What Clauses Should a UAE Business Include in Contracts with Overseas Partners?

Expanding beyond borders can unlock massive opportunities for UAE-based businesses—but it also comes with complex legal risks. Whether you're exporting goods, licensing technology, or partnering on a joint venture, your contract is your first line of defense.

 

Including the right international contract clauses UAE businesses typically need can protect you from costly misunderstandings, currency issues, and cross-border disputes. A strong contract aligns expectations, locks in legal protections, and ensures you're not caught off guard if things go wrong.

 

In this guide, we’ll walk through the most important clauses to include when signing deals with overseas partners, plus tips tailored to UAE laws and enforcement realities. Let’s start with why these contracts matter so much in the first place.

 

Context & Importance of Strong Cross-Border Agreements
 The UAE has become a major global trade hub, linking businesses across Asia, Europe, and Africa. With billions moving through free zones like JAFZA and DMCC, international partnerships are now common for many UAE-based companies.

 

But with big opportunities come big risks. Without a well-drafted international contract, even a promising deal can lead to disputes, delays, or losses. A strong contract is more than paperwork—it’s your blueprint for enforceability, performance, and business continuity.

 

At its core, a cross-border contract aligns expectations, assigns responsibilities, and creates safeguards when things go wrong. It’s also your best tool for risk mitigation in unpredictable markets.

 

That’s why having the right international contract clauses UAE businesses rely on is essential. The next section explains the must-have clauses—plus UAE-specific tips to help you draft contracts that work anywhere.

 

Core International Contract Clauses UAE Businesses Need

 

Governing Law & Jurisdiction Clause
 The Governing Law & Jurisdiction Clause is one of the most essential international contract clauses UAE businesses should include. It defines the legal framework for the agreement and which courts or tribunals will resolve disputes.

 

This clause covers two main elements:

• Governing law – Which country’s legal system applies

• Jurisdiction – Which court or arbitration panel handles disputes
  
  
   

Choosing Between UAE Law and Foreign Law

• UAE Law is preferred when:

• The business operates mainly in the UAE

• Execution/enforcement happens in the UAE

• Disputes are heard in DIFC or ADGM

• You need alignment with UAE regulatory systems

 

• Foreign Law may be used when:

• The other party insists (especially in high-value deals)

• Industry practice favors neutral law (e.g., English law)

• You’ve reviewed enforceability with UAE counsel
  
   

Even with foreign law, you can keep arbitration seated in the UAE or a neutral location to retain enforceability. This clause reduces ambiguity and legal conflict, improving contract clarity and enforceability.

 

Dispute Resolution Clause
 The Dispute Resolution Clause defines how disagreements will be settled—through litigation or arbitration. For UAE businesses, arbitration is usually the smarter choice.

 

Arbitration vs. Litigation

Mechanism	Pros	Cons
Arbitration	Neutral, private, faster, globally enforceable	Can be costly, limited appeals
Litigation	Familiar to locals, public rulings	Slower, harder to enforce internationally

 

 

Why UAE businesses prefer arbitration:
 

• Avoids foreign court battles

• Maintains confidentiality

• Ensures enforceability via the New York Convention

 

 

Recommended Arbitration Venues:

• DIAC – Affordable, based in UAE

• ICC – Globally trusted for complex cases

 

Always name your preferred body (e.g., “settled by arbitration under DIAC Rules”) and specify the seat—Dubai or a neutral location. This clause supports enforceability and smooth dispute handling.

 

Payment Terms & Currency Clause
This clause sets clear terms for payment—timing, method, currency, and late penalties—to avoid confusion and cash flow problems.

 

Include details on:

• Payment currency

• Payment timeline

• Late payment consequences
  
   

Choosing Currency

• Use AED if expenses are local—to avoid forex risk

• Use USD for international transactions

 

If you invoice in USD but spend in AED, add a price adjustment clause for exchange rate fluctuations.

 

Set Clear Payment Schedules
 Examples:

• Net 30 – due 30 days from invoice

• Net 60 / 90 – for longer cycles

 

Specify whether days count from invoice or delivery.

 

Penalties for Delays

• Interest on overdue amounts (e.g., 1.5% monthly)

• Right to suspend services

• Option to terminate for repeated delays
  
   

This clause protects your cash flow and ensures timely payments under the international contract clauses UAE partners must respect.

 

Delivery, Performance & KPI Clause
This clause defines what successful delivery looks like—setting milestones, performance metrics, and remedies if obligations aren’t met.

 

Use it to keep both sides aligned, especially in supply, service, or manufacturing deals.

 

Include:

• Clear milestones – e.g., kickoff, first delivery, completion

• KPIs – e.g., 98% on-time delivery, 99.9% software uptime

• Remedies – like liquidated damages, withheld payments, or termination for repeated failure

 

 

This clause sets expectations, supports continuity, and gives legal recourse if performance fails.

 

Key Elements to Include

1. 1.Milestones

Break the project into clearly defined phases. Example:

 

• Kickoff: Within 7 days of contract signing

• First delivery: 30 days from kickoff

• Final completion: 90 days from kickoff

 

1. 2. Performance Metrics (KPIs)

 These are the measurable results you expect. Tailor them to your industry. For example:

 

• 98% on-time delivery rate

• 99.5% product accuracy

• Software uptime of 99.9%

 

1. 3. Remedies for Underperformance

This is where you protect your business if the other party fails to deliver. Common remedies include:

 

• Liquidated damages for late delivery (e.g., AED 500 per day of delay)

• Right to withhold payment until performance is corrected

• Option to terminate if repeated milestones are missed

 

Including this clause makes your international contract clauses UAE-ready by setting expectations upfront and giving you recourse when things fall apart. It supports business continuity and shows you’re serious about quality and accountability.

 

Force Majeure Clause
 The Force Majeure Clause protects both parties when unexpected global events make fulfilling the contract impossible. This has become crucial in international contracts, especially after recent disruptions.

 

 

For UAE businesses, this clause should be tailored to cover global and regional risks.

 

Common Force Majeure Events to Include

• Pandemics (e.g., COVID)

• Regulatory changes (e.g., export bans, customs shifts, UAE import restrictions)

• Natural disasters (floods, earthquakes, sandstorms)

• War, riots, terrorism

• Government actions

• Supply chain issues or port closures
  
   

During COVID-19, many UAE businesses relied on this clause to delay obligations without penalties.

 

How to Draft It Effectively

• Define what qualifies as a force majeure event

• Set a notice period to inform the other party

• Specify how long performance can be suspended before termination

• Add a duty to mitigate impacts

 

This clause ensures your international contract clauses UAE-compliant by protecting against liability in extreme situations—without harming long-term relationships.

 

Confidentiality & IP Clause
This clause is key for UAE businesses working internationally, especially when sharing sensitive data or innovations. It’s vital to distinguish between confidentiality and IP licensing.

 

 

What’s the Difference?

• Confidentiality: Covers private business info (e.g., pricing, processes, client data)

• IP licensing: Allows use of protected creations (e.g., code, designs) without giving up ownership

 

Both must be clearly defined to prevent misuse or legal ambiguity.

 

 

Key Protections to Include

• Define what’s confidential (e.g., trade secrets, plans, financials)

• Limit use to the contract’s purpose

• Set duration—typically 2–5 years after the contract ends

• Assign ownership of developed IP to the intended party

• Ban reverse-engineering or copying

• Require return or destruction of materials after termination

 

A well-drafted Confidentiality & IP Clause ensures your international contract clauses UAE partners sign are enforceable and protective across borders.

 

Termination & Exit Clause
Even the best contract needs an exit plan. The Termination & Exit Clause gives both parties a legal way to end the deal under specific conditions—clearly and fairly.

 

This is especially important in international contract clauses UAE businesses use with overseas partners, where unexpected issues can arise.

 

 

Common Triggers for Termination

• Material breach (e.g., repeated delivery failure, breach of confidentiality)

• Insolvency or bankruptcy

• Prolonged force majeure events

• Mutual agreement

• Legal or regulatory restrictions

 

Notice Requirements
 

• Clearly define the notice period (commonly 30 days)

• Immediate exit allowed for serious issues like fraud

 

 

Post-Termination Obligations

• Settle final invoices

• Return/delete confidential data

• Reassign or revoke IP rights

• Complete any ongoing work (if needed)

 

This clause ensures you’re not trapped in a failing deal and provides legal clarity when ending the contract.

 

UAE Specific Legal Safeguards
 For any UAE business in a cross-border deal, strong commercial terms aren’t enough. You must align with UAE compliance, language, and legalization rules to make the contract enforceable.

 

 

Why These Legal Safeguards Matter

• If your contract violates UAE law, courts may not recognize it

• Incorrect language or missed legalization steps can delay or invalidate contracts

• Overseas partners also need proper UAE legalization for acceptance in their country

 

These safeguards add legal weight and help enforce contracts under UAE law.

 

Compliance with UAE Law & Government Regulations

Contracts must align with the UAE Commercial Code, federal laws, and sector-specific rules. This ensures contracts are valid and enforceable.

 

 

Key Mandatory Clauses Under UAE Law:

• Governing Law and Jurisdiction – Specify applicable law and courts (e.g. DIFC)

• Force Majeure – Not mandatory, but expected

• Payment Terms – Clarify due dates, methods, penalties

• Termination Clause – Define breach triggers and notice periods

• Language Clause – Provide certified Arabic translation if Arabic isn’t the primary language

• Confidentiality & IP – Cover trade secrets and invention assignments

 

 

Omitting these can delay enforcement or void key parts of the contract under UAE law.

 

 

Bilingual Contracts (Arabic + English)

In the UAE, Arabic is the official legal language. Even if partners prefer English, courts rely on Arabic versions.

 

 

Enforceability Requirements:

• Arabic is required for UAE onshore court filings

• English-only contracts may need certified translation

• In free zones (like DIFC, ADGM), English is usually accepted—but Arabic may be needed for government dealings

 

 

Translation Best Practices:

• Use certified translators (registered with the UAE Ministry of Justice)

• Both parties should review the translation

• Clearly label versions:

• “Equally authoritative” or

• “Arabic prevails” or “English prevails”

 

A poor translation can cause disputes. Accurate language matters as much as legal terms.

 

Notarization, MOFAIC Attestation & Legalization

To make contracts enforceable in the UAE and abroad, follow this legalization process:

 

 

Step-by-Step Legalization Process:

1. 1. Notarization – Get the contract notarized in the UAE or the partner’s country

2. 2. MOFAIC Attestation – Submit to the UAE Ministry of Foreign Affairs for official confirmation

3. 3. Embassy/Consulate Attestation – Get the partner’s embassy in the UAE to validate the contract

4. 4. Legalization in Overseas Country – Further attest in the partner’s jurisdiction for recognition

5. 5. Certified Translations – If needed, translate the document officially for local compliance

 

Without these steps, even well-drafted contracts may be unenforceable abroad.

 

Best Practices for Structuring with Overseas Partners

Cross-border contracts come with added complexity—different laws, logistics, and languages. Follow these best practices to protect your UAE business:

 

Involve International Counsel

Always work with lawyers experienced in cross-border and UAE contract law. They help:

 

• Align terms with both legal systems

• Draft enforceable jurisdiction and IP clauses

• Spot tax or liability red flags

• Handle foreign investment or arbitration rules

 

Legal advice here is a necessity—not a luxury.

 

Use of Incoterms

Incoterms define responsibilities in global trade. Use them to avoid confusion.

 

Term	Stands For	Best Use
EXW	Ex Works	Buyer handles shipping
FOB	Free On Board	Seller handles goods till onboard
CIF	Cost, Insurance & Freight	Seller covers costs till buyer’s port

 

Pick the right Incoterm to avoid disputes over shipping and insurance.

 

Periodic Contract Reviews

Keep contracts updated by setting review intervals:

• Annual reviews for new UAE or foreign laws

• Quarterly audits for pricing, delivery, and KPIs

• Triggered reviews for events like sanctions or law changes

 

 

Regular reviews reduce risk and ensure contracts reflect your current business reality.

 

Common Pitfalls to Avoid

Even well-drafted contracts can fail if basic safeguards are missed. Avoid these common mistakes:

 

1. 1. Missing Clauses

 Omitting key clauses like governing law or IP rights can lead to legal battles.
 Example: A UAE tech firm didn’t include an IP clause, and the partner claimed ownership of software.

1. 2. Vague Terms

 Unclear wording like “timely payment” or “as soon as possible” causes disputes.
 Example: Delivery delays couldn’t be challenged due to vague contract language.

1. 3. Lack of Jurisdiction Clarity

No mention of which court or tribunal to use can land you in unfamiliar legal systems.
 Example: A UAE company got sued in a foreign court due to lack of a jurisdiction clause.

1. 4. Inconsistent Language Versions

 English and Arabic versions must match. Courts will rely on Arabic in case of a conflict.
 Example: Contradictions between Arabic and English created confusion during enforcement.

1. 5. Ignoring Foreign Legal Requirements

 Each country may have its own rules. Skipping legalization steps abroad can make your contract worthless there.
 Example: A UAE firm didn’t legalize the contract in the EU, making it unenforceable overseas.

 

 

Enforcing International Contracts in UAE

Cross-border deals aren’t worth much unless you can enforce them when things go wrong. The UAE offers two strong paths for international contract enforcement: court judgment enforcement and arbitration award recognition.

 

UAE Courts & Foreign Judgments

Enforcing a foreign court judgment in the UAE depends on whether the judgment meets specific recognition conditions. UAE law, particularly the UAE Civil Procedure Code, lays out these requirements:

 

Conditions for Court Judgment Enforcement:

• The foreign judgment must be final and binding in the issuing country.

• The foreign country must offer reciprocity—UAE judgments should also be enforceable there.

• The judgment must not violate UAE public policy or Islamic law.

• The foreign court must have had proper jurisdiction, and the defendant should have been given fair notice.

 

Specialization of Courts:

• Onshore UAE Courts (Abu Dhabi, Dubai, Sharjah, etc.) typically require Arabic translations and certified documentation.

• DIFC and ADGM Courts are internationally oriented and often handle contracts governed by common law in English. They’re frequently chosen for international cases due to their independent enforcement framework and commercial expertise.

 

If the contract specifies DIFC Courts as the jurisdiction, judgments are often easier to enforce internationally and within the UAE through established protocols.

 

New York Convention & Arbitration Awards

The UAE is a signatory to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards (since 2006), which greatly simplifies the recognition of international arbitration awards.

 

Arbitration Award Recognition in UAE:

• Awards must be final and not under challenge in the issuing jurisdiction.

• The arbitration must not have violated UAE public order or morality.

• The party against whom enforcement is sought must have received proper notice and had the chance to present its case.

 

Recommended Arbitration Venues:

• DIAC (Dubai International Arbitration Centre) – Widely used for regional and international commercial disputes.

• ICC (International Chamber of Commerce) – Trusted for high-stakes international contracts.

• ADGM Arbitration Centre – Offers English-language proceedings and international appeal.

 

Both DIAC and ICC awards are widely enforceable thanks to the New York Convention, making arbitration a preferred enforcement type for UAE businesses dealing with global partners

 

FAQs

1. 1. Why are international contract clauses important for UAE businesses?

They protect against cross-border legal risks, unclear payments, and enforcement issues.

 

1. 2. What does the Governing Law & Jurisdiction Clause do?
   

It sets which country’s laws apply and which court or tribunal resolves disputes.

 

 

1. 3. Why do UAE businesses prefer arbitration over litigation?
   

Arbitration is faster, private, and globally enforceable under the New York Convention.

 

1. 4. What should a Payment Terms & Currency Clause include?
   

It must clearly define the currency, timeline, and penalties for late payments.

 

1. 5. What is the purpose of a Force Majeure Clause?
   

It excuses both parties from performance if extreme, uncontrollable events occur.

 

1. 6. Are bilingual contracts necessary in the UAE?

Yes, Arabic is required for UAE court filings and takes precedence over English.

 

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