Public Policy Redefined in the United Arab Emirates: Now Encompassing Mandatory Rules

Public policy is one of the grounds that allow United Arab Emirates (“UAE”) courts to set aside an award or refuse its enforcement. In the Federal Civil Transactions Law No. 25/2025 (“New Civil Code”), which entered into force on 1 June 2026, the definition of public policy has changed. This blog post examines the new definition of public policy and its consequences. 

Public Policy as a Ground to Set Aside or Refuse Enforcement

Arbitrations seated in onshore Dubai and governed by the Federal Arbitration Law No. 6 of 2018 (“Arbitration Law”) allow awards to be annulled for violation of public policy under Article 53.2.b. The same reason, i.e. violation of public policy, also allows UAE courts to refuse the enforcement of foreign awards on the basis of Article V.2.b of the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (“New York Convention”) (for further details about the enforcement of foreign awards in the UAE, see the blog posts here and here). In both instances, UAE courts can exercise their powers to set aside awards of their own volition. 

Although domestic and foreign awards are subject to different legal provisions, i.e. Article 53.2.b of the Arbitration Law and Article V.2.b of the New York Convention, UAE courts do not draw a distinction between international and national public policy. In fact, the notion of international public policy is not a concept recognised by UAE courts. It has so far been mentioned, in passing, on one occasion, as reported here.  As such, the definition of public policy as it appears in domestic legislation is the point of reference in understanding what it encompasses.

Definition of Public Policy

For four decades, public policy was defined in Article 3 of the Federal Civil Transactions Law No. 5/1985 (“Old Civil Code”) as follows: "Public order shall be deemed to include matters relating to personal status such as marriage, inheritance, descent, and rules concerning governance, freedom of commerce, trading in wealth, rules of personal property and provisions and foundations on which the society is based in a way that do not violate final decisions and major principles of Islamic Shari’a".

That definition was very broad and could encompass every commercial transaction on the ground that such a transaction related to “trading in wealth”. However, the courts did not apply the definition in such a broad manner. Instead, they determined the exact contours of public policy through numerous decisions (see, for instance, the blog post here).

The New Civil Code provides an entirely different definition of public policy in Article 3. It states that the following is considered public order: “1. Conclusive Islamic Sharia principles. 2. Rules concerning governance. 3. Rules relating to personal status of Muslims such as marriage, inheritance and descent. 4. Mandatory legal rules, which cannot be agreed to be violated and which are stipulated in the laws issued in the United Arab Emirates.”

Notably, the definition under the New Civil Code excludes “freedom of commerce, trading in wealth, rules of personal property” from its scope and limits the public policy nature of “matters relating to personal status” to Muslims. It also clarifies which Sharia principles constitute public policy. This part of the definition is an improvement as it is more concise and narrower than the previous version. It should create fewer opportunities for parties to rely on public policy to set aside an award or challenge its enforcement. However, the remaining section of the definition could undermine the improvement achieved because it expands public policy to cover “mandatory legal rules”.

Public Policy v. Mandatory Rules

Public policy and mandatory rules are not the same thing. This distinction is adopted by many countries  (see here and here), including the UAE. Court decisions in the UAE have explained that the purpose of public policy is to protect the higher interests of society as a whole. This understanding is reflected in a decision rendered on 31 October 2022 by the General Assembly of the Dubai Court of Cassation (Case No. 1/2022), which states that “the legal principles which are considered public order are the principles which aim at achieving a political or social or economic public interest that relates to the higher system of society and is above the interests of individuals.”

The same concept can be found in other decisions, such as the Dubai Court of Cassation decision in Cassation No. 171/2010 (Commercial), which explains that public policy “includes principles which aim at achieving the higher interest of the country on the political or social or economic level ….and such interest rises above the interests of individuals and the interest of the group as a whole is the foundation upon which its [public policy] notion stands.”

Mandatory rules do not serve the same purpose. They do not protect the higher interest of society but generally protect individual interests. What they have in common with public policy is their mandatory nature. When a rule is mandatory, it will generally state that parties may not agree to the contrary or that such agreement is not valid. There are numerous illustrations of such language in the Arbitration Law. For example, Article 4.1 states that “[o]nly …the representative of the legal person, who is authorized to conclude the agreement on arbitration, may enter into an agreement on arbitration, otherwise the agreement shall be null and void.” As Article 4.1 demonstrates, the authority required to conclude an arbitration agreement on behalf of a juristic person is a mandatory rule, as the arbitration agreement that does not meet the authority requirement is “null and void.” Numerous court decisions have upheld the mandatory nature of this requirement without raising it to the level of public policy (for an analysis of this question, see the blog posts here and here).

Another example of a mandatory rule is the requirement for witnesses to take an oath when giving their testimony in UAE-seated arbitration proceedings. This requirement is also treated by the courts as a mandatory rule and not as a public policy rule (for an analysis of this question, see here).

As these examples show, and re-confirmed by the Dubai Court of Cassation in its decision rendered on 9 November 2008 (a commentary of which is available here), mandatory rules are not necessarily public policy. Here lies the distinction and the problem. If mandatory rules constitute public policy, then they can be relied on as a basis for resisting enforcement or setting aside an award far too frequently, as discussed in this post.

Concluding Remarks

There is now a risk that UAE courts will be inclined to set aside or refuse enforcement of awards more often. This will inevitably be the case if they treat every mandatory rule as public policy. Such an approach would represent a significant setback. There are two ways to remedy this problem.

One solution would be to set a higher standard for applying public policy. For example, the Egyptian Court of Cassation held that the public policy exception should be narrowly construed and would only be operative in extreme circumstances where there has been a violation of the fundamental principles of morality and justice, and not a mere violation of domestic mandatory rules (see Cass. Civ. of 26 April 1982, Case No.714/Judicial year 47).

In the UAE, courts must bear in mind that public policy is not there to serve individual interests. It serves the higher interests of society. By doing so, they can prevent every mandatory rule from being used as a basis for challenging an award. The extent to which courts will be able to do so is doubtful, however, because the concept of public policy carries a certain sanctity. When a rule is treated by the legislator as forming part of public policy, i.e. mandatory rules as per Article 3, it will be difficult for courts to strip such rules of their public policy character.

Another solution would be for the legislator to change the definition of public policy by removing mandatory rules from its scope. It is unrealistic, though, to expect legislative intervention at this stage. Perhaps, over time, the application of Article 3 by UAE courts will demonstrate whether there is indeed a need to change the definition again.