The UAE’s new Civil Code reshapes public policy grounds. The Federal Civil Transactions Law No. 25/2025 entered into force on 1 June 2026, replacing the 1985 definition. The change narrows the scope to core Sharia principles, governance rules and mandatory statutes.
Public policy remains a key ground for UAE courts to set aside an award or refuse its enforcement. Under Article 53.2.b of the Federal Arbitration Law No. 6 of 2018, an award can be annulled for violating public policy. Likewise, Article V.2.b of the New York Convention allows courts to refuse enforcement of foreign awards on the same basis. The courts can act on these grounds of their own volition.
How the New Definition Impacts Arbitration
Article 53.2.b of the Arbitration Law gives judges the power to nullify awards that breach public policy. With the New Civil Code’s tighter definition, the range of actions deemed unacceptable is now limited to four specific categories. This shift means that commercial disputes will be judged against a narrower set of mandatory rules rather than a broad notion of public order.
Article V.2.b of the New York Convention mirrors the domestic provision, allowing refusal of enforcement for public policy violations. Because the new definition excludes “freedom of commerce, trading in wealth, rules of personal property,” foreign awards that hinge on those concepts may face fewer obstacles. Practitioners will need to reassess risk assessments in light of the narrowed criteria.
From Broad to Specific: The Shift in Public Policy
For four decades, the Old Civil Code – Article 3 of Federal Civil Transactions Law No. 5/1985 – defined public order in a broad manner. It covered personal status matters, governance, freedom of commerce, trading in wealth and rules of personal property, all while respecting final decisions and major principles of Islamic Shari’a. Courts historically interpreted this wide definition through numerous decisions.
The New Civil Code’s Article 3 now lists four concrete elements: conclusive Islamic Sharia principles, rules concerning governance, personal status rules for Muslims, and mandatory legal rules that cannot be waived. Notably, the definition excludes “freedom of commerce, trading in wealth, rules of personal property.” This tighter framing aligns public policy with core legal imperatives rather than expansive commercial concepts.
The blog post was authored by Nayiri Boghossian of Nayiri Boghossian FZE on 16 July 2026. While the new definition clarifies the legal landscape, the author notes that courts have yet to apply the revised wording in a landmark case, leaving the practical impact to evolve over time.
Frequently asked questions
What is the new definition of public policy in UAE?
Effective 1 June 2026, the new definition narrows public policy to core Sharia principles, governance rules, personal status rules for Muslims, and mandatory legal rules that cannot be waived.
When will the new Civil Code take effect in UAE?
The Federal Civil Transactions Law No. 25/2025 becomes effective on 1 June 2026.
How will the new Civil Code impact arbitration in UAE?
By limiting public‑policy grounds to the four specific categories, the Code narrows the reasons courts can set aside or refuse enforcement of arbitral awards.
What are the four specific categories of public policy in the new Civil Code?
They are conclusive Islamic Sharia principles, rules concerning governance, personal‑status rules for Muslims, and mandatory legal rules that cannot be waived.
Will the new definition of public policy affect enforcement of foreign awards in UAE?
Yes; with the exclusion of concepts like freedom of commerce, foreign awards based on those concepts will face fewer obstacles to enforcement.
