Force majeure, hardship and frustration in the UAE

The 2026 U.S.-Israel-Iran conflict came as a shock to the Middle East and the wider world. After the initial disruption — closed airspace, delayed flights, midnight shelter alerts — the practical question arrives quickly: what do these events do to existing contracts? The obvious impulse is to invoke force majeure. Acted on without analysis, that impulse leads to questionable decisions, because the UAE is home to three distinct legal regimes and each answers the question differently.

Does "war" even appear in your clause?

Many force majeure clauses list "war" as a trigger. The word seems self-evident and is not. States rarely declare war: the operations in Iraq, Libya and Syria were all conducted without one, and the current operations have been described as "strikes", "military operations" and "retaliatory actions". Whether a clause listing only "war" — without "armed conflict", "hostilities" or "government restrictions" — captures the present events is a genuine question. English courts treat the existence of a war as a matter of fact and common sense rather than formal classification, and the UAE courts have similarly looked at the substance of the disruption rather than its label.

Even where the clause is engaged, that is only the beginning. In Case No. 406/2023, the Dubai Court of Appeal refused a force majeure defence raised by a digital currency broker who blamed the market volatility of the Russia-Ukraine war: he had guaranteed the investor's principal "at any time", and by making that promise had assumed the risk of exactly this happening. The principle runs back to Paradine v Jane in 1647, where a tenant dispossessed by an army still owed the rent. The law holds people to their bargains. Force majeure relieves only obligations that have genuinely become impossible through no fault of your own — and only if you can prove it.

Onshore UAE law

Under Article 273 of the Civil Code, a force majeure event that renders performance impossible extinguishes the corresponding obligation and rescinds the contract; partial and temporary impossibility are dealt with separately, and in both cases the creditor keeps the right to rescind. The courts apply three cumulative requirements: the event must have been unforeseeable at formation, unavoidable through reasonable measures, and must make performance impossible rather than difficult. Increased cost, a cancelled flight, logistical trouble and commercial inconvenience do not qualify.

Where performance remains possible but has become ruinously expensive, Article 249 empowers the court or tribunal to reduce the obligation to a reasonable level. That hardship rule is mandatory and cannot be contracted out. It is often the more honest route than an overstated claim of impossibility.

The new Civil Transactions Law (Federal Decree-Law No. 25 of 2025, in force from 1 June 2026) keeps the architecture and refines it: dissolution by operation of law for full impossibility (Article 236), a hardship rule that now lets the court rescind the contract where that is the only sensible outcome (Article 224), grace periods and instalments for affected debtors (Article 311(2)), and express powers to restore equilibrium in work contracts (Article 829). It does not apply to facts and transactions preceding it.

DIFC

The DIFC has what neither onshore UAE law nor English law has: a statutory force majeure term implied into every DIFC-governed contract by default. Article 82 of the DIFC Contract Law excuses non-performance caused by an impediment beyond a party's control which it could not reasonably have taken into account, avoided or overcome. Two limits matter in practice: obligations to pay money are not excused — rent, loan repayments and purchase instalments cannot be withheld on force majeure grounds — and a temporary impediment suspends rather than extinguishes. Notice must be given within a reasonable time and must be specific; the counterparty keeps its rights to terminate, withhold performance and claim interest. There is no hardship doctrine in the DIFC: if performance is possible but expensive, the statute offers no relief.

ADGM

In the ADGM, English common law applies directly. Force majeure has no independent legal meaning there — the relief is only as good as the clause the parties wrote, and English courts construe such clauses restrictively. Without a clause, the only fallback is frustration: the contract must have become radically different from what was undertaken, not merely more burdensome. Tsakiroglou shows how high the bar sits — rerouting a shipment around Africa at roughly double the cost did not frustrate the contract. Where frustration does apply, discharge is automatic and total; neither party has an election. There is no hardship doctrine and no judicial power to adjust prices. If the contract does not protect you, the law probably will not either.

What to do now

If you cannot perform. Notify your counterparty immediately and in writing. Name the specific impediment — not "the conflict" but the closure of a named port, a specific airspace restriction, a particular government order — and explain which obligation is affected and why performance is impossible rather than more expensive. Document your mitigation: the alternatives explored, why they failed, the steps being taken to resume. Under UAE case law force majeure must be the sole cause of non-performance, so check whether you were already in default before the crisis began.

If your counterparty has stopped performing. Do not accept a vague force majeure notice at face value. Request specifics: what impediment, which obligation, what mitigation. Test whether performance is truly impossible or merely inconvenient — the line between Article 273 and Article 249 decides the remedy. And remember that Article 246 expects both parties to act in good faith: refusing every reasonable accommodation may weaken your own position in the litigation that follows.

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