Force Majeure and Hardship in the UAE: Distinguishing Impossibility from Burden

The theories of force majeure and hardship are considered among the most important doctrines in civil law, given their direct impact on contractual obligations and legal liability, particularly during major crises such as wars and regional conflicts. The significance of distinguishing between these theories has become increasingly prominent in the United Arab Emirates with the growing geopolitical challenges in the region, as contractual relationships have become more susceptible to unforeseen external factors.

Force majeure refers to any exceptional, general, and unforeseeable event that cannot be averted and renders the performance of an obligation absolutely impossible. The UAE legislator has regulated this theory within the Civil Transactions Law, stipulating that if the performance of an obligation becomes impossible due to an extraneous cause beyond the debtor’s control, the obligation shall be extinguished and the debtor shall be exempted from liability, provided that the debtor proves that the damage arose from an extraneous cause such as force majeure or an unforeseen event.

For an event to qualify as force majeure, several essential conditions must be met: the event must have been unforeseeable at the time of contracting; it must be impossible to avert or avoid its consequences; it must be beyond the debtor’s control; and it must result in an absolute impossibility of performing the obligation, not merely difficulty or an increase in cost.

It is important to distinguish between force majeure and hardship (al-zuruf al-tari’a). Force majeure leads to the impossibility of performance and, consequently, the extinguishment of the obligation. Hardship, on the other hand, does not render performance impossible but merely onerous, which entitles the court to intervene and adjust the obligation to achieve a balance between the parties.

Wars and armed conflicts are among the most prominent examples of force majeure, provided they result in the complete disruption of the performance of obligations. Examples include the closure of ports and airports, the imposition of economic restrictions, the disruption of supply chains, and the impossibility of transport or delivery. However, the mere occurrence of war is not, in and of itself, sufficient to constitute force majeure; it must be demonstrated that the effects of the war have actually rendered performance impossible.

In light of the tensions in the region, multiple situations may arise that could fall within the concept of force majeure, such as a complete interruption in supply operations, the imposition of international restrictions that prevent the performance of obligations, or the total cessation of logistics services. Nevertheless, certain effects, such as rising prices or increased costs of performance, may not reach the threshold of force majeure and would instead fall within the scope of hardship.

The UAE judiciary is known for its precision in applying this theory. It does not merely rely on the existence of an exceptional event such as war but verifies the actual impact of that event on the performance of the obligation. It requires that this impact reach the level of genuine impossibility. The courts also take care to distinguish between cases that warrant the extinguishment of the obligation and those that only call for the restoration of contractual equilibrium, in accordance with Article 273 of the Civil Transactions Law.

The consequences of establishing force majeure include the extinguishment of the obligation, the exemption of the debtor from liability, and the non-imposition of compensation. It may also lead to the termination of the contract by operation of law and the restoration of the parties to their pre-contractual position, where possible.

In light of the current regional circumstances, the importance of incorporating clear contractual clauses governing force majeure, defining its scope and effects, becomes evident, along with the inclusion of mechanisms for dealing with hardship, so as to ensure the protection of the parties and achieve stability in transactions.