Force Majeure in an Age of Conflict: What UAE Contracts Actually Say vs. What Parties Expect

The world has changed dramatically since 2020. First the COVID-19 pandemic, then the Russia-Ukraine war, and now the cascading effects of conflicts across the Middle East — including Red Sea shipping disruptions triggered by Houthi attacks — have pushed force majeure clauses from boilerplate obscurity to the centre of commercial disputes. Parties across the UAE and the broader region are invoking force majeure with increasing frequency, often discovering that the clause they never paid much attention to does not say what they thought it did. 

This article examines how force majeure operates across the UAE’s distinct legal frameworks, why the current conflict landscape creates novel challenges for businesses relying on it, and what practical steps contracting parties should take now. 

What UAE Law Actually Says 

Unlike common law jurisdictions, the UAE has a civil law framework that expressly addresses force majeure. Two provisions of the UAE Civil Code (Federal Law No. 5 of 1985) are central until the implementation of the Federal Decree-Law No. 25 of 2025 (“New Civil Transactions Law”) which comes into effect on 1st June, 2026 (dealt with in more detail below). Article 273 provides that in contracts binding on both parties, if a force majeure event renders performance impossible, the corresponding obligation is extinguished and the contract is automatically terminated.1 Article 287 provides that if a person proves that loss arose from an external cause — including force majeure, an act of God, or an act of a third party — the obligation to compensate falls away, unless there is an explicit agreement to the contrary.2 There are many more in the contrary that are much more in the sudden situ. 

For a force majeure event to be legally recognised under UAE law, three elements must generally be satisfied.3 The event must be: (i) unforeseeable at the time the contract was concluded; (ii) unavoidable, meaning the affected party could not have prevented it; and (iii) externally caused, i.e., not attributable to the affected party. 

Importantly, UAE law draws a distinction between total impossibility — which extinguishes the obligation4 — and partial or temporary impossibility. Where performance is merely more difficult or more expensive, UAE courts have been reluctant to grant full relief. This is a critical distinction that parties often overlook when invoking force majeure clauses. 

It is also important to note that a significant legislative development is on the horizon. The UAE Civil Code (Federal Law No. 5 of 1985) has been repealed and replaced by a new Civil Transactions Law (the Federal Decree-Law No. 25 of 2025), due to enter into force on 1 June 2026.5 While the new law modernizes the UAE’s civil framework, it largely preserves the existing treatment of force majeure, now reflected under Articles 236, and 249 of the New Civil Transactions Law. Businesses entering into contracts governed by UAE law should ensure their legal advisers are familiar with the incoming framework. 

Pre-Contractual Disclosure and Good Faith under the New Law 

One reform introduced by the New Civil Transactions Law that has a direct bearing on force majeure and renegotiation is the introduction of pre-contractual disclosure obligations. Parties engaged in contract negotiations will be required to disclose fundamental information relevant to the other party’s decision to contract. This represents a shift from the current framework, which focuses principally on post-contractual liability. 

For businesses renegotiating existing contracts or entering into new ones in an environment of heightened commercial risk, this has two practical implications. First, a party that is aware of circumstances likely to affect its ability to perform, such as supply chain disruptions, financial instability, or exposure to sanctions, may need to proactively disclose these risks during negotiations. Relying on force majeure or hardship as a fallback at a later stage may no longer be sufficient.. Second, a party that enters into a contract without disclosing material risks may find its position weakened if it later seeks to invoke force majeure in relation to those very risks. 

The disclosure obligation reinforces the broader principle of good faith that runs through the UAE’s contractual framework — a principle that courts have consistently applied when assessing both force majeure claims and renegotiation conduct. Businesses should factor this into their documentation practices now, even before the new law takes effect on 1 June 2026. 

Why Payment Obligations Are Almost Never Excused 

A distinction that catches many businesses off guard is that force majeure, under UAE law, applies to the impossibility of performing non-monetary obligations — the delivery of goods, the completion of construction works, the provision of services. The obligation to pay money is a different matter entirely. 

A company whose revenue has collapsed, whose supply chain has been severed, or whose operations have been disrupted by conflict may well be unable to afford to pay. But payment is virtually never rendered impossible by an external event in the sense required by Article 273. The banking system continues to function; the mechanism for transferring funds remains available. The change pertains to a deterioration in the party’s financial capacity to perform, which, while potentially constituting economic hardship, does not meet the legal threshold of impossibility required to invoke force majeure.This principle is well established in civil law systems and has been affirmed in international arbitral practice.. The relevant change lies in the party’s diminished financial capacity, which may render performance excessively onerous and thereby attract judicial intervention under Article 249. However, it does not rise to the level of objective impossibility required to sustain a force majeure claim. The remedies are different, and the success rate is materially higher when the correct doctrine is pleaded. 

Parties negotiating deferral or restructuring of payment obligations in the current environment should be aware of this distinction. A creditor who receives a force majeure notice as justification for non-payment is unlikely to accept it at face value, and a court is unlikely to uphold it. 

The Foreseeability Problem in a Post-2022 World 

One of the most significant challenges facing parties invoking force majeure today is the foreseeability threshold. The Russia-Ukraine conflict began in 2022. Houthi attacks on Red Sea shipping lanes escalated significantly from late 2023. Armed conflict in parts of the Middle East has been ongoing, in various forms, for years. 

For contracts entered into after these events became widely known, UAE courts and arbitral tribunals are likely to take the position that geopolitical instability and its associated risks — including supply chain disruption, shipping route closures, and sanctions — were foreseeable at the time of contracting. A party that signed a long-term commodity supply agreement in 2023 and now seeks to invoke force majeure due to Red Sea disruptions will face a difficult argument. 

This does not render force majeure unavailable — but it does raise the bar significantly. Parties will need to demonstrate that the specific event, not merely the general instability, was unforeseeable and unavoidable. 

Red Sea Disruptions: A Live Case Study 

The Houthi attacks on commercial shipping in the Red Sea had forced vessels to reroute around the Cape of Good Hope, adding thousands of nautical miles, weeks of transit time, and significant cost to shipping routes between Asia, the Gulf, and Europe.6 For UAE businesses dependent on imports, exports, or just-in-time supply chains, the impact has been material.7 

Several issues arise for those seeking to invoke force majeure in this context: 

• Rerouting is possible, although costly — which supports the argument that performance is not truly impossible, merely more expensive. 

• UAE courts have historically required genuine impossibility; increased cost alone is unlikely to suffice. 

• The doctrine of hardship under Article 249 of Civil Code8 — which allows courts to reduce obligations that have become exceptionally burdensome — may offer an alternative avenue, though courts exercise this power sparingly.9 

Parties in shipping, construction, commodities, and manufacturing sectors should review their contracts carefully to understand whether delivery timelines, price escalation clauses, or alternative routing obligations affect their force majeure analysis. 

What UAE Courts Have Said: Verified Jurisprudence 

While the present conflict is still too recent for dedicated judicial treatment, UAE courts have established clear principles in closely analogous circumstances arising from the COVID-19 pandemic that are directly relevant to current force majeure assessments. 

In three judgments—  Abu Dhabi Court of Cassation Judgment 512 of 2021, and Dubai Court of Cassation Judgment 28 of 202410 — the courts established the following key principles: 

• True impossibility is required. Force majeure does not merely make performance onerous; it must render it objectively impossible. Increased costs or operational difficulties do not satisfy this threshold. 

• Force majeure must be the sole cause. In Judgment 512 of 2021, the Abu Dhabi Court of Cassation confirmed that force majeure must be the sole reason for non-performance – concurrent contributing causes will undermine the claim. 

• Foreseeability is assessed at the time of contracting. Where restrictions were already in force or widely known at the date the contract was signed, the court refused force majeure relief on grounds that the risk was foreseeable. 

These principles apply with equal force to conflict-related force majeure claims today. A party seeking to rely on regional hostilities or shipping disruptions will need to demonstrate that the event was the sole cause of impossibility, that it was unforeseeable at the time of contracting, and that all reasonable mitigation steps were taken. 

Sanctions are Not the Same as Force Majeure 

Sanctions regimes are often pleaded alongside force majeure but are legally distinct.11 Sanctions do not necessarily render performance impossible; they may render it unlawful for the performing party. This distinction matters enormously, as evident from the ICC guidance on sanctions and the ICC Force Majeure and Hardship Clauses. 

Under UAE law, where performance has become unlawful by reason of a mandatory rule of law — whether UAE law or a foreign mandatory rule that the parties agreed should apply12 — the obligation may be discharged on grounds of illegality rather than force majeure. The legal and practical consequences, including termination rights, remedies, and liability allocation, differ depending on which doctrine applies. 

Contracts that include specific sanctions clauses which are increasingly common in cross-border commercial agreements should be interpreted holistically in conjunction with any force majeure invocation, particularly where sanctions are relied upon as the triggering event. 

Material Adverse Change Clauses: Related but Distinct 

Material adverse change (MAC) clauses operate in a different register from force majeure provisions, but they are increasingly invoked alongside them in the current environment. MAC clauses are most commonly found in financing agreements, acquisition documentation, and long-term supply contracts. They give one party — typically the lender, purchaser, or offtaker — the right to withdraw, accelerate, or renegotiate if a material change occurs in the counterparty’s financial condition, business operations, or the broader commercial environment. 

The distinction from force majeure is important. A force majeure clause addresses the impossibility of performing a contractual obligation. A MAC clause addresses a change in circumstances that may or may not affect performance, but that shifts the risk profile of the transaction to a point where one party is entitled to reassess its commitment. A counterparty’s financial deterioration, a sovereign credit downgrade, or a sector-wide regulatory change may all trigger a MAC clause without approaching the impossibility threshold required for force majeure. 

Under UAE onshore law, the interpretation of MAC clauses is governed by the general principles of contract construction, including the duty of good faith under Article 246 of the Civil Code. A party invoking a MAC clause is expected to act reasonably and to demonstrate that the change was genuinely “material” in the context of the specific transaction. Courts will examine the contractual definition of materiality, the evidence supporting the claim, and whether the invoking party acted in good faith. 

In the current environment, MAC clauses warrant review from two perspectives. First, as a mechanism your business may seek to invoke: if a counterparty’s financial position has deteriorated materially, a MAC clause in your favour may give you the right to demand additional security, accelerate repayment, or exit the arrangement. Second, as a risk in agreements where the counterparty holds that right: if your own business is under pressure, you should understand which of your agreements contain MAC triggers and what activates them, before a counterparty does. 

For contracts governed by DIFC or ADGM law, MAC clauses are construed under common law principles, where the courts have generally set a high bar for what constitutes a “material” change. The drafting of the clause — particularly whether materiality is defined by reference to objective financial thresholds or subjective commercial judgment — is decisive. 

Related Reading: A Force Majeure case analysis from India.

DIFC and ADGM Contracts: A Different Framework 

Contracts governed by DIFC law13 or ADGM law14 — both of which are based on English common law principles — operate differently from UAE onshore law. 

In the DIFC, parties may invoke either a contractual force majeure provision or the statutory framework under Article 82 of the DIFC Contract Law.15 Article 82 excuses non-performance where it is caused by an impediment beyond the party’s control that was neither reasonably foreseeable at the time of contracting nor reasonably avoidable or surmountable. This statutory safety net is a notable feature of the DIFC framework that is absent under the English common law approach adopted in the ADGM. 

In the ADGM, there is no equivalent statutory provision — force majeure operates only where the contract expressly provides for it, or where the common law doctrine of frustration applies. Frustration is an even higher bar than statutory force majeure: it requires that the supervening event has rendered performance ‘radically different’ from what was originally undertaken.16 

The English courts have consistently refused to apply frustration to cases of increased cost or difficulty alone — a position confirmed most recently in Canary Wharf (BP4) T1 Ltd v European Medicines Agency [2019] EWHC 335 (Ch)17, where Brexit — which forced the EMA to relocate its headquarters — was held not to frustrate a 25-year lease because performance remained legally possible, even if commercially undesirable. 

For parties contracting under DIFC or ADGM law, the drafting of force majeure clauses is therefore paramount. A poorly drafted clause — or an absent one — may leave a party with no meaningful relief in circumstances that would excuse performance under UAE onshore law. 

Practical Checklist for Contract and Legal Professionals 

Against this backdrop, businesses operating in or through the UAE should work through the following framework in reviewing their existing agreements and structuring new ones: 

1. Defining the Trigger Event

• Does the force majeure clause expressly cover armed conflict, sanctions, shipping route closures, or state intervention? 

• Is the list of covered events open-ended (preferable) or limited to specific enumerated circumstances? 

2. Impact Threshold

• What level of impact is required — delay, material hindrance, or strict impossibility? 

• Does the clause require impossibility, or does it include commercial impracticability as a lower threshold? 

3. Causation and Mitigation

• Must the force majeure event be the sole cause of non-performance? (UAE courts have required this.) 

• What evidence is required to link the disruption to the breach? 

• Is there a duty to mitigate, and what standard applies? Are contemporaneous records being maintained? 

4. Notice and Procedure

• What are the notice deadlines and formal requirements under the clause? 

• Does failure to give proper and timely notice waive the right to invoke force majeure entirely? 

5. Suspension, Termination, and Payment

• Are obligations suspended or terminated after a defined period of force majeure? 

• How are payment obligations treated during the suspension period? 

6. Interaction with Other Provisions

• Do sanctions clauses or hardship clauses override or interact with the force majeure provision? 

• How does limitation of liability provisions apply during a force majeure event? 

7. Governing Law and Dispute Resolution

• Is the contract governed by UAE onshore law, DIFC law, or ADGM law? The applicable framework materially affects the analysis. 

• Does insurance coverage extend to conflict-related losses? Verify with insurers and brokers. 

• What dispute resolution mechanism applies, and in which jurisdiction? 

Force majeure is no longer a theoretical clause. In an era of persistent geopolitical conflict, supply chain fragility, and evolving sanctions regimes, it has become a live commercial and legal issue for businesses operating in and through the UAE. The gap between what parties expect force majeure to do and what their contract — or UAE law — actually provides can be significant and costly. 

With a new Civil Transactions Law entering into force in June 2026, now is an especially timely moment for businesses to audit their force majeure exposure, update their contractual protections, and understand the framework that will govern their disputes going forward. 

This article was edited by Benoy P Jacob.