In this article, you will learn how to ensure stable business growth in the UAE without disruptions and unnecessary legal risks. I will explain why companies need constant legal support, what mistakes are most commonly made by existing businesses and how to avoid them, what to consider when drafting contracts, as well as which regulatory requirements are particularly important. 

1. Why constant legal support is needed

For successful business operations in the UAE, it is important not only to start correctly but also to be able to adapt to changes. The legal environment in the Emirates is changing rapidly — and the decisions that worked yesterday may create obstacles today. In this system, it is crucial not just to comply with the law, but to be able to navigate it. A lawyer becomes not just a service function but a strategic partner who helps the business grow while meeting all requirements and minimizing risks.

This section will help you understand why legal support should be constant, in what situations you may need to reselect jurisdiction and licenses, and why even formal partnerships require legal oversight.

Multi-tiered legal system

The UAE operates several parallel systems: federal law, emirate laws, free zone regulations. Additionally, there are special regimes in offshore zones and in DIFC/ADGM. All of them are periodically updated, with key changes affecting taxes, corporate governance, data protection, and anti-money laundering.

For example, recent developments include:

• the possibility of 100% foreign ownership in mainland companies;

• corporate tax for companies with income above AED 1 million;

• a new personal data law.

A lawyer keeps track of updates, explains how they will affect your business, and helps respond in a timely manner.

Choosing jurisdiction and license — a decision with delayed consequences

Even if a company has been operating for many years, the originally chosen structure may start to hinder growth. For example, the business has exceeded the free zone limit or changed its type of activity. This requires a review of the license, restructuring, and obtaining new permits.

Let’s compare the key parameters of three types of jurisdictions:

A lawyer will help evaluate whether your current model suits you, and if not — how to transition to another without pain.

Relationship with the service agent: a formality that can become a problem

For certain types of licenses in the mainland, a local service agent (LSA) is required. The agent acts as the company's representative in administrative matters with government bodies but does not own shares and does not participate in management. 

It is important to maintain legally correct and effective relationships with the LSA, timely update agreements, and ensure the agent performs their functions. Incorrectly executed contracts, overdue agreements, conflicts — all of these create additional risks. A lawyer will oversee relationships with the agent and assist in disputes or changes of LSA, as well as in adapting to changes in the requirements concerning the LSA's role.

2. Typical mistakes made by existing companies: what can be avoided with a lawyer

Even successfully operating companies are not immune from legal errors. This often occurs if legislative changes are not tracked or if actions are taken by inertia. This section has collected the most common problems that businesses face in the UAE. By knowing these pitfalls, you can avoid fines, conflicts, and reputational losses.

Violations of license conditions

Expanding a business into new areas without properly updating the license or conducting activities not specified in it is a violation. This is subject to fines and suspension of operations. It is also important to comply with all conditions related to the license, including requirements for office space, number of employees, and annual renewals.

How to prevent mistakes: a lawyer will check whether your activities comply with the license and make changes if needed.

Absence of corporate documentation

Companies in the UAE are required to maintain up-to-date corporate documentation, including shareholder registers, meeting minutes, and timely notify regulatory bodies of changes in structure or management. Non-compliance with these requirements can lead to fines and complications when interacting with banks or government agencies.

How to prevent mistakes: a lawyer ensures the correct maintenance of corporate affairs, assists in preparing and submitting necessary notifications and reports, and provides advice on corporate governance matters.

Errors in employment relationships

Employment relationships in the UAE are governed by Federal Decree-Law No. 33 of 2021 and subordinate regulations that establish strict rules regarding:

• employment contracts, 

• working hours, 

• leaves, 

• wage protection system (WPS), 

• termination procedures,

• payment of severance pay. 

Violations of labor legislation can include:

• incorrect execution of employment contracts (which now must be fixed-term), 

• non-compliance with maximum working hours (including reduced hours during Ramadan), 

• errors in calculating leave or severance pay, 

• discrimination or unlawful dismissal,

• harassment and bullying in the workplace.

How to prevent mistakes: a lawyer helps develop and update employment contracts in accordance with the latest legislative changes, advises on hiring, firing, compensation calculation, implementing internal policies (mandatory for companies with more than 50 employees) and represents the company's interests in labor disputes.

Low-quality contracts with partners

Common mistakes in written contracts include:

• the use of unadapted templates from the internet, 

• vague wording, 

• absence of essential terms, 

• ignoring the requirements for bilingual contracts (Arabic and English), where the Arabic version often holds greater weight in local courts.

How to prevent mistakes: a lawyer develops and conducts audits of contracts in the UAE. This includes managing the lifecycle of contracts, monitoring compliance with obligations, and assisting in resolving disputes arising from contractual relationships.

Unregistered intellectual property

A logo, trade name, developed methodology — all this can and should be registered. Without registration, you cannot protect your rights in case of a conflict. It is important not only to register rights, but also to monitor their infringement and take protective measures.

How to prevent mistakes: a lawyer advises on IP protection strategies, assists with registering trademarks and patents, creating licensing agreements, and represents the client's interests in IP infringement disputes.

Violations of tax legislation

The UAE has VAT and corporate tax. Common mistakes include: 

• untimely registration, 

• incorrect calculations, 

• improper accounting and reporting, 

• non-compliance with Economic Substance Regulations (ESR).

Companies must also be aware of the DMTT (Domestic Minimum Top-up Tax) rules for multinational corporations.

How to prevent mistakes: a lawyer, working with tax consultants, helps ensure compliance with tax legislation, including registration, filing returns, advising on tax planning, and representing interests in tax disputes.

Tax errors are among the most common and costly

Author of the article — Irina Ryzhakova, a tax agent registered in the UAE, will help assess risks, set up accounting, and avoid fines.

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Attempts to resolve disputes independently

Commercial disputes can cause severe damage to a business. Attempts to resolve complex disputes independently without knowledge of the local legal system, mediation procedures, arbitration, or litigation (where Arabic is often the primary language) can lead to adverse outcomes.

How to prevent mistakes: a lawyer chooses the right strategy, represents the client's interests in negotiations, mediation, arbitration (e.g., in DIAC), and courts, increasing the chances of successful dispute resolution.

3. Contracts: what to pay attention to so as not to regret

Key elements of a valid contract according to UAE legislation

Contract law in the UAE is largely regulated by Federal Law No. 5 of 1985 (UAE Civil Code). For a contract to be considered legally valid, it must contain:

• Mutual consent of the parties (offer and acceptance).

• Legal capacity of the parties — both parties must have the legal right to enter into the contract.

• Legality of the object of the contract — the terms must not contradict existing legislation.

• Certainty of terms — the contract must clearly establish the main provisions of the deal.

• Reciprocity — the presence of a counter-provision, i.e., one party provides something valuable in exchange for obligations from the other.

Article 129 of the Civil Code identifies three basic conditions for validity:

• agreement of the parties on essential elements,

• clear determination of the object of the contract,

• lawful purpose of the transaction.

Additionally, it is important to consider the principle of good faith (Article 246 of the UAE Civil Code). This requires that the parties fulfill their obligations fairly, in accordance with the terms of the contract and business customs. Courts actively apply this principle when resolving disputes.

Particularities of bilingual contracts: Arabic vs. English

In the UAE's international business environment, contracts are often drawn up in both Arabic and English. The Arabic version generally holds precedence in the courts of the "mainland" UAE. Therefore, high-quality legal translation and adaptation, rather than just literal translation, is critically important. The parties can specify a prevailing language, but this does not always guarantee its priority in local courts.

Typical "pitfalls" in contracts and how to avoid them

Common problems include:

• vague wording, 

• absence of essential terms (e.g., an accurate description of the object in real estate contracts), 

• incorrect provisions on force majeure,

• unfavorable terms on liability or termination, 

• hidden costs (e.g., when purchasing real estate).

Using unadapted templates is risky, as they may not account for the specifics of UAE law.

Consequences of invalidity or violation of contract terms

Violating legislation or contract terms can lead to the following consequences:

1. Invalidity of the contract if there are legal grounds such as:

• lack of legal capacity of a party,

• illegal object of the contract,

• willingness defects (e.g., pressure, delusion, or fraud).

2. Breach of contract, even if it is valid, can manifest in:

• complete non-fulfillment of obligations,

• late performance,

• performance with inadequate quality.

In such cases, the aggrieved party has the right to demand:

• performance of obligations in kind,

• compensation for damages,

• termination of the contract,

• payment of a penalty (the amount of which the court may reduce).

Contract termination procedures: protecting your interests

A contract can be terminated in the UAE in the following cases:

• by mutual consent of the parties;

• based on the terms specified in the contract;

• by court decision;

• in case of impossibility of performance (e.g., due to force majeure).

Even if the contract provides for the right to unilateral termination, in practice it may be necessary to go to court. Courts in the UAE generally approach contract terminations with caution and prefer to keep the contract in force unless this violates the interests of the parties.

Checklist: Key points to check in a contract before signing in the UAE

A lawyer will identify weaknesses in the contract and propose wording that protects your interests.

4. Regulatory requirements: do not forget the basics

To operate successfully and legally in the UAE, companies must consistently comply with a wide range of regulatory requirements. Legal support helps navigate these complex areas and minimize risks.

Compliance with corporate governance standards

Corporate governance is not only a legal requirement but also the foundation of the company's sustainability in the UAE. Well-structured governance processes enhance investor confidence, simplify interactions with regulators, and help respond to risks in a timely manner.

Key principles of corporate governance:

• transparency and accountability,

• protection of the interests of shareholders and stakeholders,

• clear delineation of roles and powers,

• effective monitoring and risk management mechanisms.

For public companies, additionally required:

• audit committees,

• nomination and compensation committees,

• holding annual general meetings of shareholders.

Among best practices: implementing a code of conduct, regular training for management, and conducting independent audits.

Anti-money laundering (AML) and counter-terrorism financing (CTF)

Companies in certain sectors (real estate, precious metals, accounting, and corporate services) are required to comply with the legal requirements in the field of AML/CTF. The foundation is Federal Decree-Law No. 20 of 2018.

What needs to be carried out:

• perform customer due diligence,

• monitor transactions,

• report suspicious transactions (STR),

• maintain appropriate documentation and internal policies.

Non-compliance with these norms can lead to serious penalties and reputational losses.

Data protection and cybersecurity

Since 2021, Federal Decree-Law No. 45 (PDPL) governing the processing of personal data has been in effect in the UAE. Additionally, the financial free zones DIFC and ADGM have their own data protection laws, which are often more detailed and closer to the GDPR (General Data Protection Regulation — the European Union's general data protection regulation).

Companies are required to:

• obtain clear and informed consent from data subjects (unless an exemption is provided);

• ensure data protection (encryption, pseudonymization);

• appoint a data protection officer (DPO) if required;

• report data breaches within the established timeframe.

Violations of the PDPL entail not only fines but also criminal liability. 

Compliance with Economic Substance Regulations (ESR) and Ultimate Beneficial Owner (UBO) disclosure

The Economic Substance Regulations (ESR) apply to companies conducting certain types of activities in the UAE. They aim to confirm real economic activity.

ESR obligations:

• filing notifications,

• preparing and submitting reports,

• confirming that activity is conducted in the UAE with the required level of resources and personnel.

UBO obligations:

• identification of ultimate beneficial owners,

• maintaining and updating information,

• reporting to the regulator.

A lawyer helps correctly interpret and fulfill the requirements, avoiding administrative risks.

5. Business dispute resolution in the UAE: available mechanisms and practices

Despite preventive and internal measures, disputes in business still arise. The UAE has a developed system for resolving commercial conflicts: from traditional courts to alternative mechanisms that are becoming increasingly popular.

How the dispute resolution system works

The dispute resolution system in the UAE is multilayered and offers companies several pathways:

1. Judicial system:

• Mainland courts — apply civil law, proceedings are conducted in Arabic. This includes the regular state courts in the emirates.

• DIFC and ADGM courts — operate on common law principles, hearings are conducted in English. This is particularly convenient for foreign investors and international contracts.

2. Alternative dispute resolution (ADR) methods:

• mediation,

• conciliation,

• arbitration.

These methods are valued for their flexibility, speed, and confidentiality. Increasingly, parties specify in contracts that they will use ADR in the event of a conflict.

Arbitration in the UAE and the role of DIAC

For commercial and especially international disputes, arbitration remains the preferred option. It allows the parties to choose arbitrators, conduct proceedings confidentially, and faster than in court.

Major arbitration centers in the UAE:

• DIAC (Dubai International Arbitration Centre) — the leading arbitration institution in the region;

• ADCCAC (Abu Dhabi Arbitration Centre);

• Tahkeem (Sharjah Arbitration Centre).

The main advantage of arbitration is the high international enforceability of decisions.

Enforcement of foreign judgments in the UAE

Foreign judicial and arbitral decisions may be recognized and enforced in the UAE, but subject to certain conditions:

• the decision must be final and effective;

• it must not contradict public order in the UAE;

• the recognition procedure requires the submission of a petition and compliance with formal requirements.

The DIFC Courts jurisdiction is often used — as a convenient entry point for recognizing foreign decisions, especially when enforcement will later be required on the mainland. This has been made possible by agreements between the DIFC and state courts.

As for arbitration decisions — their enforcement is facilitated by the New York Convention, which the UAE is a member of. This makes arbitration a particularly effective tool for international disputes.

Conclusions: Continuous legal support is the legal foundation for growth

Doing business in the UAE means working in a fast-changing legal environment. Here, not only entrepreneurial skills are important, but also ongoing legal vigilance. Laws are regularly updated, rules vary by jurisdiction, and compliance, contract, tax, and data protection requirements are becoming increasingly stringent.

What requires constant attention:

• Changes in legislation in the UAE. Without professional legal assistance, important details may be missed or violations may occur.

• Proactive risk management. Timely identification and elimination of legal risks in operational activities: from licenses and taxes to employment contracts and intellectual property protection.

• Proper contract management. Contracts must take into account the specifics of UAE law, including language aspects (especially for bilingual versions) and the priority of Arabic text in courts.

• Compliance with regulatory requirements. Companies are required to monitor and execute norms of corporate governance, AML/CTF, PDPL, ESR, UBO, and other provisions applicable in the specific jurisdiction.

• Professional dispute resolution. Courts, arbitration, mediation — the choice of the right mechanism and legal strategy influence the outcome. Support from an experienced lawyer increases the chances of a successful resolution of the conflict.

Continuous cooperation with a qualified lawyer is an investment in stability and security. A lawyer helps not only solve existing problems but also prevent them from arising — thus saving resources, maintaining reputation, and confidently growing in a competitive environment.