Dubai’s new Law No. 7 of 2025 introduces sweeping reforms to the construction sector. Licensing, classification, subcontracting,
ethical codes, and document retention all now fall under a single, centralised regulatory framework. It’s a bold and ambitious reset.
But it may also be a missed opportunity – especially when it comes to protecting contractor payments.
For a law so focused on tightening controls and raising standards, its silence on the issue of payment risk is notable. In a region where cashflow uncertainty is the single greatest operational threat to contractors, the law could have gone further. Much further.
A Region Still Without a Safety Net
There is still no statutory payment framework in Dubai – no minimum payment cycles, no default interest on late payments, and no rapid adjudication model for resolving disputes. Payment obligations remain a matter of contract, not law.
It’s a system that favours those holding the purse strings.
This new law could have marked a turning point. Instead, it imposes a stricter regime on contractors – without offering any new legal tools to help them get paid.
We Have to Look Far for Better Models
Unfortunately, we have to look a long way from the Middle East to find contractor-friendly legal protections. Countries like Australia (through its Security of Payment Acts) and Canada (via provincial prompt payment laws) have adopted legislation that ensures contractors receive interim payments within defined timelines – often backed by fast-track adjudication processes.
These protections come at a price: they’ve given rise to what the UK calls “smash and grab” adjudications – where payment is enforced due to procedural failures rather than merit. But for all their flaws, these systems acknowledge a simple truth: contractors must be paid promptly if they’re expected to deliver projects without delay or dispute.
Dubai’s new law rightly acknowledges the need for ethics and oversight – but stops short of offering equivalent payment safeguards. That may have been a conscious decision. Still, it leaves a crucial risk unaddressed.
What About the UAE’s Own Initiatives?
There have been previous attempts. In 2018, the UAE introduced certain payment security measures (e.g. mandatory written contracts with clear payment terms, interim payment certificates, and escrow account requirements), but these did not amount to a full statutory ‘security of payment’ regime. Contractors still lack a guaranteed prompt payment right or fast-track adjudication process under UAE law. These measures remain best practices, not enforceable rights. They are not backed by statutory timeframes or automatic remedies.
Developers and employers can still withhold payment indefinitely, with little to no legal penalty – especially if the contractor lacks the appetite or resources for arbitration.
DRBs: Tried, but Rarely Trusted
The region has also experimented with Dispute Review Boards (DRBs), particularly in high-value projects using FIDIC-based contracts. Various standard form contracts provide for DRBs, but these are usually struck out or rarely used in the UAE. Even when used, their decisions are hard to enforce. Without a statutory framework, a DRB’s recommendation is often only temporarily binding and must be converted into an arbitral award or court judgment to have teeth, leading many to forego the process.
Consequently, DRBs are often treated as a costly formality, rather than a trusted step in dispute resolution. Many are simply ignored by the respondent – kicking the can down the road to ultimately a full-blown arbitration – often years down the line.
The real need is for a fast, interim enforcement mechanism. Something binding, cheap, and quick. DRBs have not filled that gap. Nor will this new law.
What Could Have Been Done?
If this new law had addressed payment risk head-on, it might have included:
- A statutory entitlement to interim payment, enforceable through a dedicated process
- Mandatory timelines for employer payment or response
- The introduction of default interest or penalties for late payment
- A legal right to suspend works in the event of non-payment
- Expansion of the ethics code to cover client behaviour, not just contractors
- A pilot scheme for adjudication-style resolution on payment matters
These are not radical concepts. They already exist elsewhere in the world – and could be adapted to suit the UAE’s legal and commercial context over time.
A Step Forward – but there is further to go
Dubai’s new law has its merits. It brings structure to a fragmented system and introduces overdue accountability. It reflects a clear intention to raise standards and formalise the market.
But it also reinforces a long-standing imbalance: contractors are held to increasingly high standards, while clients remain free to delay, defer, and dispute payment with little consequence.
If real reform is the goal, protecting cashflow must be part of the equation. Until then, Dubai law may regulate the contracting industry – but it won’t yet protect the payments of those who actually build it.
davidbrodiestedman@dispute-iq.com