In Brief:
- The legal threshold for force majeure under UAE law is very high, requiring proof that performance has become impossible, not merely more difficult or costly.
- Many construction contracts, including the standard FIDIC forms, expressly list certain events as force majeure, which may entitle a party to an extension of time and, in some cases, costs.
- Parties must act swiftly to issue contractual notices, as these are often a strict condition to claiming relief. Failure to do so can result in losing the right to make a claim.
The current regional uncertainty in the Middle East has raised urgent questions about contractual rights and obligations. This article considers the doctrine of force majeure under UAE law and common construction contracts, providing key insights for companies navigating project disruptions.
The ongoing regional developments have led many in the construction industry to consider whether they can invoke "force majeure" to excuse non-performance or claim relief from their contractual obligations. While the term is frequently used, its legal application in the UAE requires careful analysis of both the contract and the underlying law.
Force Majeure under UAE Law: For contracts governed by UAE law, the primary provision is Article 273 of the Federal Civil Transactions Law (the "Civil Code"). This article provides that if force majeure makes performance of an obligation impossible, the corresponding obligation is extinguished and the contract is automatically cancelled.
The UAE courts have interpreted "impossibility" strictly. The event must be unpredictable, impossible to prevent and the sole cause of the non-performance. Mere economic hardship, increased cost, or delay is typically insufficient to meet this test. Therefore, relying solely on Article 273 is challenging unless the uncertainty has created a direct physical or legal barrier to performance.
Contractual Force Majeure Clauses (FIDIC Example): Most modern construction contracts contain force majeure clauses that provide a more detailed framework. For example, the standard 1999 FIDIC Conditions of Contract, which is widely used in the region, specifies that a number of matters are majeure events under Clause 19.1.
To claim relief under this clause, a party must prove the event was beyond its control, not reasonably foreseeable, and could not have been reasonably avoided. Unlike Article 273, the FIDIC regime does not necessarily require absolute impossibility; it is often sufficient that the party was "prevented" from performing. A successful claim generally entitles the contractor to an extension of time and, for events like war, recovery of associated costs.
However, these clauses almost always include strict notice requirements. Under standard unamended FIDIC, a notice of force majeure must be given within 14 days of the event, and a formal claim notice must follow within 28 days under Clause 20.1. These deadlines are often absolute bars to entitlement.
The Hardship Doctrine (Article 249): Where performance has not become impossible but is "oppressive" and threatens "grave loss" due to "public exceptional unpredictable circumstances," Article 249 of the Civil Code may offer an alternative remedy. This "hardship" doctrine allows a judge or arbitral tribunal to intervene and adjust the burdensome obligation to a reasonable level. This may be more applicable than force majeure for situations involving severe cost escalation or supply chain disruption rather than outright impossibility.
Recommendation: The legal bar for proving force majeure under UAE law is high. While contracts may provide more accessible relief, the procedural requirements, particularly notice provisions, are unforgiving. Project participants should immediately review their contracts to understand their rights and obligations. It is critical to assess whether the current situation renders performance utterly impossible or merely more burdensome, as this will determine the appropriate legal strategy.
Our firm is actively advising clients on these challenges. Should you require assistance in assessing your contractual position or preparing/reviewing necessary notices, please contact Humayun Ahmad at hm.ahmad@hadefpartners.com for more information.