Dubai Law No. 7 of 2025: Regulatory Shifts in the Contracting Sector

Dubai has recently introduced Law No. 7 of 2025 (“the Law”), aimed at restructuring the regulation and management of construction and contracting activities across the Emirate. 

This legislation seeks to establish a unified system encompassing registration, oversight, compliance, and investor protection. It will become effective at the beginning of 2026, with contractors granted an additional one-year grace period to fully comply with its requirements.

Scope of Law

The Law covers all contracting activities within the Emirate of Dubai, including those conducted in free zones like the Dubai International Financial Centre (DIFC). Some exceptions include projects related to airports and those exempted by the Executive Council.

Registration & Oversight

The centralised system introduced by the Law mandates that all contractors and subcontractors must register through a unified register managed by the Dubai Municipality. This means that before undertaking any contracting work, the necessary classification documents must be submitted, and the professional competency certificates must be obtained from the authority.

To oversee and supervise these registrations, a new committee, the 'Contracting Activities Regulation and Development Committee,' (“the Committee”) will be formed. This committee will be responsible for approving activities, setting out policies, classifications and issuing a binding code of ethics for the industry.

Contractor Requirements and Compliance

Once registered, contractors must obtain classification from the Committee, which will dictate the scale and type of projects they are authorised to undertake. Contractors are required to operate strictly within their approved classification and financial capacity. Additional obligations include employing certified technical staff and complying with various laws related to construction, planning, environment, and health and safety.

Sub-contracting works are permitted only with prior approval from the competent authority and only after specific conditions for sub-contracting have been met.

Investor Protection and Turnkey Projects

Article 19 of the Law specifically addresses turnkey (EPC) projects, where contractors oversee the project from design and procurement through to construction and handover, ensuring delivery in a ready-to-use condition. 

By regulating these projects, the Law seeks to ensure that contractors taking on such projects possess the necessary technical qualifications, along with the financial capacity to execute them effectively.

Additionally, the Law introduces measures to protect property investors from risks associated with delays and quality concerns, thereby extending its regulatory scope to include developers as well as contractors.

Enforcement and Penalties

Failure to comply with the Law will result in financial and administrative penalties. Minor breaches may incur fines starting as low as AED 1,000, while more serious violations can result in fines of up to AED 100,000, with repeat offences potentially exceeding this amount. 

Furthermore, the competent authority may take administrative actions, such as suspending contracting activities, downgrading the contractor’s classification, or removing a company from the register.

Key Takeaways for Employers 

To ensure compliance with Dubai's Law No. 7 of 2025, employers need to:

• Verify contractor registration and classification before appointment, ensuring they adhere to approved project limits; and
• Confirm that any sub-contractors used have been approved by the competent authority and meet the sub-contracting criteria. 

Key Takeaways for Contractors

To ensure compliance with Dubai's Law No. 7 of 2025, contractors need to:

• Satisfy the requirements for the new registration with the Dubai Municipality;
• Ensure that they remain registered and that they are performing to the required standards; and
• Formalise their subcontracting arrangements in the market and  to ensure compliance with the new standards across the supply chain.