I. Introduction
On 1 June 2026, Federal Decree-Law No. 25 of 2025 Issuing the Civil Transactions Law (the “New Code”) came into force, replacing in its entirety Federal Law No. 5 of 1985 (the “Old Code”), which had served for four decades as the backbone of private and civil law in the UAE.
The New Code is not merely a refinement but a comprehensive re-write of UAE civil law, modernising the rules on contracts and giving statutory form to principles long developed by the Federal Supreme Court and the Courts of Cassation.
Much attention has focused on what the New Code changes. For anyone already bound by an existing agreement, however, one practical question is paramount: does the New Code apply to contracts and legal relationships created under the Old Code? This article examines when the New Code applies in time, and how two principles interact: non-retroactivity and public order.
II. The General Rule on Timing
1. The Basic Principle: New Laws Apply Going Forward, Not Backwards
As a general rule, a law applies from the date it comes into force, governing the facts and legal consequences arising while it is in effect, unless the legislature expressly provides otherwise. The New Code states this directly: the law “shall be effective from the date of its entry into force and shall not apply to facts and dispositions that preceded it, unless the law provides otherwise.” This preserves predictability, protects vested rights, and prevents valid past arrangements from being unsettled.
2. The Position Under the Old Code
The Old Code operated the same way. The difficulty was never the straightforward case, where a relationship began and ended under one law, but the contract concluded under the old rules whose performance or consequences continued under the new law. Taken to its extreme, the going-forward principle might suggest that every later effect should be governed by the new law; applied to all ongoing contracts, that would unsettle bargains struck in reliance on the old law. The task is to balance two imperatives: letting new legislation take effect promptly while protecting arrangements already built on the law it replaced.
3. How the Courts previously Responded
The courts have not treated this mechanically. The established rule is that laws apply only to events occurring after they take effect and do not reach back, unless the legislature provides otherwise; yet a new law may govern future situations and the future effects of situations already in existence. The qualification that matters concerns contracts concluded under the old law: such a contract remains governed by the law under which it was made, even where its effects continue. That continuity is not absolute: where the new law contains a rule of public order, that rule applies immediately to those continuing effects not because the new law is retroactive, but because public order rules operate immediately as overriding norms.
In short, the old law continues, in principle, to govern contracts concluded under it, even where their effects extend into the period of the new law; the exception is where the new law introduces a rule of public order, which applies immediately to those continuing effects.
4. The New Code
The New Code restates this expressly. Article 4(1) provides that the law takes effect from the date it comes into force and does not apply to earlier facts and dispositions unless the law provides otherwise. Article 3 is equally significant: it defines public order to include mandatory legal rules that cannot be set aside by agreement and that are set out in the laws of the UAE, the rules that override what the parties have agreed. The New Code does not, however, resolve every timing question raised by older contracts whose effects continue beyond 1 June 2026.
5. The Likely Position
The courts are most likely to continue the approach already developed in the precedents: contracts remain governed by the law under which they were made, the exception arising where the relevant new provision is mandatory and forms part of public order. The UAE courts have put it as follows:
It is well established that, as a general rule, laws apply only to acts or contracts that occur after their entry into force, and their effects do not extend retroactively to acts undertaken prior to their enactment, in accordance with the principle of non-retroactivity of laws. However, an exception arises where the law expressly provides for retroactive effect, or where its provisions relate to public order. In such cases, the law resumes its immediate authority over the effects resulting from such acts, transactions, and contracts, so long as these effects continue to exist at the time of its application, even if they were concluded prior to the law coming into force.[1]
This view is supported by three points:
- Non-retroactivity: the New Code does not apply to earlier facts or dispositions unless expressly stated.
- Public order: mandatory, non-waivable rules may override contractual terms where applicable.
- Judicial continuity: courts may continue applying the existing stability-based approach to ongoing contracts.
Accordingly, contracts validly concluded before 1 June 2026 should generally remain governed by the Old Code, unless a relevant provision of the New Code forms part of public order. In that case, it applies immediately as an overriding mandatory rule, not as a retroactive law.
Seek Legal Counsel
Should you have any questions or require assistance regarding the application of the UAE’s new Civil Transactions Law, including its impact on existing contracts and legal relationships, please do not hesitate to reach out to our Partner, Alia Al Mulla, Senior Associate, Bassem Ehab, and Associate, Wagdy Ismail.
Disclaimer
The content provided in this article is intended for informational purposes only and does not constitute legal advice. While every effort has been made to ensure the accuracy and completeness of this information, the article does not offer a guarantee or warranty regarding its content. The matters discussed in this article are subject to interpretation, and legal outcomes may vary based on specific facts and circumstances. We recommend that readers seek individual legal counsel before making any decisions based on the information provided. If you require specific legal advice, please contact us directly.