Question:
“We work with clients from all over the world, and when we sign contracts, there’s always this tug-of-war about whose laws apply. I’m worried that if we miss something, we’ll end up in a foreign court with unfamiliar laws. How can we ensure UAE laws protect us? And what happens if the contract doesn’t mention this at all?”
Answer:
Small text, big consequences. It’s like deciding where to play a game— on your home turf, where you know every nook and corner, or in an unfamiliar arena where you are unfamiliar with the procedures and the procedures are done in a foreign language. Let me unpack this for you.
First, if the contract doesn’t specify the governing law or jurisdiction, it doesn’t mean you’re entirely unprotected—it just means the situation gets murky. Courts (whether in the UAE or abroad) will often look at the nature of the relationship and where the obligations were performed to decide which laws apply. But let’s be honest, leaving it to interpretation is like flipping a coin when stakes are high.
Now, to avoid sleepless nights, here’s what you need to do moving forward:
- Governing Law Clause
Always explicitly state that UAE law governs the agreement. This ensures that any disputes will be resolved under familiar legal principles. It’s like planting your flag and saying, “We’re doing this by the book—the UAE book.” - Jurisdiction Clause
Specify where disputes will be resolved. You could choose UAE courts, including the federal courts and specialized ones like the DIFC and ADGM. These courts are internationally recognized, and their judgments carry weight. If you’re dealing with international clients, this adds credibility while keeping things in a forum you understand. - Mediation and Arbitration as Alternatives
For contracts with international clients, mediation and arbitration can be game-changers. By specifying a neutral mediation or arbitration center, such as the Dubai International Arbitration Centre (DIAC) or the ADGM Arbitration Centre, you avoid lengthy court proceedings and can resolve disputes privately and efficiently. Arbitration allows parties to agree on a neutral forum and arbitrator, while mediation ensures a collaborative resolution. Including these clauses shows you’re serious about resolving disputes professionally without resorting to costly litigation. - Avoiding Confusion
Watch out for situations where the governing law is UAE but the jurisdiction is elsewhere—or vice versa. Mixing these up can lead to a legal limbo where neither court or arbitration panel fully aligns with your interests. - What If It’s Already Missing?
If you’ve already signed a contract without these provisions, don’t panic. Depending on the nature of your dispute, you may still be able to assert jurisdiction in the UAE courts, especially if the primary obligations were performed here. Alternatively, engaging the other party in mediation or proposing arbitration could save time and salvage the business relationship. Also, you can explore the possibility to amend the existing contract by adding the jurisdiction and governing law clauses with the consent of all the parties to the agreement.
In essence, getting these clauses right is like buying insurance for your contract. It ensures that if something goes south, you’re dealing with familiar rules and a fair system. Whether it’s litigation, mediation, or arbitration, having the right structure in place ensures you’re playing the game to win—and on your terms. And hey, every contract is a chance to refine the next one—so let’s take the lessons learned and build agreements that work harder for your business.
