Civil Law and UAE Mediation and Reconciliation Centres in UAE Disputes

1. Introduction

Mediation and Reconciliation Centres in the UAE form an important part of the country's alternative dispute resolution system. Their purpose is to encourage parties to resolve civil and commercial disputes amicably instead of proceeding through a full court trial.

The principal federal framework is Federal Decree-Law No. 40 of 2023 on Mediation and Conciliation in Civil and Commercial Disputes. It replaced the earlier federal legislation on mediation and reconciliation and provides a unified framework for mediation, conciliation, settlement agreements, confidentiality, electronic procedures and court-referred mediation.

The system is particularly significant because it can:

• reduce court litigation;
• save time and costs;
• preserve commercial relationships;
• protect confidentiality;
• allow flexible settlement terms;
• resolve disputes before or during litigation;
• produce a settlement with the evidentiary force of a judgment once properly ratified.

The UAE system should, however, be understood as containing federal and local judicial mechanisms, together with specialised systems such as the DIFC Courts.

2. Meaning of Mediation

Under Federal Decree-Law No. 40 of 2023, mediation is an alternative and generally optional method of amicably resolving civil and commercial disputes through a neutral mediator.

The law recognises:

A. Consensual mediation

The parties voluntarily agree to mediation before or independently of court proceedings.

B. Court-ordered mediation

A court may refer a dispute to mediation at an appropriate stage, subject to the statutory requirements and the parties' involvement contemplated by the law.

The law also recognises mediation agreements made before or after the dispute arises.

3. Meaning of Reconciliation/Conciliation

Conciliation is institutionally different from ordinary mediation.

Under Federal Decree-Law No. 40 of 2023, conciliation is an alternative process that must be pursued before court registration for disputes falling within the Centre's mandatory jurisdiction, with a neutral conciliator attempting to reach a settlement signed by and binding upon the parties.

A useful distinction is:

4. Mediation and Reconciliation Centres

Federal Decree-Law No. 40 of 2023 permits the Federal Judicial Council or the relevant local judicial authority to establish one or more Mediation and Conciliation Centres within the jurisdiction of courts of first instance.

The law also permits:

• electronic mediation platforms;
• remote mediation;
• private mediation centres;
• branches of foreign mediation centres, subject to licensing. 

Thus, mediation is not limited to a physical courtroom environment.

5. Abu Dhabi Mediation and Reconciliation Centre

The Abu Dhabi Judicial Department (ADJD) operates Mediation and Reconciliation Centres as part of its alternative-justice system.

ADJD explains that its centres seek to resolve civil and commercial disputes amicably before parties proceed to court. Its centres operate in Abu Dhabi, Al Ain and Al Dhafra.

ADJD's service materials also provide for opening a mediation/reconciliation file for civil or commercial disputes and identify the documents required for the process.

6. Mandatory Conciliation Jurisdiction

One of the most important provisions of Federal Decree-Law No. 40 of 2023 concerns the jurisdiction of the Centre.

Article 27 provides that the Centre is obligatorily competent for:

1. civil and commercial disputes not exceeding AED 5 million, subject to the statutory exclusions; and
2. disputes between spouses or relatives up to the fourth degree, regardless of value. 

Parties may also agree to submit disputes exceeding AED 5 million to conciliation.

This means that the value of the dispute can determine whether the Centre must be approached before ordinary court proceedings.

7. Matters Excluded from Mandatory Conciliation

Article 28 excludes certain matters from the Centre's mandatory conciliation jurisdiction, including:

• summary and interim matters;
• cases involving the Government;
• rental disputes assigned to rental-dispute committees;
• labour disputes;
• personal-status matters;
• disputes assigned by law to another specialised body. 

Therefore, the AED 5 million threshold should not be treated as an absolute rule applicable to every type of civil dispute.

8. Effect of Filing with the Centre

A particularly important procedural consequence is the suspension of relevant legal and judicial limitation periods.

Under Article 30, when a dispute falls within the Centre's mandatory conciliation jurisdiction, it cannot simply be registered directly before the court without first being referred to the Centre.

The law also provides that applicable legal and judicial time limits are suspended from registration of the dispute at the Centre and resume after the conciliation concludes.

This protects a claimant from losing a limitation period merely because the parties attempted settlement.

9. Settlement Agreement

The ultimate objective is a Settlement Agreement.

A settlement may address:

• payment of money;
• instalment arrangements;
• delivery of property;
• contractual performance;
• termination of a contract;
• withdrawal of claims;
• release of liability;
• confidentiality;
• future obligations;
• costs.

A settlement can therefore provide a more flexible remedy than a conventional judgment.

10. Legal Effect of a Ratified Settlement

This is one of the most important features of UAE mediation law.

Under Article 25 of Federal Decree-Law No. 40 of 2023, a ratified settlement agreement is binding and irrevocable between the parties and has the same probative force as a court judgment. The same dispute between the same parties should not subsequently be litigated again.

Therefore:

Mediation → Settlement → Judicial approval/ratification → Binding effect

is a central structure of the UAE system.

11. Confidentiality

Confidentiality is fundamental to mediation.

The Federal Decree-Law provides that mediation and conciliation proceedings, including documents and information presented during them, are confidential and generally cannot be relied upon before a court or other entity.

There are exceptions, particularly concerning enforcement of the settlement agreement and legally required reporting.

This allows parties to make settlement proposals without necessarily turning every proposal into evidence against them later.

12. Remote Mediation

Federal Decree-Law No. 40 of 2023 expressly recognises remote mediation and conciliation through electronic and remote communication methods.

This is particularly important for:

• international commercial disputes;
• technology disputes;
• banking disputes;
• digital-contract disputes;
• parties located in different Emirates;
• cross-border commercial relationships.

The DIFC Courts similarly permit remote mediation. In Wilson v Simmons & Simmons, the Court ordered a mediation to be conducted remotely through a court-provided video link.

13. Role of the Mediator

The mediator is a neutral facilitator, rather than a judge.

The mediator can:

• hear the parties;
• identify disputed issues;
• conduct joint discussions;
• hold private sessions;
• evaluate documents where the law permits;
• assist the parties in identifying settlement options;
• facilitate negotiation;
• help formulate settlement terms.

Under the federal law, a mediator does not have ordinary investigative powers, although the mediator may access relevant documents and, subject to the statutory framework and party agreement, obtain expert assistance.

14. Private Sessions

A mediator may meet each party separately.

This is sometimes called a caucus.

For example:

Joint session

Both parties explain their positions.

Private session

The mediator meets Party A alone.

Party A may disclose:

“We are willing to pay AED 800,000, but we do not want the other side to know our maximum settlement figure.”

The mediator must maintain the required confidentiality and cannot disclose private information without the relevant party's permission, subject to legal exceptions.

15. Mediation of Multiparty Disputes

Modern commercial disputes can involve:

• owners;
• contractors;
• subcontractors;
• banks;
• insurers;
• suppliers;
• shareholders;
• directors.

The federal legislation expressly contemplates mediation involving multiple parties and permits continued mediation in certain circumstances even where one party does not participate, subject to court approval and the proper administration of the mediation.

This is particularly useful for construction and commercial disputes.

16. Case Law 1 — Mahesh Srichand Tourani v Dusty Tourani & Duzty LLC

[2018] DIFC CFI

This is an important UAE-based authority demonstrating judicial encouragement of mediation.

The dispute involved multiple related family claims. The Court encouraged the parties to attempt mediation before the trial and arranged for another DIFC judge to act as mediator so that the trial judge would not be influenced by confidential mediation communications.

The Court discussed advantages of mediation including:

• confidentiality;
• finality;
• compromise;
• preservation of relationships. 

Principle

Courts can actively facilitate settlement while preserving the independence of the trial process.

Importance

This case illustrates the difference between:

judge deciding the dispute

and

another judicial officer facilitating settlement.

17. Case Law 2 — Wilson v Simmons & Simmons Middle East LLP

[2020] DIFC CFI 029

The parties agreed to attend judicial mediation.

The DIFC Court ordered:

• mediation before a judicial officer;
• remote participation;
• good-faith participation;
• confidentiality;
• authority of representatives to settle;
• protection of mediation communications.

The order also provided that a settlement would not be legally binding until recorded in writing and signed by authorised representatives.

Principle

A mediation framework should establish:

authority + confidentiality + procedure + written settlement.

Importance

This case is particularly useful for understanding remote mediation.

18. Case Law 3 — Alawwal Capital JSC v Rasmala Investment Bank Ltd

[2023] DIFC CFI 038

The parties agreed to mediation.

The DIFC Court ordered the proceedings to be stayed while mediation took place. The stay could be lifted if:

1. mediation concluded without settlement; or
2. the claimant withdrew the claim following settlement. 

Principle

Mediation can operate alongside court proceedings without requiring the litigation to be permanently abandoned.

Importance

This provides a practical model:

Court proceedings → stay → mediation → settlement or return to litigation.

19. Case Law 4 — Indus International FZC v Indus Thermal LLC

[2019] DIFC CFI 045

The DIFC Court stayed proceedings so the parties could attend mediation.

The stay was subsequently extended several times to allow mediation to continue. The parties were required to notify the Court whether settlement had been achieved and, if so, submit an appropriate consent order.

Principle

Courts may give parties meaningful time to pursue mediation where settlement remains realistically possible.

Importance

This demonstrates that mediation is not necessarily a single meeting.

Commercial mediation may require:

• multiple sessions;
• technical discussions;
• financial negotiations;
• revised offers;
• settlement documentation.

20. Case Law 5 — Alistair James Company Ltd v Sakson Drilling & Oil Services

[2017] DIFC CFI 003

The parties negotiated a settlement agreement concerning disputed payment obligations.

The defendant later argued that the settlement had been entered into under economic duress.

The Court found the settlement terms clear and rejected the defence. It also considered the parties' subsequent conduct in affirming the agreement.

Principle

A settlement agreement can itself become an enforceable contractual obligation.

Importance

Mediation does not end the legal analysis.

Once settlement terms are agreed, questions may arise concerning:

• authority;
• consent;
• duress;
• interpretation;
• performance;
• breach;
• enforcement.

21. Case Law 6 — Transcom DMCC v KPR Agrochem Ltd

[2019] DIFC CFI 024

The claimant sought enforcement of obligations arising from a Settlement Agreement and related deed of acknowledgment and guarantee.

The Court found the defendant liable for the outstanding amount under the settlement arrangement and ordered payment together with interest.

Principle

A settlement agreement can create independent enforceable obligations.

Importance

This demonstrates the transition:

Dispute → settlement → settlement obligation → enforcement.

A party cannot necessarily treat a settlement merely as an informal promise.

22. Case Law 7 — Marwan Mahmoud Khadour v Yousef Salah Hawash & Others

[2022] DIFC CFI 026

The settlement agreement in this case expressly required the parties to use their best efforts to settle disputes through a formal mediation process before proceeding to the specified court.

The case illustrates the legal importance of a contractual mediation clause and the need to examine the dispute-resolution mechanism agreed by the parties.

Principle

Parties can contractually incorporate mediation into their dispute-resolution architecture.

Importance

Commercial contracts may therefore create a sequence such as:

negotiation → mediation → arbitration/court.

23. Case Law 8 — Musob v Makani & Mikin

[2023] DIFC SCT 309

The contract required the parties to attempt amicable resolution and mediation before arbitration.

The claimant nevertheless brought proceedings in the DIFC Courts. The Court found that it lacked jurisdiction over the particular dispute because the contractual and statutory jurisdictional requirements were not satisfied.

Principle

A mediation clause does not automatically give a court jurisdiction.

Importance

Parties must separately examine:

1. jurisdiction;
2. mediation obligation;
3. arbitration agreement;
4. governing law;
5. forum-selection clause.

24. Case Law Table

Qualification: These are predominantly DIFC judicial authorities. They are UAE-based authorities demonstrating mediation, settlement and procedural principles, but they should not be treated as Federal Supreme Court precedent interpreting Federal Decree-Law No. 40 of 2023.

25. Mediation vs Court Litigation

26. Mediation vs Arbitration

The parties may nevertheless use both sequentially:

Mediation → unsuccessful → arbitration

or:

Arbitration commenced → mediation → settlement.

27. Role of Lawyers

Lawyers remain important during mediation.

They may:

• analyse legal rights;
• calculate damages;
• assess settlement risk;
• negotiate terms;
• advise on authority;
• draft settlement agreements;
• ensure releases are properly worded;
• advise on enforcement;
• protect confidentiality.

A party should ensure that its representative attending mediation has actual authority to settle.

The Wilson order expressly required the participating representative of the defendant to have authority to agree a binding settlement.

28. Settlement Terms

A well-drafted UAE settlement agreement may specify:

Payment

AED 1 million in four instalments.

Release

Parties release specified claims upon payment.

Confidentiality

Parties maintain confidentiality subject to legal exceptions.

Non-disparagement

Where legally appropriate.

Withdrawal

Existing court proceedings will be withdrawn/stayed after payment.

Default

Failure to pay an instalment triggers specified enforcement rights.

Governing law

The parties identify the applicable law.

Jurisdiction

The agreement identifies the competent forum for enforcement.

29. Partial Settlement

Mediation does not necessarily have to resolve every issue.

For example:

Claim = AED 10 million.

The parties may settle:

• AED 7 million liability;

while leaving:

• AED 3 million counterclaim

for court determination.

Federal Decree-Law No. 40 of 2023 expressly allows mediation to cover the dispute in whole or in part.

30. Mediation and Commercial Relationships

Mediation is particularly useful where the parties expect to continue dealing with one another.

Examples:

• shareholder disputes;
• joint ventures;
• construction projects;
• supply agreements;
• distribution agreements;
• franchising;
• banking relationships;
• technology contracts.

A judgment may determine:

“Party A wins.”

A mediation settlement can instead produce:

“The contract continues, Party A receives AED 2 million, Party B changes delivery obligations, and both parties release past claims.”

That flexibility is one of mediation's principal commercial advantages.

31. Mediation and Construction Disputes

Construction disputes often involve several parties:

Owner → Main Contractor → Subcontractor → Consultant → Supplier

A single court judgment may not resolve the commercial relationship efficiently.

Mediation can address:

• delay claims;
• extension of time;
• defective work;
• payment certificates;
• retention;
• variations;
• liquidated damages;
• completion arrangements.

This is especially valuable where the project itself is unfinished.

32. Mediation and Banking Disputes

Banking disputes may involve:

• loan defaults;
• guarantees;
• payment obligations;
• restructuring;
• security;
• settlement of outstanding debt.

Mediation can permit a commercially structured solution such as:

principal restructuring + instalments + revised security + withdrawal of litigation.

The Alawwal Capital v Rasmala proceedings demonstrate how DIFC proceedings can be stayed to facilitate mediation in a commercial/financial dispute.

33. Mediation and Technology Disputes

Technology disputes may involve:

• software defects;
• licensing;
• cybersecurity;
• data processing;
• intellectual-property issues;
• digital platforms;
• payment technology.

Mediation can be useful because the parties may want:

• continued software access;
• technical correction;
• service credits;
• data deletion;
• confidentiality;
• revised licensing;
• monetary compensation.

A court judgment may not provide all of these commercial solutions.

34. Electronic Mediation

The federal framework expressly allows electronic and remote mediation.

An electronic mediation may involve:

1. electronic filing;
2. electronic service;
3. video conference;
4. secure document exchange;
5. private virtual caucuses;
6. electronic settlement signing;
7. electronic approval/ratification.

This is consistent with the broader digital transformation of UAE courts.

35. Costs

The federal framework regulates mediation costs and permits the court to determine unresolved costs according to the statutory framework.

Where mediation results in full settlement, the law also provides mechanisms concerning reimbursement of certain legal fees; partial settlement can produce a different reimbursement consequence.

The DIFC Courts separately publish mediation fees, with different fee levels according to claim value and special arrangements for court-recommended mediation.

36. Failure of Mediation

Mediation does not guarantee settlement.

If the parties cannot agree:

Mediation ends → court/arbitration continues.

A failed mediation should not ordinarily prejudice the merits of the underlying dispute.

The confidentiality framework is designed to prevent settlement discussions and proposals from simply becoming evidence in subsequent proceedings.

The Wilson order similarly provided that mediation communications and proposals should not be relied upon in later judicial or arbitral proceedings.

37. Important Principle: Mediator Is Not a Judge

A mediator normally does not determine:

“Party A is legally correct.”

Instead, the mediator helps the parties determine whether they can reach an acceptable solution.

This preserves party autonomy.

Even where a mediator evaluates documents or expresses an opinion at the parties' request, the ultimate settlement depends upon agreement.

38. Enforcement Problem

A settlement is only useful if it can be enforced.

Therefore, settlement drafting should consider:

• exact payment dates;
• currency;
• bank account;
• default;
• interest;
• release;
• security;
• jurisdiction;
• consent order;
• ratification;
• enforcement procedure.

The Transcom v KPR Agrochem case illustrates the consequences of treating a settlement agreement as an enforceable obligation rather than merely an informal understanding.

39. Relationship Between Mediation and Limitation

The suspension of relevant time periods during Centre proceedings is particularly important.

A claimant should nevertheless not assume that merely sending an informal settlement email automatically stops limitation.

The statutory mediation/conciliation process and applicable procedural requirements should be followed.

Federal Decree-Law No. 40 of 2023 specifically addresses suspension of legal and judicial time limits in connection with mediation and Centre proceedings.

40. Advantages of UAE Mediation Centres

1. Speed

A settlement can avoid prolonged litigation.

2. Cost reduction

It can reduce court and expert costs.

3. Confidentiality

Commercial information can be protected.

4. Flexibility

Parties can create remedies unavailable through ordinary judgment.

5. Relationship preservation

Parties can continue commercial relationships.

6. Expert involvement

Technical experts can assist where appropriate.

7. Digital access

Remote mediation is legally recognised.

8. Enforceability

A properly ratified settlement can have the evidentiary force of a judgment.

41. Limitations

Mediation is not appropriate for every dispute.

Problems may arise where:

• one party refuses to negotiate;
• there is a significant power imbalance;
• urgent injunctive relief is required;
• the dispute concerns non-settleable rights;
• a party needs authoritative precedent;
• limitation issues are urgent;
• criminal conduct requires reporting;
• the parties fundamentally disagree on facts.

The federal statute itself excludes certain categories from mandatory conciliation and limits mediation to disputes where settlement is legally permissible.

42. Practical Example

Assume:

Company A claims AED 3 million from Company B for defective construction work.

Under the federal Centre framework, the AED 3 million claim falls within the AED 5 million mandatory conciliation threshold, assuming no statutory exclusion applies.

Stage 1

Company A files the dispute with the Centre.

Stage 2

The parties exchange relevant documents.

Stage 3

The conciliator identifies:

• defective work;
• repair cost;
• delay;
• payment already made.

Stage 4

The parties negotiate.

Company B offers:

AED 1.8 million + completion of remaining works.

Company A accepts.

Stage 5

Settlement agreement is signed.

Stage 6

The settlement is ratified.

Result

The parties avoid a full trial, and the ratified settlement receives the statutory legal effect provided by Article 25.

43. Overall Legal Structure

The UAE system can be represented as:

Dispute arises

↓

Check whether mediation/conciliation is appropriate or mandatory

↓

Approach relevant Centre

↓

Mediator/Conciliator appointed

↓

Confidential sessions

↓

Evidence/documents examined

↓

Negotiation

↓

If settlement succeeds:

Settlement Agreement

↓

Judicial ratification

↓

Binding/enforceable effect

If settlement fails:

Proceed to competent court/arbitration

This structure integrates ADR into the UAE civil-justice system rather than treating mediation as entirely separate from courts.

44. Key Case-Law Principles

The cases collectively establish several important propositions:

1. Tourani — courts can encourage mediation while protecting the independence of the trial judge. 
2. Wilson — mediation can be conducted remotely and confidentially, with authorised settlement representatives. 
3. Alawwal Capital — court proceedings can be stayed to facilitate mediation. 
4. Indus International — mediation may continue over an extended period where the court considers it appropriate. 
5. Alistair James — a clearly drafted settlement agreement can be binding and enforceable. 
6. Transcom — settlement obligations can independently form the basis of enforcement proceedings. 
7. Khadour — contractual mediation clauses can form part of the parties' dispute-resolution architecture. 
8. Musob — a mediation clause must be distinguished from the separate question of court jurisdiction. 

45. Conclusion

UAE Mediation and Reconciliation Centres represent an important component of modern UAE civil justice.

The current federal framework under Federal Decree-Law No. 40 of 2023 provides a comprehensive structure for:

• consensual mediation;
• court-referred mediation;
• mandatory conciliation in specified disputes;
• electronic and remote mediation;
• confidentiality;
• private mediators;
• settlement agreements;
• judicial ratification;
• suspension of relevant time limits;
• enforcement of settlements. 

The most important legal principle is:

Mediation facilitates settlement; it does not replace judicial authority.

Where settlement is reached and properly ratified, however, the result can acquire the same probative force as a court judgment, making mediation not merely a negotiation exercise but a legally significant component of the UAE dispute-resolution system.

Quick Revision Points

1. Federal Decree-Law No. 40 of 2023 is the principal federal mediation/conciliation framework.
2. Mediation is generally an alternative, settlement-oriented process.
3. Conciliation is mandatory for specified categories of disputes.
4. Civil/commercial disputes up to AED 5 million fall within mandatory Centre conciliation, subject to exclusions.
5. Labour, rental-committee, Government and certain other disputes are excluded from mandatory Centre conciliation.
6. Mediation can occur before or during litigation.
7. Remote mediation is legally recognised.
8. Mediation proceedings are confidential.
9. A ratified settlement has the probative force of a court judgment.
10. Relevant limitation periods can be suspended during the statutory process.
11. DIFC Courts actively facilitate judicial mediation.
12. Tourani demonstrates judicial encouragement of mediation.
13. Wilson demonstrates confidential remote mediation.
14. Alawwal Capital and Indus International demonstrate stays for mediation.
15. Alistair James and Transcom demonstrate enforceability of settlement obligations.
16. Khadour demonstrates contractual mediation clauses.
17. Musob demonstrates that mediation and jurisdiction are legally distinct questions.
18. Mediation is especially valuable in continuing commercial relationships, construction, banking, technology and multi-party disputes.