Dubai [UAE], January 2: The UAE Government has issued a Federal Decree Law promulgating the Civil Transactions Law, with the aim of establishing a comprehensive and integrated legal framework. The new law represents a pivotal legislative milestone and a qualitative shift in regulating civil transactions in the UAE, based on a balanced and contemporary vision that seeks to reorganise the general foundations of rights and obligations, while enhancing the clarity of legal rules and facilitating their practical application.
The new Civil Transactions Law forms part of a continuous national legislative trajectory focused on modernising the legal framework. It adopts a practical approach that simplifies the understanding of legal provisions, unifies legal references, and eliminates duplication with recently enacted special laws.
This approach enhances the efficiency of application, reduces procedural complexities, and contributes to building a more coherent and harmonious legislative system, in support of the federal government's comprehensive development agenda founded on the rule of law.
From a judicial perspective, the law expands the scope of judicial reasoning and grants courts broader discretion when referring to the principles of Islamic Sharia in cases where an applicable legislative provision is absent.
Where no statutory rule exists, either explicitly or implicitly, the judge may refer to the principles of Islamic Sharia and select the solution that best achieves justice and public interest in accordance with the circumstances of each case, without being bound by a specific school of jurisprudence or one single Sharia doctrine.
This approach strengthens the role of the judiciary in keeping pace with societal developments and the evolving nature of modern transactions. The law also provides for the application of Sharia principles in the absence of special legislation governing matters relating to persons of unknown parentage, missing persons, and absentees.
The substantive amendments introduced by the new Decree Law aim to achieve legislative integration and reinforce coherence between general legal principles and special regulatory frameworks, ensuring clarity and stability in legal application.
The comprehensive review of the law took into account practical challenges faced by the judiciary, while respecting the competencies of local authorities in regulating certain matters, issuing licenses, and supervising activities related to civil transactions and local regulations within their respective jurisdictions. The Law affirms the continued applicability of such local legislation within the scope of each emirate's authority, while preserving the unity and integrity of the federal legislative framework and ensuring harmonisation between federal and local roles.
To prevent duplication, provisions overlapping with other legislation were removed. With respect to proprietary rights, the law reorganised the rules governing usufructuary construction rights, requiring registration of the contract with the competent authority and providing for nullity in the absence of registration. It also introduced provisions governing the obligations of the holder of such rights and allowed the parties to determine the duration thereof. The Law further provides that financial assets located within the UAE belonging to a foreigner with no heirs shall be designated as a charitable endowment, subject to supervision by the competent authority to ensure proper management and allocation.
In addition, the new legislation introduced a new framework governing assignment, including the assignment of rights, and established provisions for the protection of possession through preventive actions aimed at halting new acts of encroachment before harm occurs.
The Law adopts clearer legal concepts aligned with contemporary transactional realities, reinforcing individual legal capacity and protecting free will in legal acts and contracts. This approach balances empowering individuals to manage their legal and financial affairs with safeguarding them against exploitation or harm.
A core reform concerns the age of majority, which has been reduced from twenty one lunar years to eighteen Gregorian years, aligning with prevailing comparative legal systems. This change unifies the legal age for full capacity, ensures consistency with other national legislation such as juvenile and labour laws, and harmonises civil and criminal responsibility standards, thereby enhancing legal clarity and coherence.
In the same context, the law lowers the age at which a minor may seek judicial authorisation to manage their assets from eighteen Hijri years to fifteen Gregorian years, in support of entrepreneurship and youth participation in economic activity within a clear and stable legal framework.
The Law introduces provisions addressing persons requiring assistance due to incapacity to express their will, empowering courts to appoint a judicial assistant to support such individuals in acts serving their best interests.
The new Decree Law establishes an advanced framework governing pre-contractual negotiations, imposing an obligation to disclose any fundamental information to ensure informed and conscious contractual decision making. This enhances trust between parties and reduces disputes before they arise.
It also introduces the concept of a framework agreement to regulate recurring or long-term contractual relationships by predefining essential terms, reducing time and cost, and ensuring consistent legal reference for subsequent contracts.
Regarding contractual capacity, financial acts of a discerning minor involving both benefit and detriment are deemed voidable in the minor's interest rather than suspended, granting the guardian the right to seek annulment within one year from knowledge, and allowing the minor to seek annulment within one year after reaching majority.
The new Law also permits the combination of blood money or assessed compensation with additional damages where death or injury results in material or moral harm not fully covered by blood money or assessed compensation. This reform addresses practical judicial challenges and affirms the principle of full reparation.
The Law updates provisions governing sale contracts, including clearer regulation of sale by sample and by model, protection of persons lacking full capacity in cases of gross inadequacy in real estate sales, and enhanced rules governing latent defects.
Buyers are granted the option to reject the goods, accept them with price reduction, or allow the seller to provide a defect-free substitute. The limitation period for claims relating to latent defects has been extended from six months to one year from delivery, unless a longer guarantee is agreed.
The Law introduces detailed rules governing the sale of disputed rights, prohibiting acquisition by judges, prosecutors, court officials, and attorneys involved in the dispute, under penalty of nullity, to safeguard judicial integrity.
Corporate provisions were modernised to align the Civil Transactions Law with commercial legislation. The Law distinguishes between civil and commercial companies based on activity and legal form, permits single-person companies, regulates partner withdrawal, continuation of companies, and liquidation procedures, and enhances corporate stability.
A dedicated legal framework for nonprofit companies was introduced, requiring reinvestment of profits into the company's objectives, thereby supporting sustainable development.
The Law also establishes a modern regime for professional companies, regulates ownership, naming, liability, and introduces independent regulation of "mudaraba contracts" outside the scope of company law.
Provisions governing contracts of works were updated to clarify responsibilities, regulate termination, address unforeseen circumstances affecting contractual equilibrium, and empower courts to restore balance through adjustment or termination.
Insurance provisions were refined, including a comprehensive framework for takaful insurance. Rules governing guarantees were reorganised to protect guarantors and ensure equitable enforcement.
The new Civil Transactions Law reflects a modern legislative approach that balances legal authenticity with contemporary needs, reinforces legal certainty and trust, supports individuals and institutions, and contributes to the sustainability of economic and social development in the State.
Source: Emirates News Agency
