Resolving administrative contract disputes using the mediation law in the UAE to achieve amicable consensus and reduce the backlog of cases

The increasing sophistication of state contracting in contemporary legal systems has fundamentally reshaped the nature and scale of disputes arising therefrom (Pedro, 2023). In the United Arab Emirates (UAE), where public procurement and large-scale governmental projects constitute a central pillar of economic development, disputes relating to state contracts are no longer exceptional but are structurally embedded within the life cycle of public governance. Traditionally, such disputes have been resolved through litigation before national courts or arbitration, particularly in contracts involving foreign investment (Gould and King, 2010; Rodionova, 2022). Yet these mechanisms, while legally authoritative, reveal inherent deficiencies when applied to the dynamic and relational nature of state contracts. They are often adversarial, time-intensive and insufficiently responsive to the economic and administrative imperatives that underpin public contracting (Rodionova, 2021). Consequently, alternative dispute resolution (ADR) mechanisms have emerged as a necessary evolution, not merely as procedural substitutes, but as instruments capable of reconfiguring the very philosophy of dispute settlement in the public contractual sphere (Porges, 2022).

Within this broader framework, mediation marks a paradigmatic shift from coercive adjudication to consensual resolution (Chau, 1992; Grill and Martin, 2021). It is not merely a technique but a normative model grounded in cooperation, flexibility and the preservation of legal and commercial relationships. In its general application, mediation reflects a transformation in legal thought − from the rigid enforcement of rights to the negotiated harmonisation of interests. This transformation takes on heightened significance in the context of state contracts, where disputes are not confined to private interests but are intrinsically linked to public resources, administrative legitimacy and sovereign accountability (Goodkind, 1988; Aboelazm, 2024). The introduction of mediation into this field thus raises a critical question: whether a process premised on party autonomy and compromise can be reconciled with the structural constraints imposed on public authorities, particularly the principles of legality, transparency and the protection of public funds (Ahnuar et al., 2023).

In recent years, the UAE legal system has demonstrated a deliberate, strategic orientation towards promoting ADR mechanisms as part of a broader agenda of judicial modernisation and economic competitiveness. Legislative developments − most notably in arbitration − alongside the proliferation of institutional mediation frameworks and court-annexed settlement procedures reflect a growing recognition of the value of non-adjudicative dispute resolution (Sánchez López, 2020). This evolution closely aligns with the UAE’s ambition to position itself as a global hub for investment and commerce, where efficient and predictable dispute resolution mechanisms are indispensable. However, despite this progressive trajectory, the integration of ADR within the specific domain of state contracts remains conceptually and normatively underdeveloped (Singh and Song, 2018). The absence of explicit, comprehensive regulation governing amicable settlement by public entities creates ambiguity regarding both the permissibility and the limits of such mechanisms (Melnychuk et al., 2024; Agung and Nuryanah, 2026).

In this context, mediation emerges as a particularly significant yet insufficiently theorised model within UAE law. In private contractual disputes, its effectiveness is increasingly acknowledged for reducing costs, expediting resolution and preserving commercial relationships. However, transplanting it into the field of state contracts requires deeper doctrinal reconsideration (MARESCHAL, 2005). Unlike private parties, state entities operate within a framework of constrained discretion, where any settlement must be justified not only by mutual benefit but also by public interest and legal legitimacy (Bingham and Wise, 1996). This raises complex issues concerning the authority of administrative bodies to enter into mediated settlements, the legal nature and enforceability of such agreements and the extent to which mediation can coexist with mandatory rules governing public expenditure and administrative accountability (Mareschal, 2003). Accordingly, mediation in this field cannot be viewed merely as an extension of private law practices but rather as a transformative governance tool requiring careful legal calibration (Sulistianingsih et al., 2023; Almansour and Ismail, 2024a).

Despite the growing practical importance of mediation and the expanding institutional support for ADR in the UAE, there remains a notable absence of comprehensive legal scholarship addressing mediation specifically in state contract disputes. Existing studies tend to focus either on arbitration as the dominant mechanism in government contracts or on mediation in purely private disputes, without adequately bridging the conceptual and normative divide between public law constraints and consensual dispute resolution. This gap is particularly evident in the lack of a coherent analytical framework that reconciles mediation with the principles governing state action, including legality, accountability and the protection of public funds. Accordingly, this paper seeks to fill this lacuna by critically examining mediation as a governance-oriented mechanism in UAE state contract disputes and proposing a structured approach for its effective and legally sound integration into the existing legal system.

Against this backdrop, the enactment of the UAE’s new mediation legislation marks a pivotal normative development in the evolution of dispute resolution within the public contractual sphere. By providing a formalised legal framework for mediation, the law moves beyond fragmented institutional practices and introduces a structured mechanism capable of accommodating the particularities of disputes involving state entities. It seeks to reconcile the traditionally rigid boundaries of administrative legality with the flexibility inherent in consensual settlement processes, thereby enabling public authorities to pursue dispute resolution strategies that are both efficient and legally defensible. In doing so, the legislation implicitly acknowledges that the effective management of state contract disputes is not solely a matter of adjudication but also of governance, economic prudence and institutional credibility.

Moreover, legislative endorsement of mediation has significant implications for addressing the growing backlog of cases before UAE courts and arbitral tribunals. State contract disputes, often characterised by technical complexity, high financial stakes and prolonged procedural timelines, contribute disproportionately to judicial congestion. Introducing mediation as a viable, legally recognised pathway offers the potential to alleviate this burden by diverting disputes to expedited, less adversarial resolution channels. This not only enhances procedural efficiency but also aligns with broader policy objectives to optimise judicial resources and promote timely dispute resolution. In this sense, mediation operates not merely as an alternative but as a complementary mechanism that strengthens the overall resilience and responsiveness of the dispute resolution system.

Equally important is mediation’s role in fostering confidence among the commercial and investment community engaged in state contracting in the UAE. The availability of a transparent, structured and amicable dispute resolution process signals the state’s commitment to fairness, predictability and constructive engagement with contractual counterparts. Such confidence is particularly crucial in sectors involving long-term infrastructure and development projects, where the sustainability of contractual relationships is paramount. By facilitating negotiated outcomes that preserve these relationships while safeguarding the public interest, mediation contributes to a more stable and cooperative contracting environment. Consequently, the new mediation law not only addresses procedural inefficiencies but also reinforces the UAE’s position as a jurisdiction that balances sovereign authority with modern, business-oriented dispute resolution practices.

This study adopts an integrated, methodologically robust framework to produce a nuanced, context-sensitive legal analysis of mediation in state contract disputes under UAE law.

The research is grounded primarily in the doctrinal legal method, through which UAE legislative texts − most notably the Civil Transactions Law, the Federal Arbitration Law and relevant procedural and administrative regulations − are systematically examined to identify the legal foundations and limitations of mediation in public contractual contexts. This is reinforced by a critical analytical approach, which interrogates the extent to which mediation aligns with core public law principles, including legality, non-discretionary administrative authority and the safeguarding of public funds.

To deepen the analysis, the study incorporates a comparative legal approach, drawing on jurisdictions that have successfully embedded mediation within public contract disputes, particularly in civil law and mixed legal systems. This comparative dimension is not merely descriptive but evaluative, aimed at extracting normative insights applicable to the UAE framework. Additionally, a functional and normative approach is used to assess mediation as a governance mechanism, examining its capacity to reconcile efficiency-driven dispute resolution with the imperatives of transparency, accountability and public interest. This multi-method design ensures that the study transcends formal legal analysis and engages with the practical realities of dispute resolution in state contracting.

The study relies on qualitative, text-based data, ensuring doctrinal precision and analytical depth. Primary sources include UAE federal legislation, subordinate regulations, judicial precedents and institutional rules governing mediation and ADR. Particular attention is given to interpretative trends within UAE courts where available.

Secondary sources comprise peer-reviewed academic literature, comparative legal studies, policy reports and institutional publications from recognised arbitration and mediation bodies. These are selectively analysed to ensure relevance to the UAE context and to support critical evaluation rather than mere description. This triangulation of sources enhances the reliability and intellectual rigour of the study, enabling a comprehensive and authoritative assessment of the research problem.

The academic discourse on dispute resolution in state contracts reveals a gradual yet uneven shift from rigid adjudicative models towards more flexible and governance-oriented mechanisms. Despite this evolution, the literature remains fragmented, particularly in its treatment of mediation as an autonomous and viable mechanism within public contractual disputes. While arbitration continues to dominate scholarly attention, mediation is often addressed peripherally, without sufficient doctrinal or contextual depth. This section critically examines the existing body of literature through three interrelated dimensions: (1) the predominance and limitations of ADR − particularly arbitration − in state contracts, (2) mediation as a transformative paradigm in dispute resolution theory and practice and (3) the emerging yet underdeveloped discourse on mediation within the UAE legal framework.

The literature on dispute resolution in state contracts has overwhelmingly privileged arbitration as the principal mechanism for resolving disputes involving public entities. This preference is historically rooted in the need to provide neutral, enforceable and internationally recognised forums for resolving disputes, particularly in cross-border transactions involving foreign investors (Bharadwaj, 2025; Moffitt, 2025). Scholars frequently emphasise arbitration’s compatibility with international commercial expectations, its relative insulation from domestic judicial systems and its enforceability under instruments such as the New York Convention (Behounek and Hughes Miller, 2022; Bijnen, 2019). In this sense, arbitration has been conceptualised not merely as a dispute resolution mechanism, but as a strategic legal infrastructure underpinning global investment flows.

However, a more critical strand of the literature has begun to interrogate this dominant narrative, highlighting the structural and normative limitations of arbitration when applied to state contracts (de Graaf et al., 2014). One of the primary critiques concerns the increasing formalisation and judicialisation of arbitration proceedings (El-Manaseer et al., 2025; Dauti and Murati, 2026). Far from being a flexible alternative to litigation, arbitration has, in many instances, evolved into a procedurally complex and costly process, often mirroring the very inefficiencies it was designed to avoid. This transformation undermines its suitability for disputes that require timely and pragmatic resolution, particularly those arising in long-term public projects (Dungga et al., 2026; Alhajri, 2023).

Furthermore, scholars have raised concerns regarding the tension between arbitration and fundamental principles of public law (Ferreira, 2021; Mohamed et al., 2026). Unlike purely private disputes, state contract disputes implicate broader considerations, including the protection of public funds, administrative accountability and adherence to statutory mandates. Arbitration, by its nature, operates within a private and confidential framework, which may conflict with the transparency obligations imposed on public authorities (Boon et al., 2011; Prasetyoandi et al., 2026). This has led to increasing scrutiny of whether arbitration adequately accommodates the public dimension of state contracts or whether it inadvertently obscures decision-making processes that ought to remain subject to public oversight (Bingham and Novac, 2001).

Another critical limitation identified in the literature is the adversarial character of arbitration. State contracts are often embedded within ongoing administrative and economic relationships, where cooperation between the state and private contractors is essential for project continuity (Shcherbak et al., 2025; Almansour and Ismail, 2024b). The adversarial dynamics of arbitration, however, tend to entrench conflict rather than facilitate resolution, potentially jeopardising long-term partnerships (Bingham, 1997). Despite these shortcomings, the literature has been slow to systematically explore alternative mechanisms that might address these deficiencies. Mediation, where mentioned, is frequently treated as a preliminary or auxiliary step rather than a central dispute resolution strategy. This marginalisation reflects a broader conceptual inertia within the field, where adjudicative models continue to dominate despite their evident limitations (Alberts et al., 2005).

In contrast to the arbitration-centric literature, an expanding body of scholarship has sought to conceptualise mediation as a distinct and transformative paradigm within dispute resolution theory (Zeller and Trakman, 2019). At its core, mediation represents a shift from rights-based adjudication to interest-based negotiation, prioritising consensus over coercion and dialogue over determination. This shift is not merely procedural but epistemological, reflecting a broader reorientation in legal thought towards more collaborative and problem-solving approaches (Wolski, 2020).

The theoretical foundations of mediation are deeply rooted in principles of party autonomy, procedural flexibility and mutual gain (Zhao, 2022). Scholars have argued that mediation enables parties to transcend the binary outcomes typically associated with litigation and arbitration, allowing for more nuanced and context-sensitive solutions. This is particularly relevant in complex commercial disputes, where legal rights are often intertwined with economic and relational considerations (Chludziński, 2025; Elrod, 2020). Empirical studies further support this perspective, demonstrating that mediation can lead to faster resolutions, reduced costs and higher levels of party satisfaction.

Beyond its practical advantages, mediation has increasingly been framed within the literature as a tool of “collaborative governance”. This conceptualisation positions mediation not merely as a dispute resolution mechanism, but as an instrument for enhancing institutional legitimacy and fostering participatory decision-making (Gotti, 2014; Pedro, 2020). In this sense, mediation aligns with contemporary governance models that emphasise inclusivity, transparency and responsiveness.

However, the application of mediation within public law contexts introduces a set of profound doctrinal and practical challenges (Sousa et al., 2012). A central issue concerns the principle of legality, which constrains the actions of public authorities. Unlike private parties, state entities cannot freely negotiate or compromise without a clear legal basis. This raises fundamental questions about the extent to which mediation can operate within a framework characterised by limited administrative discretion (Araujo and De Farias Filho, 2023). Scholars have debated whether mediation inherently conflicts with these constraints or whether it can be adapted through appropriate legal safeguards (Almuwarraee, 2025).

Another significant concern relates to transparency and accountability; the confidentiality that is often regarded as a strength of mediation in private disputes may, in the public context, undermine the need for openness and public scrutiny (Scherpe and Marten, 2012; Ibrahim et al., 2026; Shhadah Alhussein et al., 2023). Critics argue that mediated settlements involving public entities risk obscuring the rationale behind decision-making processes, potentially facilitating arbitrary or inequitable outcomes. This tension between confidentiality and accountability remains one of the most contested aspects of mediation in public law (Berg, 2012).

Moreover, the literature highlights the absence of clear regulatory frameworks governing mediation in state contracts. While mediation is widely accepted in private disputes, its institutionalisation in the public sector requires explicit legal recognition, procedural guidelines and oversight mechanisms (Selesković, 2025; Khater et al., 2025). Without such structures, mediation risks being perceived as legally uncertain or even incompatible with public law principles. Despite these challenges, the prevailing scholarly consensus acknowledges the potential of mediation as a complementary mechanism, provided that it is carefully tailored to the specificities of public governance. Nonetheless, the literature stops short of offering comprehensive models for such integration, leaving a significant gap between theory and practice (Guillemard, 2015).

The literature on ADR in the UAE reflects a dynamic and rapidly evolving legal environment, driven by the State’s strategic objective of enhancing its position as a global commercial and investment hub (Aboelazm et al., 2026a; Aboelazm, 2026). A substantial portion of this scholarship focuses on arbitration, particularly following the enactment of the Federal Arbitration Law, which has been widely regarded as a milestone in aligning the UAE with international standards (Aboelazm et al., 2026b). Scholars frequently highlight the Law’s modern framework, its adoption of UNCITRAL principles and its role in reinforcing investor confidence.

In contrast, the literature on mediation in the UAE remains comparatively limited and predominantly descriptive. Existing studies tend to catalogue institutional developments, such as the establishment of mediation centres and the introduction of court-annexed conciliation procedures. While these contributions provide valuable insights into the institutional landscape, they often lack the analytical depth required to address the complex legal questions associated with mediation in state contracts (Smarż, 2021; Vidal et al., 2019).

A critical gap in the literature concerns the intersection between mediation and public law within the UAE context. Few studies engage with the question of whether − and under what conditions − government entities possess the legal authority to enter into mediated settlements (Malacka, 2022; Portocarrero, 2020). This issue is particularly significant given the constitutional and administrative principles that govern state action, including the requirement to act within the limits of statutory authority and in pursuit of the public interest. The absence of clear doctrinal analysis in this area creates uncertainty regarding the legal status and enforceability of mediated agreements involving public entities (Schmidt, 2021).

Additionally, the literature exhibits a tendency to treat ADR mechanisms as discrete and independent processes, rather than as components of an integrated dispute resolution system. There is limited exploration of how mediation can interact with litigation and arbitration, or how it can be strategically deployed at different stages of the dispute life cycle (Ippolito and Pruitt, 1990; Aboelazm, 2026). This fragmented approach fails to capture the full potential of mediation as a governance tool capable of enhancing efficiency and coherence in dispute resolution.

Furthermore, the existing scholarship does not adequately address the practical challenges associated with implementing mediation in state contracts in the UAE. Issues such as institutional capacity, mediator expertise and the development of specialised procedural rules remain largely unexplored (Grill and Martin, 2024). Nor does the literature sufficiently consider the cultural and administrative factors that may influence the effectiveness of mediation within the public sector (Marrani and Farah, 2014).

In conclusion, the literature reveals a pronounced imbalance between the extensive focus on arbitration and the relatively limited and underdeveloped treatment of mediation, particularly in the context of state contracts. While theoretical and comparative studies highlight the transformative potential of mediation, its application within the UAE legal framework remains insufficiently examined from both doctrinal and practical perspectives. This underscores the need for a more integrated and critically grounded analysis that bridges the gap between abstract mediation theory and the specific legal and institutional realities of state contracting in the UAE.

The question of whether mediation is legally permissible in state contract disputes under UAE law constitutes a foundational inquiry that implicates both private law flexibility and public law constraints. At its core, the issue revolves around the extent to which a public entity − bound by legality, accountability and the protection of public funds − may resort to consensual mechanisms that inherently involve compromise.

The answer must be derived primarily from the Federal Decree-Law No. (40) of 2023 on Mediation and Conciliation, which establishes a broad and inclusive scope for mediation. The law defines mediation as an optional mechanism applicable to disputes arising from contractual or non-contractual relationships (Article 1), thereby clearly encompassing disputes arising from state contracts. More importantly, the law provides that mediation is permissible in “all civil and commercial disputes in which settlement is possible”, subject only to the condition that such settlement does not violate applicable legislation, public order or public morals (Article 8(1)). This formulation is of critical significance, as it shifts the legal analysis from the identity of the parties to the nature of the rights involved.

Accordingly, state contracts − despite their public dimension − remain fundamentally contractual in character and thus fall within the scope of disputes capable of settlement, unless they involve non-disposable sovereign prerogatives. Furthermore, the law expressly recognises the validity of mediation agreements concluded either prior to or after the emergence of the dispute (Article 9(1)), which implies that public entities may validly incorporate mediation clauses within state contracts, provided that the representative has the legal capacity and authority to do so (Article 9(2)).

From a doctrinal perspective, the permissibility of mediation in state contracts is therefore conditional rather than absolute. It is permitted in principle, but subject to compliance with public law constraints, particularly the requirement that the settlement must not undermine public interest or exceed the limits of administrative authority. This leads to a refined conclusion: mediation is legally admissible in UAE state contracts insofar as the subject matter is legally disposable and the public entity acts within its authorised powers.

Moving beyond the question of admissibility, mediation in state contracts must be understood as operating within a complex intersection between doctrinal limitations and functional governance needs. While public law traditionally imposes restrictions on the ability of state entities to compromise, modern administrative practice increasingly recognises the necessity of flexible dispute resolution mechanisms.

The Mediation Law reinforces this flexibility through its recognition of both consensual mediation and court-ordered mediation (Article 1), thereby integrating mediation into both contractual and judicial frameworks. This dual structure enables mediation to operate at different stages of the dispute life cycle, either as a pre-dispute contractual mechanism or as a post-dispute judicial intervention. Furthermore, the law provides that recourse to mediation may suspend legal time limits (Article 11(3)), which enhances its practical utility in managing disputes without prejudicing procedural rights.

However, this flexibility is counterbalanced by a set of implicit legal constraints derived from public law principles. The requirement that mediation be limited to disputes “in which settlement is possible” (Article 8(1)) introduces a substantive limitation, excluding matters involving non-discretionary public powers. Similarly, the requirement that the mediation agreement be concluded by a legally authorised representative (Article 9(2)) imposes an institutional constraint, ensuring that public entities do not exceed their delegated powers.

Another critical dimension is the confidentiality of mediation, which is recognised as a fundamental principle under UAE law (Article 5(1)). While confidentiality enhances the effectiveness of mediation, it raises potential tensions with the principles of transparency and accountability that govern public administration. This tension must be resolved through a balanced approach that preserves confidentiality while ensuring that the outcome of mediation − particularly the settlement agreement − is subject to judicial approval and enforceability (Article 1 definition of Settlement Agreement and Article 12(4)).

Thus, mediation in state contracts operates within a controlled discretionary framework, where flexibility is permitted but subject to legal and institutional safeguards. It is neither fully assimilated into private law nor entirely constrained by public law, but rather occupies a hybrid space that reflects the evolving nature of public governance.

Although Federal Law No. (11) of 2023 on Procurement does not explicitly regulate mediation, its underlying principles and structural provisions provide a strong implicit foundation for the use of consensual dispute resolution mechanisms in state contracts.

The law establishes that procurement processes must be governed by principles of transparency, integrity, efficiency and the achievement of best public value (Article 2(2)(f)). These objectives are not limited to the pre-contractual phase but extend to the entire life cycle of procurement, including contract execution and dispute management. In this context, dispute resolution mechanisms must be evaluated not only in terms of legal correctness but also in terms of their capacity to preserve value and minimise disruption.

Furthermore, the law imposes on federal agencies the obligation to manage post-contractual activities, including disputes and risk assessment (Article 7(10)). This provision is particularly significant, as it confers broad discretion on public entities to adopt appropriate mechanisms for dispute resolution. The absence of restrictive language suggests that such mechanisms may include mediation, provided that they align with the overarching objectives of the law.

The Executive Regulation (Cabinet Resolution No. 122 of 2024) further develops this framework by establishing detailed institutional structures for procurement governance. The creation of grievance committees (Article 1 definition; Article 4) and the emphasis on structured negotiation processes within procurement procedures indicate a legislative orientation towards dialogue-based dispute resolution. Additionally, the requirement that procurement processes ensure fairness, transparency and equal treatment (Article 6) reinforces the need for dispute resolution mechanisms that are both efficient and accountable.

From an analytical perspective, mediation may be seen as a natural extension of these principles. It enables disputes to be resolved in a manner that reduces costs, preserves contractual relationships and aligns with the objective of achieving optimal public value. However, its application remains subject to the constraints of public law, particularly the requirement that any settlement must be justified in terms of public interest and approved in accordance with internal governance structures.

Accordingly, while mediation is not expressly regulated in procurement law, it is implicitly permitted and functionally supported, reflecting a legislative preference for flexible and efficient dispute management.

The relevance of mediation becomes even more pronounced in the context of public−private partnership (PPP) contracts, which are governed by Federal Law No. (12) of 2023. These contracts represent a distinct category of state contracts characterised by long-term duration, complex risk allocation and continuous interaction between public and private actors.

The law defines partnership projects as contractual arrangements aimed at delivering public services or operating public facilities (Article 1), thereby highlighting their hybrid nature as both legal and governance instruments. The objectives of the law include enhancing efficiency, maximising value for public funds and reducing financial and operational risks (Article 2(3), 2(7), 2(8)). These objectives inherently require dispute resolution mechanisms that are capable of preserving project continuity and managing risk in a dynamic environment.

The institutional structure established by the law further reinforces this requirement. The formation of project teams responsible for managing the project life cycle, including procurement and contract execution (Article 7(2)), indicates a continuous and interactive governance model. Similarly, the obligation of the concerned federal entity to oversee project implementation and address challenges (Article 6(9)–(10)) underscores the need for mechanisms that enable timely and effective resolution of disputes.

Within this framework, mediation emerges as a structurally compatible mechanism. Unlike arbitration or litigation, which may disrupt project execution, mediation allows parties to resolve disputes while maintaining the contractual relationship. This is particularly important in PPP projects, where termination or prolonged disputes may have significant economic and social consequences.

Although the PPP law does not explicitly refer to mediation, its emphasis on flexibility, efficiency and risk management provides a strong normative basis for its adoption. Moreover, the contractual autonomy inherent in PPP agreements allows parties to incorporate mediation clauses as part of a multi-tiered dispute resolution framework.

Thus, mediation in PPP contracts is not merely permissible but functionally indispensable, reflecting the collaborative nature of such arrangements and the need for adaptive governance mechanisms.

The legal regulation of mediation in UAE state contracts is not contained within a single legislative instrument but emerges from the interaction between the Mediation Law, procurement legislation and PPP law. This fragmented yet complementary framework gives rise to a set of cumulative conditions governing the validity and operation of mediation.

At the core of this framework is the requirement of a valid mediation agreement, which must be in writing and define the subject matter of the dispute and the method of appointing the mediator (Article 9(3) and 9(5) of Decree-Law No. 40 of 2023). This requirement ensures legal certainty and procedural clarity, particularly in complex state contracts.

Equally important is the requirement of legal capacity and authority, as the mediation agreement must be concluded by a representative authorised to dispose of rights (Article 9(2)). In the context of public entities, this authority is determined by internal governance rules, including delegation matrices and procurement regulations.

The scope of mediation is further limited by the requirement that the dispute be capable of settlement and not contrary to public order (Article 8(1)). This condition reflects the fundamental principle that public rights of a non-disposable nature cannot be subject to compromise. In practice, this requires a careful assessment of the subject matter of the dispute and its compatibility with public interest.

Procedural safeguards are also embedded within the mediation framework. The role of the supervising judge in approving settlement agreements (Article 12(4)) ensures judicial oversight and enhances enforceability. Additionally, the principle of confidentiality (Article 5(1)) must be balanced against the need for transparency in public administration, particularly where public funds are involved.

Finally, the broader legislative context − particularly procurement and PPP laws − imposes an overarching requirement that any dispute resolution mechanism must align with the objectives of efficiency, transparency and value for money (Article 2 of Law No. 11 of 2023; Article 2 of Law No. 12 of 2023). This introduces a functional dimension to the regulation of mediation, requiring not only legal validity but also governance compatibility.

In sum, mediation in UAE state contracts operates within a multi-layered regulatory framework, where permissibility is established by the Mediation Law, and its practical application is shaped by sector-specific legislation. This integrated approach reflects an evolving legal paradigm in which mediation is increasingly recognised as a legitimate and effective tool of public contract governance.

While the preceding analysis has established that mediation in UAE state contracts is legally permissible and functionally supported, a deeper examination reveals a critical transition point: the shift from implicit admissibility to explicit institutionalisation. The current legal framework, although sufficiently flexible, remains fragmented and lacks a unified regulatory vision governing mediation in public contractual relations.

The Mediation Law (Federal Decree-Law No. 40 of 2023) provides a general and comprehensive legal basis for mediation in civil and commercial disputes, including contractual disputes involving public entities (Article 8(1)). However, procurement law and PPP law − despite their advanced governance structures − do not expressly regulate mediation as a dispute resolution mechanism. This absence does not negate permissibility, but it introduces a degree of legal uncertainty, particularly regarding the scope of administrative discretion and the procedural legitimacy of mediated settlements involving public funds.

From a doctrinal standpoint, this situation reflects a classical tension between general law and special law. While the general law of mediation allows settlement, sector-specific laws governing public contracts remain silent, thereby leaving the application of mediation dependent on interpretation rather than explicit authorisation. This creates a risk of inconsistent application across federal entities, potentially undermining legal certainty and institutional coherence.

Moreover, the absence of explicit provisions regulating mediation in procurement and PPP contracts may discourage public officials from resorting to mediation, due to concerns regarding accountability and audit scrutiny. Given that public officials operate within a highly regulated environment, the lack of clear statutory guidance may lead to a risk-averse approach, favouring litigation or arbitration despite their inefficiencies.

Accordingly, there is a compelling need for legislative consolidation, whereby mediation is expressly recognised and regulated within the framework of public contracts. Such recognition should not merely affirm permissibility, but should define the conditions, procedures and institutional safeguards governing mediation in state contracts. This would transform mediation from a permissive option into a structured and reliable component of the UAE’s public contract governance system.

A central contribution of this study lies in reframing mediation not merely as a dispute resolution mechanism, but as a strategic governance tool within the broader architecture of public contracting. This conceptual shift is essential for understanding the role of mediation in modern administrative systems, particularly in jurisdictions such as the UAE where efficiency, innovation and economic competitiveness are central policy objectives.

The procurement law explicitly emphasises the achievement of best public value, efficiency and transparency (Federal Law No. 11 of 2023, Article 2(2)). Similarly, the PPP law prioritises risk reduction, project continuity and optimal resource utilisation (Federal Law No. 12 of 2023, Article 2). These objectives are inherently aligned with the functional advantages of mediation, which include reduced costs, expedited resolution and preservation of contractual relationships.

From a governance perspective, mediation offers a number of structural advantages. Firstly, it facilitates early dispute resolution, preventing the escalation of conflicts into formal litigation or arbitration. This is particularly important in long-term contracts, where disputes may arise at multiple stages and require timely intervention. Secondly, mediation promotes collaborative problem-solving, enabling parties to address not only legal issues but also underlying commercial and operational concerns. Thirdly, mediation enhances institutional flexibility, allowing public entities to adapt their dispute resolution strategies to the specific context of each contract.

However, the adoption of mediation as a governance tool requires a fundamental rethinking of traditional administrative law concepts. In particular, it necessitates a redefinition of the notion of public interest, moving from a rigid, rule-based conception to a more dynamic and outcome-oriented approach. Under this perspective, the public interest is not compromised by settlement, but rather served through efficient and effective dispute resolution.

Nevertheless, this reconceptualisation must be accompanied by appropriate safeguards to prevent abuse or arbitrariness. Mediation cannot operate as an unfettered discretion; it must remain subject to legal and institutional controls, including judicial oversight and internal approval mechanisms. The challenge, therefore, lies in achieving a balance between flexibility and accountability, ensuring that mediation enhances governance without undermining the rule of law.

Despite its theoretical and functional advantages, the implementation of mediation in UAE state contracts faces a number of institutional and procedural challenges that must be addressed to ensure its effectiveness.

One of the primary challenges relates to the authority of public officials to engage in mediation and conclude settlement agreements. While the Mediation Law requires that the mediation agreement be concluded by a duly authorised representative (Article 9(2)), the determination of such authority in the public sector is governed by internal rules, including delegation matrices and procurement regulations. These rules are often complex and may vary between federal entities, creating uncertainty regarding the scope of permissible action.

This issue is further compounded by the principle of accountability, which imposes strict obligations on public officials to justify their decisions, particularly those involving financial implications. In the absence of clear guidelines, officials may be reluctant to engage in mediation, fearing potential liability or audit scrutiny. This highlights the need for clear procedural frameworks that define the circumstances under which mediation may be used, the approval processes required and the criteria for evaluating settlement agreements.

Another significant challenge concerns the confidential nature of mediation, which may conflict with the transparency requirements of public administration. The Mediation Law establishes confidentiality as a fundamental principle (Article 5(1)), prohibiting the disclosure of information obtained during mediation. While this enhances the effectiveness of mediation, it raises concerns about the visibility of decision-making processes involving public entities.

To address this tension, it is necessary to distinguish between process confidentiality and outcome transparency. While the mediation process may remain confidential, the resulting settlement agreement − particularly where it involves public funds − should be subject to appropriate levels of disclosure and oversight. This approach preserves the integrity of mediation while ensuring compliance with public law principles.

Finally, there are practical challenges related to institutional capacity and expertise. Effective mediation requires skilled mediators with expertise in both legal and commercial matters, particularly in complex contracts such as PPP agreements. While the Mediation Law provides for the establishment of mediator lists (Article 10), the development of specialised expertise in public contract disputes remains an ongoing challenge.

Thus, the successful integration of mediation in UAE state contracts depends not only on legal permissibility but also on the development of robust institutional frameworks capable of supporting its effective implementation.

A key development in modern contract governance is the emergence of multi-tier dispute resolution mechanisms, which combine different methods − such as negotiation, mediation and arbitration − within a structured framework. This approach is particularly relevant in the context of UAE state contracts, where disputes may vary in complexity and require different levels of intervention.

In PPP contracts, the need for multi-tier mechanisms is especially pronounced. Given the long-term nature of these contracts and the continuous interaction between parties, disputes are inevitable. The PPP law emphasises project continuity, risk management and efficient implementation (Federal Law No. 12 of 2023, Article 2), which necessitates mechanisms capable of resolving disputes without disrupting project execution.

Mediation plays a central role within such frameworks, typically as an intermediate stage between negotiation and arbitration. It allows parties to attempt amicable resolution before resorting to more formal and adversarial mechanisms. This approach not only reduces costs but also preserves the cooperative relationship essential for the success of PPP projects.

Similarly, in procurement contracts, the integration of mediation within a multi-tier framework can enhance dispute management. The procurement law assigns federal agencies responsibility for managing disputes (Federal Law No. 11 of 2023, Article 7(10)), which may be operationalised through structured escalation mechanisms. Mediation can serve as a key stage within this structure, providing a flexible and efficient means of resolving disputes at an early stage.

However, the effectiveness of multi-tier mechanisms depends on their legal enforceability and procedural clarity. Mediation clauses must be carefully drafted to ensure that they are binding and capable of enforcement, particularly in relation to the suspension of proceedings and the recognition of settlement agreements. The Mediation Law supports this by recognising the binding nature of mediation agreements and the enforceability of settlement agreements upon judicial approval (Articles 9 and 12(4)).

Thus, the integration of mediation within multi-tier dispute resolution frameworks represents a significant step towards modernising dispute resolution in UAE state contracts, aligning legal practice with international best practices and governance standards.

The analysis conducted in this study reveals that while mediation is legally permissible and functionally valuable in UAE state contracts, its full potential remains unrealised due to the absence of a coherent and integrated regulatory framework. Accordingly, a number of recommendations may be proposed to enhance the role of mediation in this field.

Firstly, there is a need for explicit legislative recognition of mediation within procurement and PPP laws. This could be achieved through amendments that expressly authorise the use of mediation in state contract disputes and define the conditions under which it may be used. Such provisions would provide legal certainty and encourage public entities to adopt mediation as a standard practice.

Secondly, it is essential to develop detailed procedural guidelines governing mediation in state contracts. These guidelines should address issues such as the authority of public officials, approval mechanisms, documentation requirements and criteria for evaluating settlements. They should also establish clear rules for balancing confidentiality with transparency.

Thirdly, there is a need to enhance institutional capacity, particularly in terms of training mediators and public officials in the use of mediation in complex contractual disputes. This includes developing specialised expertise in sectors such as infrastructure, energy and public services, where state contracts are most prevalent.

Fourthly, the adoption of standardised mediation clauses in state contracts would promote consistency and facilitate the integration of mediation within multi-tier dispute resolution frameworks. These clauses should be tailored to the specific characteristics of public contracts, taking into account legal and governance requirements.

Finally, it is important to promote a cultural shift within public administration, recognising mediation as a legitimate and valuable tool of governance rather than a departure from legal orthodoxy. This requires not only legal reform but also institutional leadership and policy support.

In conclusion, mediation in UAE state contracts represents a transformative development at the intersection of law and governance. While the current legal framework establishes its permissibility, the absence of explicit and integrated regulation limits its practical application. By adopting a comprehensive approach that combines legislative reform, institutional development and cultural change, the UAE can fully realise the potential of mediation as a strategic tool for efficient, accountable and sustainable public contract governance.

The analysis undertaken in this study leads to a fundamental finding: mediation in UAE state contracts is legally permissible, structurally supported, yet normatively under-regulated. This conclusion challenges the traditional assumption that public law constraints inherently preclude consensual dispute resolution mechanisms.

From a doctrinal perspective, the Mediation Law establishes a broad and inclusive framework that allows mediation in all disputes capable of settlement (Federal Decree-Law No. 40 of 2023, Article 8(1)). This provision, when read in conjunction with the recognition of mediation agreements and their enforceability (Articles 9 and 12(4)), clearly extends to disputes arising from state contracts. The absence of any explicit exclusion of public entities confirms that the UAE legislator has adopted a permissive and expansive approach.

However, this permissibility is not absolute. The study finds that mediation in state contracts is subject to implicit limitations derived from public law principles, particularly legality, accountability and the protection of public funds. This creates a hybrid legal character in which mediation operates at the intersection of private contractual autonomy and public regulatory constraints (Amarini et al., 2024; Grill and Martin, 2021).

The discussion here reveals that mediation cannot be understood solely through traditional private law frameworks. Instead, it must be conceptualised as a controlled consensual mechanism, whose validity depends not only on party agreement but also on institutional legitimacy and compliance with governance standards.

A second key finding concerns the functional advantages of mediation over litigation and arbitration in the context of state contracts (Al Dalaien and Aladaseen, 2025; Hess and Pelzer, 2015). While arbitration remains the dominant mechanism in practice, the analysis demonstrates that it suffers from structural limitations, including high costs, procedural rigidity and adversarial dynamics (Kulms, 2012).

In contrast, mediation offers several advantages that are particularly relevant to state contracts. These include procedural flexibility, cost efficiency, speed and the preservation of contractual relationships. These features align closely with the objectives of UAE procurement and PPP laws, which emphasise efficiency, value for money and risk reduction (Federal Law No. 11 of 2023, Article 2; Federal Law No. 12 of 2023, Article 2).

The discussion suggests that mediation is not merely an alternative to adjudication but, in many cases, a functionally superior mechanism, particularly for disputes arising under long-term and complex contracts. This is especially evident in PPP agreements, where maintaining cooperation between parties is essential for project continuity.

However, the study also highlights that mediation’s effectiveness depends on its proper integration into the legal and institutional framework. Without clear procedures and safeguards, its advantages may be undermined by uncertainty and lack of confidence among public officials.

One of the most significant findings of this research is the identification of mediation as a governance tool rather than merely a dispute-resolution mechanism (Vidal et al., 2019). This reflects a broader transformation in the role of law within public administration, where emphasis is increasingly placed on efficiency, collaboration and outcome-oriented decision-making.

The procurement and PPP laws provide a clear policy orientation towards achieving best public value, enhancing efficiency and reducing risks (Federal Law No. 11 of 2023, Article 2(2); Federal Law No. 12 of 2023, Article 2). Mediation aligns with these objectives by enabling disputes to be resolved in a way that minimises disruption and maximises value.

The discussion, therefore, reframes mediation as part of a broader governance strategy in which dispute resolution is integrated into the management of public contracts. Under this perspective, mediation contributes not only to resolving disputes but also to improving the overall performance of public contracting systems (Wolski, 2020).

Nevertheless, this transformation raises important normative questions. The use of mediation in public contracts requires a redefinition of the concept of public interest, moving from a rigid, rule-based approach to a more flexible and pragmatic understanding (Alberts et al., 2005; Bingham, 1997). This shift must be carefully managed to ensure that flexibility does not undermine accountability.

Despite the positive findings regarding the permissibility and utility of mediation, the study identifies several critical gaps in the current legal framework.

Firstly, there is a lack of explicit regulation of mediation in procurement and PPP laws. While these laws provide a supportive environment, they do not clearly define the role, procedures or limits of mediation in state contracts. This creates a degree of legal uncertainty, particularly regarding public officials’ authority to engage in mediation and to conclude settlements (Bingham and Novac, 2001).

Secondly, the study highlights the absence of clear procedural guidelines governing mediation in public contracts. Issues such as approval mechanisms, documentation requirements and evaluation criteria for settlements remain largely undefined (Alhajri, 2023; Boon et al., 2011). This gap may discourage public entities from using mediation, due to concerns about compliance and accountability.

Thirdly, there are challenges related to transparency and confidentiality. While mediation is inherently confidential (Federal Decree-Law No. 40 of 2023, Article 5(1)), public administration requires a certain level of transparency, particularly where public funds are involved. The lack of clear rules balancing these considerations represents a significant limitation.

Finally, the study identifies a gap in institutional capacity, particularly in the availability of specialised mediators and in the training of public officials. Effective mediation in state contracts requires expertise in both legal and commercial matters, which may not yet be fully developed within the UAE context.

The discussion of these gaps underscores the need for a more comprehensive and integrated approach to regulating mediation in state contracts.

Building on the findings above, the study proposes the development of an integrated mediation model for UAE state contracts. Such a model would combine legal, institutional and practical elements to ensure the effective and legitimate use of mediation.

At the legal level, the model requires explicit recognition of mediation within procurement and PPP laws, supported by clear provisions defining its scope and conditions. At the institutional level, this requires establishing specialised mediation frameworks, including trained mediators and dedicated units within public entities. At the practical level, it involves incorporating mediation clauses into state contracts and adopting multi-tier dispute-resolution mechanisms.

The discussion emphasises that this integrated model must strike a balance between flexibility and control. Mediation should be sufficiently flexible to achieve its functional objectives, but also subject to appropriate safeguards to ensure compliance with public law principles.

Importantly, the model also requires a cultural shift within public administration, recognising mediation as a legitimate and valuable tool rather than a deviation from traditional legal processes. This shift is essential for the successful implementation of mediation in practice (de Graaf et al., 2014; Mareschal, 2003).

The findings of this study demonstrate that mediation in UAE state contracts occupies a transitional space between traditional legal doctrine and modern governance practices. While the legal framework provides a foundation for its use, significant gaps remain in regulation, institutionalisation and practical implementation.

The discussion highlights that mediation has the potential to transform dispute resolution in state contracts, enhancing efficiency, reducing costs and supporting sustainable public governance (Ahnuar et al., 2023; Melnychuk et al., 2024). However, realising this potential requires a comprehensive, integrated approach that addresses both legal and institutional challenges.

Ultimately, mediation in UAE state contracts should not be viewed as an exception or alternative, but as an essential component of a modern, adaptive legal system capable of responding to the evolving needs of public contracting in a dynamic economic environment.

This study has undertaken a comprehensive doctrinal and analytical examination of mediation in state contract disputes under UAE law, revealing a nuanced and evolving legal landscape. The central conclusion emerging from this analysis is that mediation is legally permissible, functionally justified and normatively desirable, yet remains insufficiently regulated within the specific context of public contracts.

At the legislative level, the Federal Decree-Law No. 40 of 2023 on Mediation and Conciliation establishes a broad and enabling framework that encompasses all civil and commercial disputes capable of settlement (Article 8(1)). This general permissibility extends, in principle, to state contracts, which retain their contractual nature despite their public dimension. The law further recognises the validity of mediation agreements and the enforceability of settlement outcomes upon judicial approval (Articles 9 and 12(4)), thereby providing a solid legal foundation for mediation in public contractual disputes.

However, this general framework operates alongside sector-specific legislation − namely, Federal Law No. 11 of 2023 on Procurement and Federal Law No. 12 of 2023 on Public-Private Partnerships (PPP) − which, while implicitly supportive of mediation, do not expressly regulate it. These laws emphasise efficiency, transparency, risk management and the achievement of best public value (Article 2 of both laws), all of which closely align with the functional advantages of mediation. Yet, their silence on mediation creates a regulatory gap, leaving its application dependent on interpretation rather than explicit statutory guidance.

From a doctrinal perspective, mediation in state contracts occupies a hybrid legal space, where private law principles of contractual autonomy intersect with public law constraints of legality, accountability and protection of public funds. This hybrid nature necessitates a careful balancing act, ensuring that mediation’s flexibility does not undermine the fundamental principles governing state action.

From a functional standpoint, the study has demonstrated that mediation offers significant advantages over traditional dispute-resolution mechanisms, particularly in the context of long-term, complex contracts such as PPP agreements. Its ability to deliver timely, cost-effective and relationship-preserving solutions makes it a strategic governance tool that can enhance the performance and sustainability of public contracting.

Nevertheless, the absence of explicit regulation, clear procedural frameworks and institutional capacity limits the practical utilisation of mediation in UAE state contracts. This underscores the need for a more coherent and integrated approach that bridges the gap between legal permissibility and practical implementation.

Based on the study’s findings and analysis, we propose several recommendations to enhance the role and effectiveness of mediation in UAE state contracts.

There is a pressing need to incorporate explicit provisions on mediation within procurement and PPP legislation. Such provisions should clearly affirm the permissibility of mediation in state contract disputes and define its scope, conditions and limits. This would enhance legal certainty and encourage public entities to adopt mediation as a standard dispute-resolution mechanism rather than treating it as an exceptional option.

The current fragmentation between general mediation law and sector-specific legislation should be addressed by developing a unified regulatory framework. This framework should harmonise the application of mediation across different types of state contracts and ensure consistency in legal interpretation and practice. It should also clarify the relationship between mediation and other dispute resolution mechanisms, particularly arbitration and litigation.

Detailed procedural guidelines should be developed to govern the use of mediation in state contracts. These guidelines should address key issues, including the authority of public officials to enter into mediation agreements, the internal approval processes required, the documentation of mediation proceedings and the criteria for evaluating settlement agreements. Clear procedures will reduce uncertainty and mitigate the risk of legal or administrative challenges.

Effective mediation implementation requires robust institutional support. This includes developing specialised mediation centres with expertise in public contract disputes, as well as training mediators in the legal and commercial complexities of state contracts. In addition, public officials should receive targeted training on mediation, including its legal framework, practical application and governance implications.

State contracts, particularly in procurement and PPP projects, should include multi-tier dispute resolution clauses that require mediation as a mandatory or preliminary step before arbitration or litigation. Such clauses would institutionalise mediation within the contractual framework and promote early and efficient resolution of disputes.

Given the tension between the confidentiality of mediation (Federal Decree-Law No. 40 of 2023, Article 5(1)) and the transparency requirements of public administration, it is essential to establish clear rules governing disclosure. While the mediation process should remain confidential, the outcomes − particularly settlement agreements involving public funds − should be subject to appropriate levels of transparency and oversight to ensure accountability.

Mediation in state contracts should be subject to structured oversight mechanisms to ensure compliance with public interest requirements. This may include the involvement of supervisory committees, audit bodies or judicial authorities in reviewing and approving settlement agreements. Such oversight will enhance trust in mediation and ensure that it operates within the boundaries of lawful administrative action.

Finally, the successful integration of mediation in UAE state contracts requires a broader cultural transformation within public administration. Mediation should be recognised not as a deviation from legal norms, but as a legitimate and effective governance tool. This shift can be achieved through policy initiatives, awareness programmes and leadership support, encouraging public entities to adopt more flexible and collaborative approaches to dispute resolution.

In conclusion, mediation represents a significant opportunity for the UAE to modernise its approach to dispute resolution in state contracts, aligning legal practice with contemporary governance standards and international best practices. By addressing the identified gaps and implementing the proposed recommendations, the UAE can establish a coherent, efficient and accountable mediation framework that enhances the legal and economic performance of its public contracting system.

The authors gratefully acknowledge the generous support of the United Arab Emirates University in funding this research and the University’s commitment to academic excellence, which made this work possible. The authors also extend their sincere appreciation to Prof. Fatiha Gourari, the Dean of the College of Law, and Prof. Ibrahim Al-Shawabka, the Head of the Public Law Department, for their continuous encouragement and institutional support. Finally, the authors thank all individuals and institutions who contributed, directly or indirectly, to the successful completion of this study.