Crude and refined product trading contracts in the UAE

• The price reporting agency named in your pricing clause now affects whether free zone trading income keeps the 0 per cent rate.
• A quality certificate from the independent inspector is usually final and binding, so the inspection appointment matters more than the dispute clause.
• Demurrage claims die on a documentary time bar, commonly 90 days, whatever the merits.
• Contracts signed on or after 1 June 2026 fall under the new UAE civil code, and its hardship provision cannot be excluded.

Where title and risk pass in an oil cargo

Oil sale contracts use their own delivery conventions, and they do not map cleanly onto Incoterms 2020. In an FOB or CIF crude sale, title and risk normally pass as the cargo crosses the permanent hose connection at the load port. Everything before that flange belongs to the seller. Everything after it belongs to the buyer. That includes contamination discovered three weeks later at the discharge port. Our commercial lawyers in Dubai review the delivery, inspection and pricing clauses together, because a defect in one shifts risk into another.

The distinction from a general goods contract matters in practice. Our guide to supply chain contract disputes covers Incoterms selection for manufactured goods. A crude cargo needs the flange language written out, along with the treatment of vessel and shore tank figures. The standard Incoterm alone will not settle a quantity dispute.

The inspector decides quality, not the tribunal

Most trading contracts appoint an independent inspector at the load port. The certificate of quality and quantity is then final and binding on both parties, save for fraud or manifest error. That clause does more work than any other in the contract. A buyer who receives off-specification product and appointed no joint inspector at loading is usually left arguing fraud rather than specification.

Two drafting points repay attention. State whether shore tank or vessel figures govern. The two rarely agree, and the wording decides who absorbs the gap. State the operational tolerance in percentage terms and say whether it is at the seller's or the vessel master's option.

Your pricing clause is now a tax clause

This is the change most UAE trading desks have not absorbed. Ministerial Decision No. 229 of 2025 repealed Ministerial Decision No. 265 of 2023 and rewrote the rules for trading of qualifying commodities. It applies retroactively from 1 June 2023.

The decision removed the requirement that a commodity be traded "in raw form". Metals, minerals, industrial chemicals, energy and agricultural commodities now qualify, along with associated by-products and environmental commodities such as carbon credits. The condition is that a Quoted Price exists. That means a price specified by a recognised commodity exchange market or by a recognised price reporting agency. Ministerial Decision No. 230 of 2025 lists the agencies, and the list includes S&P Global Commodity Insights, Argus Media, ICIS, OPIS, General Index and ICE.

A desk that prices off an agency outside that list has a qualifying income problem. So does a desk pricing off a bilateral formula with no published reference. Check the pricing clause against the list before the tax return, not after.

The second condition catches integrated traders. The activity stops qualifying once distribution, warehousing, logistics or inventory management revenue reaches 51 per cent of the entity's revenue for the tax period. A trader that also runs storage for third parties can cross that line without changing anything about how it buys and sells. Our note on free zone corporate tax audits and QFZP status sets out the wider test.

The demurrage time bar that ends valid claims

Laytime starts when the vessel tenders notice of readiness and the contractual conditions are met. Once the allowance runs out, demurrage accrues at the agreed daily rate. None of that is controversial. The claims fail on the paperwork.

Trading contracts almost always set a fixed presentation period for a demurrage claim, commonly 90 days from completion of discharge, with all supporting documents attached. The claim is extinguished if the deadline passes, or if it arrives without the statement of facts, the notice of readiness and the pumping log. The tribunal does not weigh the merits, because the clause is a condition rather than a limitation period. Build the demurrage file during the voyage and diarise the deadline on the day discharge completes.

Letters of indemnity when the bill of lading is late

Cargoes trade faster than documents move. The vessel reaches the discharge port and the original bills of lading are still with a bank somewhere in the chain. Rather than let the vessel wait and demurrage accrue, the trader asks the carrier to deliver against a letter of indemnity.

The exposure is larger than most desks assume. Delivering cargo without production of the original bill of lading falls outside standard P&I club cover. The letter of indemnity replaces that cover rather than adding to it. The International Group of P&I Clubs publishes standard wording, and clubs recommend that the indemnity be countersigned by a first class bank. Claims under these letters can exceed the value of the vessel.

Three practical controls follow. Check that the party giving the indemnity can meet a call on it. An indemnity from a thinly capitalised chain member is worth no more than its balance sheet. Track when the obligation ends. Under the standard wording it ends once the original bills reach the indemnifier and are properly tendered. Keep the indemnity chain aligned. A trader in the middle that gives a wider indemnity than it received carries the difference. If a cargo claim escalates to arrest, our guide to ship arrest in the UAE sets out the process.

What UAE law does to an English law trading contract

Most cargo contracts choose English law and arbitration in London or Singapore. That choice holds. It stops mattering at the point where a party enforces against UAE assets or sues a UAE counterparty onshore.

Federal Decree-Law No. 25 of 2025 replaced the 1985 civil code with effect from 1 June 2026. Contracts concluded before that date remain under the old law, and contracts signed after it do not. Two provisions matter for term supply arrangements. Article 340 lets a court reduce agreed compensation. The grounds include an exaggerated amount, partial performance, and a creditor who contributed to the harm. Article 224 lets a court reduce or rescind an obligation that exceptional circumstances have made oppressive. Any agreement excluding that power is void. A price review clause negotiated on the assumption that the parties control the outcome should be read again against Article 224.

Interest is the other trap. The Commercial Transactions Law applies the contractual rate on a commercial debt. Where the contract states no rate, it applies the market rate capped at 9 per cent, and compound interest is not allowed. Payment terms in a cargo contract should state the late payment rate expressly. Our guide to recovering unpaid trade debts in the UAE covers the recovery routes, and our guide to letters of credit covers the payment mechanics.

What to check before the next cargo

• Confirm the pricing reference against the recognised price reporting agency list.
• Measure distribution, warehousing and logistics revenue against the 51 per cent threshold.
• Name the inspector, the sampling standard and whether shore or vessel figures govern.
• Diarise the demurrage presentation deadline from completion of discharge.
• Check the creditworthiness of any counterparty giving you a letter of indemnity.
• State the late payment interest rate expressly rather than leaving it to the default.
• Screen the counterparty and the vessel before fixing, as set out in our guide to sanctions compliance for UAE oil and fuel traders.

The Federal Tax Authority is still building its practice on the qualifying commodities rules. The UAE courts have yet to interpret the new civil code provisions on hardship and agreed compensation. Traders should review both positions again before the next corporate tax filing. Legal advice may be required to assess how these rules apply to a particular trading structure.

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