Dubai Contractor Registration 2026 + New Civil Code

The UAE construction sector operates under a legal framework that combines civil law principles, FIDIC contract standards, and emirate-level regulations. Two major legislative changes take effect in 2026: Dubai Law No. 7 of 2025, which introduces mandatory contractor registration from January, and Federal Decree-Law No. 25 of 2025, a complete overhaul of the Civil Code effective from June. These changes fundamentally alter how construction contracts are formed, performed, and enforced.

This guide explains the legal framework governing construction projects in the UAE, the claims and disputes that arise, and how the 2026 reforms affect contractors, developers, and project owners.

The Legal Framework for Construction in the UAE

The Civil Code: Foundation of Construction Contracts

Construction contracts in the UAE are governed primarily by the Civil Transactions Law (Federal Law No. 5 of 1985, as amended), specifically Articles 872 to 896 dealing with Muqawala contracts. These provisions establish default rules for contract formation, performance, payment, and liability that apply unless the parties agree otherwise.

Key mandatory provisions that cannot be contracted out include:

Article 880 (Decennial Liability): Contractors and supervising architects are jointly liable for ten years after handover for any total or partial collapse of the building, or any defect threatening its stability or safety. This is strict liability — no proof of fault is required. Any attempt to exclude or limit this liability is void under Article 882.

Article 390 (Liquidated Damages): Courts have discretion to adjust agreed damages up or down to match actual loss. Parties cannot contract out of this judicial power.

Article 246 (Good Faith): Contracts must be performed in good faith, adhering not only to express terms but also to legal, customary, and transactional standards.

Article 267 (Termination): A contract can only be terminated by consent, court order, or provision of law. This creates complexity when contracts include unilateral termination clauses, as discussed below.

The New Civil Code: Federal Decree-Law No. 25 of 2025

Effective 1 June 2026, the new Civil Transactions Law represents the most significant overhaul of UAE civil law in four decades. Key changes affecting construction include:

Contractual primacy: The new code gives express primacy to agreed contractual terms. Contractors must complete works in accordance with the contract and within the agreed timeframe. Where no agreement exists, contractors must perform in accordance with custom and reasonable standards.

Hardship provisions: Courts are now expressly empowered to restore contractual equilibrium where exceptional circumstances beyond the parties' control cause contractual imbalance. This codifies what was implicit under Article 249 of the current code. Courts may extend completion periods, increase or decrease remuneration, or terminate contracts to achieve fairness.

Termination for convenience: The new code introduces a statutory right for employers to withdraw from contracts before completion, provided the contractor is fairly compensated for expenses, completed work, and lost profit. Compensation is subject to mitigation.

Defective work remedies: If defective work is identified during execution, the employer may issue a formal warning with a correction period. If the contractor fails to remedy the defect, the employer may terminate or appoint another contractor at the defaulting contractor's expense — without necessarily requiring prior court approval.

Decennial liability and subcontractors: A new provision expressly preserves the contractor's right of recourse against subcontractors, but clarifies that strict decennial liability does not extend to such recovery actions. Contractors seeking recovery against subcontractors must establish fault or breach of contract.

Pre-contractual disclosure: The new code imposes obligations to disclose material information during negotiations. Deliberate non-disclosure may give grounds to annul a contract.

Dubai Law No. 7 of 2025: Contractor Registration and Classification

Dubai Law No. 7 of 2025, effective 8 January 2026, establishes a unified regulatory framework for all contracting activities in Dubai, including free zones and the DIFC. Existing contractors have until 8 January 2027 to comply.

Mandatory registration: All contractors operating in Dubai must register with the unified Contractor Register managed by Dubai Municipality, integrated with the Invest in Dubai digital platform.

Classification system: Contractors must obtain classification based on financial capacity, technical capability, and experience. Contractors may only undertake projects within their classification limits.

Technical staff certification: Technical personnel must obtain professional competency certificates from Dubai Municipality.

Subcontracting controls: Prior approval from the competent authority is required before subcontracting. Informal or unapproved subcontracting arrangements are prohibited.

Document retention: All project documents must be retained for a minimum of ten years from project completion or contract expiry — aligning with the decennial liability period.

EPC/Turnkey regulation: Article 19 specifically addresses turnkey projects, requiring contractors to demonstrate technical qualifications and financial capacity.

Penalties: Violations attract fines from AED 1,000 to AED 100,000, doubling to AED 200,000 for repeat offences within one year. Additional measures include suspension, classification downgrade, cancellation of registration, and revocation of competency certificates.

Employer obligations: Project owners may not engage unregistered contractors. Employers who fail to verify contractor registration risk project delays, legal disputes, and potential liability.

FIDIC Contracts in the UAE

The FIDIC suite of contracts is the most widely used standard form in the UAE. The 1999 Red Book (employer-designed projects) remains most common, though the 2017 editions are increasingly adopted. FIDIC Yellow Book (design-build) and Silver Book (EPC/turnkey) are used for contractor-designed and turnkey projects respectively.

FIDIC contracts are rarely used unmodified. Employers routinely amend the General Conditions through Particular Conditions that shift risk to contractors. Before signing, contractors should review amendments to:

Delay provisions and extension of time entitlements
Limitation of liability clauses
Time bar provisions and notice requirements
Dispute resolution mechanisms
Payment terms and certification procedures

UAE law recognises FIDIC contracts as custom. However, mandatory provisions of UAE law — particularly decennial liability and the court's power to adjust liquidated damages — override conflicting contractual provisions regardless of the parties' agreement.

Claims and Disputes: What Goes Wrong and Why

Construction disputes in the UAE follow predictable patterns. Payment gets withheld. Delays accumulate. Variations go uncertified. By the time parties reach arbitration or court, millions of dirhams and months of project time have been lost.

What separates contractors who recover from those who don't often comes down to one thing: whether they followed the notice requirements in their contract.

Time Bars and Notice Requirements

Under FIDIC Sub-Clause 20.1 (1999 edition) or Sub-Clause 20.2 (2017 edition), a contractor seeking an extension of time or additional payment must give notice to the Engineer within 28 days of becoming aware of the event or circumstance giving rise to the claim. This is not optional. It is a condition precedent. Miss the deadline and the claim is barred.

The DIFC Court of Appeal confirmed this in Panther Real Estate Development LLC v Modern Executive Systems Contracting LLC [2022] DIFC CA 016. The employer was responsible for 304 of the 325 days of delay. But because the contractor failed to issue timely notice, its claim for an extension of time and loss and expense was dismissed, and liquidated damages were enforced.

The Court of Appeal rejected arguments based on the "prevention principle" (that a party should not benefit from its own wrongdoing) and good faith. The carefully constructed contractual claims procedure must be followed. The contractor cannot "pick and choose" whether to make an extension of time claim, safe in the knowledge that if the employer caused delay, liquidated damages would not be recoverable.

Practical implications:

Issue notices immediately upon becoming aware of any event that may entitle you to additional time or money
Submit fully detailed claims within the required period (typically 42 days under FIDIC 1999)
Respond to Engineer's determinations within the specified timeframe (often 14 days) or they become final and binding
Maintain contemporaneous records — delay claims rely heavily on documentary evidence

Delay and Extension of Time Claims

Extension of time claims require the contractor to prove:

The delay is a delay to the critical path (Critical Delay)
The Critical Delay was caused by an event for which the employer is responsible or which entitles the contractor to an extension

Concurrent delay arises where employer-caused delay and contractor-caused delay affect the same critical path activity during the same period. UAE law has no statutory rule on concurrent delay. However, Articles 290 and 291 of the Civil Code provide for apportionment of liability where multiple parties are responsible for damage.

Unlike English law (where concurrent delay typically entitles the contractor to an extension of time but not prolongation costs), UAE courts and arbitrators are likely to apportion liability for concurrent delay. If a period of concurrent delay is apportioned 50/50, the contractor may receive only half the extension of time requested but recover prolongation costs for that period.

The Society of Construction Law Delay and Disruption Protocol (2nd edition) is increasingly referenced in UAE arbitrations as a guide to best practice.

Variations and Change Orders

Variation disputes arise when:

Changes are instructed without agreed pricing
Scope creep occurs without formal variation orders
Parties disagree whether work falls within the original contract scope
The Engineer fails to certify variations

Under FIDIC, variations must be valued in accordance with the contract. Where no applicable rates exist, the Engineer determines fair rates. Contractors who proceed with changed work without documenting entitlement risk losing their claim.

Payment Disputes

Payment disputes are endemic in UAE construction. Common issues include:

Delayed interim payment certificates
Withheld retention beyond contractual periods
Disputed valuations of work completed
"Pay-when-paid" clauses leaving subcontractors unpaid
Failure to release performance bonds after completion

Contractor remedies for non-payment:

Suspension of work: Under FIDIC Sub-Clause 16.1, the contractor may suspend work if the employer fails to pay amounts due. Notice requirements must be followed precisely. Suspension without proper grounds or notice exposes the contractor to termination.

Termination: Under FIDIC Sub-Clause 16.2, the contractor may terminate if payment remains outstanding after a prolonged period and notice has been given. This is a last resort.

Order for payment: For undisputed debts, contractors may seek a summary order for payment, bypassing standard litigation procedures.

Performance bond: Calling on security bonds to secure payment, if the contract permits.

Defects and Decennial Liability

Under Article 880 of the Civil Code, contractors and supervising architects are jointly liable for ten years after handover for:

Total collapse of the building
Partial collapse of the building
Any defect threatening the stability or safety of the structure

This liability:

Is strict — no proof of fault required
Cannot be excluded or limited by contract (Article 882)
Applies even if the defect arises from ground conditions or the employer consented to defective construction
Begins from delivery of works (typically the Taking Over Certificate date)

What triggers decennial liability?

The Federal Supreme Court has held that liability is restricted to collapse or defects threatening the "soundness and stability of the building." It does not extend to every defect. Minor finishing defects, mechanical systems failures, or aesthetic issues generally fall outside Article 880 unless they affect structural integrity.

Limitation periods:

The ten-year decennial liability period runs from delivery
Under Article 883, claims must be brought within three years of discovering the defect
This three-year period can effectively extend liability beyond ten years if a defect is discovered late in the period

Subcontractor recovery:

Under the new Civil Code effective June 2026, contractors have an express right of recourse against subcontractors, but must establish fault or breach of contract. The five-year commercial limitation period means recovery actions against subcontractors could become time-barred before a decennial claim is asserted against the contractor.

Liquidated Damages

Liquidated damages for delay are enforceable in the UAE. However, Article 390 of the Civil Code gives courts and arbitrators discretion to adjust liquidated damages up or down to match actual loss. The parties cannot contract out of this.

Key principles:

The burden is on the contractor to prove that liquidated damages are disproportionate to actual loss
Courts may increase damages if actual loss exceeds the agreed sum (employers rarely pursue this)
Market practice caps liquidated damages at 10% of contract price
Liquidated damages may not survive contract termination unless the clause is drafted to do so

Extension of time disputes often underlie liquidated damages claims. If the contractor was entitled to more time than granted, there is no delay and no liquidated damages. The real dispute is about entitlement to extensions.

Termination Disputes

Termination in the UAE is complicated by Article 267 of the Civil Code, which provides that contracts can only be terminated by consent, court order, or provision of law.

This creates uncertainty when FIDIC contracts provide for unilateral termination. One view is that by agreeing to the contract, parties consented to termination if grounds are met. The contrary view is that consent can only occur when termination is contemplated, requiring court approval.

Practical approach for employers:

Issue a Notice to Correct under FIDIC Clause 15.1, specifying the default precisely
Allow the contractor reasonable time to remedy (proportionate to the breach)
If the contractor fails to comply, issue a termination notice under Clause 15.2
Document everything — the termination may be challenged

Consequences of wrongful termination:

If you terminate without proper grounds or procedure, you become the party in breach. The contractor can claim lost profit on work never performed, leading to counterclaims exceeding the original contract value.

Performance bonds: When terminating for default, employers often call the performance bond. The contractor's remedy is to seek an injunction under Article 417(2) of the Commercial Transactions Law, but the threshold is high. On-demand bonds can be called even if the contractor disputes entitlement.

Dispute Resolution

Arbitration

Arbitration is the preferred dispute resolution method for major construction projects in the UAE. The main reasons:

Confidentiality
International recognition of awards under the New York Convention
Ability to appoint arbitrators with construction expertise
Flexibility in managing complex evidence

The Dubai International Arbitration Centre (DIAC) is the primary arbitration centre in Dubai following Dubai Decree No. 34 of 2021, which abolished the LCIA-DIFC centre. ICC arbitration remains common for international projects.

Caution on arbitration clauses: The Dubai Court of Cassation has held that incorporating FIDIC's arbitration clause by general reference (rather than expressly setting it out) may not be sufficient to oust court jurisdiction. If arbitration is intended, the clause should be express and detailed.

Government contracts: For Dubai government contracts, Law No. 6 of 1997 requires that dispute resolution clauses opt for Dubai as the seat of arbitration. Cabinet Resolution No. 32 of 2014 provides that for government contracts, the substantive law must be UAE law — any contrary provision is invalid.

Litigation

UAE local courts conduct proceedings in Arabic. Judges routinely appoint construction experts to assist with technical and factual issues.

Each emirate has its own court system. Abu Dhabi, Dubai, and Ras Al Khaimah maintain independent local courts. Sharjah, Ajman, Fujairah, and Umm Al Quwain follow the federal judicial system.

The DIFC and ADGM have their own common law courts, conducting proceedings in English. These courts can accept jurisdiction over disputes with no connection to the free zones if the parties agree.

Dispute Adjudication Boards

FIDIC contracts provide for disputes to be referred to a Dispute Adjudication Board (DAB) or Dispute Avoidance/Adjudication Board (DAAB). Standing DABs are appointed at contract commencement; ad hoc DABs are appointed when disputes arise.

In the UAE, parties are reluctant to appoint standing DABs at the outset. Most prefer ad hoc boards appointed only if a dispute arises. This undermines the dispute avoidance function.

The DAB must issue a decision within 84 days. Decisions are binding unless challenged through the contractual dispute resolution process.

Practical Compliance Checklist

For Contractors

Before signing:

Review Particular Conditions for risk-shifting amendments
Understand time bar provisions and notice requirements
Check limitation of liability clauses against UAE mandatory law
Verify arbitration clause is express and detailed
Assess payment terms and certification procedures

Dubai Law No. 7 of 2025 compliance (by January 2027):

Register with Dubai Municipality unified contractor register
Obtain appropriate classification for intended project scope
Ensure technical staff hold professional competency certificates
Formalise subcontracting arrangements with approval procedures
Implement 10-year document retention systems

During project execution:

Issue notices immediately upon becoming aware of delay events
Submit fully detailed claims within 42 days (FIDIC 1999)
Respond to Engineer's determinations within 14 days
Document all variations before commencing changed work
Maintain contemporaneous records (photographs, reports, correspondence)

At completion:

Apply for Taking Over Certificate promptly when works are substantially complete
Document the state of works at handover
Maintain professional indemnity and decennial liability insurance for 10 years
Retain all project documents for 10 years

For Employers and Developers

Procurement:

Verify contractor registration and classification (from January 2026)
Include contract provisions requiring ongoing compliance verification
Provide for termination and step-in rights if registration lapses
Update tender processes to require registration evidence

Contract administration:

Respond to contractor claims within specified timeframes
Ensure Engineer acts impartially in certifying works
Document grounds for any withholding of payment
Follow notice requirements precisely before terminating

Termination:

Issue Notice to Correct specifying default
Allow proportionate time to remedy
Document failure to remedy before issuing termination notice
Consider claiming liquidated damages before termination takes effect

Key Dates for 2026

DateEvent8 January 2026Dubai Law No. 7 of 2025 takes effect — new contractor registration framework begins1 June 2026New Civil Transactions Law (Federal Decree-Law No. 25 of 2025) takes effect8 January 2027Deadline for existing Dubai contractors to comply with registration requirements

Frequently Asked Questions

Can I exclude decennial liability in my contract?

No. Article 882 of the Civil Code provides that any agreement to exclude or limit decennial liability is void. You can extend the period beyond ten years by agreement, but not reduce it.

What happens if I miss the 28-day notice deadline for a FIDIC claim?

Your claim is likely barred. The DIFC Court of Appeal has confirmed that the 28-day notice requirement is a condition precedent. However, some UAE courts have been more flexible where employer-caused delay is clear. Do not rely on this — issue notices immediately.

Can liquidated damages be challenged?

Yes. Under Article 390 of the Civil Code, courts may adjust liquidated damages to match actual loss. The contractor bears the burden of proving disproportionality.

Do I need court approval to terminate a construction contract?

This remains uncertain under UAE law. Article 267 suggests termination requires court order unless by consent or provision of law. The safer approach is to ensure contractual termination provisions are express and to follow all notice requirements precisely.

Will the new Civil Code apply to my existing contract?

The new Civil Code applies from 1 June 2026 and does not generally affect transactions concluded before that date. Transitional issues will arise in long-term contracts and ongoing disputes.

Does Dubai Law No. 7 of 2025 apply to DIFC contractors?

Yes. The law applies to all contracting activities in Dubai, including free zones and the DIFC. Airport-related activities are exempted.

This guide provides general information on UAE construction law. It does not constitute legal advice. For guidance on your specific project or dispute, consult qualified legal counsel.

Planning a construction project or facing a dispute?

Our Construction Law team advises contractors, developers, employers, and consultants on contract drafting, claims management, regulatory compliance, and dispute resolution across the UAE and the Middle East.

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UAE Construction Law: The Complete Legal Guide for Contractors, Developers, and Project Owners (2026)