Introduction

In a major legal transformation, the United Arab Emirates has introduced a comprehensive civil code under Federal Decree-Law No. 25 of 2025 on the Civil Transactions Law, set to take effect on 1 June 2026. This law replaces the old Civil Transactions Law of 1985 and represents a significant leap in the regulation of civil rights and obligations across the UAE. The reform is part of a broader legislative agenda aimed at modernizing the UAE’s legal framework, enhancing clarity, promoting judicial consistency, and aligning civil law with contemporary commercial and social realities. 

Unlike piecemeal amendments to specific sectors, this law reconfigures foundational civil principles, including capacity, contracts, property rights, remedies, and corporate civil provisions. The changes are noteworthy for individuals, businesses, expatriates, and courts alike, as they streamline legal processes, reinforce core legal doctrines, and improve predictability in civil dispute resolution.

Modernizing Legal Capacity and Age of Majority

A landmark shift in the Civil Transactions Law is the reduction of the age of majority from 21 lunar years to 18 Gregorian years, bringing the UAE into closer alignment with international standards and harmonizing civil legal capacity with other national laws, such as juvenile and labor legislation.

This reform has far-reaching implications:

1. Individuals aged 18 and above are recognized as having full legal capacity, enabling them to independently enter contracts, manage personal and financial affairs, and assume legal obligations without guardian consent. 
2. Minors aged 15 and above may seek judicial authorization to administer parts of their assets under court supervision, supporting entrepreneurial participation while safeguarding their interests. 

These changes enhance legal certainty and reduce disputes over contractual capacity, which previously led to litigation when adults aged 18–20 lacked full contractual authority under the old code. 

Pre-Contractual Duties and Framework Agreements

Another notable innovation concerns pre-contractual relations. The new law introduces a formal duty of disclosure during pre-contractual negotiations, requiring parties to share fundamental information material to the transaction. 

Professionals and commercial entities must now:

1. Disclose essential facts that materially affect the decision to contract
2. Avoid misrepresentation or withholding of critical information
3. Document negotiations more carefully to limit pre-contractual liability

This framework encourages good faith conduct from the outset and reduces disputes arising from incomplete or misleading disclosures prior to formal contract execution. 

The law also recognizes framework agreements, which refers contracts that establish standard terms for recurring or long-term relationships. By pre-agreeing essential terms, parties reduce negotiation costs, streamline subsequent contracts, and create a stable legal foundation for ongoing commercial interactions.

Expanded Judicial Discretion and Sharia Integration

The Civil Transactions Law expands judicial authority in interpreting and applying the law where no specific statutory provision exists. In such gaps, judges may invoke principles of Islamic Sharia law to achieve justice and public interest, without being bound to a single theological school.

This development:

1. Reinforces the judiciary’s role in addressing novel civil issues not expressly covered in legislation
2. Allows flexible and outcome-oriented reasoning grounded in recognized principles
3. Applies to personal status scenarios involving missing persons, unknown parentage, and absentees when no specific law exists. 

The shift moves the legal system toward a pragmatic blend of statutory, customary, and principled jurisprudence while maintaining alignment with public policy.

Enhanced Protection in Sale and Contract Law

The reform also strengthens protective mechanisms in sale and contract law. Key areas include:

1. Sale by Sample or Model: The law clarifies the seller’s obligation to ensure that when a sale is made by sample or model, the goods delivered must conform to the sample or model that was shown to the buyer, reducing ambiguity over conformity and performance standards.

2. Latent Defects: Buyers now enjoy clearer remedies where hidden defects arise, including rejection of goods, price reduction, or replacement. The limitation period for latent defect claims has been extended from six months to one year from delivery, unless a longer period is contractually agreed. 

3. Consumer Protection: Protecting persons with limited capacity is strengthened, especially in cases of real estate sales with gross inadequacy, providing more robust safeguards against exploitation. 

These reforms promote fairness in commercial transactions and align civil contract rules with contemporary commercial expectations.

Property Rights, Possession, and Assignments

The Civil Transactions Law introduces clearer and more modern provisions governing property rights:

1. Usufruct and Musataha Rights are recognized rights under UAE law that allow the use or development of property owned by another without transferring ownership of the land itself. A usufruct grants the right to use and derive benefit from property while preserving its substance, enabling the usufructuary to occupy, lease, or generate income from the property, while ownership remains with the original owner.

A musataha, by contrast, grants the right to construct, plant, or develop on land owned by another for a specified period, with the right to own the buildings or structures erected during that term. Under the updated legal framework, both usufruct and musataha rights must be registered with the competent authorities to be legally valid and enforceable, underscoring the UAE’s emphasis on formality, transparency, and certainty in real estate transactions.

1. Assignments and Protection of Possession are addressed with greater clarity under the updated law, which codifies the right to assign certain real and contractual rights by the original holder to another legally recognized party in accordance with agreed terms and statutory conditions. The law also strengthens possessory protection by expressly recognizing remedies against unlawful interference, including the right to prevent encroachment and to initiate preventive actions where a threatened violation is imminent, even before actual damage occurs.

These provisions enhance legal certainty by protecting lawful possession independently of ownership and reducing the risk of self-help or prolonged disputes. In doing so, the law reinforces the protection of proprietary interests and aligns the UAE’s property and civil law framework with internationally recognized standards of land and asset governance.

Expatriate Assets and Succession

A particularly relevant reform for UAE expatriates concerns the treatment of heirless assets. Under the new law, financial assets in the UAE belonging to a foreign national who dies without a will and without legal heirs will be designated as a charitable endowment or waqf, managed under the supervision of competent authorities to ensure proper allocation. 

This replaces previous ambiguities in succession law and provides a transparent legal mechanism for dealing with estates of expatriates, underscoring the importance of estate planning through wills for individuals with UAE-based assets.

Corporate Civil Provisions Modernization

The Civil Transactions Law also modernizes provisions relating to companies and commercial structures:

1. Distinguishes civil companies from commercial companies based on activity and legal form. 
2. Permits single-person civil companies, enhancing flexibility for entrepreneurs.
3. Clarifies partner withdrawal, continuation of civil companies, and liquidation procedures. 
4. Introduces dedicated frameworks for non-profit and professional companies, supporting structured development of these entities. 

These reforms align civil law with commercial practices and reduce legal friction between civil and commercial regulatory regimes.

Compensation, Guarantees, and Obligations

The new law refines rules around civil obligations, including:

1. Guarantor Protection: Creditors cannot pursue a guarantor until the principal debtor’s obligations are exhausted, protecting guarantors from premature enforcement. 
2. Compensation for Harm: The law allows combining traditional compensation mechanisms (such as diya or fixed compensation) with additional damages for material or moral harm where the standard schemes fall short, promoting fuller reparation. 
3. Good Faith and Fair Dealing: Good faith obligations permeate civil dealings, including pre-contractual stages, reinforcing trust in commercial and personal interactions. 

These reforms strengthen the legal regime for obligations, remedies, and fairness in civil relationships.

Omission of Gambling Provisions

One structural change with significant implications for specialized regulatory frameworks is the removal of all gambling and betting provisions from the Civil Transactions Law. Articles 1012–1021 of the repealed 1985 code addressed gambling and associated civil consequences; these have not been carried forward, likely to avoid duplication with emerging specialist gaming regulation regimes. 

This reflects a legislative choice to streamline the civil code and defer complex sector-specific regulation to bespoke laws.

Conclusion

The enactment of the UAE Civil Transactions Law (Federal Decree-Law No. 25 of 2025) marks a watershed moment in the UAE legal landscape. By modernizing foundational civil law principles, from legal capacity and contractual fairness to property rights, succession, and corporate civil provisions, the proposed law enhances legal clarity, reduces ambiguity, and strengthens judicial predictability.

For individuals, expatriates, and businesses, the reforms encourage greater transparency, reduce dispute risk, and align the UAE with global civil law standards. Importantly, the law moves beyond outdated formulas, emphasizing good faith, empowerment within legal structures, and balanced protection of rights and obligations.

As the law comes into force on 1 June 2026, legal practitioners, commercial entities, and private clients alike must prepare for a new era in civil legal practice, one that combines modern legal methodology with practical responsiveness to the needs of a dynamic and evolving society.

References:

• United Arab Emirates Government, ‘The UAE Government Issues a Federal Decree-Law Promulgating the Civil Transactions Law’ (UAE Legislation News, 2025) https://uaelegislation.gov.ae/en/news/the-uae-government-issues-a-federal-decree-law-promulgating-the-civil-transactions-law accessed 3 February 2026.

• Khaleej Times, ‘UAE Civil Transaction Law’ (Khaleej Times, 2026) https://www.khaleejtimes.com/uae/legal/uae-civil-transaction-law accessed 3 February 2026.
• Times of India, ‘UAE Civil Law 2026 Update: Expat Assets with No Heirs Now Taken Over by Charities’ (TimesofIndia.indiatimes.com, 2026) https://timesofindia.indiatimes.com/world/middle-east/uae-civil-law-2026-update-expat-assets-with-no-heirs-now-taken-over-by-charities/articleshow/126300809.cms accessed 3 February 2026.

• Mondaq, ‘UAE Civil Code: Gambling Provisions Removed’ (Mondaq.com, 2026) https://www.mondaq.com/gaming/1734998/uae-civil-code-gambling-provisions-removed accessed 3 February 2026.

• Sharjah24, ‘Article on Civil Rights and Property Protection’ (Sharjah24.ae, 2026) https://sharjah24.ae/en/Articles/2026/01/01/a5 accessed 3 February 2026.

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