Resolving Mergers and Acquisitions Disputes Effectively

Most disputes on a UAE acquisition are not about whether a party behaved badly. They are about a number in a completion account, an earn-out target that was never defined in accounting terms, a warranty that turned out to be qualified by something buried in a data room, or a share transfer that everybody treated as done and that was never registered. The law that decides them is usually clear. What decides how long they take, and how much of the price is recoverable, is the dispute resolution clause agreed months earlier by people who assumed it would never be read.

Related: Our mergers and acquisitions team advises on UAE deals from term sheet through to post-completion claims.

The transfer itself is a common point of failure

In a share deal involving a mainland limited liability company, signing the sale and purchase agreement does not move the shares. The transfer takes effect through an amendment to the company's constitutional documents executed before a notary and registered with the licensing authority, in the form Federal Decree-Law No. 32 of 2021 and the authority's own procedures require. Where the target holds a licence in a regulated activity, or where a shareholder change requires the approval of a sector regulator or the free zone authority, that consent is a condition of the transfer rather than a formality to be tidied up afterwards.

Disputes arise where the parties behaved commercially as though completion had happened — the buyer took over management, the seller took the money — while the register still names the seller. Unwinding that is far harder than agreeing it properly. A sale agreement should state exactly which registration steps constitute completion, who is responsible for each, what happens to the consideration if a required approval is refused, and how the target is run in the gap between signing and registration.

Where the transaction crosses a merger control notification threshold, clearance from the Ministry of Economy is required before completion. Treating that as a post-closing administrative step is a serious error, and a seller who has warranted that no such filing was needed will be the one holding the risk.

Related: See our M&A transaction support services for completion mechanics and regulatory conditions.

Price adjustment and earn-out disputes are accounting disputes

Completion accounts and earn-outs generate more post-closing claims than any other mechanism, and they are rarely about honesty. They are about which accounting policies apply, whether a provision was required, how a receivable was aged, and whether an item sits above or below the line the parties drew.

Two drafting choices decide how painful this becomes. The first is a hierarchy of accounting policies: the specific policies set out in the agreement, then the target's consistent past practice, then the applicable accounting standards — in that order, stated expressly. The second is an expert determination clause that sends accounting questions to an independent accountant with a defined mandate and a stated effect, rather than into full arbitration. That clause needs to say what the expert may decide, what happens to items outside their remit, and whether their determination is final and binding absent manifest error. Where it does not, the parties end up arguing about the expert's jurisdiction before they argue about the money.

Earn-outs add a second layer, because the buyer now controls the business whose performance sets the seller's price. The seller's protection is not a good-faith clause; it is a specific list of things the buyer will not do during the earn-out period without consent, along with information rights that let the seller see the numbers as they accrue rather than at the end.

Warranty claims and what the disclosure letter did

Buyers frequently discover that the warranty they are relying on was qualified out of existence. Whether the contents of a data room are deemed disclosed against the warranties, and whether disclosure has to be fair and specific, is a matter of what the agreement says. So is the notice regime: the form a claim must take, the information it must contain, and the period within which it must be given. Claims are lost on those requirements more often than on the merits.

Where the parties expect a warranty gap, the alternatives are a retained sum held in escrow with clear release conditions, a specific indemnity for the identified issue rather than a general warranty, or warranty and indemnity insurance where the deal supports it. Each has a different failure mode, and each should be matched to the risk actually found in due diligence rather than adopted as standard wording. Our M&A legal team negotiates these protections on both buy and sell side.

Related: Retention and escrow arrangements often become their own dispute; our escrow and payment disputes practice handles release and set-off claims.

Choosing the forum before there is a dispute

UAE deals have several genuine options, and they are not interchangeable.

• Onshore courts. Proceedings are in Arabic, on documents, with court-appointed experts commonly deciding technical and accounting issues. Substantive commercial questions are governed by Federal Decree-Law No. 50 of 2022 on commercial transactions and by Federal Decree-Law No. 32 of 2021 on companies.
• Arbitration seated onshore under Federal Law No. 6 of 2018, as amended in 2023. The Dubai International Arbitration Centre is the principal institution in Dubai; in Abu Dhabi, the former ADCCAC has been restructured as arbitrateAD since 2024.
• Arbitration seated in the DIFC, which remains available as a seat and brings the DIFC Courts in as the supervisory court.
• The DIFC or ADGM Courts, which parties may choose by written agreement even where neither is established there — common law procedure, in English, with judgments that then have to be taken elsewhere for execution if the assets sit outside the centre.

The choice should follow the assets and the counterparty, not habit. If the money and the shares are onshore, a clause that produces an elegant award requiring a further recognition process is a slower route to the same place.

Related: Our mergers and acquisitions in Abu Dhabi and Dubai teams draft forum clauses against where the assets actually are.

Legacy clauses that no longer work

A large number of share purchase agreements still in force refer disputes to the DIFC-LCIA Arbitration Centre. That institution was abolished by Dubai Decree No. 34 of 2021 and its caseload moved to the Dubai International Arbitration Centre. Agreements naming it are still being enforced, but a party facing a claim can and will take a jurisdictional point on the clause, adding a preliminary fight before the merits are reached.

If a legacy clause of this kind sits in a live agreement, the cheapest fix is a short written amendment agreed while relations are still good. Once a dispute has started, the other side has no reason to help.

Making an outcome enforceable

An award or judgment is only worth what can be executed against. Where the target and its assets are onshore, enforcement runs through the onshore execution courts, with the documents translated into Arabic; where a claim needs security, precautionary attachment obtained early is usually more valuable than a larger claim obtained late. Where the counterparty's assets sit in another jurisdiction entirely, that jurisdiction's recognition rules should be checked before the forum is chosen, not after the hearing.

Practical points for UAE deals

Most of what determines the outcome of an M&A dispute in the UAE is settled during drafting:

1. Define completion by reference to the registration steps, not the signature.
2. Set an accounting policy hierarchy and a properly scoped expert determination clause for price adjustments.
3. Say expressly whether data room contents are disclosed, and set a notice regime the buyer can realistically meet.
4. Match the retention, indemnity or insurance to the risk that due diligence actually found.
5. Choose the forum by asking where the assets are and what will have to be enforced.
6. Review older agreements for clauses referring to institutions that no longer exist.

Related Services: Explore our Mergers and Acquisitions and DIFC M&A services for practical legal support in this area.

Disclaimer: The information provided in this article is for general informational purposes only and does not constitute legal advice. Readers should seek professional legal advice tailored to their specific circumstances before making any decisions or taking any action based on the content of this article.

Nour Attorneys Team

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