Can a buyer force a UAE small business into arbitration under its contract?

A UAE Court of Cassation sidestepped the constitutional question and upheld the arbitration clause, leaving the dispute to proceed under DIAC: an early, non-binding signal of how buyers and MSME suppliers can expect this argument to be treated if it is raised against them.

A recent case before one of the UAE's Courts of Cassation tested a question that arises constantly in supply, distribution and franchise contracts between larger buyers and small or micro-sized UAE suppliers: does an arbitration clause bind an MSME (micro, small or medium enterprise) counterparty in the same way it binds a large corporate, or does the state's SME-support policy give the smaller party a right to insist on national courts instead? The court declined to settle the point in the abstract. Instead, it upheld the parties' arbitration agreement and left the dispute to proceed by arbitration administered under DIAC rules. For clients, the practical question is not what the court eventually rules on the merits: it is what happens procedurally when this argument is raised, and how to draft around it now.

This briefing refers generally to UAE federal arbitration legislation, federal SME-support legislation, and the Dubai International Arbitration Centre (DIAC) rules and procedure. It is a summary of a reported court decision for general information purposes only and does not constitute legal advice. As a single cassation-level ruling, it is illustrative rather than binding precedent under UAE law. Specific statutory references, the identity of the issuing court, and procedural detail, if required, should be verified against the current text of the applicable Federal Decree-Laws and the relevant court judgment before being relied upon.