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Ali Saeed Al Shamsi

Civil and commercial cases

Agreed Compensation in the UAE: When Can a Court Reduce It?

Agreed Compensation in the UAE: When Can a Court Reduce It?

The new law regulates judicial adjustment of agreed compensation. Relevant matters can include an excessive amount, partial performance, the creditor’s contribution to damage and any fraud or gross fault.

Prepare the contract, completion records, reasons for delay, correspondence and evidence of actual damage. A party seeking adjustment must identify the legal basis and evidence supporting the requested outcome.

A stated contractual amount is not automatically recoverable in full in every case, and an agreed-compensation clause is not automatically invalid. Assess the particular obligation, breach, damage and applicable rules.

Federal Decree-Law No. 25 of 2025 entered into force on 1 June 2026. Check the dates, applicable special legislation and temporal rules for the particular case.

Official sources

Civil Transactions Law | Official explanation of the reforms

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