Introduction
Contractual obligations may become difficult to perform due to unforeseen external events that disrupt normal commercial operations. In recent years, particularly in the wake of the COVID-19 pandemic and various geopolitical tensions, the term “force majeure” has come under increased scrutiny in the realm of business agreements.
Consequently, businesses are now meticulously examining their contracts and assessing the adequacy of their “force majeure” provisions in light of the risks posed by these tensions.
However, force majeure is only available in certain situations and cannot be invoked merely because performance has become harder or more expensive.
- The doctrine works within certain legal limits
- Its application depends on whether the event makes performance absolutely impossible
Historically, the doctrine was codified in the Civil Code under Federal Law No. 5 of 1985, which established the legal framework governing circumstances that prevent or significantly hinder contractual performance.
The UAE approved a new set of laws called Federal Decree-Law №25 of 2025 on Civil Transactions, which is set to come into force on 1 June 2026.
Although the new law keeps the basic rules on “force majeure” and “extraordinary circumstances”, it also clarifies the following:
- When performance is impossible
- When performance is still possible but too difficult
It is important to understand the difference between these two terms when deciding whether geopolitical factors can justify breaking or changing a contract.
Legal Framework of Force Majeure Clause and Exceptional Circumstances
The doctrines of force majeure in the UAE law (Civil Code of 1985) under Article 273 and exceptional circumstances under Article 249 provide legal ways to deal with cases where events beyond the parties’ control make it impossible to perform the contract.
Both theories are based on unexpected events that neither party could have predicted. However, they are very different and should only be used in certain circumstances.
Force Majeure Under UAE Law
When an unexpected and uncontrollable event makes it objectively impossible to fulfil a contractual duty, this is called “force majeure” in UAE law.
When a contract has a “force majeure” clause, the problem will be addressed according to the terms of the contract.
Article 273 of the Civil Code also covers situations where performance is impossible because of “force majeure”, even if there is no specific clause in the agreement.
- A party cannot reasonably be expected to fulfil an obligation that is impossible
- In bilateral agreements, the contract may automatically end
- Partial impossibility affects only part of the contract
- Can act as a legal defense against liability
Conditions For Applying Force Majeure
| Condition | Description |
|---|---|
| Unforeseeable | The event must not be predictable at contract formation |
| Unavoidable | Cannot be prevented despite reasonable efforts |
| Impossible Performance | Must make performance impossible, not just difficult |
Exceptional Circumstances (Hardship)
The concept of exceptional circumstances, which is sometimes called hardship, is different from force majeure.
This idea is used when performance is still technically possible but too hard to do because of unexpected public events.
- Performance is possible but excessively burdensome
- Courts may intervene to restore fairness
- Contract continues instead of terminating
| Doctrine | Meaning | Outcome |
|---|---|---|
| Force Majeure | Performance impossible | The contract may terminate |
| Exceptional Circumstances | Performance difficult | Contract adjusted |
Application of Force Majeure Clause in Form F Real Estate Agreements
The Dubai Land Department (DLD) issues Form F, also known as the Unified Sale Agreement or MOU, as the standard contract that documents the mutually agreed-upon terms between the buyer and seller in a property transaction.
- Purchase price
- Security deposit (10% in most cases)
- Completion date
- Broker’s commission
- Obligations of both parties
If a force majeure event occurs in Dubai real estate practice, the parties may be excused from fulfilling the terms of the contract, and the contract may be terminated without penalty.
However, Form F in Dubai real estate does not always include a comprehensive force majeure clause in most of the transactions.
Regardless of its absence, the UAE Civil Code principles continue to be applicable.
Consequences of Breach in Form F
| Scenario | Legal Outcome |
|---|---|
| Buyer defaults | The seller may retain 10% deposit |
| Seller defaults | The buyer may claim compensation or a refund. |
| Force majeure proven | No liability for breach |
Dispute Resolution Process
- Review Form F contract clauses
- Issue legal notice
- Seek completion or termination
- Approach UAE courts if unresolved
The court will determine if the circumstances meet the criteria for force majeure and whether the deposit should be returned or handled under legal rules.
Conclusion: Evaluating Force Majeure Clause
When UAE courts apply the concept of force majeure, they are very careful and go no further than the law allows.
- Must show direct link between event and non-performance
- Event must make performance impossible
- Higher cost or loss of income is not enough
- Must prove event was beyond control
Situations such as transport disruptions, airspace closures, or trade restrictions may qualify if they genuinely prevent contractual performance.
Key Factors for Evaluating Force Majeure Clause
- Scope of clause and covered events
- Notice and procedural requirements
- Governing law and dispute resolution clauses
The party must also show the following:
- The event directly caused the breach
- Reasonable steps were taken to mitigate impact
- Good-faith actions were taken
- Proper notice was given
Facing a Property Dispute in Dubai? Talk to Awatif Mohammad Shoqi Advocates today.
Real estate transactions in Dubai — especially Form F agreements — can quickly become complex when disputes arise.
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End-Notes:
- https://www.alrowaad.ae/knowledge/legal-articles/property-law/force-majeure-clauses-in-contracts-a-special-reference-to-form-f-in-dubai-real-estate-transactions/
