Can Every Mandatory Rule Become Public Policy?

One of the most interesting recent developments in arbitration has gone largely unnoticed: the UAE's new Civil Transactions Law, which entered into force on 1 June 2026, now provides that mandatory legal rules from which parties may not derogate form part of the country's public policy.

At first glance, this may look like a purely domestic legislative amendment.
It may not be.

Under the UAE Arbitration Law, an award may be set aside if it contradicts public policy. Likewise, Article V(2)(b) of the New York Convention permits courts to refuse recognition or enforcement where an award would be contrary to the public policy of the enforcing State.

This raises an interesting question: if domestic legislation defines mandatory rules as part of public policy, does that inevitably broaden the scope of the public policy exception in arbitration?

Traditionally, courts have distinguished between the two concepts. They may, in some cases, overlap, but they remain conceptually distinct. And that distinction matters.

If every mandatory rule were automatically elevated to public policy, the public policy exception could gradually evolve from a narrow safeguard into a far broader ground for challenging or resisting arbitral awards. Whether UAE courts will take that path remains to be seen.

The legislative amendment therefore raises a broader question that extends well beyond the UAE: can domestic legislation redefine public policy without reshaping the practical boundaries of Article V(2)(b) of the New York Convention? That is a debate worth following.