Force Majeure is regulated in Article 273 of UAE Federal Law No. 5 of 1985 (known as the UAE Civil Code).
Article 273 reads as follows:
- In bilateral contracts, if a Force Majeure arises that makes the performance of the obligation impossible, the corresponding obligation shall, be extinguished and the contract ipso facto rescinded.
- If the impossibility is partial, the consideration for the impossible part shall be extinguished. This shall also apply on the provisional impossibility in continuous contracts. In both instances the creditor may rescind the contract provided the debtor has knowledge thereof.
UAE Courts’ jurisprudence requires the events leading to the application of Force Majeure to be unforeseeable, extraneous and must render the obligation impossible to perform rather than more onerous.
Dubai Court of Cassation, 188/2009: It is well established in the precedents of this court in the case of Force Majeure negating liability for compensation for damage for breach of an obligation, it is a prerequisite for being allowed to rely on Force Majeure that it should be the result of an unforeseen event that could not have been averted, namely that the results thereof could not have been guarded against or prevented, in such a way as to make performance of the obligation impossible. The assessment of whether the facts alleged amount to Force Majeure is a matter of fact for the trial court.
Dubai Court of Cassation, 730/2015 It is well established in the precedents of this court that the Force Majeure requires lack of connection between that parties and the accident, and that the accident to be unpredictable and impossible to be averted, and that what should be impossible to anticipate or stop is what the accident causes, such as wars, earthquake, fire, drowning or theft or floods, droughts, storms, and so on. If the Force Majeure is the only reason for the damage, then the causal relationship does not materialize and the responsibility does not materialize.
Pursuant to Article 273 of the UAE Civil Code and UAE jurisprudence, Force Majeure is a mandatory safeguard offered by the UAE legislation. Contractual parties could claim Force Majeure even if not reflected under the underlying contracts. Conversely parties cannot define as Force Majeure anything they wish as an attempt to safeguard delays. Force Majeure has the characteristics defined by the UAE Courts, currently requiring that the events are unforeseeable, extraneous and that render the obligation impossible.
This differs from common law jurisdictions where the application of Force Majeure will depend on the wording used by the Parties in the contract.
In case the Force Majeure events lead to termination of the contract, the parties will need to be resorted to the pre-contract position or damages will be awarded in furtherance of Article 274 of the UAE Civil Code:
“When a contract is or shall be rescinded, the two contracting parties shall be reinstated to their former position, prior to contracting, and in case this is impossible, the Court may award damages.”
However, when an obligation is not impossible but rather burdensome in such a manner as to threatening him with heavy loss, Article 273 of the UAE Civil Code will not apply and parties will need to seek recourse to Article 249 of the UAE Civil Code, which reads as follows:
If public exceptional unpredictable circumstances shall arise, and their happening has resulted in making the execution of the contracted obligation, if not impossible, has become burdensome to the debtor in such a manner as to threatening him with heavy loss, the judge may, according to circumstances and by comparing the interests of both parties, reduce the burdensome obligation to reasonable limits, if justice so requires. Any agreement to the contrary is void