Civil Law and UAE: Election Between Contractual and Tort Claims

1. Introduction

Under UAE civil law, a single factual situation may potentially give rise to contractual liability, tortious liability (liability arising from a harmful act), or—depending on the facts—different claims against different parties.

The important legal question is therefore not simply:

“Should the claimant choose contract or tort?”

The court generally first determines the source of the legal duty, the true legal relationship between the parties, the nature of the wrongful conduct, the damage suffered, and the causal connection.

This issue has become particularly important after Federal Decree-Law No. 25 of 2025 promulgating the new Civil Transactions Law, which entered into force on 1 June 2026 and repealed the 1985 Civil Transactions Law.

Older case law remains useful for principles that are substantially preserved, but it should be identified as jurisprudence developed under the former Civil Code.

2. Meaning of Contractual Liability

Contractual liability arises where:

1. a valid contractual relationship exists;
2. a contractual obligation has been breached;
3. legally compensable damage has occurred; and
4. the breach is causally connected with that damage.

Example

A contractor agrees to complete a building by 31 December.

The contractor substantially delays completion without a legally recognised justification.

The employer's claim for losses resulting from that contractual non-performance is ordinarily analysed as contractual liability.

The central question is:

What obligation did the contract impose, and how was it breached?

3. Meaning of Tortious Liability

Tortious liability arises from a harmful or unlawful act causing damage, independently of the existence of a contractual obligation between the injured person and the wrongdoer.

Typical examples include:

• negligent damage to property;
• personal injury;
• unlawful interference with another's rights;
• fraudulent conduct;
• damage caused to a third party during contractual performance.

Example

A contractor is renovating Building A.

During the work, the contractor negligently causes a fire that damages neighbouring Building B.

The owner of Building B has no contract with the contractor. The claim is therefore principally based on tort/harmful-act liability.

4. Why the Election Between Contract and Tort Matters

The classification can affect:

This does not mean that the claimant always has a free choice between the two causes of action.

5. The Central UAE Principle: Characterisation Before Remedy

UAE courts examine the substance of the legal relationship, rather than merely accepting the label given to a claim.

Thus, a claimant cannot necessarily convert a contractual claim into a tort claim merely by describing contractual non-performance as “negligence.”

The analytical sequence is:

Facts → Legal relationship → Source of duty → Characterisation → Breach/wrongful act → Damage → Causation → Remedy

This distinction is particularly important in professional services, construction, banking, insurance, employment-related agreements, leases and commercial contracts.

6. Current UAE Law and the New Civil Transactions Law

The current UAE Civil Transactions Law became effective on 1 June 2026. It replaced Federal Law No. 5 of 1985.

The new legislation retains the fundamental civil-law distinction between obligations arising from agreements and liability arising from harmful acts, while modernising rules concerning damages, causation, contractual obligations and liability allocation.

An important current provision is Article 257, concerning contractual provisions that exclude or reduce liability arising from a harmful act. Such a condition is void, whereas an agreement increasing such liability is generally permissible unless the law provides otherwise. This makes it important to distinguish contractual risk allocation from liability arising independently from a harmful act.

7. Case Law 1 — Dubai Court of Cassation, Commercial Cassation No. 941 of 2019

This authority is particularly relevant to the legal characterisation of liability.

The principle associated with the judgment is that the court must determine the true legal character of the dispute rather than simply adopt the terminology used by the parties.

Where the parties are connected by a contract, a claim arising from non-performance of the contractual obligations will ordinarily be examined through the contractual framework. An independent wrongful act may, however, generate separate consequences where the necessary requirements of non-contractual liability are established.

Importance

The case demonstrates:

A contractual relationship is an important starting point for determining the legal basis of a compensation claim.

A claimant therefore needs to identify whether the alleged wrongdoing is:

• merely failure to perform the contract;
• defective contractual performance;
• an independent harmful act;
• fraud;
• a crime; or
• another legally recognised wrong.

This case should be treated as a historical authority under the former Civil Transactions Law, not as a direct interpretation of the 2025 Law.

8. Case Law 2 — Dubai Court of Cassation, Case No. 33 of 2019

The judgment is important for the relationship between breach, damage and causation.

It recognised that civil liability—whether contractual or tortious—requires the relevant elements to coexist. A breach standing alone does not automatically establish an entitlement to compensation; the claimant must establish the damage and its causal connection with the defendant's conduct. The DIFC Court of First Instance reproduced and discussed this Dubai Cassation authority in BAM Higgs & Hill LLC v Affan Innovative Structures LLC.

Importance for contractual/tort claims

Suppose a contractor breached a contractual obligation but the claimant cannot establish any compensable loss.

The existence of the breach alone does not necessarily produce a damages award.

Likewise, in tort:

Wrongful conduct + damage + causal connection

must be established.

The case therefore shows an important common structural feature of both forms of liability.

9. Case Law 3 — Dubai Court of Cassation, Commercial Appeal No. 445/2020/1034

In the judgment dated 23 December 2020, the Dubai Court of Cassation was cited as emphasising that liability, whether contractual or tortious, depends upon the necessary relationship between fault, damage and causation.

The decision also recognised the relevance of matters such as:

• force majeure;
• an external cause;
• the claimant's own fault;
• third-party conduct; and
• absence of causal connection.

The authority was considered by the DIFC Court of First Instance in BAM Higgs & Hill LLC v Affan Innovative Structures LLC.

Importance

This case demonstrates why the distinction between contract and tort cannot be separated from causation.

For example:

Contractor's breach → alleged loss → intervening event → additional loss

The court must determine which loss was actually caused by the breach.

The same principle can apply where the claim is characterised as tortious.

10. Case Law 4 — Dubai Court of Cassation, Civil Appeal No. 309 of 2016

This authority concerns multiple persons contributing to the same harm.

The Dubai Court of Cassation explained the conditions relevant to joint liability for compensation, including:

1. fault by each person held responsible;
2. contribution of those faults to the damage; and
3. unity of the harm.

The judgment has subsequently been discussed in the 2026 ADGM proceedings in Union Properties PJSC v Trinkler & Partners Ltd & Others.

Relevance to contractual/tort convergence

Imagine:

• A property owner has a contract with a contractor.
• The contractor negligently performs work.
• An independent consultant also commits a negligent act.
• The resulting physical damage is one indivisible loss.

The owner may have:

• a contractual claim against the contractor; and
• a tortious claim against a person who is not contractually bound to the owner.

Thus, the same factual event may generate different legal relationships with different defendants.

11. Case Law 5 — Abu Dhabi Court of Cassation, Commercial Appeal Nos. 9 and 13 of 2026

These appeals, decided on 3 February 2026, are particularly relevant to the relationship between contractual duties and harmful consequences in commercial leases.

The reported decision concerned premises that were allegedly unsafe and unsuitable for their intended use. The court considered the respective contribution of landlord and tenant to the resulting damage and apportioned responsibility between them.

The case illustrates an important point:

Where the damage flows from failure to perform contractual obligations, the analysis may remain contractual; where conduct independently creates legally recognised harm, tort principles may become relevant.

The decision is particularly useful for analysing concurrent contractual and delictual responsibility and contribution to damage.

Because the decision is from 2026, it is also useful when studying the transition to the current legal environment, although the precise statutory provisions applicable to the dispute must always be checked.

12. Case Law 6 — Abu Dhabi Court of Cassation, Commercial Appeal No. 790 of 2013

This authority is significant for the relationship between contract termination and subsequent compensation claims.

The traditional UAE position was that termination of a contract could affect contractual obligations such as contractual penalty/liquidated-damages provisions.

However, in Commercial Appeal No. 790 of 2013, decided on 22 October 2014, the Abu Dhabi Court of Cassation developed the position and recognised that termination does not necessarily prevent application of a contractual penalty clause in every circumstance.

Relevance

This demonstrates why the simple formula:

“Contract terminated = only tort claim remains”

is too broad.

The legal consequences of termination depend on:

• the wording of the contract;
• the nature of the obligation;
• the timing of the breach;
• the applicable contractual remedy;
• whether the relevant obligation survives termination; and
• the applicable UAE statutory rules.

13. Case Law 7 — Federal Supreme Court Civil Cassation No. 99 of Judicial Year 16, 17 December 1995

This historical Federal Supreme Court authority is relevant to causation and harmful acts, particularly the civil-law distinction between direct conduct and causative/indirect conduct.

It is useful when analysing the difference between:

• the person who directly causes damage; and
• a person whose conduct contributes to the harmful result through an intermediate causal process.

Importance for contract/tort election

A contractual breach does not automatically make every subsequent consequence recoverable.

Similarly, the use of a tort label does not eliminate the need to prove:

• a legally relevant harmful act;
• damage; and
• causal connection.

Because this decision predates the 2025 Civil Transactions Law, it should be treated as historical jurisprudential guidance.

14. Case Law 8 — Dubai Commercial Appeal No. 374 of 2011

This line of Dubai jurisprudence concerning exceptional circumstances and contractual performance is useful for distinguishing contractual liability from general tort liability.

Where an extraordinary event substantially affects contractual performance, the court examines the contractual relationship and the statutory doctrine governing changed circumstances.

The analysis is therefore not automatically converted into tort simply because the claimant suffers financial harm.

Example

A construction contract becomes extraordinarily expensive because of an unforeseen economic event.

The contractor's resulting loss does not automatically constitute a tort.

The court must first examine:

• the contractual allocation of risk;
• the nature of the event;
• foreseeability;
• the parties' conduct;
• statutory requirements for intervention; and
• the resulting damage.

This is fundamentally a contract-law analysis.

15. Contractual Claim Versus Tort Claim: Practical Test

A UAE lawyer can use the following test.

Question 1 — Is there a contract?

If no, the claim will normally be analysed through non-contractual civil liability or another applicable legal source.

If yes, continue.

Question 2 — What duty was violated?

If the duty exists because the parties expressly or impliedly agreed to it, the claim is primarily contractual.

If the duty exists independently of the contract, tort/harmful-act liability may become relevant.

Question 3 — Did the defendant commit an independent harmful act?

Examples:

• fraud;
• physical injury;
• intentional property damage;
• unlawful interference;
• independent negligence causing damage to another person.

If yes, a separate tort basis may potentially arise.

Question 4 — Who suffered the damage?

This is crucial.

A contractual claimant and a third party may suffer damage from exactly the same conduct but possess different legal causes of action.

16. Same Conduct Can Produce Different Claims

Consider a bank and customer relationship.

Facts

A bank employee improperly processes a customer's transaction.

The customer suffers financial loss.

At least three legal questions may arise:

Contract:
Did the bank breach its contractual obligations?

Tort:
Did the conduct independently constitute a harmful act causing damage?

Fraud:
Was there deliberate deception?

The answer cannot be determined simply by selecting whichever cause of action offers the largest remedy.

The court must identify the legally applicable source of responsibility.

17. Contractual Liability Is Not the Same as Tort Liability

Contractual liability focuses on the promised performance

Typical questions:

• What did the parties agree?
• What was the contractual obligation?
• Was performance late?
• Was performance defective?
• Was there non-performance?
• Did the contract allocate the relevant risk?

Tort liability focuses on wrongful harm

Typical questions:

• What harmful act occurred?
• Was the conduct unlawful or otherwise legally actionable?
• What damage resulted?
• Was there causation?
• Did the claimant contribute to the damage?

18. Can a Claimant Plead Both?

The answer requires careful qualification.

The same facts may support alternative or overlapping legal characterisations, but that does not mean that the claimant automatically obtains double recovery.

The fundamental objective of civil compensation is generally to compensate legally recognised damage rather than provide two recoveries for the same loss.

For example:

Contractual breach = AED 1 million loss
Independent tort = same AED 1 million loss

The claimant cannot ordinarily obtain AED 1 million twice merely because two legal theories have been pleaded.

The court must determine the appropriate legal basis and ensure that compensation corresponds to the legally established damage.

19. Importance of Causation

Causation is one of the strongest connecting principles between contractual and tortious liability.

The claimant must establish a legally sufficient connection between:

Defendant's conduct → Damage

The Dubai cases discussed above demonstrate that the existence of a breach or fault alone is insufficient where causation or actual damage has not been established.

Potential causal complications include:

• force majeure;
• third-party intervention;
• claimant's own conduct;
• pre-existing damage;
• intervening events;
• multiple responsible persons;
• uncertain future losses.

20. Liability Exclusion and the Contract/Tort Boundary

The distinction has become especially important under the current Civil Transactions Law.

Article 257 addresses contractual conditions concerning liability arising from harmful acts. A clause excluding or reducing such liability is generally void, while increasing such liability is permissible subject to statutory limitations.

Example

A contract states:

“The supplier shall never be responsible for any damage whatsoever.”

That wording cannot automatically eliminate every form of civil liability.

The court must ask:

1. Is the claim contractual?
2. Is it based on a harmful act?
3. Is the exclusion clause legally effective for that category of liability?
4. Does mandatory legislation restrict the clause?

This is one of the most important practical consequences of distinguishing contract from tort.

21. Election of Claims in Construction Disputes

Construction disputes frequently produce the greatest overlap.

Situation

A contractor:

• breaches the completion date;
• uses defective materials;
• negligently damages neighbouring property; and
• causes physical injury to a worker or visitor.

There may be different legal claims:

Thus, one project does not necessarily mean one cause of action.

22. Election in Professional Negligence

Professionals such as:

• architects;
• engineers;
• consultants;
• accountants;
• financial advisers;
• medical professionals

may owe contractual duties to their clients while also being subject to duties arising independently from general civil-law principles and applicable professional legislation.

Therefore, a professional negligence case requires careful identification of:

Who was owed the duty, what was its source, and what damage did the conduct cause?

A third party who relied upon professional conduct may have a different legal position from the professional's contractual client.

23. Important Distinction: Onshore UAE Courts and DIFC Courts

The case law should not be treated as one homogeneous body.

Onshore UAE authorities

These include:

• Federal Supreme Court;
• Dubai Court of Cassation;
• Abu Dhabi Court of Cassation;
• other emirate-level courts.

These are the principal authorities for UAE onshore civil law.

DIFC authorities

DIFC courts operate under their own legal framework and frequently apply common-law principles.

For example, BAM Higgs & Hill LLC v Affan Innovative Structures LLC is a DIFC Court of First Instance case. It is useful because it discusses Dubai Court of Cassation authorities, including Dubai Cassation No. 33 of 2019 and Commercial Appeal No. 445/2020/1034, but it should not be treated as an onshore UAE Court of Cassation judgment.

24. Comparative Summary of the Main Cases

25. A Simple Examination Formula

For an examination or legal research problem, use:

C — Contract

Is there a contractual relationship?

D — Duty

What legal duty was owed?

B — Breach/Wrong

Was the contractual duty breached or was an independent harmful act committed?

D — Damage

What legally recognised damage occurred?

C — Causation

Did the breach/wrongful act cause the damage?

R — Remedy

What remedy does the applicable law permit?

So:

Relationship → Duty → Characterisation → Breach/Wrong → Damage → Causation → Remedy

26. Conclusion

The UAE approach does not treat the “election” between contractual and tort claims as a purely strategic choice by the claimant.

The more fundamental issue is legal characterisation.

Where the loss arises from failure to perform a contractual obligation, contractual liability is ordinarily the starting point. Where an independent harmful act causes damage—particularly to someone outside the contractual relationship—tortious liability may provide the relevant legal basis.

At the same time, the same factual circumstances can generate different legal relationships: contractual liability toward one person and tortious liability toward another. The UAE case law on causation and multiple responsible persons demonstrates why courts must examine the precise source of the duty and the causal chain rather than rely solely on the labels “contract” or “tort.”

Finally, because the 2025 Civil Transactions Law has been effective since 1 June 2026, older cases should now be used carefully: they remain useful for established civil-law reasoning, but the corresponding provisions of the new Civil Transactions Law must be checked before treating an older judgment as controlling authority.