New UAE Civil Code: what the 1 June 2026 transition means for existing contracts

As we approach 1 June, we will be issuing a series of articles in which we will explore these differences and how they are likely to impact contracts in the construction and engineering industry (muqawala).

In this first article, we will be focusing on the circumstances in which the new UAE Civil Code could apply to contracts executed prior to 1 June.

Article 4(1) of the new UAE Civil Code

Article 4(1) of the new UAE Civil Code provides that this new law will only be effective from the date when it comes into force, i.e., 1 June 2026. The starting position is likely to be that any contracts that were entered into before 1 June will be governed by the old UAE Civil Code with all contracts entered into on or after 1 June being governed by the new UAE Civil Code. There is, however, one stated exception to this rule concerning limitation periods. Article 6 of the new UAE Civil Code provides that from 1 June, any limitation periods that have not expired will be the subject to the limitation periods that are set out in the new UAE Civil Code.  

Whilst Article 4(1) is clear, it does not specifically address the position with regards to long-term contracts, renewals, extensions, or amendments to contracts that were entered into prior to 1 June. By way of example:

1. If Party A and Party B executed a contract prior to 1 June for some civil works and, on 1 July, they agreed to substantially amend the terms of the contract that included scope changes, additional costs, and an extension to completion dates, and the terms of the amendment are drafted in a way that they amend the terms of the original contract. In this scenario, it may be argued that whilst the original contract is to be governed by the old UAE Civil Code and amendments should be governed by the new UAE Civil Code.
2. If Party A and Party B executed a contract prior to 1 June under which a completion date for works was set at 1 January 2032. During the performance of the works, variations were instructed, there were disputes about defective work, payment disputes, and entitlements to extensions of time. In 2031, the contract was terminated due to an allegation of default. In 2033, these matters were referred to arbitration. In this scenario, it can be argued that the claims should be governed by the old UAE Civil Code because the contract was entered into prior to 1 June 2026, however given the passage of time it is conceivable that any arbitrator considering the issues in 2033 is likely to be influenced by the new UAE Civil Code particularly in relation to procedural fairness; abuse of rights; defective works; and evidentiary standards. 

These examples are not beyond the realms of possibility and therefore it is important for parties to:

1. Be clear about how amendments to contracts are to be interpreted and parties should ensure that any amendments expressly includes a provision that addresses which law should apply: the old UAE Civil Code or the new UAE Civil Code.
2. Anticipate that disputes will be decided in a post-2026 legal mindset.

Authored by Emerson Holmes and Jamie Phillips.