Welcome back to Lawgical, where we untangle legal knots so you don’t have to. I’m Ludmila Yamalova, a US-qualified lawyer based in Dubai. In each episode, we break down complex laws into clear, practical insights you can actually use. In today’s episode, we’ll discuss Dubai’s new and unprecedented, one-of-its-kind law regulating contractors in the Emirate of Dubai.
This is Law No. 7 of 2025, so it’s very new and fresh. It regulates the practice of contracting activities. The law was issued on July 8, 2025, just a few weeks ago, and it enters into force six months after publication, on January 8, 2026. This is important. While the law has already been published in the Official Gazette, today we’ll talk about the text of the law itself.
The law does not come into effect until six months after publication, which is January 8, 2026. As you’ll hear, the law introduces a lot of new requirements, qualifications, procedures, and authorities, and so on. Because it is an unprecedented law—one of its kind—and there was not one before, at least that I know or can recall, the level of new requirements embodied in this law is substantial. That means the industry will need time to come together and put this law into practice.
Therefore, in terms of the timeline, there’s another deadline: one year after the law comes into effect for contractors and the entire contracting industry in Dubai to implement these new regulations. So, once again, the law was introduced in July 2025, it will come officially into effect in January 2026, and after that there will be another year for contractors and the whole contracting industry to start complying with the law itself.
As mentioned earlier, the law is truly unprecedented. There was never a law dedicated specifically to regulating contractors. When I’m talking about contractors, I mean those in the construction industry: the people you hire to modify your villa or apartment, change your kitchen or bathroom, or do painting. These are the contractors we’re talking about. There was no specific law before that regulated what is required for a contractor to actually be a contractor, to have a contracting license, what requirements existed for someone to call themselves a contractor, or what standards existed for contractors to do their job.
This new law addresses a major gap in Dubai’s legal framework and the lack of regulation, oversight, and accountability in the contracting sector. For years, clients and contractors alike have struggled with disputes, substandard work, and unqualified operators. Importantly, the law is quite far-reaching in its application. It applies across all of Dubai—remember, this is Dubai, not the UAE—including special development zones and free zones such as the DIFC. This is a notable example because the DIFC generally has its own laws, court, and legal framework. But as far as this contracting law is concerned, it appears to apply expressly to the DIFC as well. The only exceptions are airport-related work and activities, which are exempt by special laws. What those laws are will be addressed in the future.
In short, this is a major legal milestone. But as with any new regulation, the real question is how it will work in practice. Before we delve into the law, let’s discuss a few case studies and the problems that exist today to understand why this new law is so important and transformative.
At present, basically anyone can call themselves a contractor. For the time being, there are no specific qualification requirements, no financial guarantees required, and no minimum standards codified that contractors must follow. That’s one. Two, there’s basically no accountability for staff—the people contractors hire. What skills are they supposed to have? Any skills at all? What legal requirements must they comply with? For now, there are no binding rules on the competency of the people who actually show up on site.
Number three, there are no standards or proper benchmarks. In practice, there are no enforceable quality standards. Many clients—especially those coming from certain Western countries—expect that if they hire someone to build, fit out, or paint, there’s an implicit baseline of quality. In reality, in Dubai for the time being, there is no such baseline. For example, a client may ask a contractor to paint a villa expecting straight lines, smooth finishes, and durable paint. What often happens—based on our many experiences on behalf of a number of our clients—is uneven coverage, visible brushstrokes, or paint peeling within months.
Another example: a client hires a contractor to fit out a new office expecting certain timelines and quality standards. Instead, the job runs months late, the wiring is substandard, the AC system fails, and the client bears liability for missed moving dates and costs. Another common problem is chronic delays. We’ve had countless cases over the years regarding this issue. Almost all projects—from minor renovations to full build-outs—run late.
This means extended rent obligations, delayed business operations, or personal inconveniences, all borne by the client. We’ve had cases just in the last year where families hire a contractor, move into a different villa temporarily while their villa is being worked on, and carry two types of expenses plus the contracting expenses. They rent temporary accommodation for six months expecting the works to be done in that time. Fast forward nine months, the works are still not done. Now they carry the mortgage for their main house, continue paying contractors, and must extend their temporary accommodation. This often inconveniences the entire family because the accommodation could be far from the children’s school, for example, and disrupts routines assumed within the original timeframe.
These are just some recent examples. Unfortunately, there hasn’t been an effective mechanism for families like this to seek redress except perhaps withholding the last installment. That’s not always the right way to handle the dispute nor is it adequate to compensate for added costs and inconveniences.
Another example is shoddy workmanship. Even when works are completed, they are often below expectations. Contractors may use cheap materials, poor finishes, or unsafe practices. Clients have very little recourse because there are no codified standards by which clients can point to a benchmark and say, “This finish was supposed to meet this standard.” There isn’t such a rulebook. Unless standards are specifically documented in the agreement—and I have yet to see a single agreement that detailed—there’s no other way to hold contractors to those standards. To what level of detail would you include in the agreement the type of paint, type of polish, the specific methods, or how to protect floor trims from splatter? There are so many nuances. Without such detail in contracts, there’s no other way to hold contractors accountable.
There are often disputes about shoddy workmanship. Also, there is no real enforcement in terms of licensing, categorization, or oversight. There’s no bar or association that licenses contractors. Disputes often end in stalemates with clients frustrated and out of pocket. How do you tell a contractor they are not a good contractor? Says who? Without a standard, it becomes subjective and leads to many disputes.
This is the landscape the new law is designed to change. By introducing specific licensing, classification, and accountability requirements, Dubai aims to filter out unqualified operators and create standards clients can rely on. For clients, the new law could be transformative. It will filter out unlicensed and unqualified contractors. It will curb the practice of endlessly subcontracting work without accountability. It creates the possibility of a dedicated authority to hear contractor–client disputes.
That last point is perhaps one of the most important. If disputes can be resolved before an administrative authority—like the Rental Dispute Center, the Insurance Authority, or the Consumer Protection Authority—then even relatively small claims, such as AED 70,000, could be pursued much more efficiently. At present, many contracting disputes involve smaller amounts like AED 70,000, 30,000, or 50,000, and with no specific body other than the courts, most clients end up bickering with contractors and then throwing in the towel.
The law mentions the introduction of a number of authorities and overseeing bodies. Because it’s so new, and it takes a year to come into effect, we don’t yet know exactly what the potential body for resolving disputes will be. We assume, based on other existing authorities and other sectors—such as the Rental Dispute Center, Consumer Protection, or the Insurance Authority—that something similar may exist within the contracting industry. As I go through the law and talk more about the specific requirements and qualifications being introduced, keep in mind that this is a general legal framework. The nuts and bolts of how it will work in practice remain to be seen. Over time, we’ll see what this new authority will be, its mandate, and its powers. For now, some specifics lack detail. As they evolve, we’ll provide further updates.
In terms of scope, the law is very broad. It covers virtually all contractor activities in Dubai, including civil, architectural, electrical, mechanical, and industrial works. It also includes infrastructure such as roads, bridges, tunnels, and railways; utilities like sewage, water, and cooling networks; and environmental, agriculture, and coastal works. It’s quite expansive.
For the purposes of this law, a contractor is defined as any company or sole proprietorship registered in the new registry—there will be a registry—and licensed to perform contracting activities. Anyone not in this registry and not properly licensed will not be qualified as a contractor for the purposes of Dubai’s contracting industry. In other words, if you want to call yourself a contractor in Dubai, you will now need both a commercial license and a professional registration.
An analogy from the legal profession: as legal consultants, we have a commercial license to operate a business. But to practice law, we also need secondary approval from the Dubai Legal Affairs Department (Ruler’s Court). All lawyers—legal consultants and advocates—are subject to that approval and must show certain qualifications and competency. We remain under their regulatory oversight. In the contracting industry, we anticipate something analogous. In addition to having a commercial or business license, contractors will need to be qualified by a similar board or committee. They will only be qualified if they meet certain qualification and education requirements, and they will remain subject to that regulatory body’s oversight. This is very similar and very exciting.
At a high level, what’s the purpose of the law? It is fairly robust and quite detailed, with very specific and ambitious objectives: to promote the contracting sector; to regulate practice to international standards, which is very welcome; to establish a clear classification system for contractors—perhaps one of the most exciting aspects, given its potential impact on Dubai’s real estate and construction industry; to encourage investment; and to ensure projects meet Dubai’s construction and urban planning standards. In other words, this is about raising the bar for the entire industry.
Before the details, here’s a recap of timing: the law was issued on July 8, 2025. Six months after publication—January 8, 2026—it will come officially into effect. Then a year from that, by January 2027, the contracting industry in Dubai should have evolved and transformed under the new framework.
Now to specifics. There are certain prohibitions, and these are particularly interesting given the context of clients’ grievances when dealing with contractors.
First, no one can undertake contracting without a license or registration. Just because someone knows how to paint or change electrical fixtures does not mean they can do such work without the proper license and registration.
Second, contractors cannot take on projects outside their classification. If a contractor is registered as an electrician or painter, they cannot provide other contracting services outside their classification. They must work within the qualifications and classification on their license.
Third, contractors cannot delegate work to unqualified staff. This is transformative. Many contractors bring support staff on site, and there are often questions about whether that staff knows what they’re doing, their background, or even who they are. The practice developed without scrutiny. That will no longer be allowed.
There’s also an important provision: no entity may contract with an unlicensed contractor. This means that the public—individuals and companies—will not be allowed to contract with anyone not properly registered, licensed, and qualified under the new law. If I want to do fit-outs and a friend offers services, I would be in breach of the law if I hire them and they’re not in the public registry with the right classification. The burden is also on society—on those hiring unlicensed contractors. In practice, there could be penalties for those who hire unlicensed contractors. More importantly, if anything goes wrong, you likely won’t be able to legally enforce your rights against an unlicensed party, because you were not permitted to contract with them in the first place. That’s another legal element.
Subcontracting is another big section. Contractors must perform the work they’re hired to do and may only subcontract under specific conditions. Subcontracting is permitted only if:
- It is not prohibited in the main contract. If you want the main contractor to be fully responsible, make sure the contract says no subcontracting.
- The work does not legally require the main contractor to perform it, and the scope does not specifically mandate the main contractor’s performance.
- The subcontractor is licensed for that activity. A licensed main contractor cannot bring in an unlicensed subcontractor.
- The subcontractor’s scope is clearly defined and the relevant authority is notified.
As for contractual obligations under the law:
- Contractors may not undertake projects beyond their financial or technical capacity. There will be financial and technical requirements, and contractors cannot work beyond them.
- Contractors must employ qualified technical staff proportional to the project size. For example, a small firm with five employees cannot take on a multi-villa project requiring a team of 15 or 20 without proving sufficient staffing.
- Contractors must comply with contracts, consultant instructions, laws, and must not misuse any license or advertise without registration.
- All staff must have valid residency and labor permits. This is big. On many construction sites, you know the main contractor, but other people come and go, and it’s unclear who they are, whether they actually work for that company, under what visas, or whether they are even properly authorized to work in the UAE. Under the law, if a contractor wants to bring people to help, they must be employees of that company, under its residence visas, and with the correct labor permits. The labor permit must match the actual responsibilities performed offsite. Someone whose contract says “assistant,” “receptionist,” or “cleaner” cannot simply work offsite on construction tasks.
- Contractors must keep records for 10 years. Nothing like this existed before. Ten years aligns with the special limitation period for construction defects. If, seven years after completion, something arises as a construction defect, contractors cannot claim they no longer have documents. By law, they must keep records for at least 10 years.
Next, registration and licensing. The law introduces a central registry—similar to Dubai’s Invest Dubai system—but for contractors. To register, a contractor must hold a valid commercial license (the legal entity license), must not be prohibited from practice (no bans or disqualifying issues), must have the necessary qualifications and staff, and must pay prescribed fees. Registration lasts one year and must be renewed annually. Certain licenses are subject to revocation if requirements are no longer met or if false information is provided.
This is similar to the legal industry. Lawyers are listed in the Legal Affairs Department’s public registry, registrations are valid for one year, and renewals are required annually—often with continuing legal education. For contractors, we assume a similar system: a public registry as mandated by law, annual renewals, and possibly continuing qualification requirements. Admission one year does not guarantee renewal the next. Complaints from clients and professional reputation could be re-examined before renewal.
The law also sets out specific regulatory bodies for the construction industry and splits oversight across several authorities:
- The Executive Committee of Dubai will set fees, fines, and exemptions.
- Dubai Municipality will manage the registry, develop the classification system, and issue competency certificates. In other words, the public registry will most likely be under the Municipality, which will develop and maintain the classification system and issue certificates prior to registration.
- A licensing authority will handle commercial licenses. This could be the Department of Economy and Tourism (DET), formerly DED, or certain free zones, depending on structure.
- A regulatory committee will supervise implementation, resolve disputes between authorities, and approve codes of conduct. This appears more about inter-authority coordination than public–contractor disputes, ensuring coherence across entities like the Municipality, Land Department, DIFC, RTA, etc.
- “Concerned authorities” refers to government entities overseeing specific contracting activities. They will be empowered to monitor, license, investigate, and penalize.
Some of these authorities already exist; others will be new; still others may evolve to assume formal regulatory oversight over the construction industry.
How does the new law change things? Dubai Law No. 7 of 2025 aims to:
- Require licensing and registration: contractors can no longer just hang up a sign and call themselves contractors. They must be licensed and registered in the official registry.
- Impose classification and capacity requirements: contractors will be classified by their financial and technical capacity and cannot take on projects beyond their category.
- Ensure only qualified staff are involved: technical staff must hold a professional competency certificate issued by the Municipality. No more hiring unqualified workers for complex jobs.
- Oversee subcontracting: endless layers of subcontracting will be curbed. Only licensed subcontractors can be engaged and their scope must be clear.
- Increase accountability and oversight: authorities will have the power to inspect, penalize, suspend, or downgrade contractors. Fines can go up to AED 200,000 per repeated violation.
- Establish dispute resolution: while details are pending, a regulatory framework may streamline disputes, similar to the Rental Dispute Center, enabling smaller claims—such as AED 30,000 or 40,000—to be resolved more efficiently.
The key point is that the law does not just add red tape. It introduces standards, oversight, and recourse. Where clients once had no reliable way to hold contractors accountable, they will now have a system designed to protect them.
In conclusion, Dubai’s new contractors law is ambitious. It establishes licensing, registration, categorization, oversight, and accountability. If implemented effectively, it could transform the contracting industry, eliminate unqualified operators, and raise standards. Much depends on enforcement and whether the new regulatory bodies streamline disputes rather than complicate them. For now, one thing is certain: contractors in Dubai will no longer be able to operate in the shadows.
That’s all for this episode of Lawgical with Ludmila. If you found this episode useful and you like what we do, you can always find more on our website: lylawyers.com. We’re also on Apple Podcasts and Spotify, and for the full experience, you can watch our video podcast on YouTube. Until next time, stay informed, stay safe, and keep things Lawgical.
