(Competition and Life Annuity)
Federal Decree-Law No. 25 of 2025 (the “New CTL“) regulates Aleatory Contracts in Book Four thereof, with Chapter One dedicated to provisions relating to “Competition” in Articles 946 and 947, and Chapter Two addressing “Life Annuity” provisions in Articles 948 through 952.The legislator has introduced certain amendments to the relevant provisions of Federal Law No. 5 of 1985 (the “Old CTL“). This article analyzes the key amendments as follows:
First: Competition
There are no fundamental amendments to the provisions on Competition, gambling, and wagering, except for certain improvements aimed at enhancing drafting, facilitating application, and expanding the scope of contractual freedom for the parties regarding the details.
The New CTL has established a clear and new definition of Competition in Article 946(1), treating it as an independent contract with its own provisions and requirements relating to the prize. As stated in the New CTL, “Competition is a contract whereby a person undertakes to provide a prize to whoever wins in a contest in which winning depends on the competitor’s work”. Furthermore, “In competition, it is valid for the obligation to provide the prize to be from some of the competitors or from others. It is not valid for it to be from all of them”. “If the competition is between two teams, each team is deemed one person in respect of the obligation to provide the prize”.
The New CTL has also removed certain articles that were included in the Old CTL containing detailed procedural provisions for Competition. In our view, the legislator’s approach reflects a deliberate intention to subject these details to the contractual freedom of the parties with respect to specifying the terms and procedures of the competition.
It should be noted that every agreement on gambling or wagering is void under the New CTL, as was the case under the Old CTL. Consequently, no legal effects requiring performance by the contracting parties arise from such agreements, given their invalidity by operation of law.
The following requirements are necessary for the validity of a competition contract under the New Law:
- The prize shall be known and the person obligated to provide it shall be specified by his identity.
- The prize may be cash, property, a present or deferred debt, or partly present and partly deferred.
- The subject of the contract shall be described in a manner negating uncertainty, and all conditions and procedures of the competition shall be specified therein.
Second: Life Annuity
In general terms, the New CTL contains the same provisions as set forth in the Old CTL, with certain minor amendments to refine the drafting and clarify application.
Notably, the New CTL explicitly provides in Article 948(3) that the obligation to pay a life annuity to another person is extinguished in cases of bankruptcy or insolvency of the obligor. This is a logical consequence, as the essence of the obligation is based on the concept of donation—that is, a person’s undertaking to pay a periodic annuity to another for the lifetime of either of them in accordance with a written agreement.
The New CTL provides that:
A person may undertake to another to pay him a periodic annuity for life without consideration.
In the following circumstances:
If the obligation relates to education, treatment, or maintenance, it shall be fulfilled according to custom, unless the obligation provides otherwise.
The disposition creating the obligation to pay a life annuity is not valid unless it is in writing, without prejudice to what the law requires in terms of special formality for gratuitous contracts.
The obligation to pay an annuity may be for the life of the obligor, the obligee, or any other person.
The obligation is deemed established for the life of the obligor, unless otherwise agreed.
The obligation terminates by the death, bankruptcy, or insolvency of the obligor.
Therefore, it is logical that this obligation is extinguished in cases of bankruptcy or insolvency of the obligor. Despite this logical inference, the explicit provision in the New Law will ensure clear application by the competent courts.
Key Contacts
Dr. Omar Al Azawe, Of Counsel, o.alazawe@tamimi.com
Youssef Mobasher, Paralegal, Y.Mobasher@tamimi.com