The Government of the United Arab Emirates has issued a federal decree enacting the new Civil Transactions Law, effective January 1, 2026. The law represents a landmark legislative step aimed at establishing a modern and comprehensive legal framework for civil transactions across the country. It is part of the UAE’s ongoing efforts to update legislation, simplify legal provisions, unify references, and eliminate duplication with existing special laws, thereby enhancing legal clarity and procedural efficiency.

The law grants judges greater flexibility to exercise judicial discretion and to refer to Islamic Sharia principles in the absence of specific legislative texts. Sharia provisions will also apply in matters involving individuals of unknown lineage, missing persons, or those whose legal status is unclear. The legislation ensures integration between federal and local laws, respecting the regulatory authority of local governments while maintaining a cohesive federal legal framework.

The law introduces updated regulations for property and ownership rights, including easement rights and the treatment of foreign nationals’ assets without heirs, as well as modernizing rules for assignment of rights. It also enhances individual legal capacity, lowering the age of majority to 18 years and allowing minors as young as 15 to manage their assets under a legal framework.

Additionally, the law addresses defects in consent, establishes the role of a judicial assistant for those unable to express their will, and regulates pre-contractual negotiations to ensure transparency. Framework agreements for recurring or long-term contracts are also formally recognized.

The legislation modernizes compensation provisions, allowing a combination of diyah (blood money) or arsh with additional damages, extending the scope to partial or defective performance, and granting courts discretion to adjust agreed compensation. Sale regulations have been updated to protect vulnerable parties, address hidden defects, and cover sales in cases of terminal illness, as well as the sale of disputed rights.

Corporate regulations have been overhauled, distinguishing between civil and commercial companies, allowing single-person companies, and regulating partner withdrawal and company continuity. It also introduces frameworks for non-profit and professional companies and treats mudaraba (profit-sharing contracts) as an independent, regulated contract.

In contracting and insurance sectors, the law updates liability rules, addresses contract imbalances under unforeseen circumstances, and modernizes insurance and suretyship provisions, including Islamic cooperative insurance, to safeguard parties and ensure transactional stability.

The new Civil Transactions Law reflects the UAE’s commitment to a contemporary legal approach that balances legal tradition with modern realities, strengthens confidence in the legal environment, and supports sustainable economic and social development.