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Settlement agreement · UAE Mainland

Settlement Agreement (UAE)

A settlement agreement for a commercial dispute between two businesses under UAE federal law and the courts of an emirate: a settlement sum paid in one payment or instalments, full and final settlement with a mutual or one-way release, no admission of liability, confidentiality, ending any proceedings, costs, warranties of authority and no assignment of claims, and acceleration on default.

Drafted with Mike, checked against 7 published references. Reviewed 26 October 2026.

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What it is

This settlement agreement ends a commercial dispute between two businesses in the UAE mainland. It is governed by UAE federal law and the laws of the chosen emirate, with that emirate's courts deciding any dispute. One party pays an agreed settlement sum, in one payment or in instalments, in full and final settlement, with a mutual or one-way release and no admission of liability.

When to use it

It is meant for onshore business-to-business disputes, for example over a contract, unpaid invoices, defective goods or services, or a partnership or shareholder disagreement, including settlements that the court hearing the case is asked to ratify. It is not the right document for employment or worker claims, consumer disputes, settlements with more than two parties, settlements that transfer property or shares or restructure debts, or settlements that need court approval on the merits or involve a regulator.

Why use it

The template covers the settlement payment, post-dated cheques drawn on a UAE bank as security for instalments, value added tax, costs, the scope of the settled claims, releases, unknown claims, carve-outs, no admission, confidentiality, warranties, and acceleration and interest on default. To end proceedings, the parties can ask the court to ratify the settlement and record it in the minutes, or withdraw the case, and each party withdraws any police, criminal or administrative complaint about the dispute where the law allows. A language clause deals with Arabic translations or a bilingual English and Arabic text. Each releasing party settles its own claims; an affiliate’s claims are not released without that claim owner’s participation or actual authority. This commercial form is not a statutory employment waiver.

What it covers

  • Settlement of a commercial dispute between businesses (for example over a contract, unpaid invoices, defective goods or services, or a partnership or shareholder dispute) before or after proceedings have started.
  • Settlements where one party pays a sum, in one payment or by instalments, with a mutual release or a one-way release by the party receiving payment.
  • Ending court or arbitration proceedings as part of the settlement.
  • Settlements governed by UAE federal law, including settlements to be ratified by the court hearing the proceedings.

What it doesn't cover

  • Employment settlement agreements, or any settlement of an individual's employment or worker claims (which need statutory formalities).
  • Consumer disputes and settlements with individuals acting outside their business.
  • Settlements that transfer property or shares, grant licences, or restructure debts on more than a simple payment schedule.
  • Class, collective, derivative, insolvency or other settlements that need court approval on the merits, and settlements with regulators or public authorities.
  • Settlements involving more than two parties, or claims against insurers that must consent.
MIKE'S TEMPLATES

Settlement Agreement (UAE)

Parties

This agreement is dated the date on which it is signed by the last of the parties.

This agreement is made between [Party 1 legal name and details] (the "Party 1") and [Party 2 legal name and details] (the "Party 2").

Key Terms

"Dispute" means [Description of the dispute being settled].

"Proceedings" means [Court or arbitration proceedings being ended (forum and case number)].

"Settlement Sum" means [Settlement sum (amount and currency)].

"Payment Date" means [Date by which the settlement sum, or the first instalment, must be paid].

"Instalment Schedule" means [Instalment amounts and due dates].

"Payment Account" means [Receiving Party's bank account for payment].

"Withdrawal Period" means 7 days after the Receiving Party receives the Settlement Sum in full.

"Grace Period" means 7 days.

"Default Interest Rate" means [Interest rate on late payments].

"Costs Contribution" means [Contribution to the Receiving Party's legal costs].

"Excluded Claims" means [Specific claims that are NOT settled].

"Agreed Statement" means [Agreed statement about the settlement].

"Emirate" means the Emirate of [Emirate whose courts hear disputes].

Interpretation

Where a party is an individual, "it" and "its" include him or her, and "his" and "her"; a reference to a party's power and authority includes his or her legal capacity; a reference to a party's directors, officers or senior managers applies only to a party that is a body corporate or other entity; and an individual party may sign this agreement personally.

Background

The Dispute has arisen between the parties, and the claims made in connection with it are contested.

The Dispute is the subject of the Proceedings.

The parties have agreed to settle the Dispute on the terms of this agreement, to avoid the cost, time and uncertainty of continuing it, and without any admission of liability.

Settlement Payment

Party 1 (the "Paying Party") must pay the Settlement Sum to Party 2 (the "Receiving Party") in accordance with this Settlement Payment clause.

The Paying Party must pay the Settlement Sum in full, in a single payment, no later than the Payment Date.

Each payment must be made in cleared funds by bank transfer to the Payment Account, without any set-off, counterclaim, deduction or withholding except as required by law. A payment is made when the funds are received in the Payment Account. The Receiving Party must confirm receipt in writing promptly on request.

The Settlement Sum is inclusive of any value added tax that may be chargeable on it. Each party is responsible for its own tax treatment of any amount it pays or receives under this agreement.

As security for payment of the instalments, the Paying Party must, when this agreement is signed, give the Receiving Party post-dated cheques drawn on a bank in the United Arab Emirates, one for the amount and due date of each instalment in the Instalment Schedule. The Receiving Party may present a cheque only on or after its date, and must return every unpresented cheque within 10 days after the Settlement Sum has been paid in full.

Costs

Each party bears its own legal and other costs in connection with the Dispute, any proceedings about it, and the negotiation and performance of this agreement.

Settlement and Release

The terms of this agreement are in full and final settlement of the Settled Claims.

"Settled Claims" means all claims, demands, rights of action and liabilities of any kind, whether known or unknown, actual or contingent, present or future, and however arising, including in contract, tort or under statute, that arise out of or in connection with the Dispute, any proceedings about it, or the facts and matters giving rise to it, including any claim for interest or costs, but excluding the Excluded Matters.

"Released Persons" means, in relation to a party, that party, its affiliates, and its and their current and former directors, officers, employees and agents; and a party's affiliates are the persons that control it, are controlled by it or are under common control with it.

"Excluded Matters" means claims to enforce this agreement; any claim arising from fraud, fraudulent misrepresentation or dishonest concealment of which the party giving the release is unaware on the date of this agreement; and any claim that cannot lawfully be released.

The Excluded Claims are also Excluded Matters, and nothing in this agreement releases or affects them.

With effect from the date on which the Receiving Party receives the Settlement Sum in full, each party, in respect of its own claims only, releases and forever discharges each of the other party's Released Persons from all Settled Claims.

Each party that gives a release under this clause must not, and must procure that its affiliates do not, start, continue or voluntarily assist in any proceedings against a Released Person of the other party in respect of a Settled Claim, except as required by law.

Each party that gives a release under this clause acknowledges that it may later discover facts or claims in addition to or different from those it now knows or believes to exist, and intends the release to apply to Settled Claims of which it is unaware on the date of this agreement, subject only to the Excluded Matters.

To the extent the law permits, each Released Person who is not a party may enforce the release and this clause, but the parties may vary or end this agreement without the consent of any such person.

No Admission

This agreement is a compromise of disputed claims. Nothing in it, and nothing done under it, is an admission of liability or wrongdoing by any party, and neither party may rely on it as evidence of liability, except in proceedings to enforce it.

Ending the Proceedings

Within 7 days after the date of this agreement, the parties must jointly submit this agreement, with a certified Arabic translation where required, to the court hearing the Proceedings, and ask the court to ratify it and record it in the minutes of the proceedings so that it may be enforced as the law provides. Each party must attend, or be represented by a lawyer with specific authority to settle, at any hearing needed for that purpose.

Until the Proceedings have ended or been stayed under this agreement, the parties must not take any further step in them except to ask the court or tribunal to stay them, extend time or vacate any hearing so as to give effect to this agreement, and must make any such request jointly where needed. This does not prevent a party from applying to the court to enforce the terms of this agreement under any permission to apply given in the order that stays the Proceedings.

Within the Withdrawal Period, each party must withdraw any police, criminal or administrative complaint it has made against the other party or its Released Persons concerning the Dispute, to the extent the law allows it to be withdrawn, and must give the other party evidence of the withdrawal.

Status of Negotiations

This agreement is binding once signed by both parties, and either party may produce it to any court or authority to enforce it or to show that the Dispute has been settled. To the extent the law permits, neither party may rely on any offer, concession or statement made in the negotiations that led to this agreement as an admission by the other party.

Confidentiality

Each party must keep the terms of this agreement, and the negotiations that led to it, confidential, and must not disclose them except to its affiliates, professional advisers, auditors, insurers and financiers who need to know them and are bound to keep them confidential; as required by law, a court, a regulator or the rules of a stock exchange; to a tax authority; to enforce this agreement; or with the other party's written consent. Either party may say that the Dispute has been resolved to the parties' mutual satisfaction.

Either party may make the Agreed Statement in response to an enquiry about the Dispute. Neither party may make any other public statement about the Dispute or its settlement without the other party's written consent, and this takes priority over any statement the Confidentiality clause would otherwise permit.

Non-Disparagement

Each party must not make, and must take reasonable steps to ensure that its directors and senior managers do not make, any statement to a third party that is intended or reasonably likely to disparage the other party or its Released Persons in connection with the Dispute. This does not restrict any disclosure permitted by the Confidentiality clause, any statement required by law or made in legal proceedings, or any report to a regulator or law enforcement authority.

Warranties

Each party warrants to the other that it has full power and authority to enter into and perform this agreement, that it has obtained every consent and approval it needs to do so, and that the person signing on its behalf is authorised to do so.

Each party warrants to the other that it has not sold, assigned, transferred, charged or otherwise disposed of any Settled Claim it releases, or any interest in one, and that, so far as it is aware, no other person is entitled to bring such a claim in its name or on its behalf.

Each party warrants to the other that, apart from any proceedings referred to in this agreement, neither it nor, so far as it is aware, any of its affiliates has started any proceedings against a Released Person of the other party in respect of a Settled Claim.

Each party confirms that it has had the opportunity to take independent legal advice on the terms and effect of this agreement, and that it enters into it freely.

Default

If the Paying Party does not pay any amount due under this agreement in full within the Grace Period after its due date, the Receiving Party may by written notice declare the whole unpaid balance of the Settlement Sum immediately due, and the Paying Party must pay it immediately. The Receiving Party may then recover the unpaid balance as a debt, together with its reasonable costs of recovery. The Receiving Party's remedy for non-payment is to enforce this agreement, and it may not pursue the Settled Claims themselves.

Any amount not paid when due under this agreement carries interest at the Default Interest Rate from its due date until the date of payment, both before and after any judgment, to the extent permitted by applicable law.

Notices

A notice under this agreement must be in writing and delivered by hand, by reputable courier or by email to Party 1 at [Party 1 notice address and email] or to Party 2 at [Party 2 notice address and email], or to any replacement address notified in accordance with this clause. A notice is received when delivered by hand or courier or, for email, when it is sent unless the sender receives a delivery failure message; a notice received outside normal business hours in the place of receipt is treated as received at the start of the next business day. This clause does not apply to the service of legal proceedings.

General

This agreement is the entire agreement between the parties about the settlement of the Dispute and replaces all earlier negotiations, discussions and agreements about it. Each party acknowledges that in entering into this agreement it has not relied on any statement, representation or assurance that is not set out in it, but nothing in this clause limits liability for fraud.

Each party must, at its own cost, sign any document and do anything else reasonably required to give full effect to this agreement.

Neither party may assign any of its rights under this agreement without the other party's prior written consent. A variation of this agreement is effective only if it is in writing and signed by or on behalf of both parties. A waiver is effective only if it is in writing and applies only to the circumstance for which it is given. If any provision of this agreement is invalid or unenforceable, the rest of this agreement remains in force. Except as the Settlement and Release clause provides, a person who is not a party has no right to enforce any term of this agreement. This agreement may be signed in counterparts and by electronic signature.

Governing Law and Disputes

This agreement is governed by the federal laws of the United Arab Emirates and, to the extent applicable, the laws of the Emirate. The courts of the Emirate (which, for clarity, do not include the courts of the Dubai International Financial Centre or the Abu Dhabi Global Market) have exclusive jurisdiction over any dispute that arises from or in connection with this agreement, without prejudice to the jurisdiction of any court hearing proceedings about the Dispute to ratify and enforce it.

Language

This agreement is made in English. If it is translated into Arabic, including for ratification by or proceedings before the courts of the United Arab Emirates, the parties will cooperate to obtain an accurate legal translation. As between the parties, the English text prevails over any translation to the extent permitted by law.

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