UAE Law Clarifies Force Majeure Impossibility and Hardship Contract Rules

Under UAE legal practice reported by Lexology, contract disruption is governed by two separate statutory mechanisms under Federal Decree-Law No. 25 of 2025 (the Civil Transactions Law), which replaced Federal Law No. 5 of 1985. The legal outcome depends on whether contractual performance has become objectively impossible or merely onerous.

Under Article 236, force majeure applies where performance becomes impossible in bilateral contracts. In cases of total impossibility, the corresponding obligations are extinguished and the contract is rescinded automatically by operation of law, requiring neither a separate application nor a court order. For partial impossibility, parties may invoke the extinguishment of the affected obligation or petition the court to rescind the contract. For temporary impossibility in continuing agreements, parties may seek obligation extinguishment, contract modification, or judicial rescission.

In contrast, Article 224 governs hardship arising from exceptional, general circumstances that were unforeseeable at the time of contracting. Where such events render performance excessively onerous and threaten serious loss, performance is not excused automatically. Instead, relief is discretionary, allowing courts to reduce the obligation to a reasonable level or rescind the contract, with any agreement attempting to exclude this statutory protection deemed void.

The analysis notes that businesses cannot unilaterally suspend performance without meeting legal requirements. Under Article 232, contract revocation, modification, or rescission requires mutual consent, litigation, or an express provision of law, while Article 234 stipulates notice and court application procedures.