Agency and Powers of Attorney
Articles 866 to 905 of Federal Decree-Law No. 25 of 2025, and the special-authority rule that voids arbitration clauses

More UAE transactions fail on the power of attorney than on the deal. The Civil Transactions Law governs agency at Articles 866 to 905 of Federal Decree-Law No. 25 of 2025, and the provision that decides most of those failures is Article 870: anything that is not an act of management and preservation requires a special agency naming the type of act — and the list it gives includes arbitration.

A general power of attorney does not authorise an agent to agree an arbitration clause, settle a claim, pledge an asset, make an acknowledgment or give away property. That is the single most consequential rule in this chapter, and it reaches back into deals that were signed years ago.

1. What an agency is, and the form it must take

Article 866 defines agency as a contract by which the agent undertakes to perform a legal act in the name of the principal and for his account. Both limbs matter: acting in the principal's name, and for the principal's account.

Article 867 then supplies the formality rule: the agency must satisfy the formality required for the legal act that is its subject, unless otherwise agreed. So where the underlying act requires notarisation, registration or a particular form, the power of attorney must meet that same standard. A privately signed authority will not support a notarised disposition.

Article 869 recognises four shapes: general, special, conditional, and added to a future time. The last is useful and under-used — an agency can be drafted to take effect on a future date or event.

2. Article 870 — the special-authority rule, and why it reaches arbitration

Two tests have to be satisfied, and both are commonly missed. The authority must be special, and it must specify the type of act. A power of attorney that confers "all powers necessary" in sweeping terms satisfies neither.

The arbitration consequence

Arbitration is named in the list. A signatory executing a contract containing an arbitration clause, under a power of attorney that does not specifically authorise agreement to arbitration, may be acting outside the agency. The exposure is not academic: it goes to the validity of the arbitration agreement itself, and therefore to the tribunal's jurisdiction and to the enforceability of any award.

That makes this a document to check at three moments:

• At signature — confirm the signatory's authority names arbitration, not merely "entering into contracts".
• At the start of a dispute — before incurring arbitration costs, verify the authority under which the clause was agreed. It is a cheaper enquiry now than a jurisdictional challenge later.
• On enforcement — an award creditor should expect the point to be taken, and should have the authority chain ready.

The rest of the list

Gratuitous dispositions, sale, settlement, pledge and acknowledgement each need the same special treatment. In practice that means a general corporate power of attorney will not support an agent who settles a claim, grants security, admits a liability or disposes of an asset — all of which are routinely done under general authority in this market.

3. Article 880 — contracts that fail unless the agency is disclosed

For this list of contracts the agent must contract expressly as agent, attributing the act to the principal. An undisclosed or insufficiently disclosed agency does not merely bind the agent personally — the contract is not valid.

Note what is in the list. A pledge, a loan, a partnership and a mudarabah are all ordinary commercial instruments, and all are frequently signed by managers, nominees or group treasury functions. The drafting answer is simple and should be mechanical: the execution block names the principal, states that the signatory signs as attorney or agent, and identifies the instrument conferring the authority.

Article 881 adds a separation that catches litigators: "An agent to receive has no authority to litigate, and an agent to litigate has no authority to receive except by special permission." Authority to conduct proceedings is not authority to collect the proceeds, and vice versa. A power of attorney for litigation should address both expressly where both are intended.

4. The agent's duties and the limits of departure

Article 874(1): the agent must perform the agency without exceeding its prescribed limits, except in what is more beneficial to the principal.

Article 874(2) then permits departure from the limits where it is impossible to notify the principal in advance and the circumstances make it likely the principal would consent. Both conditions, not either.

That is a narrow dispensation and it is the provision an agent will have to plead when a principal disowns a transaction. The practical protection for an agent is contemporaneous: record why advance notification was impossible and why consent was likely, at the time, not in cross-examination.

The principal's obligations

• Article 892 — pay the agreed remuneration on performance. If none was agreed and the agent is one who works for remuneration, fair market remuneration is due; otherwise the agent is deemed a volunteer. The default is unpaid, so a professional agent should document that it acts for remuneration.
• Article 893 — reimburse what the agent expended in performing the agency.
• Article 896 — the Law's provisions on representation in contracting govern the relationship between principal and agent as regards third parties who deal with the agent.

5. Ending an agency, and the third-party lock

Article 897 lists the termination events, beginning with completion of the work for which the agency was given and expiry of its term.

Article 900 — the agent cannot always walk away

• 900(1) — where no third party's interest is connected with the agency, the agent may withdraw, provided it informs the principal.
• 900(2) — where a third party's interest is connected, the agent may not withdraw unless serious reasons justify it, and must inform the third party and allow for the consequences.

This is the statutory basis of the irrevocable-style agency used in UAE real estate and security structures. An agency granted to secure a third party's position is not freely revocable from either side, and that is a feature of the Law rather than merely of the drafting.

Article 903 — sub-agency

• The agent's agent is dismissed by the death or bankruptcy of the original principal, and by dismissal by the principal or by the agent.
• The sub-agent is not dismissed by the agent's own dismissal or death.
• But cancellation of the basic agency cancels every agency derived from it, by operation of law.

The practical point for anyone relying on a sub-delegated authority — common in group structures and in service-provider arrangements — is that the chain is only as good as the head agency, and the head agency can be cancelled without the sub-agent being told.

6. Civil agency is not commercial agency

A caution that is worth stating plainly, because the terms are used interchangeably in conversation and are not interchangeable in law.

A dispute about whether a distributor can be terminated is a commercial agency question. A dispute about whether the person who signed the distribution agreement had authority to agree its arbitration clause is an Article 870 question. The same matter frequently raises both, and they are answered under different instruments.

7. Checklists

Before signing anything under a power of attorney

• Does the authority name the type of act? Article 870 requires specificity, not breadth.
• If the contract contains an arbitration clause, does the authority specifically permit agreement to arbitration? This goes to the tribunal's jurisdiction and the award's enforceability.
• Does the authority cover settlement, pledge, acknowledgement or any gratuitous disposition the deal requires? Each needs special authority.
• Does the power of attorney meet the formality of the underlying act under Article 867 — notarisation, registration, legalisation?
• For a gift, loan, pledge, deposit, partnership, mudarabah or liability-denying settlement, does the execution block attribute the act to the principal? Article 880 makes the contract invalid otherwise.

At the start of a dispute

• Obtain the authority under which the contract — and specifically the arbitration clause — was signed, before committing to a forum.
• Check whether your own litigation authority covers receiving as well as litigating; Article 881 separates them.
• Trace any sub-delegated authority to the head agency. Article 903 cancels derived agencies when the basic agency is cancelled.

Drafting and governance

• Build a standing power-of-attorney register: who holds authority, for which acts, with which expiry.
• Where an agency secures a third party, say so — Article 900(2) then restricts withdrawal.
• If your agent is to be paid, record it. Article 892's default is that an agent not working for remuneration is a volunteer.
• Agents should contemporaneously record the basis for any departure from authority under Article 874(2); both conditions must be met.

Primary sources

Every provision quoted above is taken from the instruments below. Links go to the official consolidated text, not to secondary commentary.

• Federal Decree-Law No. 25 of 2025 issuing the Civil Transactions Law — agency at Arts 866–905; 867 formality, 870 special authority, 880 attribution, 881 litigate vs receive, 900 withdrawal, 903 sub-agency
• UAE Ministry of Economy — the commercial agencies register, which is a separate regime from civil agency
• UAE Ministry of Justice — laws and legislation — consolidated Arabic text, which governs over any English rendering

Questions we are asked

Related guides in the library

• Pre-Contractual Duties
• Guarantees and Suretyship
• Arbitration vs Litigation in the UAE

Published 2026-10-03. General information only — not legal advice. Contact us for matter-specific advice.