Federal Decree-Law No. (25) of 2025, in force 1 June 2026.
On 1 October 2025, the President promulgated Federal Decree-Law No. (25) of 2025. Its attached Civil Transactions Law replaces Federal Law No. (5) of 1985 in its entirety and enters into force on 1 June 2026. There is no transition window — every civil dealing in the UAE from that date is governed by the new text.
Below is a partner-grade overview of the ten cross-cutting changes that affect every commercial client. Industry-specific memos and checklists sit in the companion files (01_property_management/, 02_construction/, 03_real_estate_spa/, 04_corporate_sme/).
1. Repeal, scope and temporal application (Arts 1–9)
- Article 1 of the law confirms it applies to all matters covered "expressly or implicitly", with the gap-filling hierarchy unchanged: Islamic Shari'ah, then custom, then natural-law principles.
- Article 4 retains non-retroactivity, but Articles 6–7 are critical for live files: new prescription periods apply from the in-force date to any limitation period that has not yet expired. Where the new period is shorter than the period under the 1985 law, the new period runs from 1 June 2026. Where the residual under the old period is shorter, that residual prevails.
- Article 8 fixes the means-of-evidence rules at the time the evidence was (or should have been) prepared.
Action: every limitation diary maintained on 1 June 2026 needs a one-pass review against the new periods.
2. Pre-contractual good faith and the duty of disclosure (Arts 121–123)
This is one of the most consequential additions. The 1985 law had no codified pre-contractual regime.
- Article 121: negotiations must be conducted in good faith. Bad-faith conduct in initiating, conducting, or terminating negotiations creates liability for actual damage (not lost expected profit, unless agreed). Deliberate failure to disclose information that materially affects validity is itself bad faith.
- Article 122: a binding disclosure obligation runs on both parties for information of "decisive importance" to consent. The aggrieved party may seek annulment for breach. Any clause limiting, excluding, or contracting out of the disclosure duty is void.
- Article 123: misuse or unauthorised disclosure of confidential information obtained during negotiations attracts liability under the general rules.
Action: NDAs and heads-of-terms drafting needs a refresh. Carve-outs against the duty are now unenforceable.
3. Hardship and the restoration of contractual equilibrium (Art 224)
Article 224 codifies the imprévision doctrine with bite: where exceptional general circumstances unforeseeable at contracting render an obligation onerous and threaten serious loss, the court may reduce the burden to a reasonable limit or rescind. Any agreement to the contrary is void. The same principle is re-stated for construction at Art 829(3).
Action: "no hardship" boilerplate is unenforceable. Long-term supply, lease, finance, and construction contracts should expressly engage with the doctrine rather than try to contract out of it.
4. Adhesion contracts and unfair clauses (Arts 118, 134, 223)
The court is given an express power to modify unfair conditions in adhesion contracts or exempt the adhering party from them, "in accordance with the requirements of justice"; agreements to the contrary are void (Art 223). Acceptance in adhesion contracts is confined to mere acceptance of pre-set uniform conditions (Art 134).
Action: terms-of-service, tenancy templates, insurance policies, and standard-form construction contracts should be stress-tested for unfair-clause exposure. Hidden arbitration clauses in printed general conditions are independently flagged as void in insurance (Art 958(4)) and the same posture should be assumed for adhesion contracts generally.
5. Prescription / time-bar — the resettlement table
| Subject | Period | Article |
|---|---|---|
| General civil claim | 15 years | 429 |
| Periodic recurring rights | 5 years | 430 |
| Professionals' fees (doctors, lawyers, engineers, brokers, experts, teachers) | 3 years | 431 |
| Merchants', manufacturers', hotel/restaurant, workers' wages | 2 years | 432 |
| Tort / harmful act | 3 years from knowledge, 15 years absolute | 258 |
| Beneficial act (unjust enrichment, etc.) | 3 years from knowledge, 15 years absolute | 290 |
| Action for non-enforceability of debtor's disposition | 3 years / 15 years absolute | 349 |
| Construction decennial claim | 3 years from collapse or discovery of defect | 824 |
| Latent defect (sale) | 1 year from delivery | 510 |
| Pre-emption (Shuf'a) | 2 months from knowledge / 6 months absolute from registration | 1190 |
| Insurance | 3 years, knowledge-based starts | 966 |
| Employment | 2 years from termination | 865 |
| Hotel guest claim | 6 months from departure | 929(2) |
| Possession (recovery / disturbance) | 1 year | 1208, 1211 |
| Right of usufruct | 15 years from non-exercise | 1248 |
| Easement | 15 years from non-exercise | 1275 |
6. Moral damages and personality rights (Arts 88–91, 254)
- Personal freedom, legal capacity, and the material elements of the human being cannot be the subject of dispositions contrary to law or public order (Arts 88–89).
- Article 90 gives a direct cause of action for unlawful infringement of personality rights (cessation + compensation).
- Article 91 covers names and surnames.
- Article 254: moral damage is expressly compensable. Compensation extends to spouses and relatives up to the second degree for moral harm resulting from incapacity or death. The right is non-assignable unless quantified by agreement or final judgment.
7. Single-person civil companies and profit reinvestment (Art 603)
Article 603(2) authorises, in line with applicable legislation:
- a civil company formed or owned by a single person; and
- reinvestment of net profits to achieve the company's purposes.
The 1985 law's contract-only conception of "company" is replaced. Article 605 confirms acquisition of legal personality on formation, opposable to third parties after the prescribed procedures.
8. Professional companies — a new chapter (Arts 645–654)
Liberal-profession practices now have an explicit Civil Code home:
- Formation by licensed persons; partnerships with foreign professional companies permitted unless prohibited by law (Art 646).
- Naming rules tied to the regulator (Art 647).
- Single-firm rule: a partner cannot be a founder/partner in more than one professional company (Art 650).
- Personal liability of partners for their professional faults; firm liable to third parties; exemption from manager liability is void (Art 651(3)).
- Dissolution where all partners lose their licence (Art 654).
9. Mortgage and possessory pledge modernisation (Arts 1296–1397)
- Article 1297: a mortgage is created only by registration.
- Article 1307: mortgage is indivisible.
- Article 1313: mortgage attaches to compensation, insurance proceeds, and expropriation consideration where the property perishes.
- Article 1317: any clause permitting the mortgagee to auto-acquire the property on default or to sell without legal procedures is void; the mortgage itself survives.
- Article 1330: the possessor of a mortgaged property has a statutory right to purge.
- Article 1382: possessory pledge of a movable is opposable to third parties only by an instrument of fixed date plus possession.
10. Insurance contracts (Arts 953–985)
- Article 954: any agreement contrary to the insurance chapter is void unless it benefits the insured/beneficiary.
- Article 958 lists five categories of void clauses, including arbitration clauses buried in standard print and forfeiture for unrelated breaches of law.
- Article 960: insurer subrogation, with the standard family-and-employee carve-out.
- Article 966: 3-year limitation, knowledge-based starts.
- Articles 977–985: life insurance — written consent required for third-party life cover (Art 978); proceeds outside the estate (Art 985); intentional causation by the beneficiary forfeits cover (Art 980).
How to use this brief
- The cross-cutting issues above apply to every commercial relationship — pull the relevant Articles into your standard intake template.
- For industry-specific drafting and re-papering, use the ten companion folders in this pack.
- Where a clause in a current template offends a void-clause provision (Arts 122(4), 224, 223, 489(2), 851(3), 853(3), 958, 1317, etc.), it must be removed or restated before 1 June 2026 — courts are not required to sever, and the survival of the contract depends on the local provision.
Industry coverage map
| # | Industry / function | Folder | Key chapters of the new law |
|---|---|---|---|
| 01 | Property management, JOP/OC, leasing | 01_property_management/ | Floors & apartments (Arts 1089–1098), Lease (685–749), Privilege over movables (1411–1417), Right of retention (350–353), Adhesion contracts (223) |
| 02 | Construction & contractors | 02_construction/ | Muqawala (812–839), Decennial liability (821–824), Hardship (224, 829(3)), Subcontracting (832–833), Termination for convenience (836) |
| 03 | Real estate & SPAs | 03_real_estate_spa/ | Sale (445–547), Pre-emption (1171–1198), Musataha (1253–1261), Mortgage (1296–1342), Wills & death-illness (1154–1158) |
| 04 | Corporate & SME | 04_corporate_sme/ | Civil companies (602–635), Professional companies (645–654), Mudaraba (655–670), Agency (866–903), Employment (840–865), Suretyship (986–1035) |
| 05 | Banking & finance | 05_banking_finance/ | Mortgage (1296–1342), Possessory pledge (1343–1397), Assignment of rights (405–417), Assignment of debt (418–424), Suretyship (986–1035), Set-off (319–328) |
| 06 | Insurance | 06_insurance/ | Insurance contract (953–985), Takaful (967), Fire (968–976), Life (977–985), Void clauses (958), Subrogation (960, 976) |
| 07 | Hospitality & F&B | 07_hospitality_fnb/ | Hotelier liability (928–929), Hotelier privilege (1416–1417), Gratuities as wage (846), F&B supply (432, 510), Adhesion contracts (134, 223) |
| 08 | Family office & succession | 08_family_office_succession/ | Conflict of laws (17), Inheritance & estate liquidation (1116–1153), Wills (1154–1158), Family ownership (1084–1088), Gifts (552–589), Takhāruj (534–537), Life-cover estate exclusion (985) |
| 09 | IP & technology | 09_ip_technology/ | Incorporeal rights (111), Employee inventions (853), Trade secrets (848(5)–(6), 865), Pre-contractual disclosure (121–123), Adhesion / click-wrap (118, 134, 223), Tort & moral damage (245–258) |
| 10 | Logistics, trade & commodities | 10_logistics_trade/ | Salam (522–531), Sale (445–510), Deposit & warehousing (904–930), Documents of title (1203), Sequestration (931–945), Right of retention (350–353) |
Cross-industry void-clause catalogue
If a contract template — in any sector — contains any of the following clauses, the clause is unenforceable on 1 June 2026 and the contract should be re-papered.
| Article | Clause that is void |
|---|---|
| 88 | Waiver of personal freedom or legal capacity |
| 122(4) | Limitation, exclusion, or contracting-out of the pre-contractual disclosure duty |
| 184(2) | Conditions contrary to law, public order, or morals (clause alone is void; contract may survive) |
| 223 | Adhesion contracts: contrary to court's power to modify unfair conditions |
| 224 | "No hardship" / contracting-out of court power to restore equilibrium |
| 257 | Exemption or mitigation of liability arising from a harmful act |
| 340(5) | Agreement contrary to the agreed-compensation regime |
| 443(1) | Pre-establishment waiver of the time-bar defence; agreement on a non-statutory period |
| 489(2) | Exclusion or reduction of the warranty against entitlement in a sale |
| 651(3) | Exemption of a current or former manager of a professional company from personal liability |
| 662(1) | Allocation of capital loss in Mudaraba away from the capital provider |
| 664(1) | Fixed-amount profit for one party in Mudaraba |
| 851(3)* | Conditions departing from non-compete validity test (time, place, scope, full capacity, no employer fault) |
| 853(3) | Agreement depriving the employee of special compensation for inventions of serious economic significance |
| 958 | Five categories of void insurance clauses (laws-forfeiture, late-notice forfeiture, hidden print, embedded arbitration, unfair clauses without causation) |
| 1028 | Surety taking consideration for the suretyship |
| 1317 | Auto-acquire by mortgagee on default; sale without legal procedures |
*851(3): non-compete is invalid where the employer rescinded / refused to renew without employee fault.
Related Civil Code 2025 guides
Published 18 May 2026. General information only — not legal advice. Contact us for matter-specific advice.