Article 273 of the UAE Civil Code is the provision which relates to force majeure – although there are other similar provisions in the Civil Code related to extraneous events and specific contract types.
In order for a creditor to invoke Article 273 in order to cancel a contract for temporary or partial force majeure, it will need to prove that performance has become impossible. Previous cases in the UAE have demonstrated that the courts require that the event was unforeseeable and unavoidable. Note that there is a related provision in Article 472 which states that a right is extinguished if the debtor can prove that performance of it has become impossible due to an extraneous cause in which he played no part.
In addition to force majeure, Article 249 on oppressive performance may be relevant. This applies if an unforeseeable, exceptional circumstance of a public nature occurs, which could not have been foreseen and as a result of which performance becomes oppressive for the debtor so as to threaten him with loss. In such circumstances, a judge may at their discretion, rebalance the contract to reduce the oppressive obligation to a reasonable level.
There is at present no case law to demonstrate the approach of the UAE courts to the availability of these provisions in the context of the coronavirus pandemic.
Companies should also take into account the wording of force majeure clause (if any) along with the general terms of the contract.
Contact details of the authors are as below:
Ben Smith: [email protected], +971 4 384 4512;
Rob Lawrence: [email protected], +971 4 384 4571; and
Susie Abdel-Nabi: [email protected], +971 4 384 4611.
- This summary prepared independently by Clyde & Co highlights some key considerations for businesses and shares best practices as they emerge arising out of COVID-19. We have obtained consent from Clyde & Co to share this with you.
- You may already have a legal advisor in which case we would encourage you to discuss these points with your advisor if you haven’t done so as yet.
- If you don’t have an appointed legal advisor please feel free to contact Clyde & Co at +971 4 384 4000 or any legal advisor of your choice.