A New Civil Code for the UAE

Federal Decree-Law No. 25 of 2025 represents a complete overhaul of the UAE Civil Code, effective June 2026. For the construction industry, this brings significant changes to contract formation, performance, warranties, and dispute resolution.

This is the most comprehensive update to UAE civil law since the original code was enacted, modernizing legal frameworks for the digital age and international best practices.

Key Changes for Construction Contracts

1. Enhanced Contractor Warranties

The new code strengthens warranty provisions:

| Aspect | Previous Code | New Code (2025) |

|--------|---------------|-----------------|

| Structural warranty | 10 years | 10 years (unchanged) |

| MEP systems warranty | Not specified | 5 years explicit |

| Fit-out works | Not specified | 2 years explicit |

| Latent defects | Case-by-case | Clearer liability framework |

Important: The 10-year decennial liability for structural defects remains, but contractors now have clearer obligations for non-structural elements.

2. Payment Terms & Retentions

New provisions address construction payment practices:

**Payment timelines**: Clearer rules on payment within agreed terms
**Retention caps**: Guidance on reasonable retention percentages
**Release conditions**: Explicit conditions for retention release
**Interest on late payments**: Statutory provisions strengthened

3. Variation Orders

The code now provides clearer guidance on variations:

Written variation orders required for scope changes
Pricing mechanisms when not pre-agreed
Limitations on cumulative variations
Contractor's right to refuse unreasonable variations

4. Termination Rights

Both parties get clearer termination rights:

Employer termination for convenience:

Explicit recognition with compensation framework
Payment for work done plus reasonable profit on unexecuted work

Contractor termination rights:

Non-payment beyond specified periods
Material breach by employer
Force majeure provisions updated

5. Dispute Resolution

Modernized dispute resolution framework:

**Mediation encouraged**: Pre-arbitration mediation provisions
**Expert determination**: For technical disputes
**Arbitration**: Updated provisions aligned with international practice
**Limitation periods**: Clearer prescription rules

Transitional Provisions

For existing contracts:

Contracts signed before June 2026 continue under existing law
Contract renewals may trigger new code application
Ongoing disputes follow the law at time of contract
Parties may agree to new code application

Practical Implications

For Developers

**Review standard contracts** - Update templates for new requirements
**Warranty provisions** - Ensure contracts align with new warranty periods
**Payment terms** - Review retention and payment clauses
**Dispute clauses** - Consider mediation provisions

For Contractors

**Understand new warranties** - Plan for extended warranty periods
**Document everything** - Written variations more important than ever
**Payment tracking** - New rights require proper documentation
**Insurance review** - Ensure coverage matches new liability periods

For Consultants

**Professional liability** - Review insurance coverage
**Contract amendments** - Update appointment terms
**Supervision duties** - Clearer expectations in new code

Comparison with Regional Codes

The new UAE Civil Code aligns more closely with:

**FIDIC contracts** - Many provisions now harmonized
**International best practices** - Modern contract law principles
**GCC regional standards** - Greater consistency across Gulf states

Search Construction Law Requirements

Use APEX Regulation Guide to find:

"contractor warranty period UAE"
"construction payment terms regulations"
"variation order requirements Dubai"

Access official documentation with precise citations.

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*This article summarizes key changes in Federal Decree-Law No. 25 of 2025 relevant to construction. This is not legal advice - consult qualified legal counsel for specific situations. APEX Regulation Guide provides searchable access to UAE building regulations.*

UAE Civil Code 2025: Major Changes Affecting Construction Contracts