The UAE construction sector is one of the largest and most active globally. From large-scale infrastructure projects on the UAE mainland to commercial and mixed-use developments in the DIFC and ADGM free zones, the sector encompasses tens of billions of dollars in live contracts at any given time. A significant proportion of these projects are procured using the FIDIC suite of standard forms.1
In light of recent regional developments, UAE-based construction stakeholders, including employers, contractors, subcontractors, and their legal advisers, are reassessing contractual positions to determine the extent of relief available where war, supply chain disruption, and logistics constraints materially affect performance. This assessment requires close scrutiny of the applicable FIDIC edition, the specific contractual provisions engaged, and the extent to which UAE law may supplement or override the agreed risk allocation.
This article examines the relevant contractual mechanisms, including the distinction between the FIDIC 1999 force majeure regime and the FIDIC 2017, exceptional events framework, the allocation of entitlement to time and cost, and the termination thresholds that may arise where disruption persists.
FIDIC in the UAE: Which Edition Are You Under?
Before invoking any relief under a FIDIC contract, the threshold question is which edition governs the parties’ relationship. This is a determinative issue. The procedural requirements, notice regimes, claim timelines, and scope of available remedies differ between editions in ways that have direct financial and evidential consequences.
The FIDIC 1999 Red Book (First Edition) continues to be the most widely used form across remains UAE construction projects.2 A substantial proportion of projects currently under execution, including major infrastructure and real estate developments, remain governed by the 1999 suite. By contrast, the FIDIC 2017 Red Book (Second Edition), including its subsequent amendments, is increasingly adopted in newer procurements, particularly on government, semi-government, and lender-driven projects. However, it has not yet displaced the 1999 edition as the prevailing market standard. .3
The distinction carries immediate practical implications. In the 1999 edition, force majeure is addressed under Clause 19. In the 2017 edition, the equivalent regime is set out under Clause 18 and is framed in terms of “Exceptional Events.” While the underlying allocation of risk is broadly similar, the drafting in the 2017 edition reflects a more structured and prescriptive claims regime, with enhanced notice and substantiation requirements.
For the purposes of this article, references to “Exceptional Events” or “EE” are intended to include force majeure under the 1999 edition, unless the context requires otherwise. Where the differences between the two editions materially affect entitlement, procedure, or risk allocation, each edition is addressed separately.
This Article is a Part of our Understanding Construction Contracts in the UAE Blogpost.
What Constitutes an Exceptional Event? The Four Conditions
Under both the FIDIC 1999 and 2017 editions, an event will qualify as an Exceptional Event (or Force Majeure) only where four cumulative conditions are satisfied:
- Beyond control: The event must be beyond the control of the party affected.
- Not reasonably foreseeable: The party could not reasonably have provided against the event before entering into the contract.
- Unavoidable: Once the event has arisen, the party could not reasonably have avoided or overcome it.
- Not the other party’s fault: The event is not substantially attributable to the other party.4
These conditions operate cumulatively and impose a strict threshold. As circumstances evolve, the assessment of foreseeability becomes particularly significant. A contractor entering into a contract at a time when regional hostilities are already ongoing or widely anticipated may face difficulty establishing that such events were not reasonably foreseeable at the date of contract.5
The Non-Exhaustive list
Both editions include a non-exhaustive list of events that may qualify as Exceptional Events if the four conditions are satisfied.
Of particular relevance is Sub-Clause 18.1(a) of the FIDIC 2017 edition and Sub-Clause 19.1(a) of the FIDIC 1999 edition, both of which refer to “war, hostilities (whether war be declared or not), invasion, act of foreign enemies.” The formulation is deliberately broad and extends to situations of undeclared hostilities without requiring any formal classification of war.
Sub-Clause 18.1(b) of the 2017 edition, and the corresponding Sub-Clause 19.1(b) of the 1999 edition, further refer to events such as “rebellion, terrorism, revolution, insurrection, military or usurped power, or civil war”. These categories may become engaged where instability arises at a civil or internal level rather than through formal interstate conflict.6
The Prevention Threshold: The Most Common Misunderstanding
A recurring point of confusion in the application of Exceptional Event provisions concerns the threshold for relief. FIDIC does not provide a general hardship regime. The fact that performance has become more difficult, more expensive, or less profitable does not, without more, engage the Exceptional Event mechanism.
The operative distinction lies between prevention and mere hindrance or delay. Under both the FIDIC 1999 and 2017 editions, an Exceptional Event (or Force Majeure) may entitle the contractor to an extension of time where completion is or will be delayed. However, more extensive relief, including termination rights, is generally contingent on performance being prevented.
This position was reinforced in the Guidance Memorandum of March 2023 issued in March 2023 in response to the Ukraine conflict, which states: “FM/EE provisions are not hardship provisions. They only provide relief when performance is prevented, not when it is made more onerous or expensive.” 7
In practice, this distinction is critical. A contractor facing material shortages, labour disruption, or logistics constraints may establish entitlement to an extension of time if completion is delayed. However, where alternative means of performance remain available, albeit at greater cost or reduced efficiency, it will be difficult to establish prevention. In such cases, the Exceptional Event regime will not, in itself, provide a basis for recovery of additional cost.
Parties in this position should consider alternative contractual mechanisms. In particular, Sub-Clause 13.6 of the FIDIC 2017 edition and Sub-Clause 13.7 of the 1999 edition address changes in laws of the Country and may provide both time and cost relief where government measures, including sanctions, trade restrictions, or airspace and port closures, affect performance after the Base Date.
Time Relief vs. Cost Relief: A Critical Distinction
Even where an Exceptional Event is established, the nature and extent of relief depend on the category of event and the specific contractual triggers. This distinction is one of the most practically significant aspects of the FIDIC regime and is frequently misapplied in practice.
Under Sub-Clause 18.4 of the FIDIC 2017 edition and Sub-Clause 19.4 of the 1999 edition, the contractor may be entitled to:
- an extension of time where completion is or will be delayed by an Exceptional Event; and
- in defined categories of events, payment of Cost8
Cost recovery is not available for all Exceptional Events. It is typically limited to specified events such as war, hostilities, invasion, and certain risks occurring in the Country. By contrast, for other categories of Exceptional Events, the contractor’s entitlement is generally confined to time relief.
Table 1: Entitlement to Time and Cost under Exceptional Events (FIDIC 2017 Sub-Clause 18.4 / FIDIC 1999 Sub-Clause 19.4)
| Category of Exceptional Event | Extension of Time? | Cost Recovery? |
|---|---|---|
| War, hostilities (whether declared or not), invasion [Sub-Clause 18.1(a)] | Yes | Yes — even if war is outside the Country |
| Rebellion, terrorism, civil war [Sub-Clause 18.1(b)] | Yes | Yes — if occurring in the Country |
| Riot, disorder (not involving Contractor’s personnel) [Sub-Clause 18.1(c)] | Yes | Yes — if occurring in the Country |
| Strike or lockout (not involving Contractor’s personnel) [Sub-Clause 18.1(d)] | Yes | Yes — if occurring in the Country |
| Natural catastrophes (earthquake, tsunami, hurricane, typhoon) [Sub-Clause 18.1(f)] | Yes | No — time only |
The practical implication is that, where a UAE project is affected by war or hostilities falling within the relevant Sub-Clauses (referred to in Table 1 above), the contractor may be entitled to both an extension of time and recovery of Cost, subject to compliance with the contractual notice and substantiation requirements. This entitlement does not depend on demonstrating that performance has been prevented; it is sufficient that completion is delayed by the relevant event.
However, the Exceptional Event regime under FIDIC does not suspend core payment obligations. The employer remains obliged to pay certified amounts, and the contractor remains responsible for its payment obligations to subcontractors, subject to any separate contractual mechanisms or agreed amendments.9
The Notice Trap: Why This Is Where Projects Are Lost
A recurrent cause of failed Exceptional Event claims lies in non-compliance with the contractual notice regime. FIDIC imposes structured and time-sensitive notice requirements, which are often treated as conditions precedent to entitlement, subject to the governing law and the approach of the tribunal or court.
Under both editions, the affected party is required to:
- Initial notice of the Exceptional Event:give notice to the other party within 14 days after becoming aware, or when it should have become aware, of the event (Sub-Clause 18.2 (2017) / 19.2 (1999)).
- Notice of claim: give notice of the claim for extension of time and or additional payment within 28 days after becoming aware, or when it should have become aware, of the event or circumstance giving rise to the claim (Sub-Clause 20.2.1 (2017) / 20.1 (1999)).
- Fully detailed claim: submit a fully detailed claim within 84 days under the 2017 edition (Sub-Clause 20.2.4) and within 42 days under the 1999 edition (Sub-Clause 20.1), unless otherwise agreed or determined.
The consequences of non-compliance can be significant. Under the 2017 edition, the notice provisions are more expressly framed as conditions precedent, and failure to comply may result in loss of entitlement to time and or Cost. Under the 1999 edition, Sub-Clause 20.1 contains a similar time bar mechanism, although its application has been the subject of more varied arbitral treatment, including arguments based on waiver, estoppel, or the conduct of the engineer or employer.
From a UAE perspective, enforcement of contractual time bars will depend on the applicable legal framework and the facts of the case. While DIFC and ADGM jurisdictions generally uphold clearly drafted conditions precedent, onshore UAE courts and tribunals may, in certain circumstances, consider principles of good faith and prevention when assessing strict compliance. This creates a degree of uncertainty but does not reduce the practical importance of timely notice.
Suggested Practical step: Any party affected by current regional disruption should issue protective notices under Sub-Clause 18.2 and the relevant claims provision (Sub-Clause 20.2.1 (2017) or 20.1 (1999)) without delay. Notice should not be deferred pending full quantification of the impact. Early, precautionary notice is consistent with the structure of FIDIC and preserves entitlement while the effects of the event continue to develop.
The Duty to Mitigate: Document Everything
Both editions impose an obligation on the affected party to use reasonable endeavours to minimise any delay resulting from an Exceptional Event (Sub-Clause 18.3 (2017) / 19.3 (1999)). This is an active obligation. It requires the party to consider and, where reasonable, implement alternative materials, suppliers, logistics routes, or construction methods.
However, the duty to mitigate is not absolute. It does not require a party to adopt measures that are commercially unreasonable or disproportionate. The assessment is fact-specific and will turn on what a reasonable contractor, in the same circumstances, would have done.
In the present context, this raises a recurring issue. Where materials remain available from alternative sources at materially higher cost, the contractor may be required to consider such alternatives to mitigate delay. However, if the relevant Exceptional Event category does not provide for cost recovery, the contractor may bear that additional cost. This reflects the allocation of risk under the contract rather than a failure of the mitigation principle.
Accordingly, parties should assess mitigation options in parallel with other contractual mechanisms. In particular, Sub-Clause 13.6 of the FIDIC 2017 edition and Sub-Clause 13.7 of the 1999 edition (Changes in Laws) may provide a basis for recovery of additional cost where government measures, sanctions, or regulatory restrictions affect performance after the Base Date.
From an evidential perspective, mitigation must be demonstrable. Contemporaneous records of steps taken, alternatives considered, procurement efforts, cost differentials, and communications with subcontractors and suppliers will be central to establishing entitlement in any subsequent claim or arbitration.
Termination: The 84-Day and 140-Day Thresholds
Where an Exceptional Event persists for a prolonged period, the termination regime under the FIDIC contracts may be engaged. Under Sub-Clause 18.5 of the FIDIC 2017 edition and Sub-Clause 19.6 of the 1999 edition, either party may give notice of termination where:10
- the execution of substantially all the Works in progress is prevented for a continuous period of 84 days by reason of an Exceptional Event; or
- the execution of substantially all the Works is prevented for multiple periods which together exceed 140 days due to the same Exceptional Event.
These thresholds are of practical importance in the context of sustained disruption. Whether they are met will depend on a fact-specific assessment of whether “substantially all” of the Works has been prevented, which is a high threshold and not satisfied by partial disruption or reduced productivity alone.
Upon termination under Sub-Clause 18.5 (2017) / 19.6 (1999), the Engineer is required to determine the amount due to the contractor. This includes the value of work executed, the cost of Plant and Materials ordered for the Works, reasonable costs of removal of Temporary Works and Contractor’s Equipment, repatriation of personnel, and other Cost incurred in expectation of completing the Works. The valuation exercise is typically complex and will require detailed evidential and, in many cases, expert input.
Separately, Sub-Clause 18.6 of the 2017 edition and Sub-Clause 19.7 of the 1999 edition deal with release from performance under the law. Where performance becomes impossible or unlawful, or the parties are otherwise released from performance under the governing law, either party may by notice bring the contract to an end without waiting for the 84-day or 140-day thresholds.
UAE Law in the Background: Civil Code and DIFC/ADGM Frameworks
The FIDIC contractual regime operates within the broader framework of UAE law. The interaction between contract and governing law is particularly relevant where contracts are subject to UAE onshore law or where enforcement may take place before UAE courts.11
For contracts governed by UAE onshore law, the UAE Civil Code provides parallel doctrines that may be engaged in appropriate circumstances. Articles 273 and 287 of the UAE Civil Code address force majeure, while Article 249 of the UAE Civil Code reflects the principle of exceptional circumstances (hardship), allowing judicial adjustment of obligations where performance becomes excessively onerous. These provisions may operate as a residual layer of protection. However, their application will depend on the terms of the contract, including the extent to which the parties have agreed a detailed risk allocation mechanism such as FIDIC. UAE courts will generally seek to give effect to the contractual framework, although mandatory principles, including good faith, may influence the outcome in certain cases.
Federal Decree-Law No. 25 of 2025 promulgating the Civil Transactions Law has been issued and is stated to come into force on 1 June 2026. Any final article references should nevertheless be checked against the promulgated text when relying on them in advice or proceedings.
By contrast, contracts governed by ADGM law are subject to English common law principles as applied in ADGM, while contracts governed by DIFC law are governed primarily by the DIFC Contract Law, supplemented where relevant by DIFC case law and common law principles. In both jurisdictions, frustration or analogous supervening-event relief may arise, but the threshold remains high and will not be satisfied merely because performance has become more difficult or expensive.
The DAAB Gap: Why Dispute Resolution Is Slower Than It Should Be
The FIDIC’s 2017 suite introduced the Dispute Avoidance/Adjudication Board (DAAB), envisaged as a standing board appointed at the outset of the project to facilitate real-time dispute avoidance and, where necessary, provide prompt determinations during the course of the works.12
In practice, uptake in the UAE remains limited. Many contracts do not provide for a standing DAAB at contract formation, and the provisions are frequently amended to allow for ad hoc appointment only once a dispute has crystallised or are omitted altogether. As a result, the intended function of early, contemporaneous dispute resolution is often not realised.
This has practical implications in the context of Exceptional Events. Determinations on extension of time, entitlement to Cost, and related issues may be required on an expedited basis. In the absence of a standing DAAB, parties are typically left to negotiate or to proceed directly to formal dispute resolution.
In most cases, disputes will progress to arbitration under institutional rules such as those of the Dubai International Arbitration Centre (DIAC), the International Chamber of Commerce (ICC), or arbitrateAD. While these forums provide robust procedures, they are not designed to deliver immediate project-level determinations within the timelines contemplated by the DAAB mechanism.
The practical consequence is that, in the absence of an effective DAAB framework, greater emphasis falls on early compliance with notice provisions, contemporaneous record-keeping, and structured engagement between the parties to manage disputes before they escalate.
Practical Approach for UAE Construction Parties
In light of the foregoing, we recommend the following immediate actions:
- Identify the applicable FIDIC edition: Confirm whether your contract is on the 1999 or 2017 form and review any Particular Conditions that modify the General Conditions. Amendments in UAE projects frequently reallocate risk, particularly in favour of the employer. A clear understanding of the contractual framework is essential.
- Issue protective notices without delay: Where an Exceptional Event has arisen or is likely to impact performance, issue notice under Sub-Clause 18.2 and the relevant claims provision (Sub-Clause 20.2.1 (2017) or 20.1 (1999)) within the prescribed time limits. Notice should not be deferred pending full quantification of the impact.
- Assess whether performance is truly ‘prevented’: Distinguish between prevention, which may engage broader contractual consequences, and delay, which may support an extension of time. Increased cost or difficulty alone will not, in most cases, suffice under the Exceptional Event regime, though alternative provisions such as Changes in Laws (Sub-Clause 13.6 (2017) / 13.7 (1999)) may be relevant.
- Maintain contemporaneous records of mitigation: Document steps taken to mitigate delay, including alternative sourcing, procurement efforts, logistics arrangements, and associated costs. These records will be central to establishing entitlement in any subsequent claim.
- Monitor the 84-day and 140-day termination thresholds: Track whether the conditions under Sub-Clause 18.5 (2017) / 19.6 (1999) may be engaged, including the duration and extent of any prevention affecting substantially all of the Works. Early assessment supports informed decision-making.
- Review subcontract back-to-back alignment: Assess whether subcontract provisions mirror the main contract. Misalignment may expose contractors to unrecoverable liabilities where upstream and downstream entitlements differ.
- Consider whether FIDIC provisions interact with UAE law relief: For contracts governed by UAE onshore law, evaluate whether statutory provisions on force majeure or hardship may be engaged where the contractual thresholds are not met.
Conclusion
The current regional instability has placed UAE construction contracts under significant operational and legal pressure. The FIDIC Exceptional Event (or Force Majeure) regime, whether under the 1999 or 2017 edition, provides a structured framework for relief. Its application, however, is highly procedural and fact-sensitive. entitlement will depend on strict compliance with contractual requirements and a clear understanding of the risk allocation agreed between the parties.
The principal practical considerations may be summarised as follows: relief under the Exceptional Event (or Force Majeure) provisions depends on whether performance is prevented or delayed, rather than merely rendered more onerous; notice requirements are strict and time-sensitive; certain categories of events, including war and hostilities, may give rise to both time and cost entitlement subject to the contractual conditions; prolonged prevention may engage termination rights; and, for UAE law governed contracts, statutory doctrines of force majeure and hardship may operate alongside the contractual framework in appropriate circumstances.
