On 1 June 2026, a new Civil Transactions Law came into effect in the United Arab Emirates, overhauling the Civil Code that governs contracts and commercial dealings across the country. Much of the early commentary has focused mainly on the mechanics of this reform that matter most to lawyers: contract drafting, liquidated damages, termination and how disputes will be fought.

One change, however, carries direct consequences for how firms doing business in the UAE communicate. The law introduces a ‘good faith duty’ that now reaches backwards into the negotiation phase, before any contract is signed. For firms negotiating in the UAE, this turns negotiations into a communications challenge just as much as a legal and practical one.

What the new reforms actually say

Articles 121 to 123 set out new obligations governing how parties negotiate and what they must disclose.

Article 121 states: “The initiation of pre-contractual negotiations, their conduct, and their termination shall be in accordance with the requirements of good faith.”

Negotiating or walking away from negotiations in bad faith now makes a party liable to compensate the other for the actual damage suffered.

Article 122 goes further, imposing a duty to disclose information that is “essential and decisive” for the other party’s consent. A breach of this obligation could cause the resulting contract to be annulled.

Critically, these provisions apply to all limitation periods not yet completed, not just agreements struck after the law came into effect on 1 June. This means that parties can retroactively be liable for their conduct and disclosure during any pre-contract negotiations behind deals that are currently active.

The practical upshot is significant. Parties are now subject to these obligations during negotiations even where no contract is ultimately agreed. Disputes over a contract’s performance and interpretation can now sweep in claims about how the parties conducted themselves before signing. That raises the stakes considerably on every document and communication exchanged or prepared during the tender phase.

The uncertainty that makes this a communications issue

‘Bad faith’ has not been formally defined in the new Civil Code. We will have to wait and see how courts interpret this obligation in practice and what they ultimately decide constitutes ‘bad conduct’. Legal analysts believe that the courts are likely to focus on how parties conducted themselves rather than broad assertions of unfairness when evaluating claims for breach of good faith.

This definitional uncertainty is precisely why this issue lands in the communications domain. When the legal line is undrawn, evidence of conduct becomes what matters, and a great deal of that evidence is communication. A bid produces letters of intent, emails, pitch presentations, board and lender updates, partner briefings and public statements about deals that are “progressing”. All these materials are a potential record of how a party conducted themselves during the negotiation phase, and the gap between what was said and what was done is exactly where a bad-faith argument can take root.

Messaging discipline as risk management

A firm’s instinct under this new operating context may be to say less during negotiations, but that may be misguided. The firms that handle these changes are the ones whose pre-contract communications are coherent and comprehensive enough to withstand scrutiny. A disciplined communications strategy now functions as a form of risk management. By communicating carefully and consistently through the negotiation process, parties protect themselves against good faith claims down the line.

In practice, that means a few things.

1. Messaging should be consistent across audiences: the story told to lenders, joint-venture partners, the board and the press should not diverge in ways that are hard to reconcile later.
2. Optimism needs handling with care: announcing that a deal is effectively done or getting ahead of where negotiations actually stand can read very differently in hindsight.
3. Informal communications fall within scope: text messages, letters of intent and quick assurances now carry evidential weight that they did not before, so they deserve the same thought and care as a formal statement.

Above all, these reforms emphasise the importance of closing the distance between the legal team and the communications function. Too often they operate in separate rooms, with communications managing perception and legal managing exposure. Under the new code, these tasks are intertwined and should be run together. Messaging that is persuasive but legally careless is a liability; messaging that is legally sound but poorly pitched risks falling flat with external stakeholders and audiences. Getting both teams aligned early, before the contract becomes public, is how firms produce communication that is at once commercially compelling and defensible.

The good faith duty should be read as a signal, not as a constraint. In a market where reputation and repeat business matter as much as any singular contract, getting it right is not just a task for the legal team alone. It is where a communications partner that understands both the law and the relationship earns its value.

This article addresses communications and reputational strategy and does not constitute legal advice.