Arbitration Force Majeure Claims in UAE: Covid-19 and Beyond
Article 273, the contract clause, and the conditions a claim has to meet
Force majeure claims under Article 273 of the UAE Civil Code, and how a contractual clause can reach beyond it. Covers the notice and mitigation conditions that can defeat a claim, the effect of the seat and institutional rules, the hardship doctrine, and what each side has to prove in arbitration.
Reviewed by Mohamed Noureldin, Founder, Managing Partner & Senior Legal Consultant
COVID-19 tested the force majeure doctrine in the UAE, particularly in arbitration. Businesses that could not perform, or performed late, invoked force majeure to escape liability for non-performance or delayed performance. Their counterparties pressed for contractual performance or claimed damages. A party invoking the doctrine has to satisfy both the UAE Civil Code and the force majeure clause in its own contract.
Article 273 sets the statutory test
The UAE Civil Code, Federal Law No. 5 of 1985, holds the founding principles on contracts and obligations. Article 273 defines force majeure as an external, uncontrollable and unavoidable event that renders a debtor unable to fulfil their contractual obligations. That definition is the backbone of force majeure claims in judicial and arbitral settings alike, and it frames every force majeure claim brought in arbitration.
The pandemic tested that definition. Its global reach and prolonged impact raised questions about the duration and extent of a force majeure event, and about the interplay between force majeure and hardship. Courts and arbitral tribunals have had to weigh parties asserting force majeure to escape liability against parties seeking to enforce contractual performance despite the disruption. The invocation of force majeure in arbitration has surged since the pandemic, and with it the need to understand how UAE law and arbitral tribunals interpret and apply these claims.
The clause the parties wrote can reach further than the Code
In arbitration, the Civil Code provisions are often supplemented or modified by the force majeure clause the parties agreed. Such clauses typically set out the scope of the doctrine, the notice requirements and the consequences of invoking it, which lets the parties tailor how that risk is allocated. Contracts governed by UAE law commonly include detailed clauses that extend beyond the statutory definition, capturing events such as pandemics, government actions and supply chain disruptions.
Clauses of this kind usually enumerate the events they cover, such as natural disasters, wars, strikes and governmental acts. Since COVID-19, many contracts have been amended or newly drafted to name pandemics, epidemics and related governmental restrictions. The specificity of the wording bears directly on the strength of a claim: vague or overly broad clauses may be read restrictively by an arbitral tribunal or a court. Drafting such a clause is an exercise in anticipating risks and disputes, and arbitration practice since COVID-19 has underlined the importance of anticipatory contract drafting and of planning for dispute resolution. Clear and precise force majeure provisions, with preparation for a possible dispute, are how parties address the risks that unforeseen global disruptions bring. Our contract drafting team prepares and reviews these clauses.
A supplier may claim force majeure to avoid liability for delayed deliveries, while a purchaser may challenge the invocation to enforce contractual performance or claim damages. Such disputes require arbitrators to consider the wording of the clause, the factual matrix and the broader legal context.
Notice and mitigation are conditions, not formalities
Force majeure clauses carry procedural requirements, and the pandemic brought them into sharp focus. Many contracts require the affected party to notify its counterparty of the event promptly, and to take reasonable steps to mitigate the impact. Failure to comply with those procedural elements can defeat a force majeure claim, even where the event itself qualifies under the clause or under the Civil Code.
Meticulous documentation is key to the claim: the force majeure event, its impact on contractual performance, and the steps taken to mitigate damages. Our arbitration services cover force majeure claims of this kind.
The seat and the rules shape how the claim is heard
Enforceability is also influenced by the governing arbitration rules and the chosen arbitral seat. Where the arbitration is seated in the UAE, the Federal Arbitration Law, Federal Law No. 6 of 2018, gives procedural guidance but defers substantive contract law matters to the law the parties chose, which is often UAE law. An arbitrator has to balance procedural neutrality against substantive legal principles.
Parties may also agree institutional rules, such as those of the Dubai International Arbitration Centre (DIAC) or the International Chamber of Commerce (ICC), and those rules may include provisions that affect how a force majeure claim is treated. Arbitration remains a favoured mechanism for commercial disputes in the UAE, given its neutrality, flexibility and enforceability. Our arbitration practice includes international arbitration.
Hardship answers a different question
Force majeure generally requires impossibility of performance. Hardship involves a substantial and unforeseen change in circumstances that renders performance excessively burdensome but not impossible. The interplay between the two doctrines calls for thorough factual investigation and legal analysis, to reject unfounded claims and maintain contractual balance.
The UAE Civil Code does not explicitly provide for hardship. UAE arbitral tribunals have nonetheless built solutions on principles of good faith and equity, often referencing international instruments such as the UNIDROIT Principles of International Commercial Contracts. Those principles enable arbitrators to adapt contracts to re-balance obligations or, in exceptional cases, to terminate them.
Where a party cannot demonstrate impossibility, because of a government exemption or because it kept operating at partial capacity, it may assert instead that the pandemic caused an excessive increase in costs or other impediments to performance. Arbitrators then have to distinguish genuine hardship from mere economic difficulty, and grant relief only where it is justified.
Whether a hardship claim is accepted depends heavily on the contractual language. A clause that expressly provides for hardship or for price adjustment lets arbitrators apply equitable remedies more readily. Without one, arbitrators rely on general principles of contract law and on the factual circumstances, which makes the outcome less predictable. Since the pandemic, force majeure and hardship claims are increasingly combined, which requires a tribunal to rule on both with careful differentiation. Hardship has become a standing part of dispute resolution strategy in UAE arbitration, and parties often raise it in conjunction with force majeure or as an alternative to it, which complicates the proceedings. Parties are advised to draft their contractual provisions and their dispute resolution clauses so that both doctrines are addressed.
What a claimant proves, and where a respondent attacks
A force majeure claim stands on a rigorous factual and legal foundation, and it has to meet the statutory and the contractual conditions alike. A claimant has to show that the event qualifies as force majeure under the applicable UAE Civil Code provisions and under the contractual clause. That means establishing that the event was external, unforeseeable and beyond the party's control, and drawing a clear causal link between the event and the non-performance or delay. Adherence to procedural requirements such as timely notice is crucial to the integrity of the claim.
A respondent works the same ground from the other side. It may challenge the existence or the impact of the event, the claimant's compliance with notice provisions, or the availability of alternative performance options. It may also argue that the event did not render performance impossible, only more difficult or more costly, which moves the dispute towards hardship. Building that defence takes detailed factual investigation and contractual interpretation, to expose the weaknesses in the claimant's position. Our arbitration lawyers also act in commercial litigation.
How a tribunal resolves the conflict
An arbitrator brings together the Civil Code provisions, the contractual clauses and the relevant international principles. Ambiguous clauses call for a purposive approach, construing the parties' intentions within the context of the pandemic's impact. Expert evidence and contractual interpretation do much of the work of separating a well-founded claim from a spurious one, and of upholding contractual stability.
The remedies run from excuse of performance to adaptation of the contract or termination. Not every dispute has to reach that point. Parties may resolve disputes early through alternative dispute resolution, including settlement negotiations and mediation, which preserves the commercial relationship.
Nour Attorneys works on arbitration, contract drafting and corporate law.
Disclaimer: This article is for informational purposes only and does not constitute legal advice.
