Standing forums for a difficult matter: internal reconciliation boards and the statutory committee

Article 19 of UAE Federal Decree-Law No. 37 of 2022 concerning Family Businesses sets out two forums for a dispute inside a family business, one created by the family and one created by the State.

Article 19(1) provides that the articles of association or the charter may include a provision under which a board of partners, family members or third parties is formed to consider disputes between partners, between them and family members, and between these and the family business, to attempt to reconcile them, and which specifies that body's members, its powers and the mechanisms for managing its sessions and issuing its recommendations. Two features matter. Membership may extend beyond the family, and the output is recommendations.

Article 19(2) supplies what follows. Where the articles or the charter include no such provision, or the board has not succeeded in its conciliation endeavours within a maximum period of three months from the date the dispute was presented to it unless extended by agreement, or the parties agree not to refer their differences to that board, then unless the articles stipulate otherwise the Committee takes disputes arising from the articles of association, or from the management or ownership of the family business, or from the application of the Decree-Law.

Article 19(3) gives the Committee a maximum of three months to decide, extendable for a similar period at a reasoned request from the concerned parties, and allows it to take the preventive and urgent measures it deems appropriate to maintain the continuity of the business and prevent interruption of its business or effects on its reputation or financial position while the dispute is considered. Article 19(4) makes its decisions subject to appeal to the competent court in the State. Article 19(5) allows the parties instead to agree to refer the dispute to arbitration under legislation in force in the State, or to the courts existing in the financial free zones. Article 19(6) requires the Committee to report annually to the Ministry on the disputes brought to it and their outcomes.

Article 20 provides that a Family Business Dispute Resolution Committee is established in each emirate by decision of the Minister of Justice or the head of the local judicial authority as the case may be, and that it may seek the assistance of whomever it deems experienced and specialised. Because each emirate's committee is formed by its own decision, composition is set at that level. In Abu Dhabi, the forming decision provides for a committee under the chairmanship of a judge, assisted by two experts in legal, financial and family business management fields, with a secretary. Article 21 subjects disputes of family businesses registered in the financial free zones to those zones' legislation.

The Committee also carries a valuation function, connecting the dispute forum to shareholder exit. Under Article 8(3), where a third party outside the family acquires a partner's share other than in the cases Article 8(2) permits, the remaining partners may within sixty days request recovery of the share, at the value agreed with the third party or the value the Committee determines where there is no agreement. Under Article 8(4), where no partner requests redemption the share is offered to the family business, and where it is not redeemed within thirty days third parties may obtain it. Under Article 9(2) the Committee evaluates shares by the mechanism stipulated in the articles or the charter, and where neither contains one, by experts with financial and technical expertise it selects at the buyer's expense. Article 11 permits a family business to purchase no more than 30 per cent of its shares, on a capital reduction or on purchase or redemption of the shares of a partner who wishes to sell or who is bankrupt or insolvent where no partner will buy, subject to approval by partners representing the majority of the shares represented at the general assembly meeting unless the articles provide another percentage, those shares carrying no vote while the business holds them.

Where the articles of association or the charter name a reconciliation board that does not function, the three-month conciliation window in Article 19(2) still runs before the matter reaches the Committee. A dormant internal board therefore alters the timetable rather than the destination.

Sources, all retrieved 11 August 2026:

• Federal Decree by Law No. 37 of 2022 Concerning the Family Businesses, full text, UAE Legislation portal: https://uaelegislation.gov.ae/en/legislations/1608
• Abu Dhabi Media Office, decision forming family business dispute resolution committees in Abu Dhabi, including their composition: https://www.mediaoffice.abudhabi/en/government-affairs/in-his-capacity-as-chairman-of-abu-dhabi-judicial-department-mansour-bin-zayed-issues-decision-to-form-family-business-dispute-resolution-committees-in-emirate/

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