In today’s fiercely competitive business environment, safeguarding sensitive information is paramount. The UAE Civil Transactions Law (Federal Law No. 5 of 1985) governs the drafting of Non-Disclosure Agreements (NDAs), which are indispensable legal instruments designed to protect trade secrets, intellectual property, and other confidential information from unauthorized disclosure. An NDA ensures that businesses have recourse to civil litigation and criminal penalties as remedies for breaches of confidentiality.
The Principle of Freedom of Contract
The UAE’s legal framework upholds the principle of freedom of contract, a cornerstone of contract law. This principle empowers individuals and entities to negotiate and enter into binding agreements without undue interference, allowing parties to tailor their contractual relationships according to their own terms, conditions, and preferences.
Types of NDAs
There are several types of NDAs, each catering to specific business needs:
- One-Way NDA: Employed when the disclosure of information is unilateral. For instance, investors may receive confidential information about a company without reciprocating with their own sensitive data.
- Mutual NDA: Involves a bilateral exchange of confidential information, commonly utilized in Merger & Acquisition transactions where both parties share sensitive information.
NDAs for Employees
The Federal Decree-Law No. (33) of 2021, regarding the Regulation of Employment Relationships and its amendments, underscores the importance of protecting trade secrets within employment contracts. Article (10) – Non-Competition Clause, stipulates that employees with access to confidential business information are prohibited from sharing these secrets with competitors if such a clause is incorporated into their contract.
Framework for Drafting an NDA
When drafting an NDA, it is crucial to incorporate the following elements:
- Identification of Parties: Clearly specify the names of the entities or individuals bound by the NDA.
- Definition of Confidential Information: Define what constitutes ‘confidential information’ to avoid ambiguity and ensure all parties understand what information is protected.
- Consequences of Breach: Articulate the severity and potential damages resulting from a breach to underscore the importance of maintaining confidentiality.
- Duration: While many NDAs stipulate perpetual confidentiality, it is advisable to specify a clear time frame for the NDA’s validity.
Despite the robust protections provided by UAE law, it is prudent to have a meticulously drafted NDA to ensure that confidential information remains secure.
At SAT & Co., we specialize in diverse practice areas, including Commercial Law, Civil Law, Family Law, Labor Law, Real Estate, and Property Disputes. Our team is dedicated to providing expert legal advice and safeguarding your business’s confidential information.
This article was drafted by Ahmed Yehia, Senior Associate and globally recognized legal expert. Contact us today to learn more about how we can assist you in drafting effective NDAs tailored to your specific needs.
