Force Majeure and Exceptional Circumstances in UAE Contracts: What Relief Is Actually Available?

In the UAE construction and commercial landscape, contracts form the backbone of every project. When external events disrupt performance—whether pandemics, regional tensions, supply-chain shocks, government restrictions, or extreme weather—parties often reach for the force majeure clause or invoke statutory relief. Yet many discover that the available remedies are narrower, more technical, and more evidence-driven than expected. Understanding the precise legal thresholds under UAE law, and the practical difference between true force majeure and exceptional circumstances, is essential for contractors, developers, and employers seeking real relief rather than false comfort.

This article explains the current legal framework, the high bars that must be met, the remedies that courts and tribunals can actually grant, and the practical steps that strengthen or weaken a claim. It draws on the UAE Civil Transactions Law as updated by Federal Decree-Law No. 25 of 2025 (effective 1 June 2026) and consistent judicial practice.

The Two Distinct Doctrines

UAE law does not treat every disruption the same way. Two separate statutory regimes apply, each with its own test and outcome.

Force majeure :

(now Article 236 of the Civil Transactions Law, formerly Article 273) addresses situations in which performance has become impossible. In bilateral contracts, if a force majeure event renders performance of an obligation impossible, the corresponding obligation is extinguished and the contract is automatically rescinded. Where impossibility is only partial, the affected part is extinguished; the obligee may, on notice, elect to terminate the whole contract. Temporary impossibility in continuing contracts may allow extinguishment of the corresponding obligation, modification, or court-ordered rescission.

The classic requirements applied by UAE courts are cumulative:

• The event must have been unforeseeable at the time the contract was concluded.
• The event (and its consequences) must have been beyond the party’s control and unavoidable despite reasonable efforts.
• Performance must be genuinely impossible—not merely more expensive, delayed, or commercially unattractive.
• There must be a direct causal link between the event and the inability to perform.

Mere difficulty, increased cost, or reduced profitability does not suffice. Courts have repeatedly confirmed this high threshold in COVID-era decisions and subsequent cases involving market disruption or regional events. If a contractor continued partial performance or found alternative (even costly) means of performance, force majeure claims have often failed.

Exceptional circumstances / hardship :

(now Article 224, formerly Article 249) applies where performance remains possible but has become excessively onerous, threatening the obligor with serious loss, because of exceptional, general circumstances that could not have been foreseen at the time of contracting. The court (or arbitral tribunal) may, after balancing the interests of both parties, reduce the onerous obligation to a reasonable level or, under the updated provision, order rescission of the contract. Any contractual attempt to exclude this doctrine is void—it is a mandatory rule of public policy.

This doctrine is closer to the French théorie de l’imprévision. It does not automatically terminate the contract; it empowers the court to rebalance it. Because the threshold is lower than absolute impossibility, it is often the more realistic route for parties facing severe cost inflation, prolonged supply shortages, or other economic shocks that stop short of making performance impossible.

What Relief Is Actually Available?

Relief under force majeure is binary and automatic once the conditions are met: the affected obligations cease and the contract (or the affected part) ends. Parties are generally restored to their pre-contractual positions regarding those obligations, subject to any completed performance and good-faith duties. Notice is prudent even though the statute operates by law, to avoid later allegations of bad-faith performance.

Under exceptional circumstances the relief is discretionary and more flexible. Courts can:

• Reduce the quantum of an obligation (for example, adjust a fixed price or rent).
• Extend time for performance.
• Modify other terms to restore a reasonable balance.
• In appropriate cases under the current law, order rescission.

The court weighs the interests of both sides and the overall justice of the case. Parties cannot contract out of this judicial power.

In practice, UAE courts apply both doctrines strictly. They examine the precise wording of any contractual force majeure clause (which can expand or clarify the statutory position for force majeure but cannot oust the mandatory hardship rule), the foreseeability of the specific event at the date of contracting, the steps taken to mitigate, contemporaneous notices, and the causal chain. General economic downturns, ordinary inflation, or foreseeable commercial risks rarely qualify. Events of a public or general character (pandemics, major government lockdowns, widespread regional disruption) stand a better chance, but each case turns on its facts.

Contractual Clauses Still Matter

A well-drafted force majeure clause remains valuable. It can define triggering events more clearly than the statute, set notice periods and mitigation duties, allocate risk for temporary disruption, and prescribe the consequences of prolonged force majeure (suspension, termination rights after a stated period, cost consequences). Parties should ensure the clause is consistent with UAE mandatory rules and that it interacts sensibly with extension-of-time, variation, and claims procedures under the main contract (often FIDIC-based in the UAE construction sector).

Silence in the contract does not leave parties without protection: the statutory provisions apply by default. But a carefully negotiated clause reduces uncertainty and can improve the position of the party most exposed to disruption.

Practical Lessons for Project Parties

Success or failure usually turns on evidence and process rather than abstract legal argument:

1. Contemporaneous records – Programmes, correspondence, site records, cost data, and notices issued at the time of the event carry far more weight than later reconstructions.
2. Prompt notice – Contractual notice periods must be observed. Even where the statute operates automatically, early formal notice preserves rights and demonstrates good faith.
3. Mitigation – Parties must show they took reasonable steps to avoid or minimise the impact. Failure to mitigate can defeat or reduce relief.
4. Causation – The event must be the operative cause of the impossibility or hardship. Concurrent delays or pre-existing problems weaken the claim.
5. Choice of remedy – Parties should assess early whether they are truly facing impossibility (force majeure) or severe onerousness (exceptional circumstances). Mischaracterising the claim can lead to dismissal.
6. Forum – Onshore courts apply the Civil Transactions Law rigorously. DIFC or ADGM contracts may engage different principles (common-law inspired force majeure or frustration concepts), so governing law and dispute resolution clauses matter.

For construction projects, these issues frequently arise alongside extension-of-time claims, prolongation costs, variation disputes, and suspension rights. Coordinating the contractual claims machinery with the statutory doctrines is essential.

How Professional Support Makes the Difference

Navigating these doctrines requires more than a general understanding of the Civil Code. It demands close reading of the specific contract, rigorous analysis of the facts against the legal tests, timely notices, and coherent quantification of impact. Early strategic advice can determine whether a party preserves rights, improves its negotiating position, or avoids an unsuccessful formal claim.

3EG Group’s Contract Advisory service helps clients structure contracts with clear risk allocation, force majeure and hardship language, notice procedures, and alignment with UAE law from the outset. When disruption occurs, our Claim Management team assists with entitlement assessment, notice preparation, delay and quantum analysis, and the assembly of robust, contemporaneous evidence that meets the strict evidentiary standards applied by UAE courts and tribunals.

In an environment where regional and global events continue to test contractual frameworks, the parties who understand the real limits of available relief—and prepare accordingly—are best placed to protect their commercial interests.

The doctrines of force majeure and exceptional circumstances exist to provide fairness when the unforeseen strikes. They do not, however, rewrite commercial bargains lightly. Relief is available, but only to those who can satisfy the precise legal tests with clear evidence and disciplined contract administration. For UAE projects, that disciplined approach remains the most reliable path to genuine contractual protection.