Coronavirus COVID-19 and Force Majeure under UAE law

We are living in the time when the UAE as many other countries around the globe fights a pandemic of coronavirus COVID-19. The UAE Government has implemented protective measures such as quarantines, business restrictions, travel restrictions, visa bans, etc. While these measures are necessary, they could significantly affect the society and private businesses. Every resident of the Emirates feels the affect of the preventive measures on his/her life. The owners of the businesses in the UAE feel major impact of the pandemic on finances and ability to sustain the businesses.

My clients come up to me with a question where COVID-19 is a Force Majeure event that would relieve the company from its obligations to perform existing contracts. The answer to this question is not strait forward and depends on few factors that need to be considered.

UAE legislation on Force Majeure

Force Majeure comes from a French term that literally translates to “greater force” and are commonly included within commercial contracts. The term Force Majeure in a legal context excuses a party from not performing its contractual obligations that have become impossible or impracticable because of an event that the parties have not foreseen. Force Majeure is typically understood as either a natural event (such as natural disasters) or statutory event (such as a change in law or a government nationalisation of an industry) giving rise to a party being unable to perform its obligations.

The starting point for any analysis of whether COVID-19 may constitute a Force Majeure event or exceptional circumstances is the contract in question and, in particular, whether there is a definition that could encompass an epidemic or pandemic scenario. It is less common to see Force Majeure clauses in the contracts that expressly provide for a global health emergency, pandemic or epidemic as a Force Majeure event. If terms such as "epidemic" or "pandemic" is included, you may be in a stronger position to make such a claim. Where such specific language is not used, Force Majeure clauses often include a general sweep up clause which captures "any such events which are not within the reasonable control of the parties". If contract is silent or unclear, then it will be for the Court to determine whether the existence and effects of an epidemic or pandemic constitute Force Majeure in the context of the Civil Cod.

For contracts governed by UAE law a Force Majeure clause may be invoked by a party pursuant to the federal laws of the UAE, even if not expressly included in a contract. The main law on this subject is the UAE Civil Code (Federal Law Number 5 of 1985) (“UAE Civil Code”).

Article 273 of the UAE Civil Code above provides that if a force majeure event occurs that renders performance of a contract (fully or partially) impossible, all contractual obligations will cease and the contract will be cancelled (fully or partially). If a contract is cancelled, the parties are to be restored to the position they were in before they entered into the contract; if that is not possible, damages may be awarded by way of compensation to a party that has suffered a loss as a result of the inability to unwind the contract. 

It is important to note that it is not sufficient that performance is only obstructed by mere hardship, or uneconomic balance between parties in order for Force Majeure to be invoked. The most important prerequisite is that a Force Majeure event must be unforeseeable. Force Majeure may not be invoked where any party to a contract was in a position to anticipate the Force Majeure event. The analogy behind this is clear, as each party to a contract is under an obligation to act in good faith and to mitigate damages where it is reasonably foreseeable.


Timely Notification

Timely notification may be critical to the success of invoking a force majeure clause. Force Majeure clauses in the contracts also normally include stringent notification provisions. For instance, a party may be required to notify the other party of the Force Majeure event within a certain timeframe after they have become aware of the relevant event. You may also be required to provide updates and detailed reports. A delay in notifying may prevent you from invoking force majeure.


Performing obligations to the extent possible

Force Majeure clauses may also require that you, as the claiming party, must continue to perform obligations unaffected by the Force Majeure event, or use reasonable endeavours to mitigate any disruptions caused by the Force Majeure event. It is therefore important that even where a Force Majeure is successfully invoked by you, it may not completely relieve you from all your contractual obligations, but rather the contract will still need to be performed to the extent possible.


If you wish to consider a Force Majeure notice

Where your company is to consider a Force Majeure notification, you should:



Question to consider


urgently review your affected contracts and consider the Force Majeure clauses and obligations

Does the contract include an explicit force majeure provision (even not be labelled 'force majeure') and, if so, is the impediment in the form of “epidemic” or “pandemic” caught by that provision? How is the impediment measured, how long will it last and when can it reasonably be said to have ended?


continue to perform the unaffected obligations where required

Is the impediment due to an event under one party's control? Could one party reasonably have mitigated or avoided the consequences of non-performance altogether?


where it is clear that a notice must be served, ensure that this is timely filed and do not delay

Does the contract require notice of a force majeure event to be given and has notice been given accordingly?


consider the impact and consequence of the event and the extent it hinders performance

Is performance of the contract impeded? Is the contract now impossible to perform, or is it merely more difficult?


acknowledge possible and reasonable endeavours that can be executed to overcome the event

Can the impediment be dealt with by cooperative means, including expressly varying the contract to accommodate the change? For example, adjusting contract value, its duration, deducting part of it, or extending its duration if it can be implemented despite the partial impossibility. Create appropriate contingency plan.


make sure that the contract is governed by the UAE laws and the jurisdiction is for UAE courts

Whether or not the contract contains a force majeure clause, what is the governing law of the contract and what does that law say about force majeure or similar doctrines?


based on the analysis above, notify the other party of your intentions to activate the Force Majeure clause

The affected party shall gather as many evidence as possible to support its potential claim, such as the timing, the number of parties impacted, how the supply chain has been affected and other evidence as deemed appropriate.


If you are served with a Force Majeure notice

Where your company is served with a Force Majeure notification by a counterparty who claims they are unable to perform their obligations, you should:


Closing remarks

The COVID-19 outbreak is rapidly evolving day-by-day and it is likely to continue to do so for a protracted timeframe. At this stage, it is difficult to predict how the courts in the UAEwill deal with Force Majeure and exceptional circumstances raised by COVID-19. Much may depend on the severity of the outbreak and whether the disruption suffered as a result goes beyond that experienced in other recent situations. The courts will have to consider the effect of actions taken by the UAE Government and foreign authorities on existing contracts. It does seem likely that these legal issues will be brought into the spotlight over the coming months and that parties will be looking carefully at the relevant provisions of the UAE Civil Code.

The issues discussed above reflect what we consider to be the key legal issues for businesses and organisations in the UAE during COVID-19 outbreak. The best our clients can do is to reach an amicable understanding that will satisfy all parties involved, without the need to resort to the court proceedings.  Perhaps you should try to agree to amend the contract in such a way as to minimize losses and expenses, in particular, by transferring the obligations of the parties to stages that can be performed in the future, both, in terms of time and cost of the contract, in the interests of both parties.

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