In Brief:
UAE law treats force majeure and exceptional circumstances as distinct legal doctrines, and neither applies automatically due to regional instability or war-related events. Force majeure requires impossibility of performance, while exceptional circumstances apply where performance becomes excessively burdensome and risks serious loss. Each doctrine carries different legal tests and remedies, and parties must prove a direct causal link to obtain relief. Businesses should carefully review contracts, comply with notice obligations, document mitigation efforts, and assess risks before invoking either doctrine.
Body:
The new Civil Transactions Law no. 25 of 2025 (“New CTL”) was issued on 1 October 2025 and was published on 14 October 2025. In accordance with Article 3 of its issuance articles, the New CTL comes into force on 1 June 2026. Therefore, all events that precede this date are governed by the currently applicable Civil Transactions Law no. 5 of 1985 (“CTL”). Accordingly, all references in this guide are to the CTL, and not, the New CTL.
1. Force Majeure: when performance becomes impossible
1.1. Key Elements:
The requirements for applying the doctrine of Force majeure can be extracted from Article 273 of the UAE Federal Civil Transactions Law no. 5 of 1985 and the well-established judgments issued from the UAE supreme courts, as follows:
- Unforeseeability: the event that a party seeks to rely on to apply the force majeure doctrine should be unforeseeable at the time of entering into the contract.
- Unavoidability: the event must be caused by a reason beyond the parties’ control, and the consequences of the force majeure event must be unavoidable, despite exerting reasonable efforts to avoid or mitigate them.
- Impossibility: the event must render the performance of the relevant party’s obligation impossible, whether fully or partially.
1.2. Legal Consequences:
If the performance of the contractual obligations becomes completely impossible, the contract will be rescinded automatically subject to a declaratory judgment stating the same from the competent court. When the contract is rescinded, the parties are restored to their pre-contractual positions, however if achieving such restoration is impossible, compensation can be awarded to the prejudiced party. Finally, if the impossibility relates to only part of the obligations, then the obligor will only be exempted from performing such part.
2. Exceptional Circumstances: When Performance Is Still Possible but Excessively Onerous
2.1. Key Elements
- Exceptional event of a public nature: there must be an exceptional event of a public nature that affects a specific group/segment of people and not only the obligor.
- Unforeseeability: the event must be unforeseeable at the time of entering into the contract.
- Unavoidability: the event must be unavoidable even after exerting reasonable efforts to avoid or mitigate it.
- Excessive Hardship: the event must cause excessive hardship to the extent that the obligor would suffer serious loss in performing the relevant contractual obligation. A loss that a person may suffer in normal circumstances or in the normal course of trading is not considered a reason to apply the doctrine of exceptional circumstances.
- Valid agreement under which performance is ongoing: Event must occur between entering into the contract and completion of its performance.
2.2. Legal Consequences:
The presence of all elements of the exceptional circumstances doctrine leads to interference from the competent court to amend the parties’ agreement to the extent that the economic equilibrium of the contract is restored. In practice this means that the Court shall amend the relevant part(s) of the agreement to ensure that the effect of the serious loss caused by the exceptional circumstances will be appropriately allocated among the contract parties.
3. Mitigation Duty
The CTL does not provide separately for the duty of mitigation, which can be viewed as part of the element of unavoidability, in addition to the widely applicable principle of good faith stipulated in Article 246 of the CTL that governs all contracts, governed by UAE law.
Thus, the court that hears a claim that is raised by a party seeking the application of either doctrine must determine whether such party exhausted all possible options to avoid or mitigate the consequences of the force majeure or exceptional event.
If the court finds that there was a way to avoid or mitigate those consequences, the court will likely reject this party’s claim.
4. Overview of the approach of the UAE courts to the doctrines
The legal threshold to prove either of doctrines is high as the UAE Courts tend to adopt the well enshrined principle that the contract is the law of its parties, and for a court to deviate from this principle, it must assess the application of the elements of the doctrine strictly. Therefore, a party must be prudent before seeking to invoke these doctrines and should not assume that either will be applicable to its case merely due to current events in the region. A general review of recent judgments issued by several courts in UAE reveals that the courts are reluctant to apply these doctrines lightly and that each required element is carefully reviewed to ensure that all elements have materialised in order that the relevant doctrine can be applied.
5. Validity of agreements that regulate the consequences of the doctrines
Article 287 of the CTL allows parties to include clauses in their agreement, which address the arrangements that apply in the event of a force majeure event applying, including the process to apply to determine whether an event qualifies as force majeure, and the actions to be taken in such case. If there is any agreement between contract parties in relation to force majeure, this agreement would, in principle, supersede any contradictory CTL provisions.
Contrary to force majeure, Article 249 of the CTL renders invalid any agreement that contradicts it, meaning that parties to an agreement cannot exclude the application of exceptional circumstances doctrine to their agreement.
6. Next Steps
- Review the "Notices" and "Force Majeure" clauses in your contract and ensure compliance (e.g., "Notice must be given within 72 hours"). Failure to meet contractual deadlines can affect your right to relief.
- Compile a folder for all communications, government circulars, news reports, and internal logs that evidence the impact of the event.
- Assess the consequences: What is the cost increase? How many days is the delay? You will need this information to meet the “Serious Loss" test in court or to prove the impossibility of performing the obligation.
- Reach out to the other party early. Frame the conversation around business continuity rather than legal excuse.
- Instead of declaring performance impossibility, consider presenting a "Plan B". Can you deliver 50% now? Can you use a different shipping route if the other party shares the increased cost? Can you defer performance of certain obligations or allow extension of time for your supplier/contractor?
- Document Cooperation: If you offer a reasonable compromise and the other party refuses, this refusal may potentially be useful evidence of your good faith and their lack of cooperation should the matter develop into a legal dispute.
7. Conclusion/Recommendation:
The central message of this Article is that neither force majeure nor exceptional circumstances should be invoked reflexively. Under UAE law, both doctrines are exceptional pathways subject to strict legal thresholds, rigorous judicial scrutiny, and detailed evidential requirements. Businesses facing disruption should therefore begin with a careful review of the contract, a disciplined factual and financial assessment, and a documented mitigation strategy in order to determine whether the situation amounts to impossibility, excessive hardship, or regular commercial risk.
A measured early response often preserves both legal rights and commercial relationships. Where the issue is complex, early legal assessment is critical to avoid adopting a position that may later be inconsistent with the contract, the evidence, or applicable principles of UAE law. For any query on this topic, please contact Mohamed Eid at m.eid@hadefpartners.com.
This article is intended for general informational purposes only and does not constitute legal advice. Readers should seek independent legal counsel in relation to their specific circumstances.