UAE Law and Practice Contributed by: Raghad Hammad and Huda Al Zein, BLK Partners
is framed as a condition precedent, a breach will not relieve the insurer of liability unless: • the clause was clearly disclosed and accepted; and • the breach materially contributed to the loss or was committed in bad faith. DIFC/ADGM In the DIFC and ADGM, conditions precedent are governed by common-law principles. A condition precedent does not need to be expressly described as such, but must be clearly drafted so that it is evi- dent that compliance is a prerequisite to the insurer’s liability. If a valid condition precedent is breached, the insur- er is generally entitled to deny liability, regardless of whether the breach caused the loss, unless the con- tract or governing law provides otherwise. There are no statutory restrictions equivalent to Article 1028 of the UAE Civil Code. Where English law applies (which is common), mod- ern principles under the UK Insurance Act 2015 may soften the effect of conditions precedent by requiring a causal link in certain circumstances. 9. Insurance Disputes 9.1 Insurance Disputes Over Coverage Onshore UAE (Mainland) If there is a disagreement about whether an insur- ance policy covers a claim, the process usually fol- lows these steps: • First, the policyholder should submit a formal complaint to the insurance company itself. Insurers are required to have internal complaint-handling systems and must review the issue. • If the dispute is not resolved, consumer and retail policyholders must refer the matter to Sanadak, the UAE’s independent insurance and financial ombudsman. Sanadak is designed to help individu- als and small businesses resolve disputes without going to court and does not charge consumers for using its services.
• If Sanadak is unable to settle the dispute, the case is referred to the Insurance Disputes Settlement and Resolution Committee under the CBUAE. This committee has exclusive authority to decide insur- ance disputes before they can be brought before the courts. • A party that disagrees with the Committee’s deci- sion may appeal to the UAE Court of Appeal within 30 days, subject to the applicable rules. Financial Free Zones (DIFC and ADGM) In the DIFC and ADGM, insurance disputes are han- dled differently. There is no mandatory ombudsman or committee stage. Disputes are usually brought directly before the DIFC/ ADGM Courts, which follow procedures similar to those used in England. If the insurance policy con- tains a valid arbitration clause, the dispute will instead be decided by an arbitral tribunal (for example, under DIAC or DIFC-LCIA rules). Consumer Insurance versus Reinsurance Contracts Consumer insurance receives stronger protection under UAE law. Clauses that limit coverage or cause the policyholder to lose rights must be clearly high- lighted in the policy (for example, printed in bold or in a different colour) in order to be enforceable. Consum- ers also have mandatory access to Sanadak, which provides a free and accessible dispute resolution pro- cess. Reinsurance contracts, by contrast, are treated as commercial agreements between professional par- ties (insurers and reinsurers). These disputes usually do not go through Sanadak or consumer-focused committees and are commonly resolved through arbitration or the DIFC/ADGM Courts, which are more accustomed to international insurance and reinsur- ance market practices. 9.2 Insurance Disputes Over Jurisdiction and Choice of Law UAE jurisdiction and choice-of-law disputes are gov- erned primarily by UAE domestic legislation, in par- ticular the UAE Civil Procedure Law (Federal Decree- Law No. 42 of 2022) and the UAE Civil Code, which
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