Non-Compete Clauses in the UAE: What Holds, What Fails, and What Courts Expect

neetudc
Jul 5
4 min read

Introduction

Non-compete clauses are everywhere — tucked inside employment contracts, consultancy agreements, franchise arrangements, and share sale deals. Everyone includes them. Few get them right. In the UAE, courts do not enforce these clauses just because they exist. They scrutinize them, clause by clause. If yours is overbroad, lazy, or recycled, it will not survive. And once tested in court, a weak non-compete can do more harm than good.

What the Law Says

The legal framework in the UAE is clear on this point — restraint of trade is an exception, not a default right. The party seeking to enforce a non-compete carries the burden of proof. You want to block someone from working? Show the court why.

Article 10 of Federal Decree-Law No. 33 of 2021 on the Regulation of Labour Relations permits a post-employment non-compete clause only if:

The employee had access to sensitive information
The clause protects a legitimate business interest
The restriction is limited in time, place, and scope

Then there’s Cabinet Resolution No. 1 of 2022, which caps enforceability at two years from the end of employment. That’s not a green light — it’s a ceiling. Courts routinely reduce that period to six months or less unless the employer justifies why more is needed.

In Cassation Case No. 196/2016, the Dubai Court of Cassation dismissed a non-compete clause that was too vague in defining the prohibited activity and excessive in duration. That decision has since become the benchmark for non-compete enforcement in the private sector.

Non-compete obligations in the UAE are not limited to employment contracts. They appear just as often in consultancy agreements, franchise arrangements, joint venture term sheets, commercial agency contracts, share purchase agreements, and business sale deals. In each case, the clause aims to prevent one party from using inside knowledge, brand equity, or strategic access to compete against the other. The legal basis shifts slightly depending on context — for commercial relationships, Article 909 of the Civil Transactions Law governs these restrictions. But the test remains consistent: the clause must serve a real business interest, be limited in time and scope, and not overreach. When applied outside employment, non-competes are often tied to the sale of goodwill, transfer of proprietary systems, or exclusivity in distribution — all situations where post-deal competition would undercut the bargain. Whether it's an ex-partner, seller, franchisee, or advisor, the same logic applies: protect what needs protecting, and leave the rest alone.

Steps to Comply

If you want your non-compete clause to stand up in court — or even prevent litigation — it needs to be drafted with intent. That means every word should do work. Here’s what matters:

Narrow the scope. Define the restricted activity in plain terms. Avoid language like “any similar business” — it’s meaningless and unenforceable.
Limit the geography. If your company operates in Dubai, you don’t need a blanket restriction across all seven emirates — unless you can show operational overlap.
Keep it short. More than 12 months? You better have evidence. Six months is generally acceptable for most roles unless the employee had access to core IP or top-tier clients.
Be specific about the risk. Courts want to see that the employee or partner had access to confidential information, client strategies, or pricing mechanisms — and that misuse would result in identifiable harm.
Link the clause to the role. A generic clause for all employees, regardless of position, will not be taken seriously. Senior roles need custom drafting.
Use Arabic for enforceability. If the contract is bilingual, the Arabic version will prevail in court. Make sure it says exactly what the English says — not just a quick translation.
Update on promotion or restructuring. A clause signed years ago in a different role or context won’t automatically bind someone who’s moved up or across departments.

Common Mistakes to Avoid

Too many businesses rely on boilerplate. It’s the number one reason non-compete clauses fail. Here's what else you need to avoid:

Copy-pasting foreign templates. UAE law is unique. What works in London, New York, or Mumbai won’t hold here.
Overreaching. Blocking someone from working in the entire industry across the entire UAE for two years is not protecting your business. It’s trying to control theirs. The courts won’t allow it.
Failing to prove access. If your claim rests on the employee having trade secrets, be ready to show what they were, how access was given, and how misuse could hurt you.
Mixing non-competes with non-disclosure clauses. They serve different purposes. A confidentiality clause is about secrecy. A non-compete is about restraint. Treat them separately.
Not revisiting the clause post-termination. When someone exits, especially in a contentious separation, review what applies and document the business rationale for any restrictions you plan to enforce.
Ignoring MOHRE involvement. For employees, MOHRE (Ministry of Human Resources and Emiratisation) may get involved before civil courts do. Make sure you’ve followed their procedural rules if the case goes there.

How Juris Maestro Can Help

We work with both companies and individuals on non-compete matters. But we don’t just draft. We ask hard questions. We stress-test your assumptions. We treat these clauses as potential litigation — because that’s exactly what they become.

If you're a business, we can:

Audit your existing contracts and flag clauses that won’t hold up
Rewrite your non-compete language to align with current UAE court trends
Assist with enforcement — including notice letters, settlement offers, and court filings
Advise on how to structure client access and internal confidentiality protocols to support future enforcement

If you’re an individual, we’ll:

Review whether the clause is enforceable — and what your actual risks are
Negotiate amendments or removals that let you work without threat
Defend you against unfair or excessive enforcement claims