Key developments under Federal Decree-Law No. 25 of 2025

The UAE has introduced a new Civil Transactions Law through Federal Decree-Law No. 25 of 2025, which will enter into force on 1 June 2026. The law replaces the existing civil code framework established under Federal Law No. 5 of 1985, marking a significant recalibration of the UAE’s core private law regime.

 

Rather than a wholesale departure from established civil law principles, the reform should be 

understood as a modernisation exercise. The new law preserves the underlying doctrinal foundations of the UAE system while refining their application, clarifying areas of ambiguity, and aligning certain rules with contemporary commercial and social realities. Its practical significance lies in a number of targeted changes which, taken together, alter how capacity, contractual dealings and judicial interpretation operate in practice.

 

Approach to statutory interpretation and judicial reasoning

The new law revisits the framework governing how courts address issues not expressly regulated by statute. Under the previous regime, courts were directed to apply principles of Islamic Sharia in accordance with a defined hierarchy of schools, with priority given to the Maliki school.

The updated provision adopts a more flexible formulation. Courts are now empowered to apply Sharia principles in a manner that best achieves justice, public order and public interest, without being confined to a particular school of jurisprudence.

This represents a departure from the previous framework, as the revised wording removes the express reference to a hierarchy of schools and instead emphasises outcome-oriented considerations.

This adjustment does not displace the role of Sharia as a supplementary source, but it does recalibrate how it is engaged.

In practical terms, this may broaden the scope of judicial reasoning by allowing courts greater latitude in how Sharia principles are applied, particularly in areas where statutory guidance remains limited.

 

Legal capacity and the age of majority

A central feature of the reform is the reduction of the age of majority from 21 years to 18 years.Under the previous framework, individuals remained subject to guardianship and related restrictions until reaching 21. From June 2026, full legal capacity will arise at 18, provided the individual is of sound mind and not otherwise restricted.

This change brings the UAE into closer alignment with international practice and has immediate 

consequences for legal autonomy. Individuals will be able to enter into binding contracts, manage assets and undertake legal acts at an earlier stage, with corresponding implications for counterparties.

The shift is not purely technical. Many legal arrangements currently in place, particularly in estate planning and asset management contexts, have been structured on the assumption that majority is reached at 21. Those assumptions will require careful reassessment.

 

Implications for succession planning and probate

The reduction in the age of majority has a direct impact on the operation of existing wills and 

guardianship structures. It is common for testamentary arrangements to defer control of assets until beneficiaries reach 21, often with interim management by guardians or court supervision.

Under the new law, those mechanisms will typically cease to apply once a beneficiary reaches 18. This creates a potential disconnect between the intended timing of asset distribution and the legal position. 

In some cases, assets may become accessible earlier than anticipated.

The reform also affects ongoing probate matters. Where assets are currently held under court 

supervision solely on the basis of minority, beneficiaries reaching 18 may now be entitled to seek release. This may accelerate the administration of estates but also requires active case review.

In parallel, the recognition of full legal capacity at 18 enables individuals of that age to execute valid wills. This may be relevant in family structures involving early asset ownership or cross-border succession planning.

 

Managed autonomy for younger minors

Alongside the general rules on capacity, the new law introduces a mechanism allowing minors from the age of 15 to manage assets with court approval. Authorisation may be granted on application by the minor or their guardian and may be subject to conditions or subsequent restriction. This represents a more graduated approach to capacity than under the previous framework, which was more rigid in its treatment of minority. It provides a controlled pathway to financial autonomy in appropriate cases, particularly where minors hold assets or participate in family business arrangements.

 

Contractual framework and commercial dealings

The new law also refines aspects of the contractual framework, with an emphasis on greater clarity and practical application. While the existing civil code recognised core contractual principles, it did so in relatively general terms.

The updated provisions engage more directly with the realities of modern transactions. They introduce express recognition of pre-contractual negotiations, including obligations relating to the disclosure of essential information, and provide for the use of framework agreements in ongoing commercial Relationships.

In the context of sales, the law articulates a more detailed set of remedies for defective performance, including rights of rejection, price adjustment and replacement. The extension of limitation periods for latent defects further strengthens the position of buyers.

Taken together, these changes suggest a shift towards a more operationally detailed contract regime, reducing reliance on broad principles and increasing predictability in dispute scenarios.

 

Liability and compensation

The reform also addresses aspects of civil liability, particularly in cases involving personal injury or death. It clarifies that traditional forms of compensation may operate alongside additional damages where necessary to achieve full reparation.

This reflects a more explicit recognition of the principle that compensation should address both material and non-material harm. The practical impact will depend on how courts apply these provisions, but the direction of travel is towards a more comprehensive approach to damages.

 

Treatment of assets in the absence of heirs

The new law introduces a defined outcome for assets held in the UAE by foreign nationals who die without heirs. In such cases, those assets are to be allocated to a charitable endowment under the supervision of the competent authority.

This provides clarity in an area that previously gave rise to uncertainty, particularly for institutions holding or administering assets. It also reinforces the importance of putting in place valid and enforceable testamentary arrangements for UAE-based property.

 

Looking ahead

The Civil Transactions Law represents a measured but meaningful evolution of the UAE’s civil law framework. Its impact is likely to arise less from any single headline reform and more from the cumulative effect of targeted changes, including clearer statutory drafting, a more flexible approach to judicial reasoning, and revised assumptions around legal capacity.

In practical terms, this means that existing legal and commercial arrangements may no longer operate as originally intended. For example, the reduction in the age of majority may accelerate the transfer of asset control, while the expanded contractual framework may affect how rights and obligations are interpreted and enforced in practice.

With the implementation date approaching, businesses and individuals should review existing 

arrangements, particularly those involving age-based rights, asset control, and contractual structures, to ensure that they remain aligned with the new regime. Early engagement will be key to managing the transition effectively and avoiding unintended legal or commercial consequences.