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

The Supreme Court sidestepped the constitutional question and sent the case to DIAC anyway — a strong indication of what buyers and MSME suppliers should expect if this argument is raised against them.

A recent Supreme Court case 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. It referred the dispute to DIAC. 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 Supreme Court decision for general information purposes only and does not constitute legal advice. Specific statutory references, if required, should be verified against the current text of the applicable Federal Decree-Laws before being relied upon.