New practical guide by DET, Dubai Chambers and Baker McKenzie explains when exceptional events can legally affect contractual obligations.
Dubai: The Dubai Department of Economy and Tourism (DET), in cooperation with Dubai Chambers and the global law firm Baker McKenzie, has issued a practical guide for companies and commercial establishments, aimed at clarifying the legal frameworks and practical mechanisms for dealing with contract disruptions resulting from exceptional unforeseen events.
The Force Majeure Guide includes guidance to help companies operating in Dubai understand force majeure – an exceptional event beyond the control of the contracting parties that objectively makes contractual performance impossible – as well as manage contract interruptions, and make informed decisions in accordance with UAE law. The Guide noted, however, that many disruptions that companies typically face, from rising construction costs, supply chain delays, and shipping route changes, to regional instability, do not automatically qualify as force majeure.
The guide helps companies operating in Dubai understand the concept of force majeure in the UAE, manage contract interruptions in accordance with UAE law, and explains how to assess interruptions, preserve evidence, meet notification and mitigation requirements, manage payment issues, and explore mediation and dispute resolution channels in Dubai.
According to Dubai’s DET, the guide was designed specifically for companies, business owners, and legal, financial, and operational teams in Dubai who need practical guidance on managing contract interruptions during unforeseen events. It may also be useful for decision-makers reviewing contractual obligations, payment issues, proof requirements, notification procedures, and dispute resolution options under UAE law.
‘The compelling circumstance’
According to the Guide, companies often describe major business disruptions as force majeure, but UAE law provides a specific legal definition of force majeure, and it is subject to clear legal requirements. Not every unexpected event, market disruption, cost increase, delay, or negative business consequence constitutes force majeure. One of the key differences in UAE law lies in distinguishing between an event that makes performance objectively impossible and an event that makes performance more difficult, costly, delayed, or a business burden.
This distinction is particularly important because the legal consequences of force majeure differ significantly from those associated with business difficulties or risks or ordinary breach of contract. Many of the disruptions that companies commonly face — including rising construction costs, inflation, supply chain delays, changes in shipping routes, higher fuel prices, or regional instability — do not automatically qualify as force majeure.
Determining whether force majeure or difficulties apply depends on the specific facts, the terms of the contract, and the applicable legal framework.
Contract disorders
The Guide aims to provide a practical overview of how to assess force majeure and ‘force majeure circumstances’ under UAE law, the circumstances in which they may apply, and the practical steps that companies can take to manage contract disruptions and risks. The Guide is designed to help Dubai-based companies deal with contract disruptions caused by unforeseen events, with a particular focus on the application of force majeure and ‘force majeure circumstances’, and related legal concepts under UAE law.
According to the Guide, with the enforcement of the new UAE Civil Transactions Law, issued under Federal Law No. 25 of 2025, on June 1, 2026, companies may now be running contracts subject to different legal rules. As a practical starting point, the key question is the date the contract was concluded, as this will generally determine whether the previous or new Civil Code applies.
The Guide primarily deals with the principles of force majeure and force majeure circumstances developed under the previous civil code, in addition to a large collection of judicial rulings that interpret those provisions, which are still particularly relevant to contracts concluded before June 1, 2026.
Force majeure
According to the guide, ‘force majeure’ refers to an exceptional event beyond the control of the contracting parties that objectively makes contractual performance impossible. In practice, this applies when the event is external and could not reasonably have been foreseen or prevented, the affected party is not at fault, and performance becomes objectively impossible, not merely more difficult or costly.
The Guide noted that the ‘force majeure’ system in the UAE has undergone major legislative reforms, with the introduction of the new Civil Code.
As a result, companies must first determine whether their facts and/or contracts are subject to the previous or new Civil Code. Under the previous Civil Code, ‘force majeure’ was mainly governed by Article 273 and interpreted through a large body of UAE court decisions. Under the new Civil Code, ‘force majeure’ is dealt with through the corresponding provisions in Article 2363.
According to the Guide, the new law maintained the basic distinction between ‘force majeure’ and ‘emergency situations,’ but it provided a more flexible framework for dealing with exceptional events. The Guide points out the difference between ‘force majeure’ and ‘emergency situations’, as they are not the same thing. In the case of force majeure, the performance process becomes objectively impossible, so the affected obligation may be extinguished or suspended, depending on the situation and the applicable legal system.
In the case of ‘emergency situations’, performance remains possible, but an exceptional and unexpected event makes the obligation excessively burdensome and threatens one of the parties with a significant loss. The Guide explains that obligations relating to the payment of amounts that have already become due remain, as a general rule, due and enforceable, unless the contract expressly states otherwise.
Source: Emirates 24|7