The ongoing regional conflict is materially disrupting supply chains, shipping routes, and commercial operations across the Gulf. For businesses operating in or through the UAE, the key question is whether force majeure provides relief from contractual performance, and, critically, on what terms. The answer depends fundamentally on the governing law of the contract, and the legal position varies more materially across UAE, DIFC, and ADGM than most businesses realize.

Force majeure conceptually describes events beyond the reasonable control of the affected party, such as armed conflict, government intervention or natural disasters, but only where such events prevent or legally impede performance. Whether it is engaged in any given case turns on the precise contractual wording and a clear causal link between the event and the inability to perform.

The threshold across all applicable regimes is demanding. It is a narrowly construed legal remedy, and an incorrect invocation, particularly where performance remains possible, may itself be treated as a repudiatory breach, entitling the counterparty to terminate and claim damages.

A Tale of Three Regimes

The position changes materially depending on whether the contract is governed by UAE mainland law, DIFC law, or ADGM law, and businesses operating across these jurisdictions should not assume uniformity.

The Legal Threshold: Impossibility, Impediment, and Difficulty

The distinction between ‘impossibility’ and ‘mere onerousness’ is the central fault line. Increased cost, extended timelines, and logistical inconvenience are not force majeure events; they are ordinary commercial risk. The position is well established.

Under UAE mainland law, Article 273 requires impossibility of performance, not mere difficulty, delay or increased cost: the obligation must be incapable of performance by any reasonable means. Where an alternative route, supplier, or method of performance exists, the claim fails. Article 249 operates where performance is possible but excessively onerous; the threshold is lower, but the remedy is judicial adjustment, not termination.

Under DIFC law, Article 82 requires an ‘impediment’ beyond the party’s control that could not reasonably have been foreseen or overcome. Avoidable impediments, by rerouting or substitution, will not qualify. Under ADGM and English law, there is no implied doctrine. The contract governs. The only fallback is frustration, which requires performance to be radically different from what was undertaken, a bar higher than impossibility under the UAE or DIFC regimes. In Tsakiroglou & Co Ltd v Noblee Thorl GmbH, the House of Lords held that Suez Canal closure did not frustrate a contract because the Cape of Good Hope remained available. The analogy is direct: Hormuz disruption does not frustrate a contract if alternative routing exists. Cost is not impossibility.

Causation: The Most Contested Element in Practice

The existence of a conflict by itself does not invoke force majeure. The invoking party must demonstrate that the specific event caused a specific obligation to become specifically unperformable. Courts apply this rigorously, and it is the condition on which otherwise well-founded claims most often fail.

Where multiple factors contributed to non-performance, the burden lies on the invoking party to show that the force majeure event was the dominant or operative cause, not merely one of several. Supply chains already under strain before hostilities escalated present a harder causation argument. Pre-existing breach will generally defeat the invocation. The force majeure doctrine does not operate to relieve a party from obligations already in default prior to the force majeure event.

Key Risk Areas and Contractual Contexts: What Actually Qualifies

The legal framework translates differently across contractual contexts and risk areas. The analysis below identifies where claims are strongest, where they fail, and where a different instrument applies.

Shipping and Logistics

The threshold question is whether an alternative route exists. Where it does, whether through alternative ports, pipeline, air freight, the disruption constitutes increased cost and delay, not impossibility. Article 273 will not apply; Article 249 hardship may apply where the cost differential is severe. Legal prohibition of navigation by governmental order or sanctions, with no viable alternative, produces a materially stronger force majeure case. For English law charterparties, CONWARTIME and VOYWAR war-risk clauses provide a separate and lower-threshold regime: shipowners may refuse orders where there is a real likelihood of war-risk exposure, without needing to establish impossibility.

Supply chain breakdown, including disruption to critical inputs or single-source components, will only support a force majeure argument where substitutes are not reasonably available; general shortages or procurement at higher cost remain within the domain of hardship, not impossibility.

Sanctions, Government Action and Banking Disruption

The strongest category. Legal impossibility, where performance would require breach of applicable law, is recognized across all regimes without requiring proof of physical impossibility. Assess whether obligations have been rendered unlawful, not merely more difficult. This includes constraints arising from banking channel disruption, such as refusal of correspondent banks to process payments, inability to obtain or confirm letters of credit, or blocking of fund flows through the international financial system. A disruption that begins as logistical can become legal as sanctions tighten. Parties should monitor both regulatory developments and banking channel viability on a continuous basis.

Financing Arrangements

Force majeure in finance documents (facility, security and ancillary documents) generally trigger in parallel. They usually contain provisions obligating borrowers to promptly notify the lender of force majeure events which impact their ability to perform the contract. Waiver restrictions commonly prohibit borrowers from settling / releasing force majeure claims under project documents without lender consent. Borrowers should coordinate with lenders proactively, else risk converting a manageable disruption into a technical default.

Real Estate and Construction

Force majeure in real estate documentation (off-plan SPAs, Form F and underlying construction contracts) should be assessed across this stack, rather than in isolation. In construction contracts (including FIDIC-based forms), force majeure provisions generally entitle contractors to extensions of time (but not price adjustment) and are subject to strict notice and substantiation requirements, whereas SPAs and brokerage contracts tend to contain narrower relief & do not excuse payment obligations. Article 273 will rarely apply; construction and delivery obligations are seldom rendered impossible, making Article 249 (hardship) the operative provision where cost escalation, labour disruption, or supply chain breakdown materially affects performance. Contractors / developers should assess whether cost escalation or delay crosses the ‘grave loss’ threshold before seeking judicial intervention, and should not withhold performance in the interim.

Workforce and Site Access

Evacuations, closures, and curfews imposed by governmental authority may prevent performance of site-specific obligations. The force majeure case is strongest where the obligation cannot be relocated or deferred. Temporary restrictions, where work resumes once the impediment lifts, are more likely to result in suspension under Article 273 or judicial adjustment under Article 249 than immediate contract discharge.

M&A and Transaction Contracts

Force majeure is rarely the operative mechanism in pre-closing aspects of M&A. Share purchase agreements and transaction documents typically address disruption through Material Adverse Change / Effect clauses, which operate on distinct legal principles and a different threshold from force majeure. Parties to live transactions should examine their MAC/MAE provisions, including what qualifies, what is expressly carved out, and what evidence is required to invoke the clause, rather than applying force majeure analysis.

War-Risk Insurance Withdrawal

Increased premiums are a cost problem, not force majeure. Outright unavailability of legally required insurance, where no provider will write coverage at any price, may support a legal impossibility argument for force majeure purposes. The risk is most acute in sectors where insurance is a legal or contractual precondition to performance, including maritime transport, aviation, construction and infrastructure projects where such insurance is a condition precedent to lawful or contractual performance.

Remedies in Practice – What Relief Actually Looks Like

The same disruption may terminate a contract under UAE law, suspend obligations under DIFC law, and produce no relief at all under English law absent an express clause. The regime determines the outcome.

UAE Mainland

Where Article 273 is engaged, total impossibility may result in automatic cancellation by operation of law. Partial impossibility extinguishes only the affected obligation; the remainder survives. Temporary impossibility suspends performance; obligations revive when the impediment resolves. Critically, Article 273 operates to suspend or extinguish obligations; it does not provide a basis for recovery of additional costs unless the contract expressly provides. Article 249: where performance is possible but excessively onerous, courts adjust the obligation to a reasonable level. The contract survives. This provision is underused and highly relevant to current conditions but requires judicial intervention and cannot be invoked unilaterally.

DIFC

A successful Article 82 claim excuses non-performance for the duration of the impediment. There is no automatic termination; termination depends entirely on the contract’s own mechanics. Parties with no express termination trigger may find themselves suspended indefinitely with no clean exit.

ADGM and English Law

Express clauses govern and are construed strictly. Without one, frustration is the only fallback, and it will rarely succeed where alternative performance remains possible. The practical consequence: parties absorb the economic impact of disruption within their existing contract terms.

Looking Ahead

  • Identify governing law and dispute resolution forum first. As seen above, force majeure, hardship, and frustration produce materially different thresholds and remedies across UAE mainland, DIFC, and ADGM. The same disruption yields different legal outcomes depending on the contractual architecture.

  • Treat notice as a legal workstream. Timely notice is often a condition precedent to relief. A valid notice characterizes the impediment precisely, identifies affected obligations, states mitigation steps taken, and reserves rights where facts are still developing. Late notice may defeat otherwise sound claims.

  • Start building the evidence file now. A contemporaneous record, incl. carrier correspondence, insurer notifications, routing restrictions, delivery logs, governmental directives etc. determines outcomes in negotiation and dispute alike. Evidence reconstructed after the fact carries significantly less weight.

  • Mitigation is both a legal duty and a causation issue. Failure to take reasonable steps to overcome an impediment will defeat an otherwise valid claim. Document every alternative considered and step taken.

  • Do not invoke force majeure as a first move. Force majeure relief often operates to excuse or suspend performance rather than create a freestanding right to cost recovery. Before formally invoking, assess whether variation, price adjustment, Article 249 hardship proceedings, or renegotiation delivers a better outcome. A wrongly invoked force majeure declaration may itself constitute repudiatory breach.

  • Review contracts before 1 June 2026. Federal Decree-Law No. 25 of 2025 enters into force on that date. It preserves the core framework but reinforces contractual autonomy and codifies good faith. New contracts should include express force majeure and hardship provisions covering armed conflict, government action, insurance withdrawal, sanctions, and disruption. Businesses operating under ADGM or English law do not benefit from a statutory safety net and should now expressly include force majeure and hardship provisions.