Force Majeure and Contractual Performance under UAE Law
In commercial contracts, a single signature can move millions of dirhams. But when unexpected events disrupt business, parties often turn to one legal defense: force majeure.
The courts in the UAE, however, have made it clear that this defense is not easy to invoke. Through a series of decisions, UAE courts set strict conditions for when force majeure can excuse a party from performing its contractual obligations. Economic hardship or market pressure alone is not enough. The law requires something far more serious: a truly unforeseeable event that makes performance impossible.
In this article, we examine how courts in the UAE shaped the concept of force majeure, and what its rulings reveal about when the law will and will not excuse a party from fulfilling its contractual commitments.
Legal Framework and Concept of Force Majeure
Force majeure is not simply a standard clause added to contracts as a formality. It is a legal doctrine shaped by legislation and clarified through the rulings of UAE Courts.
Over time, the Court has established clear criteria for when this defence may be invoked. It is recognized only when four conditions are fully met.
- The event must have been unforeseeable at the time the contract was signed;
- The event must be beyond the debtor’s control and not caused by their actions negligence;
- Its consequences must be impossible to prevent or avoid through reasonable means;
- The event must make performance objectively impossible, not simply difficult, expensive, or inconvenient.
The Court has also made clear that a force majeure clause in a contract does not automatically excuse a party from liability. The final determination remains within the discretion of the judge, who must assess the facts and evidence of each case.
Legislative Basis
The judicial approach outlined above is grounded in Article 273 of the UAE Civil Transactions Law, which provides that an obligation is extinguished if its performance becomes impossible due to an external cause beyond the debtor’s control.
Meaning:
- Impossibility of performance is the essential condition.
- The external cause must be proven.
- The burden of proof rests entirely on the party raising the defense.
Accordingly, it is not enough to refer broadly to an economic crisis or exceptional circumstances. The party invoking force majeure must demonstrate a direct and specific impact on the contract in dispute, showing that the event itself made performance impossible.
Judicial Applications
The principles governing force majeure have been clarified through a series of rulings by UAE courts. These decisions show how strictly the courts apply the doctrine in practice.
- Appeal No. 730 of 2015 – Federal Supreme Court
The Court held that force majeure is an unforeseeable event that leads to an actual impossibility in performing the contractual obligation.
It also confirmed that determining whether force majeure exists is a matter of fact to be assessed by the trial court, provided that the judgment is based on sound reasoning and supported by evidence.
- Appeal No. 479 of 2021 – Dubai Court of Cassation
In this ruling, the Court addressed the impact of global events such as pandemics. It held that the mere existence of a widespread crisis is not sufficient to establish force majeure.
What matters is whether there is a direct causal link between the event and the failure to fulfil the contractual obligation. The Court clarified that economic or commercial consequences alone, even if significant, do not amount to legal or factual impossibility of performance.
- Appeal No. 174 of 2023 – Dubai Court of Cassation
The Court rejected the force majeure defense because the party invoking it failed to prove that the exceptional event was the direct cause of the inability to perform
The Court further reaffirmed that a breach resulting from negligence or circumstances within the control of the contracting party cannot be characterized as force majeure. As in all such cases, the burden of proof lies entirely on the party relying on the defense.
Distinguishing Between Force Majeure and Exceptional Circumstances
UAE law draws a clear distinction between force majeure and exceptional circumstances, often referred to as the hardship doctrine. Although both arise from extraordinary events, their legal consequences are fundamentally different.
Force majeure applies when an event makes the performance of the contractual obligation objectively impossible. In such cases, the obligation may be terminated or suspended, depending on whether the impossibility is permanent or temporary.
Exceptional circumstances, on the other hand, do not make performance impossible. Instead, they render the obligation excessively burdensome or difficult for one of the parties. In these situations, the court may intervene to rebalance the contractual obligations in order to restore fairness between the parties, rather than bringing the contract to an end.
Evidentiary Standard Before the Courts
Judicial precedents confirm that invoking force majeure cannot rely on mere allegations. The party relying on this defense must present objective and convincing evidence demonstrating that the legal requirements are fully satisfied.
In practice, the party invoking force majeure must establish, through evidence before the court, the conditions outlined earlier, namely:
- The actual occurrence of the exceptional event;
- That the event was unforeseeable at the time of the contract;
- The inability to prevent or mitigate its effects through reasonable means;
- The existence of a direct causal link between the event and the failure to perform the contractual obligation.
In assessing these elements, courts often rely on official documents, expert reports, and the factual circumstances surrounding the execution of the contract.
Sixth: Practical Examples of Force Majeure
Force majeure may arise in exceptional situations that make performance impossible to preform, such as:
- Natural disasters, such as earthquakes or floods, which get in the way and prevent construction work.
- Sudden government decisions that completely prohibit a specific activity.
- Wars or forced border closures, which makes performance impossible.
In contrast, the following situations generally do not constitute force majeure:
- Market fluctuations.
- Economic losses or reduced profitability
- Default by suppliers or subcontractors, unless such default is itself caused by an uncontrollable exceptional event.
Legal Effects of Force Majeure on Contractual Obligations
The legal consequences of force majeure depend on the nature of the obligation and the circumstances surrounding the contract. If force majeure results in permanent impossibility of performance, the obligation to perform ceases to exist by the law, but If the impossibility is temporary, performance of the obligation may be suspended until the obstacle ceases.
In bilateral contracts, the impossibility of performing one party’s obligation may lead to the automatic termination of the contract, since the contractual balance between the parties can no longer be maintained.
Force Majeure Clauses in Contracts
Many modern commercial contracts contain specific force majeure clauses that define qualifying events and establish notification procedures between the parties, and determine the period during which contractual obligations may be suspended.
These clauses help allocate risk and provide contractual guidance on how parties should respond to unexpected events. However, their existence does not eliminate the need to satisfy the legal requirements of force majeure, which is why the court has the final authority in assessing whether the circumstances of the case meet the legal threshold for force majeure.
Conclusion
The rulings of the courts in the UAE send a clear message: force majeure is not a convenient escape from contractual obligations. The courts approach it cautiously, aware that an overly broad interpretation would undermine the stability of commercial transactions and invite the exploitation of the doctrine by parties seeking to avoid their commitments.
Economic pressure, market volatility, or commercial losses, however significant, do not by themselves release a party from its contractual promises. What the law requires is far more demanding: an extraordinary event that truly places performance beyond the control of the parties and renders the obligation impossible to perform.
For businesses operating in the UAE, the lesson is straightforward. The success of a force majeure defence depends not on the scale of the crisis invoked, but on the evidence establishing a direct causal link between the event and the inability to perform the contract.
This way, the courts maintain a careful balance between protecting parties from genuine and uncontrollable disruptions, while preventing the misuse or exploitation of force majeure as a means of escaping contractual responsibility.
Copyright: Dr. Mohammed Hassan Al Raeesi Advocates & Legal Consultants retains all intellectual property rights to this content. No third party may use, copy, or modify any part of it without prior permission and without proper attribution to our firm.
Disclaimer: This is a conceptual framework intended for thought leadership and does not constitute legal or financial advice. For professional evaluation of your company’s policies, please contact our firm.
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