Civil Law and UAE: Shift From Rule-Making to System-Tuning Governance Models

1. Introduction

The expression “shift from rule-making to system-tuning governance” describes a change in the way modern legal governance can operate.

Traditional governance mainly works through:

Rule → Obligation → Compliance → Enforcement

A system-tuning model increasingly works through:

Rule → Data → Monitoring → Feedback → Adjustment → Enforcement

In the UAE, this does not mean that legislation or courts are being replaced by algorithms. Rather, the regulatory environment increasingly combines legislation with digital platforms, specialised regulators, automated processes, data monitoring, risk-based supervision, specialist courts and technology-enabled dispute resolution.

The UAE's new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, which came into force on 1 June 2026, itself illustrates a move toward a more integrated and contemporary legal framework. Article 1 establishes a hierarchy of legislation, Sharia, custom, and principles of natural law and justice, while Article 2 expressly recognises the role of Usul al-Fiqh in understanding, interpreting and construing legislative texts. (UAE Legislation)

The important legal question is therefore not whether UAE law is abandoning rules, but how fixed legal rules interact with continuously adjusted institutional and technological systems.

2. Meaning of Rule-Making Governance

Rule-making governance is the traditional legislative model.

The legislature or competent authority:

identifies a social or economic problem;

creates a legal rule;

defines rights and duties;

establishes sanctions or remedies;

courts interpret the rule;

regulators enforce it.

For example:

a company must maintain statutory records;

a financial institution must satisfy regulatory requirements;

a contracting party must perform its contractual obligations;

a person causing legally recognised damage may owe compensation.

The principal instrument is therefore the general legal rule.

Basic model

Legislature → Rule → Regulated person → Compliance → Enforcement

This remains fundamental to UAE civil law.

3. Meaning of System-Tuning Governance

System-tuning governance goes further.

Instead of relying exclusively upon a fixed rule, the governance system continuously adjusts how the rule is implemented according to:

new information;

technological developments;

market conditions;

compliance data;

risk indicators;

judicial experience;

regulatory feedback;

economic circumstances.

The law establishes the boundaries, while administrative and institutional systems continuously improve the operation of those boundaries.

Example

Suppose financial law prohibits fraudulent transactions.

Traditional model:

Fraud occurs → investigation → litigation → judgment.

System-tuning model:

transaction data → monitoring → anomaly detection → regulatory alert → investigation → human assessment → enforcement.

The algorithm does not itself establish liability.

It identifies information that may require legal attention.

4. Why This Model Is Relevant to the UAE

The UAE has developed a particularly sophisticated institutional environment involving:

federal legislation;

emirate-level legislation;

specialised economic zones;

financial regulators;

digital-government systems;

electronic evidence;

specialist courts;

arbitration;

mediation;

digital-asset regulation;

technology and construction courts;

the DIFC Digital Economy Court;

data-protection regulation.

The DIFC Courts, for example, now have a distinct Digital Economy Court, and recent litigation concerning digital assets demonstrates how existing legal principles are being applied to technologically complex systems. In Techteryx Ltd v Aria Commodities DMCC & Others, the DIFC Digital Economy Court dealt with a dispute concerning approximately USD 456 million in reserves backing the TrueUSD stablecoin and granted proprietary and worldwide freezing relief. (DIFC Courts)

This illustrates the movement from simply creating rules for traditional objects toward adapting legal institutions to continuously changing technological environments.

5. Legal Foundations of System-Tuning Governance in UAE Civil Law

A. Legislation remains the starting point

The new Civil Transactions Law establishes that legislative provisions apply to matters expressly or implicitly addressed by legislation.

Therefore, system-tuning cannot mean unrestricted administrative experimentation.

The first question remains:

What does the applicable law provide?

Only where the legislation does not provide an answer does Article 1 move through Sharia, custom and finally principles of natural law and justice. (UAE Legislation)

B. Interpretation is itself adaptive

Article 2 of the new Civil Transactions Law provides for reference to the principles of Islamic jurisprudence (Usul al-Fiqh) when understanding, interpreting and construing legislative texts. (UAE Legislation)

Consequently, interpretation is not merely mechanical reading.

The legal system has interpretive tools that allow courts to deal with:

new factual circumstances;

technological developments;

new commercial structures;

contractual innovation;

gaps in legislation.

6. System-Tuning Does Not Mean Rule Abandonment

This distinction is extremely important.

Rule-making model

Law determines behaviour.

System-tuning model

Law establishes parameters and institutions continuously adjust implementation within those parameters.

Therefore:

System tuning is subordinate to legality.

An algorithm cannot lawfully create a civil liability that legislation does not recognise merely because its statistical model predicts harmful conduct.

Similarly:

a risk score is not automatically liability;

an automated flag is not automatically proof;

a prediction is not automatically a judicial finding;

data correlation is not automatically causation;

machine-generated interpretation is not automatically authoritative interpretation.

7. Major Components of the UAE System-Tuning Model

7.1 Risk-Based Regulation

Modern regulators increasingly distinguish between:

low-risk activity;

moderate-risk activity;

high-risk activity.

Resources can then be concentrated on areas presenting greater regulatory concerns.

This represents a movement from:

one rule applied identically to everything

toward:

common legal standards + differentiated supervisory intensity.

7.2 Digital Evidence

Federal Decree-Law No. 35 of 2022 on Evidence gives legal recognition to electronic evidence.

This is important because modern governance produces enormous quantities of:

electronic records;

emails;

electronic signatures;

electronic communications;

databases;

digital transactions;

electronic platforms.

The legal system therefore increasingly operates through data-rich environments.

7.3 Digital Courts

The DIFC's institutional structure demonstrates another form of system tuning.

Specialised procedures can be created for disputes involving technological subject matter.

The establishment and operation of the Digital Economy Court reflects the recognition that ordinary litigation processes may require specialised procedural and judicial capabilities when disputes involve digital assets, blockchain systems and technologically complex transactions.

8. Case Law

The following cases help explain the transition toward adaptive and system-oriented governance. Most are DIFC authorities and therefore should not be treated as automatically binding precedents on UAE mainland courts.

Case 1: Hexagon Holdings (Cayman) Ltd v DIFC Authority & DIFC Investments LLC [2019] DIFC CFI 013

This is an important governance case involving the DIFC Authority and the administration of a major development project.

The dispute concerned contractual rights and obligations arising from a substantial development arrangement.

The case demonstrates that even when an institutional authority performs strategic governmental or developmental functions, its conduct can remain subject to legal rules, contractual obligations and judicial review.

The Court's treatment of the contractual dispute demonstrates an important principle:

institutional governance does not eliminate ordinary legal accountability.

The case is therefore relevant to system-tuning because institutional flexibility must operate inside legally enforceable boundaries. (DIFC Courts)

Importance

It demonstrates:

institutional governance;

contractual accountability;

judicial supervision;

limits on administrative discretion;

interaction between development policy and legal rights.

Case 2: Hana Al Herz v DIFC Authority [2013] DIFC CA 004

This case concerned employment-related claims against the DIFC Authority, including issues surrounding termination, discrimination and contractual rights.

The Court of Appeal ultimately dismissed the appeal and upheld the lower court's decision. (DIFC Courts)

Importance for system-tuning

The case illustrates that even sophisticated institutions cannot simply modify legal outcomes according to administrative preference.

Institutional governance remains subject to:

applicable legislation;

contractual obligations;

evidence;

procedural requirements;

judicial determination.

Thus:

flexible governance must remain legally reviewable governance.

Case 3: Gate Mena DMCC & Huobi Mena FZE v Tabarak Investment Capital Ltd [2024] DIFC DEC 002

This is particularly important for the technological side of system-tuning.

The case concerned cryptocurrency businesses and issues surrounding the contractual treatment of crypto assets.

The Digital Economy Court considered, among other matters, whether crypto assets could constitute property and how contractual principles could apply to their custody and control. The judgment followed an earlier Court of Appeal decision and a retrial of specific issues. (DIFC Courts)

Importance

The case demonstrates how courts can adapt established legal categories to new technological objects.

Instead of creating an entirely separate civil-law universe for cryptocurrency, the Court considered existing concepts such as:

property;

possession/control;

contractual obligations;

bailment;

ownership;

transfer.

This is a classic example of:

existing legal rules + technological facts + judicial adaptation.

Case 4: Techteryx Ltd v Aria Commodities DMCC & Others [2025] DIFC DEC 001

This is one of the clearest examples of system-oriented governance.

The case concerned approximately USD 456 million said to represent reserves backing the TrueUSD stablecoin.

The Digital Economy Court granted proprietary and worldwide freezing relief concerning the funds and traceable proceeds. (DIFC Courts)

Importance

The dispute required the legal system to interact with:

stablecoins;

blockchain-related transactions;

tracing;

digital assets;

beneficial ownership;

worldwide asset preservation;

sophisticated financial evidence.

The case illustrates that governance can be responsive to digital transaction architecture, rather than waiting for every technological development to receive a completely new statutory code.

It also shows the importance of traditional judicial remedies within new technological environments.

Case 5: Access Group DWC LLC & ProEx Partners Ltd v BLS International FZE [2023] DIFC CFI 091

This dispute involved companies operating in the UAE and contractual/commercial issues.

The case demonstrates the DIFC Court's use of structured procedural management in complex commercial litigation.

The proceedings involved detailed case management and trial processes rather than a purely formalistic approach to litigation. (DIFC Courts)

Importance

It illustrates a broader principle:

modern governance is increasingly concerned not merely with creating substantive rules but with designing efficient institutional processes through which those rules can operate.

Thus system tuning includes:

case management;

procedural proportionality;

evidence management;

efficient hearings;

structured judicial processes.

Case 6: Al Buhaira National Insurance Company v Waleed Mohammad & Others [2026] DIFC CFI 010

This recent case demonstrates the importance of institutional coordination and jurisdictional governance.

The defendants challenged DIFC jurisdiction and argued, among other things, that there were onshore Dubai proceedings and an arbitration agreement.

The DIFC Court dismissed the application and ordered the defendants to pay the claimant's costs. (DIFC Courts)

Importance

This case illustrates that system governance also requires mechanisms for resolving overlapping institutional jurisdictions.

Modern UAE legal governance involves multiple systems:

federal courts;

emirate courts;

DIFC Courts;

ADGM Courts;

arbitral tribunals;

specialised regulators.

System tuning therefore requires rules for determining:

which institution should exercise legal authority in a particular dispute.

Case 7: Fursa Consulting v Ajay Sethi [2022] DIFC CFI 056

The case involved a dispute over a financial-advisory agreement and a claimed success fee.

The DIFC Court ultimately dismissed the claim. (DIFC Courts)

Importance

The case illustrates an important limitation on system-oriented commercial governance:

Technology, commercial systems and sophisticated transaction structures cannot replace proof of the legal elements necessary for a claim.

The claimant still had to establish the contractual foundation for its claimed entitlement.

Therefore:

system efficiency cannot substitute for legal proof.

9. What “System-Tuning” Means in Practice

The concept can be divided into several forms.

A. Regulatory tuning

Authorities adjust:

compliance requirements;

supervisory intensity;

reporting mechanisms;

risk controls;

enforcement priorities.

B. Judicial tuning

Courts refine:

procedural mechanisms;

case management;

evidentiary approaches;

specialist jurisdiction;

remedies.

C. Technological tuning

Legal institutions increasingly use:

electronic filing;

digital evidence;

automated document management;

data analytics;

AI-assisted research;

electronic case management;

digital-asset tracing.

D. Institutional tuning

The legal system can establish specialist institutions for emerging problems.

Examples include:

specialist financial tribunals;

technology divisions;

Digital Economy Court;

arbitration centres;

mediation systems.

10. Relationship Between AI and System-Tuning Governance

Artificial intelligence makes the distinction particularly important.

An AI system may:

collect data;

identify patterns;

classify risks;

identify anomalies;

predict possible outcomes;

generate recommendations.

But the legal system must still determine:

What legal consequence follows?

For example:

AI result

“Transaction has a 92% fraud-risk score.”

Legal question

Did the defendant commit fraud?

Those are not identical propositions.

The second requires:

applicable law;

admissible evidence;

factual findings;

causation where relevant;

judicial reasoning;

procedural fairness.

Thus:

AI output ≠ legal judgment.

11. System-Tuning and the New Civil Transactions Law

The new Civil Transactions Law is particularly significant for this topic.

Article 1 provides a structured hierarchy:

First

Legislation

Second

Islamic Sharia

where legislation does not provide an answer.

Third

Custom

where there is no applicable Sharia ruling.

Fourth

Principles of natural law and justice

where no applicable custom exists. (UAE Legislation)

Article 2 additionally recognises Usul al-Fiqh as an interpretive resource. (UAE Legislation)

This provides a useful example of structured adaptability.

The system has:

fixed hierarchy + interpretive flexibility.

That is much closer to system tuning than unrestricted rule creation.

12. System-Tuning and Good Faith

Good faith remains important because automated or institutional systems can otherwise produce formally correct but substantively problematic results.

A system may mechanically apply:

contractual terms;

automated thresholds;

procedural deadlines;

risk classifications.

But civil law often requires consideration of:

good faith;

legitimate expectations;

causation;

proportionality;

abuse of rights;

surrounding circumstances.

Therefore:

system optimisation must remain subordinate to substantive legal principles.

13. System-Tuning and Proportionality

Suppose an automated compliance system identifies a minor technical violation.

Three possible responses may exist:

immediate severe sanction;

warning and corrective action;

monitoring followed by escalation if non-compliance continues.

System-tuning governance allows enforcement intensity to be calibrated according to:

seriousness;

repetition;

risk;

actual harm;

corrective behaviour.

This does not mean that penalties can be arbitrarily changed.

The adjustment must remain within the authority granted by law.

14. Benefits of System-Tuning Governance

14.1 Faster response

The legal system can respond more quickly to emerging risks.

14.2 Better regulatory allocation

Resources can be directed toward higher-risk activity.

14.3 Technological compatibility

Existing legal principles can operate in digital environments.

14.4 Reduced administrative burden

Digital systems can automate repetitive functions.

14.5 Better information flow

Regulators and courts can process larger quantities of evidence.

14.6 Institutional specialisation

Complex fields can receive specialist treatment.

15. Risks of System-Tuning Governance

System tuning also creates substantial legal risks.

1. Automation bias

Officials may accept machine-generated recommendations without adequate independent analysis.

2. Lack of transparency

A person may not understand why a system classified them as high risk.

3. Data bias

Bad or incomplete data can produce bad decisions.

4. Regulatory overreach

Administrative systems may gradually perform functions that belong to the legislature or courts.

5. Accountability problem

If an automated system makes an error, responsibility must still be legally identifiable.

6. Privacy

Continuous monitoring may involve significant personal or commercial information.

7. Due process

Affected persons must have meaningful opportunities to challenge decisions.

16. Essential Safeguards

A UAE system-tuning governance model should therefore incorporate:

17. Difference Between Rule-Making and System-Tuning

18. Important Constitutional Limitation

System-tuning cannot eliminate the principle of legality.

The state cannot simply say:

“The algorithm determined this outcome.”

There must be a legal basis for:

collecting information;

imposing an obligation;

restricting a right;

imposing a sanction;

ordering compensation;

exercising judicial power.

Therefore:

Technology may tune the operation of governance, but law determines the legitimate boundaries of governance.

19. Mainland UAE, DIFC and ADGM

A major examination point is that the UAE does not have one completely uniform civil-law procedural system.

Mainland UAE

Primarily governed by:

Federal legislation;

UAE Civil Transactions Law;

Civil Procedure Code;

Evidence Law;

Companies Law;

specialised federal/emirate legislation.

DIFC

Operates under its own legal and judicial framework, including specialist courts and the Digital Economy Court.

ADGM

Also has its own legal and judicial framework with substantial common-law influence.

Therefore, a DIFC case concerning system governance cannot automatically be presented as a binding mainland UAE civil-law precedent.

20. Conceptual Model

The evolution can be represented as follows:

Traditional model

RULE

↓

COMPLIANCE

↓

VIOLATION

↓

ENFORCEMENT

↓

JUDGMENT

Modern system-tuning model

RULE

↓

DATA

↓

MONITORING

↓

RISK DETECTION

↓

HUMAN REVIEW

↓

REGULATORY/JUDICIAL RESPONSE

↓

FEEDBACK

↓

SYSTEM ADJUSTMENT

↓

NEW DATA

The process becomes iterative.

21. Key Legal Principle

The central principle can be expressed as:

Governance may become adaptive without becoming arbitrary.

The UAE's emerging model combines:

legal rules + institutional discretion + digital infrastructure + specialised adjudication + feedback mechanisms.

But all of these remain constrained by:

legislation;

jurisdiction;

due process;

evidence;

judicial reasoning;

public order;

contractual principles;

fundamental legal rights.

22. Exam-Oriented Conclusion

The shift from rule-making to system-tuning governance models in UAE civil law does not represent the disappearance of legislation. Instead, it represents a transition from a purely static conception of regulation toward a more adaptive, data-supported and institutionally coordinated legal environment.

The new Civil Transactions Law demonstrates that the legal hierarchy remains central while permitting structured interpretive development. The DIFC's specialised courts, digital-economy litigation and technologically sophisticated procedures demonstrate how legal institutions can adapt to new commercial realities. Cases such as Hexagon Holdings, Hana Al Herz, Gate Mena v Tabarak and Techteryx demonstrate different aspects of institutional, contractual and technological adaptation. (DIFC Courts)

The most important limitation is that system tuning cannot replace legal judgment. Data, algorithms, risk scores and automated systems can assist governance, but the final legal determination must remain anchored in lawful authority, evidence, procedural fairness and reasoned adjudication.

Quick Revision Formula

Rule-Making → Digitalisation → Monitoring → Risk-Based Governance → Feedback → System Tuning → Human Legal Judgment

Key idea:
The UAE governance model is becoming more adaptive and technology-enabled, but system optimisation remains subordinate to law, legality and judicial accountability.