Commercial mediation in international contracts is an optional, alternative means of resolving disputes that arise between parties from different countries, in which the two parties rely on a neutral mediator who brings their positions closer together and helps them reach an amicable settlement without holding any power to adjudicate the dispute. In the United Arab Emirates, it is governed by Federal Decree-Law No. (40) of 2023 on Mediation and Conciliation in Civil and Commercial Disputes, which replaced earlier legislation and established a modern framework for alternative justice. Its provisions apply to mediation conducted within the State, and they also extend to an international commercial dispute that takes place outside the State whenever its parties agree to subject it to this Decree-Law. This pathway offers companies a faster, lower-cost solution than litigation, while preserving commercial relationships and the confidentiality of information.

What Is Commercial Mediation in International Contracts, and How Does UAE Law Regulate It?

1. Defining Commercial Mediation in International Contracts

Mediation is a consensual means of settling civil and commercial disputes, whether contractual or non-contractual, in which a neutral third party — the "mediator" — intervenes to facilitate dialogue between the disputing parties and help them craft a solution acceptable to all. Mediation in international contracts is distinguished by the fact that its parties usually belong to different legal systems, which makes a flexible, neutral, amicable mechanism a practical alternative to complex cross-border litigation.

2. The Legal Framework for Commercial Mediation in the UAE

The legislative framework for mediation rests on Federal Decree-Law No. (40) of 2023 on Mediation and Conciliation in Civil and Commercial Disputes, which was issued to organise and promote mediation and conciliation as an alternative to litigation. This Decree-Law repealed Law No. (6) of 2021 on Mediation and Law No. (17) of 2016 on Establishing Mediation and Conciliation Centres, consolidating the system into a single, modern, and integrated piece of legislation.

The Federal Judicial Council further completed this system with a package of regulatory resolutions issued in 2025, which entrenched standards for the registration, training, and professional conduct of mediators and conciliators, organised remote mediation, and established new specialised centres. The most prominent of these resolutions are:

3. When Do the Mediation Provisions Apply to International Commercial Disputes?

The Decree-Law set out the scope of application of the mediation provisions in two principal cases, the second of which relates directly to international contracts:

The mediation agreement must be in writing, and any express reference in a written contract to a document containing a mediation clause is deemed to be in the same standing, provided the reference clearly treats that clause as part of the contract. The agreement must also identify the subject matter of the dispute and the manner of appointing the mediator. The parties may agree to conduct the mediation in a language other than Arabic, provided that the documents and memoranda submitted are translated into Arabic in accordance with the law.

4. The Difference Between Mediation, Conciliation, Arbitration, and Litigation

Many parties confuse the means of resolving disputes, yet each has its own nature and effect. Mediation is an entirely consensual mechanism, while conciliation is an alternative means resorted to compulsorily in certain cases; arbitration leads to a binding ruling, whereas litigation is the traditional judicial pathway before the courts.

Mediation differs from arbitration in that the mediator issues no binding decision, whereas the arbitrator issues an enforceable ruling. It also differs from litigation in its flexibility, confidentiality, speed, and lower cost, and in its ability to preserve the commercial relationship between the parties rather than ending it through a protracted judicial dispute.

5. Advantages of Choosing Mediation to Settle International Contract Disputes

6. The Mediation Clause in Drafting International Commercial Contracts

Drafting the dispute-resolution clause is among the most important and most critical provisions of an international contract. It is advisable to include a clear mediation clause that designates recourse to mediation as a first step before escalating to arbitration or the courts, while specifying the applicable law, the body or centre through which the mediation is administered, and the language of the proceedings.

It is preferable to adopt a tiered dispute-resolution clause that begins with direct negotiation, then mediation, and, if settlement proves impossible, moves the dispute to arbitration or to the competent court. This tiering gives the parties an opportunity for an early amicable solution before bearing the burdens of litigation.

7. Mediation Procedures, the "Wasata" Platform, and Enforcing the Settlement Agreement

The Ministry of Justice has launched an electronic platform named "Wasata" as an alternative to litigation, enabling the settlement of civil and commercial disputes through specialised and registered mediators, in either Arabic or English. The 2025 resolutions reinforced this digital orientation by permitting mediation and conciliation sessions to be held remotely via video communication, with identity verified using the "UAE PASS" digital identity or the Emirates ID card, while prohibiting the recording or filming of sessions to preserve confidentiality.

Mediation ends for one of several reasons, the most prominent being the parties' signing of a settlement agreement, their agreement to terminate it, or the mediator's notification that continuing it serves no purpose. When a settlement is reached, a written agreement is drawn up and signed by the two parties, thereby becoming binding upon them.

8. The Lawyer's Role in International Commercial Mediation

Despite the amicable nature of mediation, the lawyer's role remains pivotal at every stage: from drafting the mediation clause in the contract, to assessing the client's legal position, preparing the negotiation strategy, and reviewing the settlement agreement before signing to ensure its obligations are clear and enforceable. A precisely drafted agreement protects the client from later disputes, whereas an ambiguous agreement may reopen the door to conflict.

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