Dubai Enacts Landmark Law to Regulate Contracting Sector

His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued Law No. 7 of 2025 to regulate contracting activities across the emirate, according to Dubai Media Office. The new law aims to unify standards and practices within the contracting sector by laying down a clear framework for classifying contractors based on expertise, qualifications, and capabilities.

 

The initiative is designed to enhance transparency, improve coordination between authorities, and align the sector with Dubai’s rapid urban and economic development. The law represents a significant step in strengthening the legal and governance framework of the emirate’s contracting sector and supports Dubai’s vision for advancing key industries in line with global best practices.

 

New Committee for Sector Oversight

A key provision of the law is the establishment of the Contracting Activities Regulation and Development Committee, chaired by a representative from Dubai Municipality and formed by a decision of the Chairman of The Executive Council of Dubai. The committee will include members from relevant government authorities involved in contracting activities.

 

This committee will:

• Approve contracting activities in Dubai

• Identify and assign supervising authorities

• Oversee the implementation of the law

• Propose new policies and legislation for the sector

• Resolve jurisdictional conflicts between regulatory bodies

• Adopt and implement a sector-wide code of ethics

• Coordinate with public and private stakeholders

• Review and act upon recommendations from concerned authorities

 

Broad Scope with Specific Exemptions

The law applies to all contractors operating in Dubai, including those within special development zones and free zones, such as the Dubai International Financial Centre (DIFC). However, it excludes contracting activities related to airport infrastructure and any other projects exempted by decision of the Chairman of The Executive Council based on recommendations from the committee.

 

Centralised Digital Registry and Contractor Classification

The Dubai Municipality has been designated to establish, operate, and manage an integrated electronic registry system for all contracting activities across the emirate. This platform will be linked to the ‘Invest in Dubai’ initiative and will serve as the central database for contractor registrations.

In addition to managing the registry, the Municipality is tasked with:

 

• Developing an industry code of conduct

• Classifying contractors based on fields such as construction, building, and demolition

• Issuing professional competency certificates to qualified technical personnel

 

Contractors must adhere to their approved classification and technical and financial capacity, and subcontracting is prohibited without prior permission.

 

Penalties for Non-Compliance

The law outlines stringent penalties for violations, including:

 

• Fines ranging from Dh1,000 to Dh100,000

• Repeat offences within a year may lead to doubled penalties up to Dh200,000

• Additional measures such as:

  • Suspension from contracting activities for up to one year

    • Downgrading of classification

    • Removal from the contractor registry

    • Cancellation of commercial licences

    • Suspension or de-registration of technical staff

    • Revocation of professional competency certificates

 

Mandatory Regularisation Period

All contractors currently operating in Dubai are required to regularise their status within one year of the law’s enforcement. The Committee may extend this period by another year if necessary. Contractors whose registrations expire during this time will be permitted to renew upon signing a declaration of compliance with the new law.

 

Any existing legislation that conflicts with Law No. 7 of 2025 will be annulled. The law will come into effect six months after its publication in the Official Gazette.

 

Updated Evaluation System

This legislative update follows the Dubai Municipality’s recent overhaul of its ‘Contractors and Engineering Offices Evaluation System’, set to take effect in early 2026. The revised system will introduce precise performance standards and ethical norms, aiming for safer and more efficient construction practices.

 

As part of these reforms, two engineering consultancy firms were suspended for six months after violating professional regulations, posing risks to property owners and developers. The action was taken by the Professional Practice Registration and Licensing Committee of the Municipality.

 

This comprehensive regulation underscores Dubai’s commitment to sustainable development, legal reform, and international best practices in the contracting and construction sectors.

 

 For any enquiries or information, contact info@thelawreporters.com or call us on +971 52 644 3004. Follow  The Law Reporters on WhatsApp Channels