Dubai Issues New Law to Overhaul Contracting Sector: Law No. 7 of 2025 Brings Unified Regulatory Framework
Nisna K Muhammed
Senior Legal Correspondent
In a landmark move to modernise and regulate the emirate’s booming construction and contracting sector, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai, has issued Law No. 7 of 2025. This new legislation introduces sweeping reforms aimed at unifying standards, streamlining oversight, and reinforcing compliance across both mainland and free zone contracting operations, including those within the Dubai International Financial Centre (DIFC) and other special jurisdictions.
Key Highlights of the Law
- Unified Classification System:
Contractors will now be classified into categories based on a transparent evaluation of their technical expertise, financial strength, and operational capability. This classification will determine the scope and value of projects they are authorised to undertake. It eliminates ambiguity around contractor qualifications and ensures only suitably qualified entities handle large-scale infrastructure works.
- Mandatory Registration and Operational Limits:
All contractors, local and international, must register under the new regulatory framework. Importantly, they are prohibited from exceeding their licensed technical or financial capacity or from subcontracting work without prior written approval. This measure seeks to curtail project delays, quality issues, and misuse of licenses.
- Formation of Oversight Committee:
A new Contracting Activities Regulation and Development Committee has been established under the leadership of Dubai Municipality. This cross-functional body will:
- Approve contracting activity applications
- Assign regulatory responsibilities to relevant authorities
- Monitor implementation
- Resolve conflicts between licensing entities
- Penalties and Enforcement:
The law sets a graduated penalty regime to ensure compliance, with fines ranging from AED 1,000 to AED 200,000 for violations. Repeated or serious breaches could result in suspension of activities, deletion from the official registry, or outright cancellation of licenses.
- One-Year Grace Period for Compliance:
Contractors currently operating in Dubai are given a grace period of one year from the law’s effective date to regularise their status, obtain proper classification, and meet all licensing conditions. This period can be extended by the Committee on a case-by-case basis where justified.
- Digital Registry and Integration with “Invest in Dubai” Platform:
Dubai Municipality will oversee a centralised electronic registry, consolidating contractor data and status, fully integrated with the Invest in Dubai platform. This will facilitate investor access to credible contractors and enhance sector-wide transparency.
Also Read: UAE Enacts Sweeping Media Law with Penalties Up to Dh1 Million to Uphold Ethical Standards
- Code of Ethics and Governance Framework:
A sector-specific code of ethics will be introduced to guide contractor behaviour, ensure fair competition, and promote adherence to safety, sustainability, and professional conduct standards. This aligns with Dubai's broader vision of building a knowledge-based, compliant, and sustainable economy.
Looking Ahead: 2026 Evaluation System Overhaul
Complementing Law No. 7 of 2025, the government also announced a planned revamp of the Contractors and Engineering Offices Evaluation System by early 2026. This initiative will introduce stricter quality benchmarks, ethical obligations, and digital performance tracking, reinforcing Dubai’s position as a global hub for smart and sustainable infrastructure.
