Civil Law and UAE Simple Business Dispute Issues

1. Introduction

A simple business dispute is a commercial disagreement between businesses, partners, suppliers, customers, contractors, agents, or other commercial parties where the central issue can usually be identified from a relatively straightforward transaction or contract.

Typical UAE business disputes include:

non-payment of invoices;

breach of a supply agreement;

failure to deliver goods;

defective goods or services;

failure to perform a contract;

termination of a commercial agreement;

unpaid commissions;

simple partnership or shareholder disagreements;

failure to comply with a settlement agreement;

disputes about jurisdiction or arbitration.

The basic legal structure can be expressed as:

Commercial relationship → Contract → Performance → Breach → Loss → Remedy

Under the UAE's current legal framework, these disputes may involve the new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, the Commercial Transactions Law, Federal Decree-Law No. 50 of 2022, the Commercial Companies Law, and applicable procedural and sector-specific legislation.

Older UAE cases remain useful for understanding established principles, but they should be treated as historical authorities where they were decided under earlier legislation.

2. What Is a Simple Business Dispute?

A simple business dispute generally arises when one party says:

"I performed my obligation, but you did not perform yours."

Example

Company A supplies goods worth AED 100,000 to Company B.

Company B receives the goods but does not pay.

The dispute may involve:

Was there a valid contract?

Were the goods actually delivered?

Were they defective?

Was payment due?

Was payment made?

Was there a valid reason for withholding payment?

What amount is outstanding?

What remedy is available?

This is a relatively straightforward commercial dispute.

3. Main Types of Simple Business Disputes

4. Contract Is Usually the Starting Point

The first question in a simple business dispute is:

What did the parties agree?

The court may examine:

written contract;

purchase orders;

invoices;

delivery notes;

emails;

WhatsApp/business communications;

quotations;

amendments;

settlement agreements;

payment records;

expert reports.

The contractual document normally establishes the primary obligations.

For example:

Supplier: deliver 1,000 units.

Buyer: pay AED 200,000 within 30 days.

If the supplier delivers and the buyer does not pay, the principal issue is contractual non-performance.

5. Formation of the Business Contract

A simple business dispute may first require determination of whether a contract actually existed.

The court may examine:

offer;

acceptance;

agreement on essential terms;

authority of representatives;

consideration/payment arrangements where legally relevant;

performance by the parties;

written or electronic evidence.

Practical example

Company A emails:

"We will supply 5,000 units at AED 20 each."

Company B responds:

"Confirmed. Delivery by 30 September."

The parties subsequently perform part of the transaction.

Even where the formal contract is disputed, subsequent conduct may become important evidence of the parties' commercial relationship.

6. Breach of Contract

The simplest business dispute normally involves breach.

A breach may occur when a party:

fails to pay;

delivers late;

delivers defective goods;

delivers fewer goods;

refuses to perform;

performs only part of the agreement;

breaches confidentiality;

violates exclusivity;

improperly terminates the contract.

A useful formula is:

Contractual obligation + failure to perform + legally relevant consequence = breach

7. Non-Payment of Commercial Invoices

One of the most common UAE business disputes is unpaid invoices.

Example

A supplier issues an invoice for:

AED 250,000

The buyer accepts delivery but pays only:

AED 150,000

The remaining:

AED 100,000

becomes the central dispute.

The supplier generally needs evidence of:

contract/order;

delivery;

invoice;

agreed price;

payment received;

outstanding balance.

The buyer may argue:

goods were defective;

delivery was incomplete;

invoice was incorrect;

payment was already made;

set-off applies;

contractual conditions were not satisfied.

8. Case Law: SIG Middle East LLC v Perfect Building Materials LLC

SIG Middle East LLC v Perfect Building Materials LLC [2025] DIFC CFI 057/2024

This is a useful example of an ordinary commercial payment dispute.

SIG Middle East supplied materials to Perfect Building Materials. The original outstanding amount was approximately AED 4.14 million.

The parties subsequently entered into settlement arrangements:

first settlement reduced the amount to approximately AED 2.44 million;

the defendant made only partial payments;

a further final settlement was entered into for AED 1.2 million;

the final settlement was secured by six post-dated cheques.

The dispute therefore moved through several stages:

Original debt → settlement → partial performance → new settlement → alleged breach. (DIFC Courts)

Principle

A settlement agreement can become an important independent contractual instrument. Once parties restructure an existing commercial debt, the court may have to examine both the original transaction and the subsequent settlement.

9. Settlement Agreements in Business Disputes

Businesses often attempt to settle disputes without litigation.

A settlement may provide:

reduced debt;

instalment payments;

post-dated cheques;

waiver of part of the claim;

withdrawal of proceedings;

release of claims.

Example

Original debt = AED 1,000,000.

Supplier agrees to accept AED 700,000 if paid in six instalments.

The buyer accepts but pays only AED 200,000.

The dispute may then concern:

whether the settlement was valid;

whether the original debt was extinguished;

whether the settlement was breached;

whether the original claim revives;

what amount remains payable.

10. Case Law: Ingemar Interiors LLC v Iolana Restaurants LLC

Ingemar Interiors LLC v Iolana Restaurants LLC [2018] DIFC SCT 087

This case involved a fit-out agreement.

The contractor was required to perform fit-out works for a restaurant for approximately AED 471,500.

The contractor alleged that it completed the work but the restaurant failed to pay the final invoice of approximately AED 73,869.47.

The defendant counterclaimed for:

delay penalties;

costs of correcting alleged defects;

specialist testing costs;

additional losses.

The case therefore demonstrates a classic business dispute:

Performance claimed by contractor ↔ payment claimed by contractor ↔ defects/delay alleged by customer. (DIFC Courts)

Principle

In a commercial contract, the court may have to consider both parties' performance, rather than automatically awarding the invoice merely because it was issued.

11. Defective Goods or Services

A buyer may refuse payment because goods or services are defective.

Example

Company A agrees to install an air-conditioning system for AED 500,000.

Company A completes installation.

Company B refuses to pay the final AED 100,000 because it says:

the system does not function properly;

specifications were not followed;

defects require rectification.

The court may need expert evidence.

The key question becomes:

Was the supplier's performance substantially consistent with the contractual requirements?

12. Case Law: Nasr v Ness

Nasr v Ness [2024] DIFC SCT 150

The dispute concerned an agreement under which the claimant had paid fees to the defendant.

The claimant subsequently sought a refund after encountering difficulties with a visa application and relied upon a contractual refund provision.

The defendant disputed responsibility and argued that the circumstances did not amount to a contractual breach.

The DIFC Court expressly considered the dispute under the DIFC Contract Law and principles concerning breach of contract. (DIFC Courts)

Principle

A commercial court must examine:

the contractual promise;

the factual event;

whether that event constitutes breach;

the contractual consequences;

the remedy actually available under the agreement.

13. Delay in Performance

Delay is another basic business dispute.

Suppose:

Contract date: 1 January
Delivery date: 1 June
Actual delivery: 1 August

The court may ask:

Was the deadline contractual?

Was time expressly essential?

Was there an extension?

Was the delay caused by the buyer?

Was there force majeure?

Was a contractual penalty agreed?

Was actual loss suffered?

14. Contractual Penalties

Business contracts frequently contain provisions such as:

"For each day of delay, the contractor shall pay AED 10,000."

Such clauses can create disputes over:

whether delay occurred;

whether the clause applies;

whether the amount is proportionate;

whether the parties modified the deadline;

whether the delay was caused by the claimant.

The court must apply the governing UAE legal rules concerning agreed compensation/penalty provisions rather than mechanically treating every contractual figure as automatically payable.

15. Termination of a Business Contract

A business relationship may end because one party:

materially breaches the contract;

fails to pay;

fails to deliver;

becomes insolvent;

violates an essential condition;

exercises a contractual termination clause.

The important distinction is between:

Contractual termination

The agreement itself provides a termination mechanism.

Termination based on breach

One party seeks termination because the other substantially failed to perform.

Mutual termination

Both parties agree to end the relationship.

16. Case Law: Sky News Arabia FZ-LLC v Kassab Media FZ

Sky News Arabia FZ-LLC v Kassab Media FZ (LLC) [2017] DIFC CA 010/2016

The dispute arose from an agreement for advertising and sponsorship sales representation.

Sky News Arabia alleged that Kassab Media failed to fulfil its contractual obligations and sought a declaration that the agreement had been effectively terminated.

The case also involved a jurisdictional dispute concerning whether the DIFC Courts could hear the contractual dispute. (DIFC Courts)

Principle

A business dispute may involve two separate questions:

Substantive question:
Was the contract breached or terminated?

Procedural question:
Which court has jurisdiction?

The second question may need to be resolved before the court considers the merits.

17. Jurisdiction in Business Disputes

A contract might contain:

"The courts of Dubai shall have exclusive jurisdiction."

Or:

"The DIFC Courts shall have exclusive jurisdiction."

Or:

"Disputes shall be resolved by arbitration."

The wording matters.

Important distinction

Mainland UAE courts ≠ DIFC Courts ≠ ADGM Courts ≠ arbitral tribunal

Each operates under its own jurisdictional framework.

18. Case Law: Lural v Listran & Lokhan

Lural v Listran & Lokhan [2021] DIFC CA 003

The dispute involved an agreement containing an exclusive jurisdiction clause.

The DIFC Court of Appeal considered the contractual jurisdiction provision and concluded that the DIFC Courts had jurisdiction over the relevant dispute under the applicable jurisdictional framework. (DIFC Courts)

Principle

A clearly drafted jurisdiction clause can have substantial importance in determining where a commercial dispute should be litigated.

19. Arbitration Clauses

Many UAE commercial agreements contain arbitration clauses.

A simple business contract might say:

"Any dispute arising from this agreement shall be finally resolved by arbitration."

If one party nevertheless starts court proceedings, the other party may object based upon the arbitration agreement.

The court may then need to determine:

Is there an arbitration agreement?

Is it valid?

Does it cover this dispute?

Is the party bound by it?

Has the right to rely upon it been waived?

20. Case Law: Alucor Limited v Rohr Rein Chemie Middle East LLC

Alucor Limited v Rohr Rein Chemie Middle East LLC [2021] DIFC TCD 001

The parties entered into a subcontract for work on the Al Taweelah Alumina Refinery Project.

The contract was governed by English law and contained an exclusive jurisdiction clause referring disputes to the DIFC Courts.

The subcontractor subsequently commenced proceedings in the Dubai Courts for alleged non-payment and obtained a payment order.

The dispute then involved questions concerning the contractual jurisdiction clause and the relationship between Dubai and DIFC judicial proceedings. (DIFC Courts)

Principle

A commercial party should examine the dispute-resolution clause before commencing proceedings, particularly where a contract has connections with both onshore Dubai and the DIFC.

21. Business Disputes and Expert Evidence

Simple commercial disputes can become technically complex when the amount claimed needs calculation.

An expert may determine:

unpaid invoices;

accounts between partners;

construction quantities;

delay;

lost profits;

contractual payments;

interest;

reconciliation of accounts.

Example

Claim:

AED 5 million

Defendant says:

AED 3 million already paid.

The court may appoint an accounting expert to determine the actual balance.

22. Case Law: DAMAC Dispute

Dr Lothar Ludwig Hardt and Hardt Trading F.Z.E. v DAMAC (DIFC) Company Limited & Others [2009] DIFC CFI 036

This was a much larger commercial dispute involving multiple agreements and substantial property investments.

The claimants alleged contractual breaches concerning property projects and sought recovery of approximately USD 9.7 million, together with damages and other relief.

The case involved numerous alleged contractual and statutory causes of action and required careful analysis of the DIFC Court's jurisdiction over the various claims. (DIFC Courts)

Principle

Where a commercial relationship produces multiple agreements and multiple causes of action, the court must identify:

the relevant contract;

the parties;

the cause of action;

the applicable law;

the appropriate forum.

23. Simple Partnership Disputes

Business disputes are not limited to external contracts.

Partners may disagree about:

profit distribution;

management;

capital contributions;

withdrawal;

transfer of shares;

misuse of company property;

accounting;

authority of managers.

Example

Two partners own a company 50:50.

Partner A claims:

"Partner B withdrew AED 300,000 without authority."

Partner B says:

"The money was a legitimate business expense."

The dispute may require:

company accounts;

bank records;

board resolutions;

shareholder agreements;

invoices;

expert accounting evidence.

24. Simple Agency and Commission Disputes

Another common business dispute concerns commission.

Example

A company agrees to pay an agent:

5% commission on completed sales.

The agent introduces a customer.

The customer signs the contract.

The company later refuses to pay commission.

The dispute may concern:

whether the agent produced the customer;

when commission became payable;

whether the customer actually completed payment;

whether termination affected commission;

whether the commission clause was exclusive.

25. Business Dispute and Good Faith

A basic civil-law principle is that contractual rights should be exercised consistently with applicable legal standards, including good faith.

Good faith can become relevant where a party:

deliberately frustrates contractual performance;

conceals relevant information;

attempts to exploit a contractual technicality;

prevents the other party from performing;

acts inconsistently with its contractual undertaking.

However, good faith should not be treated as an unlimited power to rewrite a commercial contract.

The court still begins with:

What did the parties actually agree?

26. Damages in Simple Business Disputes

Where breach is established, a claimant may seek legally recoverable compensation.

Possible losses include:

unpaid contract price;

direct financial loss;

cost of replacement performance;

repair costs;

certain consequential losses where legally recoverable;

interest where applicable.

The claimant normally needs to establish:

1. Breach

There was a contractual violation.

2. Causation

The breach caused the claimed loss.

3. Loss

The claimant suffered a legally recognizable financial loss.

4. Proof

The amount can be established with sufficient evidence.

27. Business Dispute and Mitigation

A claimant generally should not allow losses to increase unnecessarily.

Example

A supplier wrongfully refuses to deliver machinery.

The buyer needs the machinery for its business.

If reasonably available, the buyer may obtain replacement machinery rather than allowing losses to accumulate indefinitely.

The question of mitigation depends on the facts and applicable law.

28. Simple Business Dispute – Practical Legal Test

For an examination or legal analysis, use the following 8-step test:

Step 1 – Identify the parties

Who contracted with whom?

Step 2 – Identify the contract

What document governs the relationship?

Step 3 – Identify the obligation

What exactly was each party required to do?

Step 4 – Identify performance

Who performed and who did not?

Step 5 – Identify breach

What contractual obligation was violated?

Step 6 – Identify defence

Was there:

payment?

defective performance?

force majeure?

contractual excuse?

set-off?

waiver?

settlement?

Step 7 – Identify loss

What financial loss resulted?

Step 8 – Identify remedy and forum

Should the matter go to:

UAE courts;

DIFC Courts;

ADGM Courts;

arbitration?

And what remedy is available?

29. Six Core Case Laws – Quick Revision Table

These are predominantly DIFC authorities and should not be described as binding precedents on UAE mainland courts. They are useful for illustrating commercial-contract principles and UAE business-dispute issues.

30. Simple Business Dispute Flowchart

Business relationship
↓
Contract / agreement
↓
Performance by Party A
↓
Non-performance by Party B
↓
Breach alleged
↓
Defence raised
↓
Evidence / expert examination
↓
Loss calculated
↓
Jurisdiction determined
↓
Court / arbitration
↓
Remedy

31. Common Remedies

Depending upon the facts and governing law, remedies may include:

A. Payment

Recovery of the amount contractually due.

B. Compensation

Compensation for legally established loss.

C. Specific performance

Where legally available and appropriate.

D. Termination

Ending the contractual relationship where the legal requirements are satisfied.

E. Restitution

Returning money or property where legally required.

F. Interest

Where legally recoverable.

G. Costs

Court or arbitration costs according to the applicable procedural regime.

32. Important Exam Distinction

Do not confuse:

Breach

A party failed to perform a contractual obligation.

with:

Damages

The financial consequence that the law permits the claimant to recover because of the breach.

And do not confuse either with:

Jurisdiction

The question of which court or tribunal is legally entitled to decide the dispute.

Thus:

Breach ≠ Damages ≠ Jurisdiction

All three may arise in the same business dispute.

33. Conclusion

A simple UAE business dispute can usually be analysed through a structured civil-law approach:

Contract → Obligation → Performance → Breach → Defence → Loss → Remedy.

The most frequent disputes involve unpaid invoices, defective performance, delay, termination, settlements, commissions, partnership obligations and jurisdiction.

The case law demonstrates that even apparently simple disputes can become legally significant because courts may have to determine:

whether a contract was breached;

whether a settlement replaced the original obligation;

whether performance was defective;

whether damages were actually proved;

whether the chosen court has jurisdiction;

whether an arbitration agreement applies.

For examination purposes, the easiest formula to remember is:

“Find the contract, identify the obligation, prove the breach, examine the defence, establish the loss, and select the correct forum and remedy.”