Given the ceasefire that has been announced, now is an appropriate time to reflect on the options open to parties whose contracts have been disrupted as a result of the Iranian war.
Needless to say, the war and the resulting geopolitical developments in the Middle East have created significant uncertainty for businesses operating across the Gulf region. The evolving situation has raised concerns around potential supply chain disruption, operation interruptions, and the ability of parties to perform their contractual obligations.
Amidst these developments, we have received a number of enquiries from clients regarding whether these developments may allow parties to invoke force majeure provisions in their commercial contracts.
The availability of force majeure relief will depend largely on the governing law of the contract and the specific wording of the relevant contractual provisions. In this article, we provide a brief overview of the legal position on force majeure in the UAE, focusing on UAE federal law and the laws of the UAE financial free zones such as the Dubai International Financial Centre (DIFC) and the Abu Dhabi Global Market (ADGM). We then consider recent developments affecting the Gulf region and highlight some key considerations for businesses assessing whether force majeure may apply to their contractual arrangements.
The recent ceasefire will complicate this position further and it is now possible that a party who may previously have been able to rely on force majeure now cannot, or at least, will be exposed to an argument by its contractual counterparty that it cannot rely on force majeure. For instance, it is possible that a contract that was impossible to perform on 7 April 2026 has become possible to perform again, after the ceasefire was announced on 8 April 2026 and that a party may make an argument to that effect.
The below analysis needs to be seen in that context.
What is Force Majeure?
Force majeure generally refers to events beyond a party's reasonable control that prevent a party from performing its contractual obligations. Whether force majeure relief is available will depend primarily on the governing law of the contract and the contractual terms agreed between the parties.
In the UAE, the legal position may differ depending on whether the contract is governed by UAE federal law, or the laws of the DIFC or ADGM. Under UAE law and DIFC law, certain statutory provisions addressing force majeure may operate in the absence of, or alongside, contractual force majeure clauses, unless the parties have expressly allocated the relevant risk differently in the contract.
We address each of these legal frameworks in turn below.
UAE Law
There is no single statutory definition of force majeure, in the English common law sense of the expression, under UAE federal law. However, several provisions of the UAE Federal Law No. 5 of 1985 (Civil Code) address the concept and its consequences.
Under Article 273 of the Civil Code, where a force majeure event renders performance impossible, the corresponding obligation ceases and the contract shall be automatically cancelled. In such circumstances, the parties are generally returned to their pre-contractual positions. Where the impossibility is partial, only the affected part of the obligation will be extinguished while the remainder of the contract continues to apply.
Force majeure may also operate as a defence to liability. In this regard, Article 287 of the Civil Code provides that a party will not be liable for loss if it can demonstrate that the loss arose from an extraneous cause beyond its control, such as a natural disaster, unavoidable accident or force majeure event.
In practice, UAE courts tend to interpret force majeure restrictively. The event must generally be unforeseeable and unavoidable, and courts will consider whether the non-performing party could reasonably have anticipated or assumed the risk of the event at the time the contract was concluded.
DIFC Law
The starting point for the DIFC position is contained within the DIFC Contract Law (DIFC Law No. 6 of 2004) (Law No 6)).
Under Article 82, non-performance may be excused where it is caused by an impediment beyond the party's control, provided that the party could not reasonably have taken the impediment into account at the time the contract was concluded or avoided or overcome its consequences.
In practice, this means that a party seeking relief must generally demonstrate that:
- The non-performance was caused by the event in question;
- The event was beyond the party's control;
- The risk of the event could not reasonably have been assumed at the time of contracting; and
-
The consequences of the event could not reasonably have been avoided or overcome.
Non-performance is excluded only for the period during which the impediment affects performance, and the affected party must give notice of the impediment and its effects within a reasonable time. Failure to provide such notice may result in liability for losses arising from the delay in notification.
ADGM Law
The ADGM adopts English common law directly through its legislative framework.
English law does not recognise force majeure as an independent common law doctrine, it exists only insofar as it is expressly provided for in a contract.
The scope of relief therefore depends primarily on the wording of the clause.
In order to rely on a force majeure provision, the affected party must typically demonstrate that the event:
- Falls within the scope of the clause;
- Was beyond the party's control;
- Caused the failure to perform the contractual obligation; and
- Could not reasonably have been avoided or mitigated.
Disruptions Affecting the Gulf
The relevance of force majeure provisions has recently come into sharper focus in light of the conflict across the Gulf region.
The war has disrupted several sectors, including, unsurprisingly, energy production, shipping and aviation. These developments have prompted companies and governments to review their contractual commitments and operational arrangements.
In this context, Bahrain's national oil company, Bapco Energies, recently announced that it had served notice of force majeure on its group operations following a recent attack on its refinery complex. While the precise contractual arrangements affected have not been publicly detailed, force majeure notices of this kind are commonly issued where external events disrupt production or operational capacity.
Such declarations can have wider implications across supply chains, particularly in sectors such as energy, shipping and trading commodities where contractual obligations are closely tied to production capacity and transportation infrastructure.
As geopolitical developments continue to evolve, companies in or trading within the Gulf region may therefore increasingly consider whether current events fall within the scope of force majeure provisions in their contractual arrangements.
Key Considerations for Businesses
Businesses assessing whether force majeure may apply to their contracts should carefully consider several factors, such as:
- The governing law of the contract: this is critical as the availability and consequences of force majeure relief may differ.
- The wording of the force majeure clause: this will often determine the scope or relief available. For example, clauses may require performance to be "prevented", "hindered" or merely "affected", and these thresholds can significantly influence whether relief is available.
- Causal link: parties typically need to demonstrate a causal link between the event and the inability to perform the contractual obligation.
- Mitigation: even where force majeure relief is available, parties are often expected to take reasonable steps to mitigate the impact of the event or explore alternative means of performance.
- Notice requirements: many force majeure clauses contain strict notice requirements, and failure to comply with these requirements may affect a party's ability to rely on the clause.
As the regional situation continues to develop, businesses may wish to review their contractual arrangements carefully to assess whether force majeure provisions may be engaged.
If you would like to discuss the potential impact of recent developments on your contracts, our team would be happy to assist and provide further advice.
