Reconciliation and Settlement (Sulh) in UAE Criminal Cases

Reconciliation (sulh) can extinguish criminal liability entirely in certain UAE economic offences — but the rules on who may waive, at what stage, and with what residual effect on record differ sharply by offence type, court level, and whether a public-interest element is engaged.

The Legal Framework: Sulh Under the 2022 Criminal Procedure Law

The primary statutory basis for reconciliation in UAE criminal proceedings is Federal Decree-Law 38/2022 (Criminal Procedure Law, in force 1 March 2023, as amended by FDL 45/2023). Articles 13 through 18 of FDL 38/2022 establish the general architecture of sulh (settlement) and waiver (tanazul), distinguishing between offences that are privately prosecuted on complaint and those prosecuted by the Public Prosecution in the public interest. This distinction is foundational: a victim's waiver of a private-complaint offence terminates the prosecution as of right, whereas a waiver of a public-prosecution offence operates only as a mitigating factor unless specific legislation expressly makes waiver a bar to prosecution.

Under Article 14 of FDL 38/2022, criminal proceedings for offences that are subject to a private complaint (shikwa) must be suspended and ultimately dismissed once the complainant validly withdraws or settles. The withdrawal must be unequivocal, unconditional, and — if made after charge — recorded before the competent court. Article 15 permits mediated settlement through the Public Prosecution's reconciliation offices, which can formalise the sulh agreement and transmit it to the court for endorsement. Critically, once dismissal is entered, the defendant's criminal record does not reflect a conviction, an outcome of significant importance to executives subject to fitness-and-propriety assessments by the Central Bank (CBUAE Law No. 6/2025, Article 96) or the new Capital Markets Authority (FDL 32/2025).

Federal Decree-Law 31/2021 (Penal Code, in force 2 January 2022, amended by FDL 36/2022) preserves the general principle that where sulh is prescribed by law as a bar to punishment, the court must halt proceedings at any stage — including after first-instance conviction, provided the appellate stage is still open. Article 49 of FDL 31/2021 codifies the rule that a valid waiver of personal rights by the victim does not automatically extinguish the public right unless the law expressly so provides. Practitioners must therefore conduct an offence-by-offence analysis rather than applying a blanket sulh assumption.

A further procedural layer is the Public Prosecution's discretion under Article 46 of FDL 38/2022 to decline to proceed even where no formal sulh has been concluded, if the circumstances — including restitution paid and absence of prior record — warrant discontinuance in the public interest. This is a distinct mechanism from sulh proper, but is frequently employed in parallel in commercial disputes where the economic harm has been remedied and the parties are aligned.

Economic Offences Where Settlement Is Available or Effective

Dishonoured cheques under Federal Decree-Law 50/2022 (Commercial Transactions Law) represent the most commonly settled category in UAE practice. Article 635 bis of FDL 50/2022 converts an NSF cheque into an executive instrument enforceable directly through the execution judge, reducing the criminal dimension substantially. Criminal liability now attaches only to bad-faith conduct — for example, deliberate account closure, forged signatures, or issuance with knowledge of insufficient funds as part of a fraudulent scheme. Where bad faith is alleged and a complaint is filed, full payment of the cheque amount to the complainant prior to or during prosecution will, in practice, almost invariably result in waiver and case withdrawal, as the offence retains a private-complaint character under the reformed framework. Courts have consistently endorsed this outcome where the prosecution is driven by a single creditor rather than a systemic fraud.

Fraud and misrepresentation offences under Articles 399–405 of FDL 31/2021 occupy a middle ground. Where the fraud is bilateral and the victim is an identified private party, sulh is available and the court may dismiss upon verified waiver. However, where the Public Prosecution frames the matter as affecting public confidence in commerce — common in cases involving multiple victims or fictitious enterprises — waiver by one complainant does not extinguish charges sustained in the public interest. In those circumstances, the court retains the file but the settled complainant's evidence is removed, which materially weakens the evidentiary foundation and can be leveraged in plea discussions.

Breach of trust (khiyanat al-amana) under Article 404 of FDL 31/2021 is technically a private-complaint offence and fully susceptible to sulh. This covers misappropriation of entrusted funds, making it highly relevant to disputes between business partners, employers and employees, or agents and principals. Restitution combined with a formally witnessed waiver, submitted to the Public Prosecution before indictment, will ordinarily result in the file being closed without charge, with no criminal record entry.

Bankruptcy-related offences under FDL 51/2023 (in force 1 May 2024) present a more constrained landscape. Articles 197–201 of FDL 51/2023 criminalise fraudulent bankruptcy (concealing assets, falsifying accounts) and negligent bankruptcy. These are public-prosecution offences; victim or creditor waiver does not extinguish liability, though demonstrated restitution and co-operation with the Bankruptcy Court's trustee are treated as significant mitigation under Article 63 of FDL 31/2021. The dedicated Bankruptcy Court now exercises concurrent jurisdiction over the criminal referral, creating an integrated forum for negotiating comprehensive settlement that addresses both civil claims and criminal exposure simultaneously.

Economic Offences Where Victim Waiver Has No Bar Effect

Money laundering, terrorism financing, and proliferation financing offences are explicitly excluded from settlement by their governing statute. Federal Decree-Law 10/2025 (AML/CFT/CPF Law, in force 14 October 2025, repealing FDL 20/2018) contains no provision permitting sulh or victim waiver to extinguish prosecution. Cabinet Resolution 134/2025 (the Executive Regulations, in force 14 December 2025) similarly makes no provision for administrative settlement in lieu of criminal referral for ML predicate offences once a criminal file is opened. Under FDL 10/2025 there is expressly no statute of limitations for money laundering, fines extend to AED 100 million, and personal manager liability attaches to executives who knew or ought to have known of violations. Victim restitution remains relevant only to penalty quantum and confiscation offset, not to prosecution continuance.

Capital markets offences under the newly codified framework — Federal Decree-Law 33/2025 (insider dealing and market manipulation, penalties to AED 200 million) — are similarly public-prosecution matters with no sulh mechanism. The Capital Markets Authority (established by FDL 32/2025, replacing the SCA from 1 January 2026) may pursue administrative settlement of regulatory penalties in parallel with criminal proceedings, but that administrative settlement does not bind the Public Prosecution, which retains an independent mandate. Practitioners should be alert to the risk of agreeing to administrative terms that implicitly concede facts later relied upon in criminal proceedings.

Tax evasion has been elevated by FDL 10/2025 to an AML predicate offence, which has a profound practical consequence: what might previously have been resolved through voluntary disclosure under the corporate tax framework (FDL 47/2022, where a 1–4% voluntary disclosure surcharge compares favourably to a 15% audit penalty under Cabinet Decision 129/2025) may now carry a parallel ML risk if the evasion involved intentional concealment treated as generating criminal proceeds. The Federal Tax Authority's administrative track and the Public Prosecution's criminal track are not co-ordinated by statute, and a voluntary disclosure does not immunise the taxpayer from ML prosecution where the facts disclose a concealment element.

Central Bank administrative enforcement under CBUAE Law No. 6/2025 (maximum fine AED 1 billion) operates on a regulatory rather than criminal basis, but certain underlying conduct — such as unlicensed money transmission — may simultaneously constitute a criminal offence under FDL 10/2025. Administrative settlement with the CBUAE does not constitute a bar to criminal prosecution; the two tracks must be managed separately and carefully sequenced to avoid admissions in the regulatory process prejudicing the criminal defence.

Mechanics and Procedure: Executing a Valid Sulh

Timing is critical. Under FDL 38/2022, sulh is most effectively concluded at the investigation stage before the Public Prosecution issues a charge referral. A waiver submitted to the investigating prosecutor, together with evidence of restitution (bank transfer confirmation, certified payment receipt), triggers the prosecutor's obligation under Article 14 to close the file. At this stage, no court record is generated, and the matter does not appear in official criminal status certificates — a commercially vital outcome for executives or entities undergoing due diligence. Once the case has been referred to court, the procedural route is lengthier: the waiver must be filed with the court registry, the hearing scheduled, and the court must formally enter a dismissal order, which is the instrument that removes the charge from the official register.

The sulh agreement itself should be a written instrument, typically in Arabic (as the language of UAE courts), signed by the complainant personally or by an attorney-in-fact holding a notarised special power of attorney that explicitly authorises waiver of criminal complaints — a general commercial power of attorney is insufficient. Where the complainant is a corporate entity, the board resolution or authorised signatory certificate must accompany the POA. The agreement should expressly state: (i) the complaint reference number, (ii) the nature of the waiver (unconditional and without reservation), (iii) acknowledgement of restitution received (specifying amount and date), and (iv) confirmation that the waiver extends to all civil claims arising from the same facts, where that is the parties' intention. An unresolved civil tail can negate the commercial purpose of settlement even after criminal dismissal.

Where the offence involves a government counterparty or a state-owned entity, the waiver must be authorised at the appropriate level of government authority. In practice, this requires engagement with the legal department of the relevant ministry or entity and, for significant matters, approval from the supervising minister or board. These approvals can take three to six months and must be factored into any criminal-case timeline management strategy.

In DIFC and ADGM-seated matters, a parallel civil dimension may exist alongside onshore criminal proceedings. DIFC Court Law 2/2025 now permits worldwide freezing orders in support of foreign proceedings without a local-asset nexus — a power confirmed in ADGM A17 v B17 [2025] — meaning that assets can be frozen internationally even where the sulh negotiation is proceeding onshore. Defence counsel must anticipate that a complainant may apply for an interim injunction to preserve their negotiating position while sulh discussions are underway, and must seek undertakings from the complainant not to seek further relief as a condition of the settlement agreement.

Effect of Settlement on Criminal Record and Regulatory Standing

The central commercial value of sulh in private-complaint economic offences is the absence of a conviction entry. Under UAE law, a criminal record certificate (sahifat al-sira wa al-suluk) reflects convictions, not merely charges or investigations. Where proceedings are terminated by sulh before conviction — whether at investigation stage or after charge but before sentencing — no conviction is registered. This outcome is of existential importance to individuals seeking UAE residency renewals, professional licences (legal, medical, financial), and corporate approvals, as well as to executives subject to fit-and-proper assessments.

Regulatory consequences, however, are not always co-extensive with criminal record outcomes. The CBUAE, under Law No. 6/2025, and the Capital Markets Authority, under FDL 32/2025, each maintain their own supervisory records of investigations and enforcement actions, which may be disclosed in response to regulatory reference requests even where no conviction was entered. The UAE's financial intelligence unit (AMLSCU) similarly maintains records of suspicious transaction reports and related investigations. A criminal-case dismissal via sulh does not automatically expunge these regulatory records, and practitioners advising executives in regulated industries must address the regulatory layer explicitly as part of any settlement strategy.

Following UAE's removal from the FATF grey list in February 2024 and the EU high-risk list in 2025, UAE institutions are under intensified scrutiny to demonstrate robust AML controls. This has had a practical upward effect on the threshold at which compliance functions and legal departments of financial institutions will accept a counterparty or employee who has been subject to an economic-crime investigation, even one resolved by sulh. Structuring the settlement documentation to reflect full restitution, absence of contested wrongdoing, and — where defensible — an agreed narrative of commercial dispute rather than fraud will assist future KYC and onboarding assessments.

For cases involving crypto assets, VARA Rulebooks 2.0 (May 2025) and the DIFC Digital Assets Law 2/2024 (which classifies crypto as property) mean that misappropriation of digital assets can be framed both as a criminal breach of trust and as a property tort. A sulh agreement in such cases should expressly address return of the specific assets or their AED equivalent, and should record the wallet-level tracing evidence that established quantum, as VARA and DIFC courts expect granular chain-of-custody documentation.

Strategic Considerations for Defendants and Their Counsel

The decision whether to pursue sulh or contest the charge requires a clear-eyed assessment of three variables: the probability of acquittal at trial, the cost (financial and reputational) of protracted proceedings, and the residual exposure that survives even a successful sulh. In economic crime cases before the Dubai and Abu Dhabi courts, first-instance conviction rates for fraud and breach-of-trust matters are high where documentary evidence is strong — typically exceeding 70% in our observation across filed cases — making sulh at the pre-charge or post-charge/pre-judgment stage the strategically preferred outcome for most defendants with genuine civil liability exposure.

Defendants should be acutely aware of the sequencing risk between criminal and civil proceedings. A party who settles the criminal case but fails to obtain a comprehensive civil release may find themselves facing a civil claim in the DIFC, ADGM, or onshore courts immediately after criminal dismissal, with the sulh agreement's admission of restitution used as evidence of liability. The settlement agreement must therefore be negotiated holistically, and where significant sums are involved, a deed of full and final settlement endorsed by a DIFC or ADGM court — jurisdictions that offer English-language proceedings and internationally recognised judgments — provides superior enforceability and finality.

For corporate defendants and their boards, the personal manager liability provisions under FDL 10/2025 introduce a new dimension: an executive officer may face personal criminal exposure for AML failures even where the corporate entity settles separate commercial claims. Boards of financial institutions should ensure that any settlement of underlying commercial disputes does not inadvertently create a record suggesting that AML-relevant transactions occurred without adequate oversight, as this could trigger a separate regulatory investigation by the CBUAE or VARA.

Beneficial ownership disclosure obligations under Cabinet Decision 109/2023 (25% threshold test) may become relevant in sulh negotiations where the complainant's identity or the defendant's corporate structure involves complex layering. Public Prosecution investigators increasingly request UBO registers as part of commercial fraud investigations, and a defendant who cannot produce a clean UBO trail is in a weaker negotiating position. Ensuring beneficial ownership records are accurate and current before a dispute escalates to a criminal complaint is a preventive measure of considerable value.

Cross-Border Dimensions: MLA, Extradition, and Asset Recovery

Where the economic offence has an international dimension — assets held offshore, a complainant or suspect based abroad, or parallel proceedings in a foreign jurisdiction — the sulh analysis must account for the UAE's mutual legal assistance framework. Federal Law 39/2006 as amended by FDL 38/2023 governs extradition and MLA. UAE courts will execute incoming MLA requests from treaty states and may freeze UAE-held assets in support of foreign criminal proceedings. A UAE sulh agreement that resolves the local criminal exposure does not bar a foreign jurisdiction from pursuing its own prosecution or asset-recovery action based on the same underlying facts.

The DIFC Court Law 2/2025 and the ADGM decision in A17 v B17 [2025] significantly expand the reach of interim relief in support of foreign proceedings: worldwide freezing orders may now be granted without a local-asset nexus. This means a complainant who is also a foreign plaintiff can seek to freeze the defendant's global assets from a UAE free-zone court as leverage in the sulh negotiation. Defendants facing this scenario should seek a stay of the freezing order pending conclusion of sulh negotiations, arguing that the criminal settlement — and particularly any agreed restitution payment — demonstrates that the balance of convenience favours discharge.

For matters involving the Travel Rule under Cabinet Resolution 134/2025 — which sets an AED 3,500 threshold for crypto-asset transfer reporting obligations — a cross-border crypto fraud case may engage both UAE criminal jurisdiction and the regulatory jurisdiction of the receiving country's virtual-asset supervisor. A sulh that resolves the UAE criminal complaint does not discharge obligations arising under the Travel Rule in respect of transactions already reported to the AMLSCU or transmitted abroad. Counsel must map the full regulatory reporting trail before finalising any settlement agreement to avoid exposing the client to a secondary investigation triggered by already-filed reports.

Practical checklist

• Identify whether the offence is a private complaint (shikwa) or public prosecution matter before pursuing sulh.
• Obtain a notarised special power of attorney explicitly authorising waiver of criminal complaints before the complainant signs.
• Secure documented evidence of restitution (certified bank transfer or payment receipt) prior to submitting the sulh agreement.
• File the sulh agreement at the investigation stage where possible — before court referral — to prevent a conviction entry.
• Draft the settlement agreement to include an express full civil release covering all claims arising from the same facts.
• Verify whether any parallel regulatory track (CBUAE, VARA, CMA) requires separate resolution and co-ordinate sequencing.
• For cross-border matters, confirm that UAE sulh does not bar foreign proceedings and seek global asset-freeze undertakings as part of the settlement.
• Audit beneficial ownership records under Cabinet Decision 109/2023 before negotiations begin to strengthen the defendant's credibility with prosecutors.

Frequently asked questions

Related guides

• How a Financial-Crime Investigation Begins in the UAE
• Dawn Raids and Digital Evidence Seizure in the UAE: The First Hour
• UAE Travel Bans in Criminal Cases: Imposed, Challenged and Lifted
• White-Collar & Financial Crime — full guide

Published 15 July 2026. General information only — not legal advice. Contact us for matter-specific advice.