Force Majeure Under UAE Law: The Legal Framework

Periods of uncertainty often lead individuals and businesses to question their contractual obligations. Recent regional developments have prompted many people in the UAE to ask whether external events may allow them to suspend, renegotiate, or terminate their contractual commitments.

These questions arise across different types of contracts. For example, buyers may reconsider real estate purchase agreements, tenants may face challenges meeting rental obligations, and companies may experience disruptions affecting commercial contracts. In each of these situations, the legal concept of force majeure is often raised.

But what does force majeure actually mean under UAE law? And when can it legitimately apply? Understanding the legal framework and how UAE courts interpret force majeure is essential for assessing whether a contract may be terminated due to extraordinary circumstances.

Summary of the Legal Framework in the UAE

In the UAE, the concept of force majeure is governed by both legislation and judicial precedent. From a legislative perspective, the principle is primarily addressed in the UAE Civil Transactions Law (Federal Law No. 5 of 1985). Specifically, Article 273(1) governs both the application and legal consequences of force majeure in bilateral contracts. The provision states:

“In contracts binding on both parties, if force majeure supervenes which makes the performance of the obligation impossible, the corresponding obligation shall cease, and the contract shall be automatically cancelled.”

This article establishes an important principle. Force majeure applies only where the performance of the contractual obligation becomes impossible. When this threshold is met, the legal consequence is not merely a temporary suspension or partial exemption from obligations. Rather, the contract itself may be automatically cancelled, releasing both parties from their obligations.

However, Article 273 does not elaborate on the precise conditions that must be satisfied for force majeure to exist. As a result, UAE courts have played a significant role in clarifying how the concept should be interpreted and applied.

Importance and Practical Impact of Force Majeure

Force majeure can arise in a wide range of contractual contexts. For example:

• In real estate transactions, buyers may attempt to rely on force majeure when extraordinary circumstances prevent completion of a property purchase.
• Similarly, tenants may raise force majeure arguments in relation to rental contracts when external events affect their ability to meet lease obligations.
• Businesses may also consider invoking force majeure in commercial contracts if operational disruptions prevent them from performing their contractual duties.

Despite its frequent mention, force majeure is not easily established under UAE law. Courts apply a strict interpretation of the concept, and the threshold for successfully invoking it is high. This means that many situations involving economic hardship, market fluctuations, or general uncertainty may not qualify as force majeure. Understanding the legal criteria applied by UAE courts is therefore critical before attempting to rely on this doctrine.

Key Conditions for Establishing Force Majeure

While the Civil Transactions Law defines the legal consequence of force majeure, UAE courts have clarified the conditions required to establish it. Over time, the Dubai Court of Cassation has identified several key requirements that must be satisfied for force majeure to apply. Importantly, these conditions are cumulative, meaning all of them must be met.

1. Unforeseeability of the Event

The event that allegedly constitutes force majeure must have been unforeseeable at the time the contract was concluded. If the circumstances could reasonably have been anticipated when the parties entered into the agreement, the event will typically not qualify as force majeure.

2. Absolute Impossibility of Performance

The event must render the performance of the contractual obligation absolutely impossible. This is a critical requirement. UAE courts distinguish between situations where performance is impossible and situations where performance has simply become more difficult or financially burdensome.

3. Direct Causal Link Between the Event and Non-Performance

The party invoking force majeure must also demonstrate a direct causal link between the extraordinary event and their inability to perform the contractual obligation. In other words, the non-performance must be directly caused by the force majeure event itself.

If other factors contributed to the failure to perform, the claim may not succeed. For example, a party cannot rely on force majeure if their non-performance preceded the alleged force majeure event.

The Role of the Courts

Even where these conditions appear to be present, determining whether force majeure exists ultimately remains a matter for judicial assessment. UAE courts evaluate each case individually, examining the specific circumstances surrounding the contract and the alleged external event. This means that the analysis is often fact-specific and discretionary.

As a result, whether particular circumstances constitute force majeure may vary depending on the evidence presented and the court’s evaluation of the case.

How LYLAW Can Assist You

Determining whether force majeure applies to a particular contract requires careful legal analysis. The outcome often depends on the wording of the contract, the nature of the event in question, and the actual impact on the parties’ ability to perform their obligations.

LYLAW is a Dubai based law firm with extensive experience advising clients on contractual disputes and force majeure claims in the UAE. The firm regularly assists individuals and businesses with reviewing contractual obligations, assessing the applicability of force majeure, and navigating disputes arising from unexpected external events.

Whether the issue involves real estate transactions, tenancy agreements, or commercial contracts, obtaining legal guidance early can help parties understand their rights and identify practical solutions within the framework of UAE law.