Civil Law and UAE: Governance Through Parameter Adjustment Rather Than Legislation

1. Introduction

Governance through parameter adjustment rather than legislation describes a modern form of legal governance in which the legal system does not constantly create new statutes for every emerging situation. Instead, existing legal rules are adjusted, interpreted, operationalised, and applied through changing parameters such as:

• good faith;
• proportionality;
• reasonableness;
• custom and commercial practice;
• nature of the transaction;
• public order;
• legitimate interests;
• technological conditions;
• evidentiary reliability;
• judicial discretion; and
• changing regulatory standards.

This concept is particularly relevant to UAE civil law because the UAE has a highly codified legal system, but its courts must apply general statutory principles to rapidly changing commercial, technological, property and contractual circumstances.

There is also an important current-law distinction. Federal Decree-Law No. 25 of 2025 introduced a new Civil Transactions Law, which came into force on 1 June 2026 and replaced the 1985 Civil Transactions Law. The new law retains many fundamental principles while renumbering and refining them. For example, the former Article 246 good-faith rule is now reflected in Article 221 of the new framework.

Thus, parameter adjustment should not be confused with legislation. Legislation establishes the legal framework; judicial and regulatory parameter adjustment determines how that framework operates in particular circumstances.

2. Meaning of Parameter Adjustment in Civil Law

A parameter is a factor that influences how a general legal rule is applied.

For example, the rule may say that a contract must be performed in good faith. The court may then examine:

What does good faith require in this particular transaction?

The answer may depend on:

• the type of contract;
• industry practice;
• conduct of the parties;
• degree of reliance;
• commercial circumstances;
• foreseeable consequences;
• contractual purpose;
• whether a party exercised a contractual right abusively.

Under the former Article 246, contractual performance was required to comply with good faith and could include obligations arising from law, custom and the nature of the transaction. The new Civil Transactions Law retains this basic architecture.

Therefore:

General statutory rule → changing parameters → judicial application → concrete legal consequence

rather than:

Every new problem → entirely new legislation.

3. Why Parameter-Based Governance Is Important in the UAE

The UAE economy contains rapidly changing sectors, including:

• artificial intelligence;
• fintech;
• digital assets;
• e-commerce;
• smart contracts;
• platform businesses;
• construction technology;
• real estate technology;
• electronic evidence;
• automated decision-making;
• cross-border commerce.

Legislation cannot necessarily provide detailed rules for every new factual configuration.

Parameter-based governance allows existing civil-law concepts to respond to new circumstances.

For example, the concept of good faith can operate in an emerging technology contract even when the legislature has not created a separate statute for every possible technological dispute.

Similarly, the UAE Evidence Law expressly recognises electronic evidence, including evidence derived from data generated, stored, transmitted or received through information technology.

This allows the legal system to adapt the parameters of evidentiary assessment without requiring a separate statute every time a new digital technology appears.

4. Parameter Adjustment and the UAE Civil Transactions Law

The UAE Civil Transactions framework contains several doctrines particularly suited to parameter-based governance.

A. Good Faith

Good faith is one of the principal adjustment mechanisms.

Under the former Article 246, the contract had to be performed:

1. according to its terms; and
2. consistently with good faith.

The obligation also extended beyond express contractual wording to matters arising from law, custom and the nature of the transaction.

The new Civil Transactions Law preserves this principle through Article 221.

Thus, good faith operates as a flexible legal parameter.

B. Abuse of Rights

A legal right is not necessarily unlimited merely because it formally exists.

The former Article 106 identified circumstances in which exercise of a right could become unlawful, including intentional infringement, disproportion between the intended benefit and harm caused, or conduct exceeding customary bounds.

This permits courts to examine the manner, purpose and consequences of exercising a right.

The modern judicial approach continues to connect abuse of rights with good faith. The Dubai Court of Cassation's Judgment No. 288 of 2025, for example, has been discussed in connection with honest contractual performance, avoidance of abuse and protection of legitimate interests.

5. Parameter Adjustment Through Judicial Interpretation

Courts frequently encounter contracts whose wording does not answer every practical question.

Judicial interpretation can therefore adjust the operative parameters by considering:

• contractual language;
• common intention;
• context;
• nature of the transaction;
• custom;
• good faith;
• applicable mandatory law.

This is not necessarily judicial legislation. The court is applying an existing statutory framework to particular facts.

The distinction is important:

Legislation establishes the rule; interpretation determines its application within legally recognised parameters.

6. Parameter Adjustment Through Custom

Custom is particularly important in UAE civil law.

A commercial relationship may involve practices that are not expressly written into the contract.

For example:

• customary payment procedures;
• industry-standard cooperation;
• established construction practices;
• commercial documentation;
• professional disclosure expectations.

The former Article 246 expressly connected contractual obligations with law, custom and the nature of the transaction, and the new framework maintains this basic approach.

Consequently, custom functions as a dynamic parameter through which the civil-law system responds to commercial evolution.

7. Parameter Adjustment Through Judicial Discretion

The UAE Civil Transactions framework gives courts discretion in several areas.

The former Article 248, for example, allowed a judge in an adhesion contract containing unfair conditions to modify the condition or exempt the adhering party in accordance with justice.

Similarly, former Article 249 allowed judicial intervention where extraordinary, unforeseeable public circumstances made performance excessively burdensome and threatened grave loss, permitting reduction of the obligation to a reasonable level where justice required.

This demonstrates a classic parameter-adjustment mechanism:

Fixed contractual obligation + extraordinary circumstances → judicial assessment → reasonable adjustment

The judge is not creating an entirely new contract. The court is operating within a statutory discretion.

8. Parameter Adjustment in Electronic and Digital Civil Law

Digitalisation provides a strong example.

The UAE Evidence Law defines electronic evidence broadly and expressly recognises electronic records and other electronically generated or transmitted information.

The practical legal question then becomes one of parameters:

• Is the electronic record authentic?
• Is it attributable to a party?
• Has it been altered?
• Is its source reliable?
• What is its evidentiary weight?
• Does it satisfy applicable procedural requirements?

The law therefore provides a general framework while courts determine its application according to technological and factual circumstances.

The UAE has likewise incorporated remote litigation and electronic procedural mechanisms into the modern judicial system.

9. Parameter Adjustment and Regulatory Governance

Parameter adjustment can also occur outside the courtroom.

Regulatory authorities may establish:

• licensing requirements;
• compliance thresholds;
• technical standards;
• reporting requirements;
• cybersecurity controls;
• professional standards;
• disclosure requirements.

These parameters can affect civil relationships without necessarily rewriting the entire Civil Transactions Law.

For example, a regulated financial intermediary may have contractual obligations whose content is influenced by regulatory duties concerning transparency and disclosure.

A recent Dubai Court of Cassation decision, Judgment No. 240 of 2026, illustrates this interaction: the court treated regulatory conduct obligations as relevant to the contractual relationship of an insurance broker rather than treating them as legally irrelevant merely because they were described as "regulatory."

This demonstrates the interaction between:

regulation → contractual standards → civil liability.

10. Important Case Laws

Case 1 — Dubai Court of Cassation, Judgment No. 288 of 2025

Principle

The decision is significant for the modern application of good faith in contractual performance.

The good-faith inquiry may include:

• honest performance;
• avoidance of deception;
• avoidance of abusive conduct;
• reasonable cooperation;
• protection of legitimate interests.

The case has subsequently been cited in discussion of the relationship between good faith and Article 106 abuse-of-right principles.

Relevance to parameter adjustment

The court does not simply ask:

"Does the contract technically permit the conduct?"

It may also examine:

"How was the contractual right exercised?"

That represents parameter-based governance.

Case 2 — Abu Dhabi Court of Cassation, Judgment No. 179 of 2024

Principle

This judgment concerns contractual interpretation and has subsequently been referred to in UAE-law litigation concerning interpretation of contractual provisions.

It is particularly relevant where contractual language requires interpretation under the statutory rules governing construction of contracts.

Relevance

The case demonstrates the movement from:

literal contractual wording → statutory interpretation → contextual meaning.

This allows the legal system to respond to contractual complexity without legislative intervention for every drafting problem.

Case 3 — Dubai Court of Cassation, Judgment No. 313 of 2007

Principle

The Court considered the legality of termination-for-convenience arrangements under the Civil Code framework, particularly the restrictions surrounding unilateral cancellation rights.

The decision is relevant to the relationship between contractual autonomy and statutory limitations.

Relevance

The case demonstrates that contractual freedom is not evaluated in isolation.

The operative parameters include:

• statutory restrictions;
• contractual wording;
• consent;
• judicial authority;
• good faith.

Case 4 — Dubai Court of Cassation, Judgment No. 440 of 2016

Principle

The decision concerned modification or revocation of contractual arrangements and the requirement to consider the statutory framework governing binding contracts, together with good faith.

Relevance

The case demonstrates that contractual governance operates through a combination of:

party autonomy + statutory boundaries + good faith.

The legal system therefore adjusts the practical operation of contractual rights without necessarily requiring a new legislative provision.

Case 5 — DAS Real Estate v First Abu Dhabi Bank, DIFC CFI 002/2016

The DIFC Court considered UAE Civil Code Article 246 and the requirement that contractual performance comply with good faith.

Principle

The case demonstrates the importance of evaluating contractual conduct against the broader good-faith requirement rather than treating contractual text as the only relevant consideration.

Relevance

It illustrates how a general statutory parameter can regulate conduct within a sophisticated commercial relationship.

Case 6 — Access Group DWC LLC & Proex Partners Ltd v BLS International FZE, DIFC CFI 091/2023

The DIFC Court discussed:

• contractual interpretation;
• Article 246 good faith;
• Article 106 abuse of rights;
• legitimate interests;
• contractual cooperation;
• avoidance of unfair disadvantage.

The judgment specifically referred to Abu Dhabi Court of Cassation Judgment No. 179 of 2024 and Dubai Court of Cassation Judgment No. 288 of 2025.

Relevance

This case provides a particularly clear example of parameter interaction:

contract wording + interpretation + good faith + abuse of rights + legitimate interests.

Rather than treating each concept as an isolated rule, the court can use them together to determine the legal consequences of particular conduct.

Case 7 — Dubai Court of Cassation, Judgment No. 364 of 2025

This decision concerned a dispute involving a registered real-estate interest and the position of a good-faith purchaser.

The Dubai Court of Cassation upheld the purchaser's ownership position in the circumstances reported, emphasising the importance of the property-registration system and protection of good-faith purchasers.

Relevance

This demonstrates another form of parameter governance:

registration status + good faith + competing proprietary interests → civil-law outcome.

The registry provides the structural rule while the circumstances surrounding good faith affect its application.

11. Parameter Adjustment Versus Judicial Legislation

The distinction can be expressed as follows:

Therefore, parameter adjustment should not be understood as a substitute for legislation.

Where the law itself is inadequate, legislation may still be necessary.

12. Advantages

1. Flexibility

The legal system can respond to new commercial practices without constantly creating new legislation.

2. Technological adaptability

General concepts can be applied to AI, electronic evidence, platforms and digital transactions.

3. Commercial practicality

Courts can consider industry custom and the nature of the transaction.

4. Individualised justice

A rigid rule can sometimes produce inappropriate results when applied to materially different circumstances.

5. Continuity

Existing legal doctrines can continue operating even as economic and technological conditions change.

13. Risks and Limitations

Parameter-based governance also creates risks.

A. Legal uncertainty

If parameters are too flexible, parties may have difficulty predicting outcomes.

B. Excessive judicial discretion

Broad standards such as good faith and reasonableness must remain connected to statutory criteria.

C. Uneven application

Different courts or factual circumstances can produce different interpretations.

D. Separation-of-powers concerns

Judicial interpretation should not become an uncontrolled replacement for legislative lawmaking.

E. Retrospective uncertainty

Parties may structure transactions based on one understanding of a general standard and later encounter a different judicial interpretation.

Therefore, parameter adjustment must operate within the boundaries of legislation, judicial competence and procedural fairness.

14. The New UAE Civil Transactions Law and Parameter Governance

The 2025 Civil Transactions Law is particularly important to this subject because it demonstrates that the UAE is using both legislation and parameter-based governance.

The new law did not simply abandon the previous civil-law architecture. It replaced the 1985 framework but retained important concepts such as:

• good faith;
• contractual binding force;
• interpretation;
• hardship;
• compensation;
• abuse-related limitations;
• obligations arising from the nature of the transaction.

The numbering and some substantive provisions have changed, so old Article numbers should not automatically be carried into contracts governed by the new law. For example, good faith moved from former Article 246 to Article 221, while other major provisions were similarly renumbered.

This illustrates an important principle:

Legislation establishes the parameters; judicial interpretation continuously calibrates their application.

15. Application to Emerging Technologies

The doctrine becomes particularly significant in:

AI contracts

Courts may consider:

• transparency;
• contractual allocation of responsibility;
• accuracy;
• human oversight;
• foreseeable risks;
• good faith.

Smart contracts

Parameters may include:

• contractual intention;
• code versus written terms;
• authentication;
• performance;
• technological failure.

Digital assets

The court may need to consider:

• ownership;
• possession;
• contractual obligations;
• evidence;
• regulatory status.

Platform contracts

Relevant parameters may include:

• standard terms;
• unequal bargaining power;
• automated termination;
• transparency;
• consumer protection;
• good faith.

Electronic evidence

The Evidence Law provides a framework while courts evaluate authenticity, integrity, reliability and relevance in the particular case.

16. Relationship With Good Faith

The central relationship can be represented as:

Legislation

↓

General Civil-Law Principle

↓

Parameter

• Good faith
• Custom
• Reasonableness
• Proportionality
• Nature of transaction
• Legitimate interest

↓

Judicial/Regulatory Assessment

↓

Concrete Civil Consequence

This makes good faith one of the most important mechanisms through which UAE civil law can adapt without requiring legislation for every factual variation.

17. Critical Legal Analysis

The concept of governance through parameter adjustment reflects a broader transformation of modern civil law.

Traditional codification attempts to provide detailed rules in advance.

Modern commercial life, however, produces situations that cannot always be predicted when legislation is enacted.

Consequently, UAE civil law combines:

codification + judicial interpretation + custom + good faith + regulatory standards + technological evidence.

The result is neither completely rigid statutory governance nor unrestricted judicial discretion.

Instead, it is a structured adaptive system.

The courts remain constrained by the statutory framework, but within that framework they can determine how general principles operate in changing factual environments.

18. Conclusion

Governance through parameter adjustment rather than legislation is a useful way of understanding the adaptive character of UAE civil law.

The UAE does not need to enact a separate civil-law statute every time a new contractual, technological or commercial problem appears. Existing principles—particularly good faith, abuse of rights, contractual interpretation, custom, reasonableness, proportionality and judicial discretion—allow the legal system to adjust the application of civil-law rules.

The case law demonstrates this process. Dubai Cassation Judgment No. 288 of 2025, Abu Dhabi Cassation Judgment No. 179 of 2024, Dubai Cassation Judgments Nos. 313/2007, 440/2016 and 364/2025, together with DAS Real Estate and Access Group v BLS, illustrate different ways in which contractual, proprietary and commercial relationships are governed through the interaction of statutory rules and flexible legal parameters.

The fundamental principle can therefore be stated as:

UAE civil-law governance is increasingly adaptive: legislation supplies the legal framework, while legally recognised parameters determine how that framework responds to changing circumstances.

Exam Revision Points

1. Parameter adjustment = adaptation of existing legal rules.
2. It is different from creating new legislation.
3. Good faith is a major UAE civil-law parameter.
4. Abuse of rights limits improper exercise of legal rights.
5. Custom can supplement contractual obligations.
6. Judicial interpretation adapts general rules to specific facts.
7. Hardship provisions demonstrate controlled judicial adjustment.
8. Electronic-evidence rules facilitate technological adaptation.
9. Regulatory standards can influence civil contractual obligations.
10. The 2025 Civil Transactions Law reinforces the modern adaptive framework.
11. Judicial discretion must remain within statutory boundaries.
12. Core formula: Statute → Parameter → Interpretation → Application → Civil consequence.