UAE Criminal Jurisdiction: Can Foreign Arbitration Clauses Prevent Criminal Prosecution?

Foreign governing-law and arbitration agreements cannot shield parties from UAE criminal proceedings.

A foreign governing-law clause or international arbitration agreement does not prevent criminal proceedings in the UAE where the alleged conduct falls within the country’s criminal jurisdiction. Criminal jurisdiction is an exercise of State authority and cannot be waived, transferred or excluded through a private contract. In cross-border transactions, parties sometimes assume that choosing English law and arbitration in London means every dispute arising from the contract must be resolved abroad. While this may apply to commercial disputes, it does not extend to suspected criminal conduct such as fraud, breach of trust, forgery, bribery or money laundering.

An international contract may therefore be governed by foreign law and subject to overseas arbitration, while the same underlying conduct remains open to investigation and prosecution under UAE criminal law.

Foreign Governing Law and the Application of UAE Criminal Law

A governing-law clause determines which legal framework applies to a contract, including how obligations are interpreted, whether a breach has occurred and what remedies may be available. It does not determine which State has the authority to prosecute criminal offences. That question is governed by the rules of criminal jurisdiction.

Under Article 17 of Federal Decree-Law No. 31 of 2021 on the Crimes and Penalties Law, UAE criminal law applies to offences committed within the country. An offence may also be treated as having been committed in the UAE if one of its constituent acts takes place there, or if its consequences occur or are intended to occur in the country.

Consequently, a contract signed abroad may still fall within UAE criminal jurisdiction where, for example, fraudulent representations are made during a meeting in Dubai, forged documents are submitted to a UAE bank, or funds allegedly obtained through criminal conduct are received or handled within the country.

Articles 20 to 24 of the Crimes and Penalties Law also address circumstances in which UAE criminal law may apply to offences committed outside the country, including cases involving the UAE and specified extraterritorial offences. In addition, Article 27 of the Civil Transactions Law restricts the application of foreign law where its provisions conflict with UAE public order.

Can an Arbitration Agreement Prevent Criminal Proceedings?

The answer is no. An arbitration agreement cannot prevent UAE authorities from investigating suspected fraud, forgery, breach of trust or money laundering. Parties may agree to refer contractual disputes to arbitration, but they cannot use that arrangement to remove matters falling within the State’s criminal jurisdiction.

Under Article 4(2) of the Arbitration Law, criminal matters cannot be settled through arbitration. A tribunal may examine the contractual consequences of alleged misconduct, including whether an agreement was induced by fraudulent misrepresentation, whether it should be rescinded or whether compensation is payable. However, it cannot determine criminal guilt or impose criminal penalties.

For example, a London-based tribunal applying English law may conclude that a contract was entered into following fraudulent misrepresentation and award damages. Whether the same conduct constitutes criminal fraud under Article 451 of the Crimes and Penalties Law remains a separate question for UAE authorities, provided the jurisdictional requirements are met.

The same distinction applies to forgery under Article 251 and breach of trust under Article 453 of the Crimes and Penalties Law. Money laundering raises additional concerns. Federal Decree-Law No. 10 of 2025 on Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation Financing establishes a separate criminal and regulatory framework. Allegations involving proceeds of crime, transfers through UAE financial institutions or the use of UAE-based entities may therefore be examined independently under UAE law. Neither an arbitration clause nor the parties’ contractual preferences can prevent the authorities from exercising their statutory powers.

Can Criminal Proceedings Continue Independently of International Arbitration?

Yes. UAE criminal proceedings and international arbitration operate under separate legal frameworks, although developments in one may affect the other. Criminal proceedings derive their authority from the State and are conducted by the Public Prosecution and the competent criminal courts. Arbitration, by contrast, derives its authority from the parties’ agreement and concerns contractual rights and remedies.

The differences become particularly important when the same transaction gives rise to parallel proceedings. Criminal liability is determined by UAE authorities and courts, whereas contractual liability is decided by the arbitral tribunal. The parties may generally settle an arbitration by agreement, but criminal proceedings can only be discontinued in accordance with the law.

Evidence may also overlap. Documents, witness statements and expert reports obtained during criminal investigations may become relevant to arbitration, subject to applicable confidentiality and admissibility rules. Criminal authorities also possess investigative and coercive powers, including the ability to seek asset freezes and travel bans in accordance with the law. These powers are distinct from interim measures available through arbitration.

Article 29 of the Criminal Procedure Law provides for the suspension of certain civil proceedings before UAE courts pending the determination of related criminal proceedings. This does not automatically suspend a foreign-seated arbitration, which remains subject to its applicable arbitral framework and the tribunal’s procedural discretion. Parties should therefore anticipate possible evidentiary overlap and ensure that their positions in criminal proceedings and arbitration remain consistent.

When Can the Same Conduct Give Rise to Both Civil and Criminal Liability?

The same set of facts may give rise to contractual or civil liability as well as criminal liability. Consider an agent who receives client funds under an agency agreement governed by English law, with disputes referred to LCIA arbitration in London, but subsequently diverts the money. Depending on the circumstances, the conduct may give rise to a claim for breach of contract and fiduciary obligations before the arbitral tribunal. It may also result in a criminal complaint for breach of trust under Article 453 of the Crimes and Penalties Law, provided the statutory elements and jurisdictional requirements are established.

The distinction between contractual non-performance and criminal conduct is particularly important. A failure to pay a debt, fulfil an obligation or return money does not automatically constitute fraud or breach of trust. The specific elements of the alleged offence, including the required criminal intent and the nature of the transaction, must be established.

Article 29 of the Criminal Procedure Law also reflects the relationship between related civil and criminal proceedings before UAE courts. A final criminal judgment may have binding consequences in subsequent UAE proceedings concerning facts necessarily determined by the criminal court, subject to the applicable statutory provisions.

However, an acquittal does not necessarily extinguish contractual liability. A finding that criminal intent has not been established does not automatically determine whether a contractual obligation was breached. The civil court or arbitral tribunal may still need to consider whether the conduct amounted to a breach and whether a contractual remedy is justified.

Considerations for Legal Practitioners

For legal practitioners advising clients involved in international transactions, the possibility of criminal proceedings in the UAE should be assessed independently of the governing-law and arbitration provisions. Before filing a criminal complaint, several matters require careful examination.

1. Identify the offence: Determine whether the alleged conduct may constitute fraud, breach of trust, forgery, bribery or money laundering under UAE law. Each offence has specific statutory requirements that must be established.
2. Establish the UAE connection: Identify where the relevant representations, payments, transfers and communications took place, and where the consequences of the alleged offence occurred or were intended to occur.
3. Assess the evidence: Examine contracts, bank statements, SWIFT transfers, emails, WhatsApp communications, corporate records, witness statements and relevant expert reports to establish the sequence of events and support the allegations.
4. Distinguish civil from criminal liability: Identify the statutory elements of the alleged offence rather than relying solely on contractual non-performance, an unpaid debt or financial loss.
5. Consider procedural requirements: Determine whether the offence is subject to a complaint requirement under Article 11 of the Criminal Procedure Law and identify the competent Police Department and Public Prosecution.
6. Coordinate parallel proceedings: Ensure that criminal complaints, arbitration submissions and civil claims adopt consistent factual and legal positions, taking account of the possible consequences of statements and evidence in each forum.

For parties facing criminal complaints, the existence of an arbitration agreement should not be treated as a defence to criminal jurisdiction. Their response should instead focus on the underlying documentation, the nature of the dispute and whether the elements of the alleged offence have actually been established. Where the matter concerns contractual non-performance rather than criminal conduct, that distinction should be clearly supported by the available evidence.

At the drafting stage, parties should also recognise that no foreign governing-law or arbitration clause can exclude the application of UAE criminal law. Appropriate anti-bribery, anti-money laundering, audit and compliance provisions can, however, strengthen internal controls and reduce the risk of commercial disputes developing into allegations of criminal misconduct.

Conclusion

Foreign governing-law and arbitration clauses remain important mechanisms for allocating and resolving civil and commercial disputes in international transactions. They cannot, however, displace UAE criminal jurisdiction.

Under Article 17 of the Crimes and Penalties Law, UAE criminal law may apply where an offence, one of its constituent acts or its intended consequences has a sufficient connection with the country. The existence of a foreign governing-law clause or an international arbitration agreement does not prevent the Public Prosecution from investigating and prosecuting conduct falling within UAE jurisdiction.

An international commercial transaction may therefore give rise to two parallel processes: arbitration determining contractual rights and financial remedies, and UAE criminal proceedings examining whether an offence has been committed. For practitioners advising on cross-border transactions, the central task is to distinguish an ordinary contractual dispute from conduct that establishes the legal basis for criminal liability and provides a sufficient connection with the UAE.

For businesses and individuals facing cross-border commercial disputes, fraud allegations or parallel arbitration and criminal proceedings, Kaden Boriss provides legal advisory services on international commercial transactions, arbitration strategy and contractual risk management. Contact the firm to assess your legal position, understand the applicable jurisdictional requirements and explore appropriate options for protecting your commercial interests.