Given the ongoing regional geopolitical instability, which disrupts airlines and key global trade corridors such as the Strait of Hormuz, it is recommended to have a wide understanding for the United Arab Emirates (“UAE”) laws and legislations concerning the non-performance of contractual obligations due to force majeure and exceptional circumstances. From businesses and consumers prospective, understanding these doctrines is needed to determine the risks when such circumstances prevent performance.
The Legal Framework
The UAE legal framework distinguishes between two primary avenues for relief under the UAE Federal Civil Code no. 5 of 1985 (“Civil Code”), were Article 273 of the Civil Code which regulated the Force Majure doctrine applies when an event renders the performance of a contract absolutely impossible. Pursuant to the precedential court judgments for an event to qualify as a force majeure, the event must be unforeseeable at the time of signing, unavoidable despite mitigation efforts, and make performing the contractual obligations impossible not only more expensive. Establishing force majeure leads to the terminating the contract and returning parties to their pre-contractual state.
While pursuant to Article 249 of the said law which regulates the exceptional circumstances, the exceptional circumstances occur when performance remains possible but it has become excessively difficult and threatening the obligor with a grave loss. In such cases, judges have discretion to revise the contractual terms by reducing obligations or extending deadlines, rather than terminating the agreement entirely.
Legal Position of the Non-Performing Party
From the perspective of a party unable to perform contractual obligations, such as suppliers, the burden of proof is high. As UAE courts require a clear causal link between the conflict and the impossibility of performance in order to qualify as a force majeure. Also, it is very important that the nonperforming party proves to the court that these circumstances were unforeseeable at the time of contracting and unavoidable.
Pursuant to the Dubai Court of Cassation Commercial Appeal no. 1 of 2024, court ruled that the Russia-Ukraine war constituted a triggering for Force Majeure. The court judgment stated that since the war constitutes an unforeseeable event at the time of contracting and that the subsequent closure of ports and cessation of services by international carriers which occurred because of the war made the contractual performance impossible. Consequently, The court decided that the party didn’t breach the contract since they couldn’t deliver the products because of something outside their control.
However, in the Dubai Court of Cassation Real Estate Appeal no. 624 of 2025, the judges made it clear that if you want to use Force Majeure as a defense, the event has to be the sole reason you couldn’t meet your contract obligations. As seen in this court judgment, the court has the absolute right to reject the claim if the party was already in default prior to the event.
Conclusion
In summary, it should be noted that using force majeure or exceptional circumstances to get out of a contract in the UAE is not automatic. The courts look at the facts of every case to decide if a contract should be cancelled or if the terms should just be adjusted.
Under the UAE laws, war can be recognized as a valid basis for relief from contractual obligations, but it is not a "blanket excuse”. As shown by the court precedents, there is a difference between a situation that is completely impossible (where the contract ends) and situations that makes it very difficult or expensive to perform the contractual obligations (where a judge might reduce the obligations).
Regional conflicts and instability can be a valid argument, but it is not guaranteed argument. To win such a case, the failure party must prove that the event was unexpected, unavoidable, and was the only reason they couldn't perform their contractual obligations. Most importantly, if a party was already late or in trouble before the conflict started, they cannot use the war as an excuse later.
Finally, if you are unsure where you stand, or if you want to know how these rules effect your contracts, just reach out to our team.
