UAE Force Majeure: Navigating Regional Contract Instability

18 May 2026

Introduction

Regional instability across the Middle East, including armed conflict, maritime disruptions, and evolving sanctions, has significantly increased the importance of UAE Force Majeure provisions in commercial contracts.
For businesses operating in or through the United Arab Emirates, understanding the legal treatment of these disruptions is essential, as Force Majeure UAE law is rooted in a codified civil law framework that requires a high threshold of "absolute impossibility" for relief.
Under the UAE Civil Transactions Law (Federal Law No. 5 of 1985) and its 2026 modernization via Federal Decree-Law No. 25 of 2025, Article 273 and Article 249 offer two distinct paths for legal relief: one for total impossibility and another for excessive economic hardship.

Onshore Force Majeure UAE Law (Civil Code Framework)

Force majeure in the UAE is primarily governed by the UAE Civil Transactions Law (Federal Law No. 5 of 1985, as amended), which was further modernised by Federal Decree-Law No. 25 of 2025, effective as of June 2026.

Contractual Impossibility

The central provision remains Article 273, which establishes the legal consequences of an event rendering contractual performance impossible:

• Automatic Termination: Where a UAE force majeure event makes performance of a contractual obligation impossible, the obligation is extinguished, and the contract is automatically terminated. 
• Partial or Temporary Relief: Where impossibility is partial, only the affected portion of the contract is discharged, while temporary impossibility results in suspension rather than termination. 
• Strict Threshold: UAE courts require absolute impossibility rather than mere difficulty or increased burden of performance. The event must be unforeseeable, external to the parties, and directly causative. 
• Economic Hardship: UAE judicial practice confirms that force majeure is not engaged where performance remains possible, even if significantly more costly. Economic hardship alone does not meet the legal threshold under Article 273.

Hardship vs. Force Majeure

A distinctive feature of Force Majeure UAE law is the parallel doctrine of hardship under Article 249 of the Civil Transactions Law.

• Onerous Performance: This provision addresses situations where performance remains technically possible but becomes "excessively onerous" due to extraordinary and unforeseeable events of a general nature. 
• Judicial Modification: In such cases, UAE courts are empowered to intervene and adjust contractual obligations to restore economic balance between the parties, rather than terminating the contract. 
• Regional Instability: This mechanism is particularly relevant in periods of regional instability, where supply chains, logistics routes, or financial flows are disrupted but not completely blocked. 
• The Distinction: The distinction is fundamental; the former (Article 273) leads to termination or suspension, while the latter (Article 249) allows judicial modification and continuation of the relationship.

The DIFC and ADGM Position

Within the financial free zones, such as the Dubai International Financial Centre (DIFC), the treatment of UAE force majeure differs in structure, though not necessarily in outcome:

• Contractual Interpretation: The DIFC applies a common law–influenced framework, where force majeure is primarily a matter of contractual interpretation. 
• Drafting Precision: Arbitral tribunals place significant weight on the express wording of the contract and the allocation of risk agreed between the parties. Relief is not presumed and must be clearly provided for within the contractual framework.

Regional Instability and Sanctions as Triggers

In recent years, regional instability, including armed conflicts, maritime disruptions, and sanctions, has become a frequent source of disputes.

• Objective Impossibility: UAE courts assess whether these events rendered performance objectively impossible. Government-imposed prohibitions on trade or closure of essential transport routes may qualify. 
• Economic Viability: General geopolitical uncertainty, market volatility, or reduced profitability do not meet the legal threshold.

Sanctions and Cross-Border Contract Risk

Sanctions regimes have become a particularly complex aspect of UAE force majeure analysis. The legal question is not whether sanctions exist in the abstract, but whether they create a legal or practical impossibility of performance under the contract. Where sanctions directly prohibit contractual performance, force majeure may be successfully invoked.
However, where sanctions merely increase compliance burdens, restrict certain counterparties, or complicate payment channels, UAE courts are generally reluctant to accept Force Majeure UAE law arguments.
In such situations, parties are expected to explore alternative means of performance, including the substitution of suppliers or restructuring of contractual arrangements. Arbitral practice increasingly reflects a strict approach, requiring clear evidence that sanctions eliminate all lawful and reasonable avenues of performance

Judicial and Arbitral Trends in the UAE

UAE courts and arbitration tribunals (DIAC and ICC) apply the doctrine narrowly, prioritizing contractual certainty.

• Evidentiary Burden: Courts require clear proof of causation, demonstrating that the alleged event directly prevented performance and that no reasonable alternative remained available. 
• COVID-19 Precedent: Recent jurisprudence reinforced this restrictive approach; while COVID-19 was acknowledged as a potential force majeure event, relief was not automatic.

Contract Drafting in the UAE Context

In light of the strict judicial interpretation of Force Majeure UAE law, contract drafting plays a decisive role in risk allocation. Parties increasingly adopt detailed clauses that explicitly define qualifying events, including war, sanctions, government actions, and regional instability. The objective is to reduce uncertainty and ensure the scope aligns with commercial expectations.
Well-drafted contracts also typically address procedural requirements such as notice obligations, mitigation duties, and the consequences of prolonged disruption. Some contracts incorporate escalation mechanisms that require renegotiation before termination, reflecting a preference for contractual continuity. Internationally recognized models, such as the ICC Force Majeure Clause, are frequently used as reference points, although they are often adapted to reflect UAE legal realities and the stricter interpretation applied by local courts.

How MIS Legal Can Support

In an increasingly volatile regional environment, MIS Legal can support companies in making the decisive factor in managing contractual risk. It is not the occurrence of instability itself, but the quality of contractual drafting and the ability to demonstrate true impossibility under UAE legal standards.