UAE Civil Transactions Law: Managing Force Majeure and Hardship Under Updated Code

The statutory framework governing force majeure in the United Arab Emirates has transitioned following the enactment of Federal Decree-Law No. 25 of 2025, which came into force on 1 June 2026 and repealed the 1985 Civil Transactions Law (Federal Law No. 5 of 1985). According to an analysis published by London Business News, while core legal principles have been preserved, key provisions have been renumbered: the statutory force majeure rule previously codified under Article 273 now sits in Article 236, while the hardship provision formerly in Article 249 is now Article 224.

Under UAE law, force majeure requires that an event be unforeseeable, unavoidable, and entirely beyond the affected party's control, rendering performance objectively impossible rather than simply more expensive. Total impossibility extinguishes the contractual obligation and cancels the contract by operation of law, whereas partial or temporary disruption—such as a temporary site closure—only suspends performance obligations for the duration of the event. The party claiming relief bears the burden of proof and must demonstrate active mitigation efforts.

The report highlights that commercial parties frequently confuse force majeure with the legal doctrine of hardship. Hardship applies when exceptional, unforeseeable events of a general nature occurring after contract formation make execution excessively burdensome and threaten grave financial loss without rendering it strictly impossible. Under hardship provisions, courts or arbitral tribunals possess the authority to adjust contractual burdens to a reasonable level rather than terminate the contract. Treating a surge in raw material prices as force majeure to justify suspending performance may itself constitute a breach of contract.

To manage legal and operational risk, commercial parties are advised to define qualifying events explicitly—such as epidemics, armed conflicts, and governmental orders—while expressly carving out supplier insolvency and routine market price volatility. Contracts should specify concrete notice deadlines, evidentiary criteria, mitigation obligations, and long-stop dates permitting termination if disruption persists. London Business News noted that companies based in onshore free zones, such as Meydan Free Zone, are generally subject to federal civil law for their contracts and should review existing and future agreements against the updated code.