Commercial contracts are signed with the expectation that both sides will perform what they have promised. But sometimes an unexpected event occurs that is outside the parties’ control and makes performance impossible.
This is where the concept of force majeure becomes relevant. For businesses that are facing a force majeure UAE contract, it is important to understand that the mere disruption is not automatically a release of a party’s obligation to perform.
What Is Force Majeure?
Force majeure generally refers to an event outside the control of the contracting parties that prevents a contractual obligation from being performed.
The important word is impossible. A contract does not normally become a force majeure case simply because performance has become more expensive, slower or commercially inconvenient. There must be a sufficiently serious connection between the event and the inability to perform the particular obligation.
Whether a particular event qualifies will therefore depend on the contract, the circumstances and the actual effect of the event.
Force Majeure Under UAE Law
The current legal framework is found in Federal Decree-Law No. 25 of 2025 Promulgating the Civil Transactions Law, which came into force on 1 June 2026.
But under Article 236 if the performance of an obligation under a bilateral contract becomes impossible due to force majeure, the corresponding obligation is discharged, and the contract is automatically terminated.
The Article also deals with less straightforward situations. If performance becomes impossible only in part, either party may rely on the extinction of the corresponding obligation or ask the court to cancel the contract. Where the impossibility is temporary in a continuing contract, the parties may rely on the corresponding obligation being extinguished, seek modification of the contract or request its cancellation.
Therefore, the legal result will depend on whether the impossibility is total, partial or temporary.
Force Majeure Is Different From Hardship
One of the most important distinctions in UAE contract law is between impossibility and hardship.
Exceptional circumstances of a general nature that could not reasonably have been foreseen at the time of contracting may justify intervention by the court where performance remains possible but has become so onerous that it threatens the debtor with grave loss according to Article 224 of the Civil Transactions Law,
In such cases, the court may balance the interests of the parties and reduce the onerous obligation to a reasonable level or order cancellation of the contract. Any agreement to exclude this statutory power is invalid. This distinction can make a difference in the remedy available to a business.
Does the Contractual Force Majeure Clause Matter?
Businesses should always examine the force majeure clause in their agreement before deciding how to respond.
A well-drafted clause commonly identifies the events covered, the obligations affected, notification requirements, mitigation measures, suspension periods and the circumstances in which either party may terminate the contract.
It matters how it is worded. The parties may have agreed on processes to be followed when there is disruption. The wider duty of good faith is also important. As per Article 221, contracts shall be performed in accordance with their contents and in accordance with the principle of good faith.
For businesses that are facing serious disruption, early review of the contract can therefore prevent the situation from becoming a larger commercial dispute. Mrs. Awatif Al Khouri’s experience in commercial matters also points to the practical importance of examining the contractual wording, supporting evidence and effect of the event before relying on force majeure.
What Should a Business Do When Force Majeure Occurs?
First, the business must identify the precise obligation that it is unable to perform and exactly how the event has made performance impossible. Keep all relevant evidence, including government notices, correspondence, shipping documents, closure notices, supplier communications and other documents that show the effect of the event.
The force majeure clause should then be carefully examined for notice periods and any duty to mitigate the effect or to consider alternative performance.
Businesses should also avoid assuming that every serious difficulty is force majeure. A party may be liable for breach of contract if it fails to perform the contract without a valid reason. If there are significant payments, termination rights, or continuing business relationships, it may be worth consulting a commercial contract lawyer.
What Happens If the Contract Is Cancelled?
Where a contract is cancelled, Article 237 generally requires the parties to be restored to the position they were in before the contract. If restoration is impossible, compensation may be awarded.
This can raise practical questions about advance payments, goods already delivered, services already performed and expenses incurred before the force majeure event.
Conclusion
A force majeure protects a business if circumstances really make performance impossible, but it is not a general escape from a bad commercial deal. The nature of the event, its impact on performance and the wording of the contract must all be carefully considered.
In making the choice between suspending, renegotiating or terminating an agreement, businesses need to distinguish between impossibility under Article 236 and exceptional hardship under Article 224. Timely documentation and compliance with contract notice provisions can also be a huge factor in a dispute.
If you are a company unsure about a force majeure UAE contract, early advice can help you to protect your contractual rights and commercial relationships. Mrs. Awatif Al Khouri assists companies in assessing the legal consequences of unforeseen events and identifying suitable contractual and legal remedies under UAE law.
FAQ’s
1. What is force majeure in UAE commercial contracts?
Force majeure generally refers to an external and unavoidable event that makes contractual performance impossible rather than merely difficult or expensive. Whether an event qualifies depends on the applicable law, the contract’s wording and its actual effect on performance. Courts and tribunals assess each claim according to its particular facts and evidence.
2. Which events may qualify as force majeure in the UAE?
Potential events may include natural disasters, war, government restrictions, widespread disruption or other circumstances beyond the affected party’s control. However, no event automatically qualifies in every contract. The party relying on force majeure must usually show that the event was unforeseeable, unavoidable and directly prevented the relevant obligation from being performed.
3. Does force majeure automatically terminate a commercial contract?
Force majeure does not always terminate the entire contract. The legal effect depends on whether performance has become temporarily, partially or permanently impossible and on the contract’s force majeure clause. Possible consequences may include suspension, partial release, adjustment or termination. The affected obligation and causal impact must therefore be examined carefully.
4. Must a party give notice before relying on force majeure?
Many commercial contracts require prompt written notice containing details of the event, affected obligations, expected duration and mitigation measures. Failure to comply with the agreed procedure may weaken the claim or create separate liability. Even where the contract is silent, timely notice and clear communication can be important evidence of good-faith contractual performance.
5. Is increased cost or commercial hardship the same as force majeure?
No. Increased costs, reduced profitability, supply difficulties or an unfavourable market may make performance burdensome without making it impossible. Such circumstances may be considered under contractual hardship provisions or applicable legal principles rather than force majeure. The distinction matters because hardship and impossibility can produce different remedies and legal consequences.
6. What evidence is needed to support a force majeure claim?
Relevant evidence may include government orders, closure notices, shipping records, supplier correspondence, project reports, financial documents and a detailed chronology. The claimant should establish when the event occurred, why it was beyond its control, how it prevented the specific obligation and what reasonable steps were taken to reduce the disruption or find alternatives.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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