Mediation is one of the most effective ways to resolve disputes in Dubai and across the UAE without lengthy court or arbitration proceedings. It is a confidential and flexible process that helps parties reach a commercial settlement with the support of an independent mediator.

At a federal level, mediation is now supported by a dedicated statutory framework under Federal Decree-Law No. 40 of 2023 on Mediation and Conciliation in Civil and Commercial Disputes, which came into force in December 2023. This law provides a comprehensive legal framework governing mediation processes, mediator conduct, and mediation centres across the UAE.

Businesses often choose mediation because it can save time, reduce costs, and protect working relationships. It is also flexible and can take place before proceedings are issued, during proceedings, or even at a late stage when the dispute has escalated.

This guide explains how mediation works in the UAE, when it is useful, and how legal support can help parties reach the best outcome.

What is mediation?

Mediation is a form of alternative dispute resolution where an impartial third party (the mediator) helps the parties negotiate a settlement. The mediator does not decide the dispute or impose an outcome. Instead, they guide discussions, clarify issues, and help parties explore realistic options for resolution.

Under Federal Decree-Law No. 40 of 2023, mediation is expressly recognised as an optional and alternative method for amicable settlement of civil and commercial disputes, whether arising from contractual or non-contractual relationships, and whether initiated by agreement or court referral.

Why mediation is increasingly popular in commercial disputes

Mediation is attractive to businesses because it offers a number of practical benefits such as:

• A faster route to settlement: Court or arbitration proceedings can take months or longer, particularly where there are multiple parties, expert issues, or jurisdictional challenges. Mediation can often be arranged quickly and may resolve a dispute in a single day.
• Cost-effective dispute resolution: While mediation requires preparation, it typically costs far less than continuing to trial or an arbitration hearing. This is particularly important where legal fees need to be controlled or proportionate.
• Confidentiality and reputational protection: Mediation is a consensual process and the parties and the mediator typically agree in a Mediation Agreement that it is confidential and without prejudice to their case. This can be critical where the dispute involves sensitive commercial arrangements, internal financial information, or reputational concerns.
• Commercial flexibility: Unlike a court judgment, mediation allows parties to agree creative solutions - for example staged payments, revised contract terms, or future trading arrangements. This often leads to outcomes that are more practical and sustainable.
• Preserving business relationships: Mediation encourages a forward-looking settlement approach. In disputes involving suppliers, partners, employees, or clients, it can help parties preserve relationships.

The Federal Mediation Law also reinforces core mediation principles such as confidentiality, helping ensure mediation is conducted fairly and efficiently and giving parties greater confidence in using mediation as an alternative to litigation. 

When is mediation suitable?

Mediation can be effective in a wide range of disputes, but it is particularly useful where:

• parties want a swift and cost-effective solution;
• the dispute involves ongoing commercial relationships;
• there is uncertainty around evidence, liability, or quantum; or
• the parties want to remain in control of the outcome.

Even where a party believes they have a strong case, mediation can still make commercial sense. A settlement can remove litigation risk, avoid reputational exposure, minimise the risk and uncertainty of having to enforce a court judgment or arbitral award, and allow the business to focus on operations rather than prolonged dispute management.

What happens during a mediation?

While each mediation is different, the process typically includes:

• Preparation:  Each party typically prepares a concise summary of their position, key documents, and what they want to achieve. Parties may also prepare settlement parameters and a negotiation strategy. It is common to exchange written summaries or ‘position papers’ ahead of the mediation session.
• Opening session: The mediator sets the ground rules and the process for the day. In some mediations, parties provide short opening remarks to outline their positions in an oral presentation.
• Private meetings: The mediator will then hold confidential meetings with each party separately. This allows the mediator to test the issues, explore settlement options and carry proposals between the parties.
• Negotiation and settlement: If agreement is reached, the settlement is recorded in writing, often on the same day,  and typically includes payment terms, confidentiality clauses and any agreed steps to close the dispute.

Is mediation legally binding in the UAE?

Mediation becomes binding once the parties sign a written settlement agreement. The terms of the agreement should be drafted carefully to avoid ambiguity and ensure the settlement is enforceable. In some cases, the settlement will also be aligned with ongoing court or arbitration proceedings, including agreed steps to discontinue claims or record the outcome formally.

Federal Decree-Law No. 40 of 2023 also confirms that mediation agreements and settlement arrangements must generally be documented in writing and signed by the parties (including via electronic communications where appropriate), strengthening enforceability and legal certainty.

How we can help with mediation in Dubai and the UAE

Our Commercial Arbitration and Litigation team supports clients across a wide range of commercial disputes, including matters involving the UAE onshore courts and the ADGM and DIFC Courts and in a wide range of arbitration centres. We help clients approach mediation strategically and with a clear focus on achieving the best commercial outcome.

We can assist with mediator selection, early case assessment and mediation strategy, drafting mediation position statements and settlement offers, preparing key documents and evidence, representing clients during mediation sessions, and negotiating and drafting settlement agreements.

Where mediation is unlikely to resolve the dispute, we can advise on alternative routes, including court litigation, arbitration, or other actions.

If you are considering mediation in the UAE, we can advise on the best approach and support you throughout the process.

For further information, please contact Alexandra Lester or Ban Lahham.