Dubai Overhauls Construction Sector with New Law to Regulate Contracting Activities: What Contractors Need to Know

Dubai has issued Law No. 7/2025 establishing a comprehensive regulatory framework for contracting activities across the Emirate, including its free zones and special development areas. The new law introduces important registration and classification requirements aimed at enhancing standards, ensuring quality, and fostering investment. 

In the first of our two-part series on the new law, we look at what contractors need to know to understand the law’s key provisions, to update their internal processes, and to ensure compliance to avoid penalties and disruptions to their projects.  In part two, we will look at the new law from an employer’s perspective.

Registration and classification of contractors

The new law provides for the establishment of a unified system for the registration of contractors across Dubai.

There are two key elements to the new system:

1. Registration: All contractors operating in Dubai will be required to be registered in this system to carry out contracting activities (including civil, architectural, electrical, mechanical, industrial, building, construction, infrastructure and more).
2. Classification: Contractors will be classified into categories based on their experience, financial, technical, and administrative capabilities

Contractors may only carry out permitted contracting activities in line with their registration and within the limits of their classification.  Contractors must also employ a minimum number of qualified and properly certified technical staff.  Contractors must maintain compliance with the registration, classification and certification requirements throughout the duration of their projects.  Contractors must keep them up-to-date and notify any changes affecting their status or that of their technical staff.

These requirements apply to contractors, subcontractors and those acting in joint ventures or consortiums.  Airport-related contracting activities are exempted from these requirements (as also will be any other specifically expected activities).

Implications for contractors

Contractors must ensure that they are properly registered and classified for all contracting activities they intend to undertake in Dubai.  It is essential to maintain up-to-date registration, classification, and technical certification throughout the duration of all projects.

Contractors are responsible for verifying that any subcontractors they engage are also properly registered, certified, and classified for the relevant activities.  This applies also to those participating in joint ventures or consortiums.  Joint venture or consortium agreements should therefore expressly require all parties to satisfy the registration, classification, and certification requirements, and include appropriate remedies in the event of a breach.

Contractors must be vigilant in complying with all employer tender and contract requirements regarding registration, classification, and certification.  Contractors should be aware of the legal and contractual consequences of non-compliance, so that they can guard against them properly.

Violations can result in fines of up to AED 100,000, with repeat offences subject to doubled penalties up to AED 200,000.  Additional measures may include suspension from practice, downgrading of classification, cancellation of registration, and revocation of competency certificates.  Designated officials have judicial powers to inspect contractor premises and project sites, and contractors may be subject to investigation and enforcement action if found to be non-compliant.

Employers are likely to include contract provisions requiring ongoing compliance and entitling the employer to specific remedies for non-compliance.  These may extend to serious measures, such as termination and step-in rights.

Transitional arrangements and next steps

The new law will take effect in January 2026.  Contractors will have one year from that date to meet the new registration and classification requirements.

During this transitional period, contractors should:

1. at the administrative level, start putting in place the people and processes to get registered and certified as soon as possible, and renewed annually thereafter;
2. revise existing, or put in place, document retention policies to satisfy the new law’s record keeping requirements;
3. review their current and planned activities to ensure that their registration and classification covers all intended contracting activities and specialisations;
4. ensure that all subcontractors they engage are likewise reviewing their activities, and taking the necessary actions internally, to get registered and certified as soon as possible;
5. review their own tender documentation and standard subcontracts to ensure they are able to pass down registration requirements and risks to their subcontractors on a back-to-back basis;
6. engage with employers on pending projects, and those with whom there are pre-existing relationships, to ensure alignment on the registration requirements; and
7. similarly, for those acting in joint ventures or consortiums, engage with their partners to ensure alignment on the registration requirements and to mitigate any risks and difficulties with the registration process.

Contractors should also ensure that their teams are trained to use the registration system and to maintain records of compliance checks as part of their due diligence.  Reviewing all ongoing and upcoming projects to confirm that all engaged parties are in the process of being registered and classified will help avoid disruptions and penalties under the new law.