A breach of contract occurs when one party fails to fulfill their obligations as agreed in a legally binding contract. In Dubai’s thriving business ecosystem—where contracts are the lifeblood of commercial relationships—breach of contract claims are one of the most common types of legal disputes. These can arise in a wide range of industries, from construction and real estate to logistics, retail, technology, and professional services.
Understanding how breach of contract claims are handled in Dubai is essential for any business or individual entering into commercial agreements within the UAE. Dubai offers a comprehensive and business-friendly legal infrastructure that allows for fair resolution of such disputes through litigation, arbitration, or negotiated settlements.
In this detailed guide, we explore what constitutes a breach of contract, the legal remedies available, how to file a claim, what the process involves, and how lawyers in Dubai can support you throughout the journey.
1. What Is a Breach of Contract?
A breach of contract occurs when a party to a legally valid agreement fails to perform their duties as stipulated. This failure can be:
- Material: A serious violation that undermines the entire agreement (e.g., non-payment, failure to deliver).
- Minor: A partial or less significant breach (e.g., slight delay in delivery).
- Anticipatory: When one party clearly expresses they will not fulfill their obligations in the future.
- Fundamental: A breach so serious that the other party is justified in terminating the contract.
Under UAE law, a contract is a binding agreement, and breaching it without valid legal grounds may result in liability for damages, performance obligations, or other remedies.
2. Applicable Law in Dubai
Breach of contract disputes in Dubai are governed by:
- Federal Law No. 5 of 1985 (UAE Civil Transactions Law) – This outlines general principles of contract law in the UAE.
- Federal Law No. 18 of 1993 (Commercial Transactions Law) – Applies to business-related agreements.
- DIFC Contract Law (No. 6 of 2004) – Applies in the Dubai International Financial Centre (DIFC), which uses English common law principles.
The appropriate law and court jurisdiction usually depend on the location of the parties, the contract terms, and whether the parties opted into a specific legal system like DIFC.
3. Key Elements Required to File a Breach of Contract Claim
To bring a successful breach of contract claim in Dubai, the claimant (the wronged party) must establish the following elements:
- Existence of a Valid Contract: A legally enforceable agreement must exist with clearly defined terms.
- Breach of Obligation: The defendant must have failed to fulfill one or more duties under the contract.
- Causation: The breach must have directly caused harm or loss.
- Damages: The claimant must prove financial or reputational harm due to the breach.
Written contracts are easier to enforce than verbal agreements, though oral contracts may still be valid under UAE law if proven.
4. Common Examples of Breach in Commercial Contexts
Breach of contract scenarios in Dubai’s commercial environment include:
- A supplier fails to deliver goods on time or delivers defective products.
- A tenant breaks a lease agreement before its end date.
- A partner withdraws from a joint venture prematurely.
- A service provider does not perform to agreed standards.
- A customer fails to make payment after receiving services.
- A franchisor breaches exclusivity terms.
These situations may vary in complexity, and outcomes depend on contract terms and the parties’ conduct.
5. Legal Remedies for Breach of Contract
UAE law offers several remedies to a party harmed by a breach of contract:
a) Compensatory Damages
The court may award financial compensation for direct losses and sometimes for consequential damages, if proven.
b) Specific Performance
In certain cases, the court may order the breaching party to fulfill their obligation rather than pay damages—common in property or unique asset disputes.
c) Termination of Contract
The harmed party may request the contract be terminated if the breach is substantial. This may also include a claim for restitution of benefits received under the contract.
d) Liquidated Damages
If the contract includes a pre-agreed penalty clause for breach, the court may enforce it—unless deemed excessive or unreasonable.
e) Injunction or Provisional Relief
Courts can order urgent remedies like freezing assets or preventing a party from taking harmful actions before the case is resolved.
6. Court Jurisdiction: Dubai Courts vs. DIFC Courts
Your choice of court will significantly affect the process and legal framework.
Dubai Courts (Onshore):
- Civil law system using Arabic as the language of proceedings.
- Suitable for contracts with no jurisdiction clause or those governed by UAE law.
- Requires all documents to be translated into Arabic.
DIFC Courts (Offshore):
- Common law system using English.
- More familiar to international parties and contracts governed by English law.
- Accessible if both parties opt in, even if the contract has no DIFC link.
The contract should specify which court will have jurisdiction in the event of a dispute to avoid unnecessary delays.
7. Alternative Dispute Resolution: Arbitration and Mediation
Contracts often include arbitration clauses, directing parties to resolve disputes privately through arbitration institutions like:
- Dubai International Arbitration Centre (DIAC)
- DIFC-LCIA Arbitration Centre
- International Chamber of Commerce (ICC)
Arbitration awards are enforceable in Dubai under the UAE Arbitration Law (Federal Law No. 6 of 2018), and the UAE is a signatory to the New York Convention, which enhances cross-border enforceability.
Mediation is another option encouraged by Dubai courts for smaller disputes or where parties wish to preserve business relations.
8. The Legal Process for Filing a Claim in Dubai
Here is the typical process when filing a breach of contract claim:
- Initial Legal Consultation: Assess if there’s a valid claim and determine the best strategy.
- Sending a Legal Notice: A formal demand sent to the breaching party to settle or perform.
- Filing the Claim: Submitting the case to the appropriate court or arbitration institution.
- Pleadings and Evidence Submission: Each party submits documents, contracts, emails, witness statements, etc.
- Court Hearings or Arbitration Sessions: Presentation of arguments and examination of evidence.
- Judgment or Award: The decision is issued and becomes enforceable.
- Execution and Enforcement: If the breaching party does not comply, the court enforces the judgment through asset seizure or other means.
9. Required Documents for a Breach of Contract Claim
To build a strong case, prepare the following:
- The original contract and any addendums
- Proof of breach (emails, messages, non-delivery notices)
- Invoices, payment records, delivery notes
- Communications showing attempts to resolve the issue
- Witness statements (if applicable)
All documents submitted to Dubai Courts must be in Arabic. Certified translations are required for English or other language contracts.
10. How Long Does It Take to Resolve a Breach of Contract Case?
Timelines vary depending on:
- Court jurisdiction
- Case complexity
- Need for expert witnesses
- Potential appeals
Typically:
- Dubai Courts (First Instance): 6–12 months
- Appeals: Additional 3–6 months
- Arbitration: 6–12 months depending on the institution and cooperation between parties
Out-of-court settlements or mediation can resolve disputes much faster.
11. Time Limits for Filing a Breach of Contract Case
UAE law sets specific time limits (statutes of limitation):
- Commercial contracts: 10 years from the date of breach
- Sales of goods contracts: 2 years
- Employment contracts: 1 year from the date of breach
Delays can lead to forfeiting your right to legal remedy. It’s important to act promptly after discovering a breach.
12. Role of Legal Professionals in Breach of Contract Cases
Breach of contract cases involve procedural, evidentiary, and strategic considerations that require legal expertise. Experienced lawyers in Dubai can assist by:
- Evaluating the strength of your claim
- Drafting or reviewing contracts to minimize future disputes
- Negotiating out-of-court settlements
- Representing you in court or arbitration
- Managing timelines, filings, and enforcement
They ensure your rights are protected and increase your chances of a favorable outcome.
Final Thoughts
Breach of contract disputes are a reality of doing business, but they don’t have to be destructive. With a robust legal system and business-friendly dispute resolution mechanisms, Dubai provides a reliable environment for enforcing commercial agreements.
Whether you’re the party harmed by a breach or accused of failing to perform, understanding your rights, obligations, and legal options is critical. Swift action, strong documentation, and professional legal representation make all the difference.With the guidance of experienced lawyers in Dubai, businesses can confidently navigate breach of contract claims, protect their interests, recover losses, and move forward with stability and credibility.
