Force Majeure: Mainland UAE vs Financial Freezones

Overview

  • Force majeure raises the awareness of neighbouring intricate contractual circumstances where a party is unable to perform their contractual duties due to certain unforeseen and unavoidable events.

  • In mainland UAE, force majeure is addressed under Federal Law No. 5/1985 on the Civil Transactions Law of the United Arab Emirates State. In the DIFC, force majeure is addressed under DIFC Law No. 6/2004 Contract Law (as amended by DIFC Law No. 2/2022). In the ADGM, force majeure is addressed under the ADGM Market Infrastructure Rulebook (MIR) 2022.

  • Hence, the term “reasonableness” is determined in commercial contracts case by case, therefore it is the responsibility of the affected party to show how they cannot execute their contractual responsibility either wholly or partially as the event distresses their performance.

  • Force majeure may either be raised based on a natural or statutory event, provided it gives rise to a party being impotent to execute its responsibilities.