The UAE Just Rewrote the Rules of the Deal — Before It Is Even Signed

On 1 June 2026, the UAE's new Civil Transactions Law (Federal Decree-Law No. 25 of 2025) replaced the 1985 Civil Code that governed contracts here for four decades. For any company doing business in the Emirates, one change stands out above the rest.

For the first time, good faith is a legal duty before the contract exists.

What actually changed

Under the old law, your obligations effectively began when you signed. Under the new law, they begin the moment you sit down to negotiate. Two principles now carry real legal weight.

Good faith in negotiations. A party that negotiates — or walks away — in bad faith can be liable for the other side's actual losses, even if no contract was ever signed.

A duty to disclose. Each side must share information that is material and decisive to the deal. Deliberately withholding it is now grounds to annul the contract — and any clause that tries to waive this duty is void.

Why this matters to every foreign investor

This applies to all of them — every nationality, every company operating onshore in the UAE, not a single group. If your standard playbook was "disclose the minimum, negotiate hard, decide later," that playbook is now a legal risk. Letters of intent, term sheets, and pre-contract exchanges are no longer informal. They are evidence.

Where it gets sharper — cross-border files

For deals with an international dimension, the stakes climb. Where a contract is silent, the governing law now follows the place of performance of the main obligation — not simply where it was signed. And the duty to disclose lands hardest on exactly the issues cross-border deals tend to leave unspoken: beneficial ownership (UBO), source of funds, pending disputes, and regulatory or banking restrictions on either side.

In files involving sanctioned or high-scrutiny jurisdictions, this is no longer a compliance "nice to have." Non-disclosure of a restriction that shapes the other party's decision can now unwind the entire deal — and trigger liability on top.

The takeaway for companies

The new law rewards exactly what serious compliance has always demanded: transparency, documented disclosure, and a clean record of who you are dealing with and where the money comes from. Due diligence is no longer the cautious party's preference. It is the standard the law now expects.

If your contracts touch the UAE, three things deserve review before your next signature: your negotiation protocols, your disclosure practices, and your governing-law clauses.

The deal no longer begins at signing. It begins at hello.

##UAE Compliance AML DueDiligence CrossBorder CivilLaw ARIKEH