Draft NDA Agreement in the UAE
A non-disclosure agreement (NDA) establishes how confidential information may be accessed, used, and shared. It is particularly important when businesses exchange sensitive information before entering into a commercial transaction or allowing an external party to participate in their operations.
Companies may need to disclose financial records, pricing strategies, customer information, technical designs, or proprietary processes during investment discussions, supplier negotiations, and consultancy engagements.
An NDA should protect the relevant information without creating restrictions that prevent the parties from carrying out their agreed activities.
Abdulrahman Alshaali Advocates & Legal Consultants assists businesses and individuals with preparing and reviewing non-disclosure agreements under UAE law, taking into account the nature of the information and the commercial relationship involved.
Non-Disclosure Agreements Under UAE Law
Federal Law No. 11 of 2021 on the Regulation and Protection of Industrial Property Rights provides statutory protection for qualifying undisclosed information.
Article 61 establishes three principal conditions for protection: the information must be secret, derive commercial value from its secrecy, and be subject to reasonable measures taken by its lawful controller to preserve confidentiality.
Article 63 requires the person lawfully controlling such information to take appropriate measures to maintain its confidentiality and restrict circulation to authorised persons.
Cabinet Resolution No. 6 of 2022, which issues the Executive Regulations of the law, provides further measures concerning the protection of undisclosed information.
Article 71 addresses precautions including access controls and confidentiality obligations in relevant employment and third-party business arrangements.
These provisions are particularly relevant where an NDA concerns commercially valuable information that satisfies the statutory conditions.
However, not every document described as confidential automatically qualifies for protection as undisclosed information under industrial property legislation.
An NDA should therefore establish clear contractual obligations while accounting for any additional statutory protection that may apply.
When Should a Business Sign an NDA?
An NDA is especially relevant when sensitive information needs to be disclosed before the parties have finalised their main commercial agreement.
For example, a company considering an acquisition may require access to the target business’s financial statements, customer relationships, and operational information.
The seller may wish to establish confidentiality restrictions before allowing access to those materials.
Other situations include discussions with prospective investors, negotiations with manufacturers, consultancy engagements, and proposals for joint business ventures.
The agreement should generally be considered before confidential information is disclosed.
Where information has already been exchanged, the parties may consider documenting obligations covering earlier disclosures. However, the wording should accurately identify the information concerned and distinguish future obligations from conduct that occurred before the agreement.
An NDA is not a substitute for the principal transaction agreement. It governs the handling of information rather than establishing every commercial obligation relating to the proposed transaction.
Identifying the Parties and Authorised Recipients
The agreement should identify the party disclosing information and the party receiving it.
Where the parties are companies, their correct registered legal names should be used.
This is particularly important where several entities operate within the same corporate group.
For example, a parent company may sign an NDA while employees of its subsidiary are expected to review the disclosed material.
The agreement should establish whether the subsidiary is an authorised recipient and how its access will be controlled.
It should also address access by employees, professional advisers, and other individuals who may need the information for the permitted purpose.
An NDA should not assume that every company within a corporate group is automatically bound merely because one entity has signed the document.
The parties should also verify that the individuals signing the agreement have the necessary authority.
Choosing Between a One-Way and Mutual NDA
The structure of an NDA depends on whether one party or both parties will disclose confidential information.
One-Way NDA
A one-way NDA primarily imposes confidentiality obligations on the receiving party.
For example, a technology company may disclose proprietary specifications to a prospective manufacturer for the purpose of obtaining a quotation.
The manufacturer receives the information but is not expected to disclose equivalent confidential material of its own.
Mutual NDA
A mutual NDA establishes confidentiality obligations for both parties.
It may be appropriate where two companies are considering a commercial collaboration and both intend to exchange sensitive information.
One company may disclose information about its customer relationships while the other provides technical documentation and financial projections.
A mutual agreement should reflect the actual obligations of each party rather than assuming that their information-sharing arrangements are identical.
The correct structure depends on the proposed relationship and the direction of disclosure.
Defining What Information Is Confidential
The definition of confidential information determines which material falls within the contractual restrictions.
An overly narrow definition may leave important material outside the agreement. An excessively broad definition may create uncertainty about information that the parties did not genuinely intend to restrict.
Depending on the transaction, the definition may cover:
- Financial statements and business projections.
- Customer and supplier information.
- Pricing strategies and commercial proposals.
- Product designs and technical specifications.
- Manufacturing processes and proprietary methods.
- Software documentation and development information.
- Information concerning proposed investments or acquisitions.
The agreement should also consider the form in which information is disclosed.
For example, a company may demonstrate a proprietary manufacturing process during a meeting without providing a written document.
If the parties intend that demonstration to be covered, the agreement should address oral, visual, and other relevant forms of disclosure.
The definition should be sufficiently clear to identify the intended material without treating every exchange between the parties as confidential regardless of its nature.
Restricting the Use of Confidential Information
Confidentiality involves more than preventing disclosure to another person.
A receiving party may misuse information without communicating it to anyone else.
For example, a manufacturer may receive product specifications solely to prepare a quotation but later use them to develop a competing product.
An NDA addressing only disclosure may fail to express the parties’ intended restrictions on use.
The agreement should therefore identify the permitted purpose.
It may provide that the information can be used only to evaluate a proposed transaction, perform an agreed service, or carry out another clearly defined activity.
The drafting should distinguish the right to access information from the right to exploit it commercially.
Disclosure under an NDA should not automatically be treated as a transfer of intellectual property ownership or a licence to use the information for unrelated purposes.
Where the parties intend to grant broader rights, the relevant permissions should be properly documented.
Establishing Appropriate Access Controls
Confidential information is frequently shared beyond the individuals who sign an NDA.
A company evaluating an investment may need to provide documents to accountants, legal advisers, and employees participating in due diligence.
The agreement should identify which recipients may access the information and the conditions governing that access.
Article 63 of Federal Law No. 11 of 2021 requires the lawful controller of protected undisclosed information to organise and restrict its circulation to authorised persons.
Article 71 of the Executive Regulations identifies additional protective measures, including appropriate controls over access to documents and information.
An NDA may therefore establish that information may be shared only with individuals who require access for the agreed purpose.
It should also address responsibility for ensuring that authorised recipients comply with the relevant confidentiality obligations.
These arrangements should be proportionate to the sensitivity of the information and the practical requirements of the transaction.
NDA Obligations for Employees and Contractors
Employees and external contractors may receive access to commercially sensitive information while performing their duties.
Article 71 of Cabinet Resolution No. 6 of 2022 addresses protective measures in relevant employment agreements and arrangements involving third parties performing business activities.
For protected undisclosed information, the regulation contemplates obligations restricting unauthorised disclosure, use, and exploitation during the relevant relationship and after its termination.
For example, a company appointing a technical consultant may need to disclose proprietary production information.
The contractual documentation should explain how the consultant may use that information and which obligations continue after the engagement ends.
Where an employee is involved, the confidentiality arrangements should also be considered alongside the legislation governing the employment relationship.
A Draft Employment Agreement may address supplementary employment obligations, while a Draft Confidentiality Agreement may be suitable where the relationship requires a broader confidentiality framework.
Confidentiality restrictions should also be distinguished from non-compete obligations, which raise different legal considerations.
Establishing Exceptions to Confidentiality
An NDA should recognise circumstances in which information does not fall within the intended restrictions.
Depending on the transaction, the parties may agree to exclude information that:
- Was already publicly available when disclosed.
- Becomes publicly available without a breach of the agreement.
- Was lawfully known to the receiving party before disclosure.
- Is independently developed without using the protected material.
- Is obtained lawfully from another source without an applicable confidentiality obligation.
For example, information contained in publicly available technical documentation should not automatically become protected as a trade secret merely because one party includes it in a confidential presentation.
However, a combination of otherwise available information may still require separate consideration if its particular arrangement satisfies the applicable conditions for protection.
The exceptions should be drafted carefully so that they do not unintentionally permit the disclosure or use of genuinely protected material.
Determining the Duration of Confidentiality Obligations
An NDA should distinguish the duration of the commercial relationship from the period during which confidentiality obligations continue.
Investment negotiations may end after a few weeks, while the information exchanged may remain commercially sensitive for considerably longer.
The appropriate duration depends on the information and the circumstances.
For example, a pricing proposal may lose its commercial significance after a relatively short period, while a proprietary manufacturing process may remain valuable for years.
Statutory protection for undisclosed information depends on the continued satisfaction of the applicable legal conditions, including secrecy and reasonable protective measures.
The agreement should therefore establish an appropriate contractual period without assuming that every category of information requires identical treatment.
It should also identify which obligations survive termination where continuing protection is intended.
Returning or Destroying Confidential Information
An NDA should establish what happens to confidential materials when negotiations end or the permitted purpose has been completed.
The disclosing party may wish to require the return of physical documents and deletion of electronic copies.
For example, a prospective investor may receive access to a virtual data room containing sensitive financial records.
If the investment does not proceed, the company may require the investor to stop using the information and return or delete relevant materials.
The agreement should address the treatment of copies held by authorised representatives and any appropriate confirmation of compliance.
However, some information may need to be retained to comply with applicable legal obligations or legitimate record-retention requirements.
The agreement should identify permitted retention arrangements and ensure that continuing confidentiality obligations remain applicable to retained information where appropriate.
A Practical Example: Protecting Information During Manufacturing Negotiations
Consider a UAE company developing a new consumer product.
It approaches a prospective manufacturer and provides detailed product specifications, technical drawings, and commercial information.
The parties sign an NDA prohibiting the manufacturer from disclosing the information to external parties.
However, the agreement does not expressly restrict the manufacturer from using the disclosed information for its own commercial activities.
Negotiations subsequently end, and the manufacturer begins developing a similar product.
The resulting dispute may concern whether the manufacturer was entitled to use the information and whether the material qualifies for statutory protection.
A more carefully prepared NDA could have established the permitted evaluation purpose, restricted unauthorised commercial use, and addressed access by the manufacturer’s employees and contractors.
It could also have established what would happen to technical documents when negotiations ended.
Whether the manufacturer’s conduct creates liability depends on the agreement, the nature of the information, the evidence, and applicable law.
The example illustrates why an NDA should address both disclosure and use.
What Happens If an NDA Is Breached?
An NDA may be breached where a receiving party discloses protected information without authorisation or uses it outside the agreed purpose.
The available legal consequences depend on the agreement, the nature of the information, and the applicable legislation.
Federal Law No. 11 of 2021 provides protection for information satisfying the statutory requirements for undisclosed information.
The law also addresses conduct involving unfair commercial practices in relation to protected information.
An NDA should establish practical procedures for responding to suspected unauthorised disclosure.
These may include prompt notification, reasonable steps to limit further dissemination, and appropriate cooperation in addressing the incident.
The parties should not assume that every contractual remedy will automatically be available exactly as written.
The appropriate legal response depends on the relevant obligations, the conduct involved, and the available evidence.
Documents Required to Draft an NDA
The information required depends on the purpose of the agreement and the material being disclosed.
Relevant documents and details may include:
- Identification or corporate documents of the contracting parties.
- Information concerning the proposed commercial transaction.
- A description of the confidential material.
- Details of intended recipients and permitted disclosures.
- Existing confidentiality obligations affecting the information.
- Relevant employment, consultancy, or commercial agreements.
- Any applicable regulatory or data-handling requirements.
Where information belongs to another business or is subject to an existing confidentiality obligation, the disclosing party should establish whether it is authorised to share that material.
The drafting process should also identify any necessary exceptions before the agreement is finalised.
NDA Drafting Assistance from Abdulrahman Alshaali Advocates & Legal Consultants
A non-disclosure agreement should reflect the information being protected and the circumstances in which it will be disclosed.
Abdulrahman Alshaali Advocates & Legal Consultants assists businesses and individuals with preparing and reviewing NDAs for investment discussions, commercial negotiations, consultancy engagements, and other transactions involving sensitive information.
Our services may include developing definitions of confidential information, establishing permitted-use restrictions, reviewing access controls, and addressing obligations that continue after the commercial relationship ends.
Where an NDA forms part of a wider transaction, our contract drafting services address the preparation and review of related agreements.
We assist clients in developing confidentiality arrangements appropriate to their commercial requirements and the applicable UAE legal framework.
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Request Assistance with Drafting Your NDA Agreement
Whether you are preparing to disclose commercially sensitive information, negotiating a business transaction, or reviewing an NDA provided by another party, the agreement should establish appropriate restrictions on the use and disclosure of confidential material.
Abdulrahman Alshaali Advocates & Legal Consultants assists clients with preparing and reviewing non-disclosure agreements under UAE law.
Contact our team to discuss your confidentiality requirements and the contractual protection appropriate to your proposed arrangement.
Frequently Asked Questions
Can an NDA Protect Information Disclosed During a Verbal Meeting?
Yes. An NDA may be drafted to cover oral disclosures, subject to the agreement’s validity and terms.
The parties should establish whether oral information is automatically covered or must be identified in a subsequent written confirmation.
If a dispute arises, evidence of what was disclosed and whether it falls within the contractual definition may become important.
Can an NDA Cover Information Shared Before the Agreement Was Signed?
An NDA may address earlier disclosures where the parties validly agree to the relevant obligations.
The agreement should identify the previous disclosures and explain which obligations apply to them.
However, the wording does not automatically establish liability for conduct that occurred before the agreement or override applicable legal requirements.
Is an NDA the Same as a Non-Compete Agreement?
No. An NDA principally regulates the use and disclosure of confidential information.
A non-compete agreement restricts specified competitive activities and is subject to the legislation applicable to the relevant relationship.
The two agreements may protect related commercial interests, but confidentiality obligations should not be used to impose unrestricted competition prohibitions.
Can Confidential Information Be Disclosed If a Court or Government Authority Requires It?
Disclosure may be required under applicable legislation or a lawful order from a competent authority.
An NDA should address legally compelled disclosure and establish appropriate notification procedures where notice is permitted.
A confidentiality clause cannot prevent compliance with mandatory legal obligations.
The receiving party should assess the scope of the legal requirement and avoid disclosing information beyond what is required.
Sources
Federal Law No. 11 of 2021 on the Regulation and Protection of Industrial Property Rights.
UAE Legislation Platform – Official Legislation
Cabinet Resolution No. 6 of 2022 Concerning the Executive Regulations of Federal Law No. 11 of 2021 on the Regulation and Protection of Industrial Property Rights.
