Published 2026-08-28
Dubai’s Department of Economy and Tourism (DET), together with Dubai Chambers and the law firm Baker McKenzie, has issued a Force Majeure Guide for companies operating in Dubai, announced on 2026-08-28. The guide answers the question most businesses have been asking since the new UAE Civil Transactions Law (Federal Decree-Law No. 25 of 2025) came into force on 2026-06-01: when does a disruption legally excuse a party from a contract, and when does it not. The short answer: force majeure under UAE law requires an external, unforeseeable event that makes performance objectively impossible. Rising construction costs, inflation, supply chain delays, rerouted shipping, higher fuel prices and regional instability do not automatically qualify. The guide also explains which of the two Civil Codes applies to a given contract (the date of signing decides), how force majeure differs from “exceptional circumstances”, why amounts already due generally remain payable, and what steps a company should take to preserve its position.
What the guide is and who it is for
The Force Majeure Guide is a practical manual rather than a piece of legislation. It was prepared by DET in cooperation with Dubai Chambers and Baker McKenzie for companies and commercial establishments licensed in Dubai. According to DET, the target readers are business owners and the legal, financial and operational teams that have to decide, often within days, how to respond when a supplier stops delivering, a project site becomes inaccessible or a counterparty declares that it cannot perform.
The guide covers six practical areas: how to assess a contract disruption, how to preserve evidence, how to meet notification and mitigation requirements, how to deal with payment issues, and how to use mediation and other dispute resolution channels available in Dubai. It also serves decision-makers who need to review contractual obligations, proof requirements and notification procedures before taking a position with a counterparty.
The timing is deliberate. Dubai Chambers has been running workshops on force majeure and contractual risk for its members, and the new Civil Code has been in force for under three months. Many companies are now running two sets of contracts under two sets of rules, and the guide is intended to give a common starting point.
Force majeure under UAE law: impossible, not merely harder
Businesses often use “force majeure” loosely to describe any major disruption. UAE law does not. The guide restates the legal definition: force majeure is an exceptional event beyond the control of the contracting parties that objectively makes contractual performance impossible. In practice, four conditions have to be met at the same time:
- the event is external to the parties;
- it could not reasonably have been foreseen or prevented;
- the affected party is not at fault;
- performance has become objectively impossible, not merely more difficult, more expensive or delayed.
The key distinction in UAE law is between an event that makes performance impossible and an event that makes performance more burdensome. The legal consequences are very different: a genuine force majeure event can extinguish or suspend the obligation, while a business difficulty leaves the obligation in place and, if the party stops performing, turns the situation into an ordinary breach of contract with all the liability that follows.
What does not automatically qualify
The guide lists the disruptions that companies most frequently describe as force majeure but that, on their own, do not meet the test:
- rising construction costs and inflation;
- supply chain delays;
- changes in shipping routes;
- higher fuel prices;
- regional instability.
Each of these can make a contract less profitable or harder to perform. None of them, by itself, makes performance impossible. Whether force majeure or a lesser form of relief applies always depends on the specific facts, the wording of the contract and the legal framework that governs it. A supplier whose route through a particular strait is closed can usually still deliver by another route at a higher cost; that is a commercial burden, not impossibility, unless the contract says otherwise.
Two Civil Codes: the contract date decides
The new Civil Transactions Law, Federal Decree-Law No. 25 of 2025, replaced Federal Law No. 5 of 1985 with effect from 2026-06-01. The guide’s practical starting point is the date the contract was concluded, because that date generally determines which Code applies.
| Contract concluded | Governing Code | Force majeure | Exceptional circumstances |
|---|---|---|---|
| Before 2026-06-01 | Federal Law No. 5 of 1985 (previous Civil Code) | Article 273, interpreted through a large body of UAE court decisions | Article 249 |
| On or after 2026-06-01 | Federal Decree-Law No. 25 of 2025 (new Civil Code) | Article 236 | Article 224 |
The guide deals primarily with the principles of force majeure developed under the previous Code and the judicial rulings that interpret them, because that is the law that still governs the large stock of contracts signed before June 2026. For newer contracts, the guide points to the corresponding provisions of the new Code, which kept the basic distinction between force majeure and exceptional circumstances but introduced a more flexible framework for dealing with extraordinary events.
For a company this means one practical step before anything else: pull the contract, check the signing date, and read the force majeure and hardship clauses in the light of the Code that applies. A long-term supply agreement signed in 2024 and a framework agreement signed in July 2026 may lead to different outcomes on identical facts.
Force majeure versus exceptional circumstances
The guide draws a line between two concepts that are often confused.
| Force majeure | Exceptional circumstances | |
|---|---|---|
| Is performance possible? | No, objectively impossible | Yes, but excessively burdensome |
| Nature of the event | External, unforeseeable, unavoidable, no fault of the affected party | Exceptional and unexpected, threatening the party with a significant loss |
| Effect on the obligation | May be extinguished or suspended, depending on the situation and the applicable Code | Obligation remains; relief is adjustment rather than release |
The difference matters for strategy. A party that wrongly declares force majeure and stops performing exposes itself to a claim for breach. A party that is facing genuine hardship should be building a case for adjustment, with evidence of the loss, rather than for termination.
Money already due stays due
One point in the guide will be uncomfortable for some readers. As a general rule, obligations to pay amounts that have already become due remain due and enforceable even when a force majeure event occurs, unless the contract expressly states otherwise. A force majeure event may excuse future performance; it does not, by default, wipe out invoices that fell due before the event or amounts that the contract makes payable irrespective of it. Companies that expect to rely on force majeure should therefore separate what has already accrued from what has not, and review the payment clauses before taking a position.
Checklist: six steps when a contract is disrupted
The structure of the guide translates into a working sequence for a Dubai company:
- Assess. Identify the event, the affected obligation and whether performance is impossible or merely harder. Check the contract date and the applicable Code.
- Preserve evidence. Collect documents that show the event, its timing, its effect on the specific obligation and the alternatives that were considered.
- Notify. Most contracts set a notification procedure and a time limit; missing it can cost the right to rely on the clause. Notify in the form and to the address the contract requires.
- Mitigate. Show what was done to reduce the impact: alternative suppliers, routes, partial performance. Courts and counterparties look at this.
- Manage payments. Separate amounts already due from future obligations; do not stop paying accrued sums on the assumption that force majeure covers them.
- Use mediation and dispute resolution channels. Dubai offers mediation and other routes short of litigation; the guide encourages companies to explore them before disputes escalate.
Why this matters for companies setting up in Dubai
For a business registering in the UAE today, every contract it signs will fall under the new Civil Code. Clauses that were copied from older templates, written with the 1985 Code in mind, deserve a fresh look: which events are listed as force majeure, what the notification window is, whether payment obligations are carved out, and whether a hardship mechanism exists at all. Getting the corporate side right is the first layer of this: a properly structured entity with a clear licence scope, signing authority and corporate documents in order is what makes the contract enforceable in the first place. Our company setup in the UAE service covers the entity, licence and corporate documents, and our bank account opening service handles the banking relationship that payment clauses depend on.
Dubai has issued several practical compliance frameworks this summer. Owners and operators of shared housing, for example, now have a fixed deadline under a new law; see our note on the Dubai shared housing law in force with compliance until 2027. Dubai Chambers, one of the three authors of the guide, has also been expanding its country business councils, most recently the Uzbekistan Business Council.
How Atlant Capital can help
Atlant Capital is a corporate services firm, not a law firm, and we do not give legal opinions on individual contracts. What we do is keep the corporate side of a Dubai company in the shape that contracts and disputes require:
- registering the company with the right licence scope and activities so that contracts are signed by a properly authorised entity;
- maintaining corporate documents, resolutions and signatory authorities that a counterparty, mediator or court will ask for;
- opening and maintaining the bank accounts that payment clauses rely on;
- coordinating with licensed UAE law firms when a contract dispute needs a formal legal position.
Conclusion
The Force Majeure Guide issued by DET, Dubai Chambers and Baker McKenzie on 2026-08-28 does not change the law; it explains it. The core message is strict: force majeure means objective impossibility, not commercial pain, and cost increases, delays and rerouted shipping do not qualify on their own. With two Civil Codes now running in parallel, the signing date of each contract determines the rules, amounts already due remain payable by default, and the party that keeps evidence, notifies on time and mitigates is the party in the stronger position. Companies operating in Dubai should read their key contracts against the guide now, before a disruption forces the question.
FAQ
Is a supply chain delay or a cost increase force majeure under UAE law?
Not automatically. The Dubai Force Majeure Guide states that rising construction costs, inflation, supply chain delays, changes in shipping routes, higher fuel prices and regional instability do not by themselves qualify as force majeure. UAE law requires an external, unforeseeable event that makes performance objectively impossible, not merely more difficult, costly or delayed. Whether relief applies depends on the specific facts, the contract wording and the applicable Code.
Which Civil Code applies to my contract, the old one or the new one?
The date the contract was concluded generally decides. Contracts signed before 2026-06-01 fall under Federal Law No. 5 of 1985, where force majeure is governed by Article 273 and exceptional circumstances by Article 249. Contracts signed on or after 2026-06-01 fall under Federal Decree-Law No. 25 of 2025, where the corresponding provisions are Article 236 for force majeure and Article 224 for exceptional circumstances.
Do I still have to pay invoices that fell due before the force majeure event?
As a general rule, yes. The guide confirms that obligations to pay amounts that have already become due remain due and enforceable, unless the contract expressly states otherwise. Force majeure may excuse future performance but does not by default cancel accrued payment obligations.
What is the difference between force majeure and exceptional circumstances in the UAE?
Under force majeure, performance becomes objectively impossible, and the affected obligation may be extinguished or suspended depending on the situation and the applicable Code. Under exceptional circumstances, performance remains possible but an unexpected event makes the obligation excessively burdensome and threatens the party with a significant loss; the remedy is adjustment of the obligation rather than release from it. The new Civil Code of 2026-06-01 kept this distinction while providing a more flexible framework.
