Civil Law and UAE: Limits of Judicial Law-Making in Civil Systems

1. Introduction

Judicial law-making means the creation, modification or development of legal rules by courts through judicial decisions rather than through legislation enacted by the competent legislature.

In a civil-law system such as the mainland UAE legal system, courts have an important interpretive and gap-filling function, but they do not generally possess the same law-making role associated with courts in a traditional common-law system.

The basic distinction is:

Legislature creates the legal rule → judiciary interprets and applies the rule → judiciary may fill genuine legal gaps only within the authority granted by legislation.

The UAE's new Civil Transactions Law, effective from 1 June 2026, makes this particularly important. Article 1 provides that legislative provisions apply to matters they address expressly or implicitly and states that there is no room for ijtihad where the text is definitive. Where legislation contains no applicable provision, the judge moves through a prescribed hierarchy: Islamic Sharia, appropriate custom, and finally principles of natural law and justice. Article 2 directs courts to principles of Islamic jurisprudence for understanding, interpretation and construction of legislative texts.

Thus, UAE civil law permits judicial reasoning, but that is not identical to unrestricted judicial legislation.

2. Meaning of Judicial Law-Making

Judicial law-making may occur when a court:

1. interprets an ambiguous statute;
2. develops an existing legal principle;
3. fills a genuine legislative gap;
4. adapts an established doctrine to new factual circumstances;
5. formulates a rule from general legal principles; or
6. creates a new doctrine through precedent.

The important question in UAE law is:

How far may a judge go before interpretation becomes legislation?

This is the central boundary.

3. Judicial Interpretation vs Judicial Legislation

These concepts must be separated.

Judicial interpretation

The court asks:

"What does the existing law mean?"

Judicial legislation

The court effectively asks:

"What new rule should the legal system have?"

The first is an ordinary judicial function.

The second generally belongs to the competent legislative authority.

This distinction is especially clear in the UAE's statutory civil-law structure.

4. The New UAE Civil Transactions Law and Judicial Reasoning

The 2025 Civil Transactions Law significantly clarifies the hierarchy that courts should follow.

Article 1 provides:

First

Apply legislative provisions that expressly or implicitly govern the matter.

Second

If there is no applicable legislative provision, apply Islamic Sharia and select the solution most appropriate to the interests involved.

Third

If Sharia contains no applicable rule, apply custom (Urf), provided it does not conflict with public order or public morals.

Fourth

If there is no applicable custom, apply principles of natural law and rules of justice.

This creates a structured judicial gap-filling mechanism.

It does not give the judge unlimited authority to invent whatever rule appears desirable.

5. Definitive Text as the First Boundary

The most important limitation is:

Where the statutory text is definitive, judicial discretion is substantially restricted.

Article 1 of the new Civil Transactions Law expressly states that there is no room for ijtihad where the legislative text is definitive in its indication.

This protects:

• separation of powers;
• legal certainty;
• predictability;
• equality before the law;
• legislative supremacy within the constitutional framework.

Example

Suppose legislation expressly provides:

"A claim must be filed within two years."

A judge generally cannot replace this with:

"Three years would be fairer in this particular case."

The judge must apply the statutory rule unless another legally recognised provision changes its operation.

6. But "Definitive Text" Does Not Mean Mechanical Judging

The restriction does not mean judges merely copy statutory words.

Judges still have to determine:

• what the words mean;
• how provisions interact;
• which statute applies;
• whether a special law overrides a general law;
• how facts fit the statutory categories;
• whether a legal concept has been satisfied;
• whether a contractual term falls within a statutory prohibition.

Consequently:

Interpretation is unavoidable; uncontrolled legislation by judges is not.

7. Role of General Legal Principles

UAE civil law contains broad principles such as:

• good faith;
• prohibition of abuse of rights;
• unjust enrichment;
• causation;
• compensation;
• contractual binding force;
• protection of public order;
• legitimate legal relationships;
• prevention of unlawful harm.

Judges use these principles to resolve disputes.

But the existence of broad principles does not automatically authorise a judge to create any new cause of action.

The principle must have a legal foundation.

8. Judicial Law-Making in a Civil-Law System

A civil-law court can therefore be understood as having three levels of activity.

Level 1 — Application

The statute clearly answers the question.

Judicial freedom: low.

Level 2 — Interpretation

The statute applies, but its meaning must be determined.

Judicial reasoning: substantial.

Level 3 — Gap-filling

No applicable statutory provision exists.

Judicial reasoning: broader, but legally structured.

The judge still follows the hierarchy established by legislation.

9. Judicial Law-Making and Separation of Powers

The UAE Constitution distributes legislative authority between the competent federal and emirate institutions.

Consequently, courts should not normally replace legislative policy choices with their own preferences.

This does not mean judicial decisions are unimportant.

Court decisions:

• clarify legislation;
• harmonise conflicting provisions;
• establish consistent interpretation;
• identify legal consequences;
• guide future litigation;
• contribute to legal certainty.

But there is an important distinction between:

developing the meaning of existing law

and

creating an entirely new legislative regime.

10. Case Law 1 — Frontline Development Partners Ltd v Asif Hakim Adil [2016] DIFC CA 006

This is one of the clearest UAE-related authorities concerning the boundary between interpretation and judicial legislation.

The DIFC Court of Appeal stated that the function of courts is to determine legislative intention through interpretation. Where statutory wording is clear, courts should give effect to it rather than rewrite it.

The Court rejected an interpretation that would effectively require the court to redraft the legislation to deal with circumstances that the statute did not expressly address. It stated that such an approach would cross from interpretation into legislation.

Principle

Courts interpret legislation; they do not rewrite clear statutory provisions simply because another result might appear more convenient or fair.

Importance

This is an excellent authority for the proposition:

Interpretation ≠ judicial legislation.

Jurisdiction: DIFC; therefore, it is not a binding Federal/onshore UAE precedent, but it is a highly useful UAE judicial authority on the conceptual boundary.

11. Case Law 2 — Industrial Group Ltd v Abdelazim El Shikh El Fadil Hamid [2022] DIFC CA 005 & 006

This is particularly important.

The DIFC Court of Appeal considered whether courts could introduce tort causes of action into DIFC law through judicial development.

The Court held that the DIFC legal system is fundamentally statutory. Although DIFC courts use common-law methodology and may develop principles incrementally where the statutory framework permits it, they cannot simply import an entire foreign cause of action that has not been implemented by legislation.

The Court concluded that incorporating the proposed torts through judicial decision would constitute impermissible judicial legislation.

Principle

Where legislation has deliberately left a legal gap, a court cannot necessarily fill that gap by importing an entire foreign legal doctrine.

Importance

This case is particularly valuable because it shows that even a common-law-influenced UAE jurisdiction places statutory boundaries on judicial development.

12. Case Law 3 — Gate Mena DMCC v Tabarak Investment Capital Ltd [2023] DIFC CA 002

The DIFC Court of Appeal considered the relationship between statutory DIFC law and common-law principles.

The Court confirmed the approach established in Industrial Group: DIFC courts may look to common-law principles and international jurisprudence where DIFC legislation identifies or incorporates such principles, but the statutory framework remains the starting point.

Principle

Foreign jurisprudence can be:

• persuasive;
• interpretive;
• supplementary;

but it does not automatically become UAE/DIFC law merely because another common-law jurisdiction recognises it.

Significance

This prevents legal transplantation without statutory authority.

13. Case Law 4 — Lals Holdings Ltd v Emirates Insurance Company [2024] DIFC CA 002

The DIFC Court of Appeal again emphasised that DIFC courts operate within a statutory framework and must avoid crossing into impermissible judicial legislation.

The case also demonstrates how courts can use principles from other common-law jurisdictions when the relevant DIFC statutory framework permits such development.

Principle

Judicial development is legitimate when it develops an existing statutory principle; it becomes problematic when it creates a legal regime unsupported by the statutory framework.

14. Case Law 5 — Carmon Reestrutura-Engenharia v Antonio Joao Catete Lopes Cuenda [2024] DIFC CA 003

The DIFC Court of Appeal considered the proper limits of judicial development concerning the court's jurisdiction and interim powers.

The Court reiterated that the jurisdiction and powers of the DIFC Courts derive from legislation and that statutory provisions determine the proper boundaries of judicial interpretation and development.

Principle

A court cannot enlarge its jurisdiction merely because doing so would make the legal system more effective or commercially convenient.

The case is particularly useful for understanding institutional limits on judicial creativity.

15. Case Law 6 — Meydan Group LLC v Banyan Tree Corporate Pte Ltd [2014] DIFC CA 005

The DIFC Court considered the relationship between:

• UAE constitutional allocation of legislative powers;
• Federal legislation;
• Dubai legislation; and
• DIFC legislation.

The case is important because it demonstrates that UAE courts must determine their powers by reference to the relevant statutory and constitutional framework rather than assuming inherent unlimited jurisdiction.

Principle

Judicial authority is itself legally structured; courts cannot assume powers simply because those powers would be useful.

16. Case Law 7 — Ashok Kumar Goel v Credit Suisse [2021] DIFC CA 002

This case concerned interpretation of contractual provisions under the UAE Civil Code framework.

The Court referred to Article 265 of the UAE Civil Code, under which clear contractual wording should not be displaced by interpretation merely to discover a different intention; where genuine ambiguity exists, the court can examine the mutual intention of the parties and the circumstances of the transaction.

Principle

Judicial interpretation has greater scope where:

• language is ambiguous;
• contractual context matters;
• competing interpretations exist.

But where language is clear, courts should not manufacture a different bargain.

Importance

This illustrates the broader principle:

Judicial interpretation operates within the boundaries of the legal text.

17. Case Law 8 — Credit Suisse v Ashok Kumar Goel [2020] DIFC CFI 066

The Court discussed Article 265 of the UAE Civil Code and the principle that interpretation seeks to identify the parties' joint intention. It distinguished between clear contractual wording and situations where interpretation is genuinely required.

Principle

A judge can interpret an existing legal relationship, but interpretation should not become judicial rewriting of the parties' contract.

This is particularly important for commercial civil law.

18. Case Law 9 — Emirates NBD Bank PJSC v Rashed Almakhawi [2025] DIFC CFI 039

This recent DIFC decision illustrates another dimension of judicial law-making: jurisdiction cannot be expanded simply by implication where the statutory scheme establishes defined jurisdictional boundaries.

The court examined the statutory basis of DIFC jurisdiction and the effect of express statutory wording. The decision emphasised that inserting a restriction or power contrary to the statutory language can amount to impermissible judicial legislation.

Principle

Courts should respect deliberate legislative choices expressed through statutory language.

19. The Special Position of DIFC

The DIFC requires special treatment.

Unlike mainland UAE civil courts, the DIFC has a common-law-influenced legal system.

Its laws expressly permit the common law and equity to supplement DIFC statutes in defined circumstances.

But even there:

Common-law methodology does not equal unlimited judicial legislation.

Industrial Group made this clear: DIFC courts can develop the law incrementally where the statutory framework permits it, but cannot create entirely new causes of action merely because they exist in England or another common-law jurisdiction.

20. Mainland UAE vs DIFC

21. Judicial Gap-Filling Under the New Civil Transactions Law

The new UAE Civil Transactions Law is particularly interesting because it expressly recognises what happens when legislation does not provide an answer.

The hierarchy is:

Legislation

↓

Islamic Sharia

↓

Custom

↓

Natural law and rules of justice

This means the UAE civil-law judge is not necessarily helpless when legislation is silent.

But the judge's freedom is structured.

The court cannot simply say:

"There is no statute, therefore I will create whatever rule I consider desirable."

Instead, the statute itself tells the judge where to look next.

22. Ijtihad and Judicial Law-Making

The new law uses the concept of ijtihad in a carefully defined way.

Where the legislative text is definitive:

No ijtihad.

Where legislation is absent:

Judicial reasoning has greater scope.

This creates an important distinction between:

Interpretation of definitive text

Limited.

Interpretation of ambiguous text

Broader.

Gap-filling

Broader still, but structured by Article 1.

Thus:

The absence of legislation expands judicial reasoning but does not create unlimited judicial legislative power.

23. Judicial Creativity and Legal Certainty

Judicial creativity can have positive functions.

It can:

• adapt old legal concepts to new technology;
• resolve unforeseen factual situations;
• maintain coherence;
• avoid injustice;
• develop principles gradually;
• clarify ambiguous legislation.

But excessive judicial creativity can produce:

• uncertainty;
• inconsistent decisions;
• unpredictable liabilities;
• unequal treatment;
• conflict with legislation;
• institutional tension between courts and legislatures.

Therefore, the civil-law system attempts to maintain:

Adaptability without abandoning legislative authority.

24. Technology and Judicial Law-Making

This issue is increasingly important in the UAE.

Consider:

• AI systems;
• autonomous vehicles;
• smart contracts;
• blockchain;
• DAOs;
• digital assets;
• algorithmic decisions;
• cloud computing;
• autonomous infrastructure.

Suppose legislation does not specifically address liability for a new autonomous technology.

The judge may need to ask:

1. Is there an existing statutory rule?
2. Can an existing legal category accommodate the technology?
3. Is there an applicable general principle?
4. Is there an applicable Sharia principle under the statutory hierarchy?
5. Is there relevant custom?
6. Does natural law or justice provide a final gap-filling basis?

The judge should not automatically create an entirely new statutory category merely because technology is new.

25. Example: AI Liability

Imagine an autonomous AI platform causes financial damage.

A court could analyse existing concepts such as:

• contractual liability;
• negligence/fault;
• agency;
• product liability;
• professional liability;
• causation;
• employer liability;
• cybersecurity duties.

The fact that the technology is novel does not necessarily require a new legal doctrine.

The first judicial task is generally:

Fit the new facts into existing legal categories where the law permits.

Only where a genuine gap remains does structured judicial reasoning become necessary.

26. Example: Digital Assets

Suppose legislation does not expressly classify a new digital asset.

The judge should first examine:

• existing property law;
• contractual rules;
• evidence legislation;
• financial regulations;
• relevant definitions;
• applicable commercial legislation.

The court should not automatically invent a completely new property regime.

The Gate Mena litigation is useful here because the DIFC Court dealt with Bitcoin within the existing statutory and common-law-influenced framework rather than treating judicial creativity as unlimited. The Court also reaffirmed the statutory boundaries on judicial development.

27. Judicial Precedent in UAE Civil Law

Another important issue is the role of precedent.

Traditional civil-law systems generally distinguish between:

Legislation

Generally the primary source.

Judicial decisions

Important for interpretation and consistency.

Binding precedent

More restricted than in a classic common-law system.

In the UAE, decisions of higher courts, particularly Federal Supreme Court and relevant Court of Cassation decisions, can have substantial interpretive authority. But this does not transform the UAE into a pure common-law precedent system.

The court must remain connected to:

• legislation;
• statutory interpretation;
• legal principles;
• the applicable jurisdiction.

28. Why Courts Cannot Simply Create New Causes of Action

A cause of action determines:

• what conduct gives rise to liability;
• who can sue;
• who can be sued;
• what must be proved;
• what remedies are available.

Creating a completely new cause of action can therefore change substantive rights throughout society.

That is fundamentally different from interpreting an existing provision.

Industrial Group illustrates this boundary particularly well: the DIFC Court concluded that importing additional torts through judicial decision would constitute impermissible judicial legislation.

29. Judicial Law-Making and Public Policy

Courts may consider public policy where legislation gives them that role.

But:

Public policy cannot become a general licence to disregard clear legislation.

A judge should distinguish:

"The law produces an undesirable consequence"

from

"The law is legally ambiguous and requires interpretation."

The first may require legislative amendment.

The second is a judicial function.

30. Judicial Law-Making and Fairness

One of the most difficult issues is the temptation to modify statutory rules because the result appears unfair in an individual case.

Frontline Development Partners is particularly instructive.

The court recognised that a statutory provision could produce situations that appeared harsh, but held that rewriting the legislation was not the judicial solution. If the legal rule required reform, that was a matter for the legislative authority.

Therefore:

Individual fairness cannot automatically justify judicial amendment of a clear statutory rule.

31. Interpretation Techniques Available to UAE Courts

Judicial interpretation can involve:

Literal interpretation

What do the words ordinarily mean?

Systematic interpretation

How does the provision fit into the wider statute?

Contextual interpretation

What is the legal context?

Purposive interpretation

What purpose does the legislation seek to achieve?

Harmonious interpretation

How can apparently conflicting provisions be read consistently?

Legal principles

How do good faith, public order, causation and other principles affect interpretation?

These are methods of interpreting law, not necessarily methods of creating new law.

32. Limits of Purposive Interpretation

Purposive interpretation is particularly useful when legislation is ambiguous.

But it has a boundary.

A judge cannot normally say:

"The purpose of the legislation is good, therefore I will replace its words with a rule that better achieves my preferred result."

The purpose must be derived from the legal framework.

This is why Frontline Development Partners is useful: the court recognised purposive interpretation but refused to use it to rewrite clear statutory language.

33. Judicial Law-Making and Commercial Certainty

Commercial parties particularly depend upon predictable rules.

If judges could freely create new liabilities after contracts were made, businesses would face uncertainty regarding:

• pricing;
• insurance;
• risk allocation;
• contractual drafting;
• compliance;
• financing;
• investment.

Consequently, judicial restraint can itself promote economic efficiency.

34. Judicial Law-Making and Legal Evolution

Judicial restraint does not mean that UAE civil law cannot evolve.

Legal evolution can occur through:

1. Legislation

New statutes.

2. Legislative amendments

Modification of existing rules.

3. Judicial interpretation

Clarification of existing provisions.

4. Structured gap-filling

Use of legally authorised supplementary sources.

5. Regulatory development

Administrative and sector-specific regulations.

This creates a controlled evolutionary model rather than unrestricted judicial law-making.

35. Six Core Boundaries

The limits can be summarised as follows:

Boundary 1 — Clear text

A definitive statutory provision should be applied.

Boundary 2 — Jurisdiction

A court cannot create powers that legislation does not confer.

Boundary 3 — Legal hierarchy

A judge must respect higher-ranking legal rules.

Boundary 4 — Existing causes of action

A court should not invent an entirely new cause of action without legal foundation.

Boundary 5 — Foreign law

Foreign doctrines cannot automatically be transplanted into UAE law.

Boundary 6 — Institutional competence

Major policy choices normally belong to the legislature.

36. Judicial Law-Making and Foreign Precedent

This is particularly important in the UAE because commercial disputes often involve:

• English law;
• Singapore law;
• New York law;
• DIFC law;
• ADGM law;
• international arbitration.

A UAE court may consider foreign legal reasoning where relevant, but foreign precedent does not automatically become UAE law.

Similarly, Industrial Group specifically rejected the assumption that a development in English common law automatically becomes part of DIFC law.

37. The Role of Justice

Justice remains an important interpretive value.

Under the new Civil Transactions Law, where there is no applicable legislation, the legal hierarchy ultimately reaches natural law and rules of justice.

But justice operates within the legal structure.

The correct principle is therefore:

Justice guides legally authorised judicial reasoning; it does not automatically authorise judges to disregard legislation.

38. Judicial Law-Making and AI-Assisted Courts

The emergence of AI creates another layer.

An AI system may:

• identify precedent;
• analyse legislation;
• detect inconsistencies;
• suggest interpretations;
• summarise cases.

But none of these functions independently grants the AI legislative or judicial authority.

A human court remains responsible for:

• identifying applicable law;
• interpreting legislation;
• explaining the decision;
• respecting jurisdiction;
• applying procedural fairness.

AI can assist legal reasoning, but it should not become an independent source of legal authority merely because an algorithm has generated a proposed rule.

39. Judicial Law-Making in Autonomous Systems

Consider an autonomous infrastructure dispute where no legislation specifically addresses the technology.

A court could develop an application of existing concepts concerning:

• negligence;
• duty of care;
• contractual responsibility;
• agency;
• product responsibility;
• causation.

But if creating liability would require a completely new statutory regime—such as creating a new legal personality for autonomous machines—that is much closer to legislation than interpretation.

The proper institutional question becomes:

Is the court interpreting an existing legal category, or creating a new legal status?

The second is generally much more difficult to justify judicially.

40. Important Case-Law Table

The DIFC cases above should be identified as DIFC authorities, not automatically treated as binding Federal/onshore UAE precedent. Their value here is especially strong for illustrating the broader UAE question of the boundary between interpretation and judicial legislation.

41. Practical Test: Has a Judge Crossed the Line?

A useful analytical test is:

Question 1

Is there an applicable statutory provision?

Yes → apply/interpret it.

Question 2

Is the wording ambiguous?

Yes → legitimate interpretation is required.

Question 3

Is there a genuine legislative gap?

Yes → use the legally prescribed gap-filling hierarchy.

Question 4

Does the proposed judicial solution contradict clear legislation?

Yes → strong indication of impermissible judicial legislation.

Question 5

Does the proposed rule create an entirely new cause of action or legal status?

Yes → normally a legislative rather than ordinary judicial task.

Question 6

Is the court merely applying an existing principle to new facts?

Yes → this is ordinarily judicial interpretation/application rather than legislation.

42. Exam Formula

A useful formula is:

Judicial Authority = Interpretation + Application + Structured Gap-Filling − Contradiction of Clear Statutory Text − Creation of Unauthorised Legal Regimes

This captures the basic balance.

43. Short Comparative Perspective

Traditional common law

Judicial precedent historically plays a major role in developing legal rules.

Classical civil law

Legislation is the principal source; judicial decisions generally interpret and apply legislation.

UAE mainland

The UAE follows a predominantly codified civil-law model, but its current Civil Transactions Law expressly gives courts a structured method for dealing with legislative gaps through Sharia, custom, natural law and justice.

DIFC

DIFC uses a common-law-influenced methodology, but the courts themselves have repeatedly emphasised that their law and jurisdiction are statutory and that judicial development must remain within those statutory boundaries.

44. Conclusion

The limits of judicial law-making in UAE civil systems are best understood through a balance between judicial reasoning and legislative authority.

UAE judges are not merely mechanical appliers of statutory words. They interpret legislation, reconcile provisions, apply general legal principles, assess new factual circumstances and, where legislation is genuinely silent, use the structured sources authorised by the legal system. The new Civil Transactions Law expressly confirms this approach by establishing a hierarchy of legislation, Sharia, custom, and ultimately natural law and rules of justice, while restricting ijtihad where the statutory text is definitive.

At the same time, judicial power has boundaries. Frontline Development Partners demonstrates that courts should not rewrite clear statutory provisions; Industrial Group demonstrates that even a common-law-influenced DIFC court cannot simply create an entirely new cause of action through judicial decision; and Gate Mena, Lals Holdings and Carmon reinforce the requirement that judicial development remain anchored in the statutory framework.

Final exam definition

The limits of judicial law-making in UAE civil systems refer to the boundary between legitimate judicial interpretation, application and legally authorised gap-filling on one hand, and impermissible judicial legislation on the other. UAE courts may interpret ambiguous provisions, apply general legal principles and resolve genuine legal gaps within the hierarchy prescribed by law, but they should not rewrite definitive statutory provisions, create unauthorised causes of action, enlarge their jurisdiction beyond legislation, or substitute judicial policy preferences for legislative choices.