The issuance of Federal Decree-Law No. (25) of 2025 represents one of the most far-reaching legislative transformations in the history of the United Arab Emirates. For more than forty years, civil and commercial relations in the country were governed by Federal Law No. 5 of 1985. While the former code provided a stable foundation for traditional transactions, the rapid evolution of modern finance, real estate development, arbitration practice, fintech, digital commerce, cross-border investment and artificial intelligence contracting created legal complexities that the old framework could no longer adequately regulate. The new Civil Transactions Law therefore does not merely amend the old code; it reconstructs the philosophical, doctrinal and procedural foundations of civil law in the UAE.

A Mandatory Interpretative Hierarchy: Reshaping Judicial Methodology

At the heart of the new law lies a mandatory interpretative hierarchy that fundamentally reshapes judicial methodology. Article 1 constitutionalize the supremacy of statutory text by requiring courts to apply legislative provisions strictly according to their wording and purpose whenever they are clear and decisive. Judicial discretion is curtailed in favour of legal certainty and predictability. Where no statutory provision exists, courts must apply Islamic Sharia principles. In the absence of Sharia guidance, prevailing custom may be applied, provided it does not conflict with public order or morals. Only where all three sources fail may courts resort to principles of justice and natural equity. This hierarchy permanently closes legislative gaps and anchors UAE civil jurisprudence in both Islamic jurisprudence and modern international fairness doctrines.

Articles 4 to 9 regulate the temporal application of the law and the continuity of legal effects. These provisions protect vested rights, prohibit implied repeal, and establish that no statutory provision may be abrogated except by express legislative text. They also modernize limitation computation through mandatory application of the Gregorian calendar and clarify how newly introduced limitation periods affect pending claims. These provisions are of particular importance for long-term contracts, real estate developments and financing arrangements, ensuring legal stability during the transition to the new regime.

Ensuring Legal Stability: Temporal Application and Continuity of Rights

A major structural reform appears in Articles 10 to 30, which codify a comprehensive system of private international law for the first time in UAE civil legislation. These articles determine the applicable law based on nationality, domicile, place of performance and the situs of property. They regulate contractual obligations, tortious liability, inheritance, personal status and corporate activity, while subjecting foreign law to public-order control and defaulting to UAE law where foreign law cannot be proven. This codification dramatically strengthens arbitration enforcement, cross-border investment security and asset-tracing mechanisms, aligning the UAE with advanced European-style conflict-of-law systems.

A Landmark Codification: Private International Law Rules

Articles 31 to 71 elevate Islamic jurisprudential legal maxims (qawāʿid fiqhiyyah) to binding statutory principles. Doctrines such as “harm must be removed,” “certainty is not removed by doubt,” “custom is authoritative,” “necessity permits prohibitions,” and “benefit accompanies liability” now operate as enforceable legislative norms. This unprecedented codification allows courts to resolve complex modern disputes using centuries-old equitable doctrines that now possess direct statutory force.

Qawāʿid Fiqhiyyah: Elevating Islamic Legal Maxims to Statutory Force

Articles 72 to 95 modernize the law of legal personality and capacity. They refine classifications of full, partial and absent capacity and introduce a judicial assistance system for persons with physical or mental impairments. This mechanism permits supervised legal participation rather than total deprivation of capacity, thereby strengthening inclusion and protection of vulnerable persons while preserving transactional integrity. Fraudulent concealment of incapacity is expressly compensable, reinforcing the principle of good faith in civil dealings.

Modernize Legal Personality and Protecting Capacity

Property law is comprehensively reconstructed in Articles 96 to 104. Property is classified into movable and immovable, fungible and non-fungible, consumable and non-consumable, public and private, and tangible and intangible assets. Public assets are declared absolutely inalienable and immune from seizure, prescription and transfer. This constitutional-level protection safeguards state infrastructure and public wealth, while private ownership, usufruct, easements and security rights are clarified to enhance real estate and investment stability.

Articles 105 to 111 codify the doctrine of abuse of rights. Civil liability arises where a right is exercised maliciously, disproportionately, or beyond customary limits. This doctrine provides a powerful deterrent against economic coercion, malicious litigation, nuisance conduct and predatory commercial practices.

Reconstructing Property Law: Classification and Inalienable Public Assets

Articles 112 to 138 establish a new contractual constitution. Contracts remain binding as the law of the parties but are now governed by mandatory principles of good faith, transparency, fairness and disclosure. Pre-contractual bad-faith negotiations are compensable, and concealment of decisive information renders contracts voidable with exposure to damages. Interpretation rules now prioritize intent, purpose, commercial practice and equity over literal formalism, fundamentally reshaping M&A, banking, real estate and joint venture contracting.

A New Contractual Constitution: Good Faith, Fairness, and Intent

Articles 139 to 145 modernize agency and representation by clarifying authority boundaries, regulating concealed agency, protecting third parties and strengthening accountability in power-of-attorney and brokerage arrangements.

Clarifying Agency, Representation, and Accountability

Articles 146 to 160 regulate capacity, guardianship and judicial permissions. They impose strict accountability on guardians, regulate court authorisations for transactions, and impose compensatory liability for fraudulent concealment of incapacity. These provisions significantly strengthen transactional security and legal protection for minors and incapacitated persons.

Strengthening Guardianship and Transactional Security

The new law also expands the sources of obligations to include contracts, harmful acts, beneficial acts such as unjust enrichment, unilateral acts and the law itself. Unjust enrichment is now fully actionable, closing major restitutionary gaps in the previous regime. Prescription, evidence and procedural computation have been modernized, with clarified limitation rules, codified interruption and suspension mechanisms, and updated evidentiary standards, significantly reducing technical litigation disputes.

Conclusion: Expanding Obligations and Modernizing Procedural Rules

Federal Decree-Law No. (25) of 2025 is not a reform—it is a new civil constitution for the United Arab Emirates. It integrates Sharia jurisprudence, international private-law doctrine, equity, modern commercial realism and global conflict-of-law systems into a single coherent legal architecture. From 1 June 2026 onwards, every civil right, contract, asset transaction and dispute in the UAE will operate under this sophisticated new legal order, fundamentally transforming litigation strategy, contract drafting, enforcement mechanisms and investor protection for generations to come.

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