Are there implied confidentiality obligations where there are no formal confidentiality agreements entered into by the parties?
In the UAE, there are no general confidentiality provisions implied into contracts. However, the UAE Civil Code requires an employee to keep his employer’s industrial and trade secrets confidential during and after termination of a contract if this is customary practice, in addition to any express contractual provisions.
Furthermore, the UAE Penal Code creates three criminal offences with respect to breaches of confidentiality which parties should be aware of. These are as follows:
1. It is an offence to publish news, pictures, or comments pertaining to the secrets of people’s private or family lives, if these are real and true.
2. It is an offence for any person, who by reason of his profession, craft, situation or art is entrusted with a secret, to disclose it other than as permitted by law, or to use it for his own, or another person’s advantage.
3. It is an offence for any individual to open a letter or telegram without the consent of the addressee, or to eavesdrop on a telephone conversation.
What are the consequences of breach?
In relation to the breach of a contract of confidentiality, the UAE Civil Code provides that if the parties cannot be restored to the pre-contractual position, then compensation may be ordered by the court. While it is permissible to provide for liquidated damages in the contract, the court retains the power to override them and award compensation for breach of contract equal to the loss. If amounts of compensation are not fixed by the contract, the court will assess them with reference to the actual loss or damage suffered.
In relation to the offences under the Penal Code mentioned above, the penalties include terms of imprisonment and fines.
Are specific terms/formalities required for a binding confidentiality agreement?
No. The formalities required for a binding confidentiality agreement are usually no different to those required for any other type of contract.
The requirements for a binding contract in the UAE are similar to those in common law jurisdictions such as England. Article 129 of the Civil Code provides for three key components of a legal contract under UAE law including: agreement upon the essential elements of the contract (offer, acceptance, intention to create legal relations and consideration); certainty of the subject matter of the contract and the contract having a lawful purpose.
It is also important to note that whilst not a requirement under Article 129 of the Civil Code, a contract must be performed in a manner consistent with the requirements of good faith (Article 246, Civil Code).