Introduction

Dubai has passed Law No. 7 of 2025, its first-ever law regulating contractors. Issued on 8 July 2025 and set to take effect on 8 January 2026, it introduces a one-year transition period for compliance. This reform closes a long-standing gap in Dubai’s legal system by creating rules for licensing, classification, and accountability in contracting.

In this article, you’ll find a clear summary of the law, its importance, key provisions, penalties, and how LYLAW can help you navigate these changes.

What is Dubai Contractors Law about?

Until now, contractors in Dubai operated in a loosely regulated environment. There were no strict requirements for qualifications, standards, or accountability. Law No. 7 of 2025 changes this by:

• Introducing a Contractors Registry managed by Dubai Municipality.
• Requiring both a commercial license and registration to operate.
• Setting out classification categories for contractors based on capacity.
• Expanding oversight to all of Dubai, including free zones such as DIFC.

This is the first law of its kind in the emirate — a milestone that establishes clear rules for an industry that impacts both individuals and businesses daily.

Why the Law Matters and Its Impact

Clients have long struggled with unqualified contractors, poor workmanship, chronic delays, and little recourse when projects went wrong. With this law:

• Unlicensed operators will be filtered out.
• Subcontracting will be restricted, preventing endless handoffs.
• Dispute resolution may become faster, as a dedicated authority could eventually handle contractor-client disputes, much like the Rental Dispute Center.

For the market, it creates clear standards, greater accountability, and more trust. And for clients, even relatively modest claims — such as AED 70,000 — could be pursued effectively.

Key Provisions of the Contractors Law

The law introduces several important rules and obligations:

1. Licensing & Registration

   • All contractors must be licensed and registered in the new Contractors Registry.
   • Registration lasts one year and requires renewal.

2. Classification & Capacity

   • Contractors are grouped by financial and technical capacity.
   • They can’t take projects beyond their category.

3. Qualified Technical Staff

   • Contractors must employ certified staff, with Dubai Municipality issuing Professional Competency Certificates.

4. Subcontracting Oversight

   • Only licensed subcontractors may be engaged.
   • Scope of work must be clearly defined, and authorities notified.

5. Contractor Obligations

   • Follow consultant instructions and contracts.
   • Ensure workers hold valid residency and labor permits.
   • Keep project records for at least 10 years.

6. Oversight and Accountability

   • Authorities may inspect, suspend, downgrade, or penalize contractors.
   • Fines can reach up to AED 200,000 for repeat violations.

Penalties for Non-Compliance

Contractors face serious consequences if they ignore the law:

• Operating without registration – prohibited.
• Taking projects beyond capacity – penalized.
• Hiring unqualified staff – subject to fines and suspension.
• Repeat violations – fines up to AED 200,000.

These penalties make compliance not just a formality, but a necessity.

How to Report or File Disputes

While the system is still developing, disputes under the new law will likely be reported through the Contractors Registry managed by Dubai Municipality, with oversight by regulatory committees. This may mirror existing models like the Rental Dispute Center, where clients file complaints directly and receive administrative resolution.

How LYLAW Can Help

Understanding and adapting to Dubai’s Contractors Law 2025 is critical for both contractors and clients. From licensing requirements to dispute resolution, the new system introduces complex compliance obligations and serious penalties.

At LYLAW, our legal team can:

• Guide contractors through registration, classification, and licensing.
• Assist clients facing disputes with contractors, from substandard work to delays.
• Draft and review contracts to ensure compliance with the new framework.
• Advocate for clients in front of regulatory authorities when disputes arise.

With decades of experience in UAE regulatory and dispute resolution matters, LYLAW is positioned to help you navigate this significant shift in Dubai’s contracting sector.