New Civil Transactions Law reshapes banking and finance rules from June 1, 2026
Federal Decree by Law No. 25 of 2025 Promulgating the Civil Transactions Law, which came into force on 1 June 2026 and repealed and replaced Federal Law No. 5 of 1985.
The analysis — automated & source-checked
- Applies to
- Financial services · UAE
- What to do
- Banks and financial institutions must review standard facility agreements, assignment and transfer provisions, guarantee documentation, customer disclosure procedures, Islamic finance documents and internal transaction processes to ensure alignment with the New Civil Transactions Law, particularly for amendments, assignments and enforcement steps arising after 1 June 2026.
The UAE's new Civil Transactions Law (Federal Decree by Law No. 25 of 2025) took effect on 1 June 2026, replacing the 1985 law. Key changes for banks and financial institutions include: clearer rules on assignment of rights and transfer of obligations, with rights assignable without debtor consent but only enforceable once the debtor is notified; express good-faith requirements for pre-contractual negotiations, with liability for bad-faith termination; expanded contract-interpretation principles favouring clarity and good faith; modernised Mudaraba (Islamic finance) provisions allowing debt as capital and requiring annual accounting; and reorganised suretyship rules limiting surety liability and requiring careful security administration. The law applies prospectively from 1 June 2026, though existing arrangements remain valid. New limitation periods apply from the effective date. Banks should review standard facility agreements, assignment provisions, guarantee documentation, disclosure procedures and Islamic finance documents for alignment with the updated framework.
Source
Reported by: BSA Ahmad Bin Hezeem 20 Jul 2026 Read the original ↗ More from BSA Ahmad Bin Hezeem →
Quick answers
What do I need to do?
Banks and financial institutions must review standard facility agreements, assignment and transfer provisions, guarantee documentation, customer disclosure procedures, Islamic finance documents and internal transaction processes to ensure alignment with the New Civil Transactions Law, particularly for amendments, assignments and enforcement steps arising after 1 June 2026.
Who reported this?
BSA Ahmad Bin Hezeem (UAE).
When was it announced?
20 Jul 2026.
Where can I read the original?
Read the original at BSA Ahmad Bin Hezeem: https://bsalaw.com/insight/the-uaes-new-civil-transactions-law-key-banking-and-finance-considerations/
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