusive is a dispute waiting to happen. If either party's tax position depends on documentation from the other, say who provides what.

The clauses that do not do what the template thinks

Agreed compensation and penalties

A liquidated damages clause is enforceable in principle, but the court can adjust the agreed amount to reflect the loss actually suffered if a party asks it to. The consequence for drafting is practical: an inflated figure chosen to frighten the other side will not survive, and a figure supported by a genuine estimate of loss is far more likely to. Keep the reasoning, not just the number.

Termination

Do not assume that a breach entitles you to walk away. Unless the contract clearly provides for termination without recourse to the courts, a party may find that termination has to be ordered judicially. Spell out the events that allow termination, the notice required, whether a cure period applies, and that the innocent party may terminate by written notice without a court order — and then follow that procedure exactly, because wrongful termination turns the claimant into the defendant.

Limitation and exclusion of liability

Caps and exclusions are used routinely, but liability for fraud and for gross negligence cannot be contracted away, and a clause that purports to exclude everything invites the whole provision to be read down. A cap expressed by reference to the contract value, with carve-outs stated openly, is more durable than a blanket exclusion.

Boilerplate that carries more weight than expected

Entire agreement, waiver and no-oral-variation clauses do not operate as absolutely as they do in common-law drafting, because performance and the parties' conduct are relevant to how obligations are interpreted. Good faith is a principle of the system, not an optional flourish. That cuts both ways: it will not rescue a badly drafted contract, but it does mean a party that behaves opportunistically cannot rely entirely on literal wording.

Language, notices and formalities

If the contract ends up in the Dubai Courts, it will be filed in Arabic translation. A bilingual contract with a stated prevailing language is better than an English contract translated hurriedly by a litigation translator years later. If Arabic is to prevail, have the Arabic reviewed by someone who understands the deal, not only by a translator.

Notice clauses are ignored at the drafting stage and then relied on absolutely. State the addresses, the permitted methods, when notice is deemed received, and keep the list of addresses updated. Many otherwise good claims start badly because the first notice went to a superseded address or by a method the contract did not allow.

Confidentiality, data and intellectual property

Say who owns what is created under the contract, and whether the customer gets ownership or a licence — silence here is expensive in development and marketing work. Where personal data moves between the parties, allocate the roles and obligations expressly; a mainland business handles personal data under Federal Decree-Law No. 45 of 2021, and the financial free zones have their own regimes, so a group contract spanning both needs to say which applies to what.

Before signature

• Full legal names, licence details and correct signatories on every page that needs them.
• Deliverables and acceptance criteria a third party could apply.
• Price, currency, VAT treatment, invoicing and late payment all stated.
• Termination rights, cure periods and the mechanism for terminating without a court order.
• A liability cap with reasoned carve-outs rather than a blanket exclusion.
• Governing law, forum, seat and language consistent with each other and with the transaction.
• Schedules attached, initialled, and matching what the main body says they are.

Careful drafting is the cheapest part of any transaction. Our corporate legal services team drafts and reviews commercial agreements for mainland and free zone entities, and our commercial dispute resolution practice sees, week after week, exactly which clauses hold and which do not.

For help with a contract you are about to sign, contact the Nour Attorneys team.

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Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

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