Force Majeure as an Excuse? Breach of Contract in Times of Regional Tension
The United Arab Emirates today ranks among the world's foremost centers of trade and commerce. As a global hub for goods, services, and investment, companies based in the UAE maintain business relationships with partners across nearly every continent. Yet it is precisely this deep international interconnection that has left the country's businesses exposed to the recent geopolitical tensions sweeping the region. Supply chains have been disrupted, shipments delayed, and agreed performance in numerous cases could no longer be delivered on time. As a result, many companies in the UAE found themselves unable, through no fault of their own, to fully meet their contractual obligations while, conversely, international business partners were equally unable to fulfil their delivery and performance duties toward companies in the Emirates as agreed. The legal and economic fallout of these disruptions has thrust the issue of breach of contract and contractual liability into sharper focus than ever before.
What Constitutes a Breach of Contract?
A breach of contract occurs when a party fails to perform its obligations, either partially, not on time, or not to the agreed standard, which under UAE law can trigger claims for damages, specific performance, or termination. Such breaches arose especially often in supply and procurement agreements, where transport disruptions and blocked trade routes prevented companies from delivering goods on time, while economic uncertainty led to delayed payments. But breach isn't limited to delivery and payment: disclosing confidential information or ignoring exclusivity rights can qualify too, and in long-term business relationships, such breaches often do lasting damage to trust, not just finances.
When a Breach Isn't a Breach: Force Majeure and Hardship
Not every one of the actions described above amounts to a breach of contract. UAE law provides for an important exception here. Where such an action results from force majeure (Article 236 of the UAE Civil Transactions Law) or hardship (Article 224 of the UAE Civil Transactions Law), extraordinary events beyond the control of the contracting parties, it does not automatically count as a breach, since the parties acted without fault. This covers events such as war, armed conflict, government measures, sanctions, or other extraordinary circumstances that significantly hinder or even make performance of the contract impossible. On this legal basis, set out in the UAE Civil Transactions Law, a contracting party can be released from liability. What matters is that the unforeseeable event objectively makes performance harder or impossible, not merely less profitable. Purely economic disadvantages or increased costs do not qualify. According to UAE case law and legal principles, the bar for successfully invoking force majeure remains high.
Alongside force majeure, UAE law also recognises the legal concept of hardship. Unlike force majeure, hardship does not make performance of the contract impossible; it merely makes it considerably more difficult. This can occur, for example, when a regional conflict causes major supply shortages, extraordinary delays, or an unreasonable burden on one of the contracting parties. In such situations, the competent authorities may intervene to restore a fair balance between the parties. Depending on the specifics of the case, deadlines may be extended, certain contract terms adjusted, or the economic consequences fairly distributed between the parties. The purpose of this rule is to prevent one party from being disproportionately burdened by extraordinary and unforeseeable events, even though performance of the contract remains possible in principle.
Yet even where a breach of contract is established, or a party invokes force majeure or hardship, this does not necessarily mean the dispute will end up in court. As a first step, it is important to examine both the statutory provisions of the UAE Civil Transactions Law and the parties' specific contractual arrangements. Particular weight is given to contractual force majeure clauses, notice requirements, limitation-of-liability provisions, and the remedies the parties have agreed upon. Although Article 236 of the UAE Civil Transactions Law already sets out the legal consequences of force majeure, many contracts include additional provisions specifying which events qualify as force majeure and what rights and obligations apply to the parties in a crisis. Beyond this, legal notices can be sent to formally flag a breach, demand performance, set a grace period, or preserve a claim in time. Quite often, disputes are resolved at this early stage through negotiation or a mutually agreed adjustment of contract terms without the need for court or arbitration proceedings.
In practice, however, litigation is often not the most economically sensible solution. For this reason, the parties frequently focus first on renegotiating existing contracts. In times of geopolitical uncertainty in particular, delivery deadlines, prices, or scopes of performance agreed at the outset may no longer be realistic or economically viable, given developments that no one could have foreseen. Lawyers therefore support their clients in negotiating extended deadlines, adjusted delivery terms, price changes, or other contract modifications, aiming for a solution that works for both sides while preserving the business relationship.
When Disputes Reach Court or Arbitration
Should no out-of-court solution prove possible in the end, pursuing the claim through litigation or arbitration remains the last resort. Which route applies depends largely on what the contract itself provides for. While some contracts assign jurisdiction to the UAE's state courts, international commercial contracts in particular often contain arbitration clauses, referring disputes to an arbitral tribunal instead.
Therefore, many international companies opt instead for arbitration before institutions such as the Dubai International Arbitration Centre (DIAC), which offers a greater degree of confidentiality, more flexibility in shaping the proceedings, and the ability to appoint arbitrators with specific expertise in complex commercial and trade disputes. Arbitral awards are also recognised and enforceable in a large number of states under the New York Convention, a factor that can matter enormously in cross-border business relationships. Set against this, however, are often higher procedural costs, since the parties must cover both the arbitral institution's fees and the arbitrators' remuneration.
Why Contract Drafting Matters Now More Than Ever
In international contracts especially, the choice of dispute resolution mechanism takes on particular importance. Companies from different countries often agree not only on the applicable law, but also on where and how disputes will be resolved. A carefully drafted jurisdiction or arbitration clause can prove decisive, in the event of a dispute, for how quickly, efficiently, and successfully claims can be enforced. Especially in times of geopolitical uncertainty and growing disruption to international supply chains, forward-looking contract drafting often turns out to matter just as much as the later legal enforcement of claims.
What unites all of these considerations, force majeure, hardship, negotiation, and dispute resolution, is that they are most effective when anticipated, not improvised under pressure. A company that has thought through these scenarios in advance, and reflected them clearly in its contracts, is far better placed to protect its interests when disruption actually strikes than one relying on statutory provisions alone after the fact. As geopolitical tensions continue to test the resilience of supply chains across the region, UAE businesses would therefore do well to treat careful contract drafting not as a formality, but as their first and most reliable line of defence.
Conclusion
Ultimately, breach of contract in the current climate of regional tension is rarely a simple question of fault. UAE law offers meaningful protection through force majeure and hardship, but both remain narrow, fact-specific defences that courts apply cautiously; they are not a substitute for sound contractual planning. The companies best positioned to weather ongoing disruption are not those hoping to rely on statutory exceptions after the fact, but those that have already addressed these risks head-on: through precise force majeure and hardship clauses, clear notice mechanisms, and a well-considered choice of dispute resolution forum. In an environment where geopolitical shocks are increasingly the rule rather than the exception, contract drafting is no longer a purely administrative task; it is a strategic tool for managing risk, and one that deserves the same attention as the commercial terms it protects.
