Bilateral trade between India and the UAE crossed USD 100 billion in FY 2024-25, a nearly two-fold jump in three years, driven substantially by the Comprehensive Economic Partnership Agreement that has been in force since May 2022. Every week, that translates into new joint ventures, supply contracts, franchise arrangements, and Dubai-incorporated entities backed by Indian promoters. And every one of those deals eventually gets to the same clause near the end of the agreement: governing law and dispute resolution. That is where the complexity, in our opinion rests.

Contracts draftsmen and women typically treat this clause as boilerplate. "We'll arbitrate in Dubai" feels like a safe, neutral compromise, which is quite efficient and effective as well. Familiar institution, English-language proceedings, a business-friendly forum and now application of common law available as well. It is a reasonable instinct. However, it is also on its own, an incomplete answer, because of a gap in Indian law that most commercial teams have often overlooked and that no amount of well-drafted UAE arbitration wording can fix from the UAE side alone.

The Seat of Arbitration

The first drafting error is conflating the "seat" of arbitration with the city where hearings happen to take place. The seat determines which courts supervise the arbitration, which law governs the arbitration agreement itself, and critically, which enforcement regime applies to the resulting award.

Under the UAE's own arbitration statute, Federal Law No. 6 of 2018, onshore-seated awards are enforced through the UAE courts, while awards seated in the DIFC or ADGM run through separate, common-law-based frameworks. Practitioners routinely flag that vague drafting naming "Dubai" without specifying onshore, DIFC, or ADGM creates avoidable disputes about which regime even applies before the underlying dispute is heard.

That distinction matters more once you look at what happens when you try to bring a UAE-seated award home to India.

The Enforcement gap

Both India and the UAE are signatories to the New York Convention. Ordinarily, that should mean a UAE-seated award is enforceable in India as a "foreign award" under Part II of India's Arbitration and Conciliation Act, 1996. But Section 44 of that Act adds a second condition: the Indian government must specifically notify the seat's country as a "reciprocating territory." As of today, the UAE has still not been notified for this purpose even though India separately notified the UAE as a reciprocating territory under the Civil Procedure Code back in 2020, a notification that covers court judgments, not arbitral awards.

The practical result: an arbitral award obtained in Dubai, on its own, cannot currently be enforced in India through the direct route a founder assumes exists. Commentators have flagged this as a live anomaly given the depth of India-UAE trade and investment ties, and it has been discussed at arbitration forums on both sides for years without any resolution.

There is a workaround, and it is one every India-UAE contract should plan for rather than discover mid-dispute: get the award ratified into a court judgment in the UAE first commonly via the DIFC Courts, which can act as a "conduit" for enforcement even onshore and then enforce that judgment in India under the 2020 CPC notification. It works, but it adds a procedural step, time, and cost that most commercial timelines don't budget for. The 2024 India-UAE Bilateral Investment Treaty goes some way toward addressing this, but it applies to investor-state disputes, not to an ordinary supply, distribution, or shareholders' agreement between two commercial parties.

At the Drafting Table

None of this argues against arbitrating in the UAE, DIAC has grown rapidly and the jurisdiction has real advantages. It argues for treating the dispute resolution clause as a commercial decision, not a template fill-in. Four things worth doing before signature:

1. Name the seat precisely. "Seat: DIFC" or "Seat: onshore Dubai, UAE" not just "Dubai" removes an entire category of pre-dispute argument about which court supervises the process.
2. Price in the two-step enforcement route. If the seat is going to be onshore UAE or DIFC and the counterparty's assets are primarily in India, build the ratify-then-enforce sequence into your risk and timeline assumptions, not just your legal opinion file.
3. Consider a third-seat structure for high-value contracts. For larger exposures, a neutral seat in a jurisdiction India has notified under Section 44, Singapore or the UK, for example; administered under DIAC, SIAC, or ICC rules, sidesteps the reciprocity gap entirely while still keeping proceedings accessible to both sides.
4. Pair the clause with security, not just process. Escrow arrangements, parent company guarantees, or performance bonds matter more, not less, when the enforcement path has an extra step. A clean arbitration clause is not a substitute for making sure there is something to enforce against.

The India-UAE corridor is only getting busier, and the reciprocity gap will likely close eventually through legislative notification or an amended treaty framework. Until it does, the safest assumption for any founder signing a cross-border contract in this corridor is that "we'll arbitrate in Dubai" is the start of the dispute resolution strategy, not the whole of it.