Legal precautionary measures for businesses operating in the UAE amid current regional developments

Given the evolving regional circumstances and heightened geopolitical tensions, businesses operating in the UAE are encouraged to adopt proactive legal and contractual measures to mitigate risk and protect their commercial position. The following is a consolidated overview of key precautionary steps:

 

Immediate contractual review

Businesses should review and update their key commercial contract templates, particularly those relating to construction, supply, logistics, financing, and services, to ensure they include robust:

• Force majeure provisions that cover war, hostilities, government action, transport disruption, and resulting price escalation.
• Termination and suspension rights that clearly define the triggering events, procedural requirements, and legal consequences for both parties.
• Notice requirements and time bars designed to preserve contractual entitlements while minimising ambiguity or dispute over compliance.
• Governing law and dispute resolution mechanisms appropriate to the value, complexity, and subject matter of the transaction.

Note: Timely issuance of contractual notices remains essential for preserving rights.

 

Formal notices & rights reservation

Where performance has been, or is likely to be, impacted due to:

• Material shortages
• Shipping or logistics disruptions
• Escalation in material costs
• Labour availability challenges
• Banking or payment delays

 

Businesses should issue protective contractual notices promptly under the relevant force majeure or delay provisions, even if the full extent of the impact is not yet known.

 

When issuing notices, it is prudent to:

• Clearly reserve all contractual and statutory rights.
• Avoid any admissions that could later prejudice claims.
• Use language that is sufficiently broad to capture evolving impacts, while remaining strictly compliant with contractual notice requirements.

Note: Failure to issue timely notice may lead to a waiver of potential remedies.

 

Supply chain & payment risk management

For construction companies, proactive risk management is essential. It is advisable to:

• Assess exposure to materials sourced through high‑risk trade routes.
• Evaluate subcontractor solvency and performance security, implementing additional safeguards where necessary.
• Monitor lead times and explore alternative sourcing options.
• Ensure appropriate back‑to‑back alignment between main contractors and subcontractors to avoid disproportionate risk exposure.

Note: Risk allocation begins at the contract drafting stage. Addressing potential vulnerabilities within the contract itself is critical to minimizing, or altogether avoiding, downstream disputes.

 

Evidence preservation

In construction and real estate projects, contemporaneous documentation is often decisive. Businesses should:

• Document site conditions and ongoing progress.
• Maintain comprehensive records of delays, disruptions, and mitigation efforts.
• Where necessary, consider precautionary legal measures to preserve evidence before initiating substantive claims.

Note: Well‑maintained and structured documentation frequently determines the outcome of disputes.

 

Sanctions & regulatory compliance

Companies should adopt enhanced compliance vigilance by:

• Conducting enhanced due diligence on counterparties and financial flows.
• Reviewing banking arrangements for exposure to cross‑border restrictions or correspondent banking limitations.
• Ensuring full compliance with UAE anti‑money laundering and regulatory frameworks.

Note: Proactive and properly documented due diligence significantly reduces exposure to regulatory and reputational risk.

 

Insurance review

Businesses should examine their insurance policies to confirm:

• The scope of business interruption coverage and any applicable exclusions.
• The availability of political risk and/or war risk insurance.
• Compliance with notification requirements and timelines.

Note: Delays or failure to notify insurers in accordance with policy terms may materially prejudice or invalidate coverage.

 

Employment & workforce considerations

Companies should assess workforce‑related implications, including:

• Reviewing employment contracts and HR policies concerning remote work, emergency leave, and workplace safety.
• Ensuring compliance with UAE Labour Law on salary payments, working hours, and health and safety obligations.
• Establishing clear and consistent internal communication channels to avoid misinformation.
• Updating business continuity and contingency plans to maintain operational stability.
• Reviewing travel policies and potential cross‑border restrictions affecting staff.

Note: Employers remain responsible for maintaining a safe workplace in line with UAE regulatory guidance.

 

Dispute resolution strategy

Where disputes are anticipated, businesses should:

• Engage in structured, without‑prejudice settlement discussions.
• Consider mediation before parties become entrenched.
• Evaluate options for interim or precautionary relief where security or assets may be at risk.
• Avoid reactive or unreviewed termination decisions.

Note: Premature termination continues to carry significant legal risk, particularly in the construction sector.

 

Corporate governance & decision-making

Businesses should ensure:

• Clear internal decision-making processes.
• Proper delegation of authority.
• Updated corporate records and signatory powers.
• Secure storage and backup of essential documentation.

 

Conclusion

While the UAE remains stable and resilient, adopting prudent legal and commercial risk‑management practices is advisable during periods of regional uncertainty. Proactive contract management, disciplined record‑keeping, and early legal positioning can significantly reduce exposure.

We remain available to support contract reviews, provide strategic advice, and assist in implementing tailored protective measures for your industry.

 

To learn more, contact our Partner, Hasan ElShafiey at hasan.elshafiey@galadarilaw.com.

 

Hasan ElShafiey Partner hasan.elshafiey@galadarilaw.com