Force majeure is a critical doctrine in UAE contract law that can excuse or extinguish contractual obligations when an unforeseeable external event renders performance objectively impossible. In the context of real estate covering sale and purchase agreements (SPAs), Dubai’s Unified Sale Agreement (Form F), off-plan developments, secondary-market transfers and leases is applied strictly by the courts. It does not serve as a general escape hatch for commercial inconvenience, rising costs, financing difficulties or market downturns.
Legal Framework under UAE Law
Unlike common-law systems, where force majeure typically exists only if expressly provided in the contract, UAE onshore law codifies it as a statutory doctrine. Under the current Federal Law No. 5 of 1985 on the Civil Transactions Law (the “Civil Code”), Article 273 provides that in bilateral contracts, if force majeure supervenes and makes performance of an obligation impossible, the corresponding obligation ceases and the contract is automatically cancelled. Partial impossibility extinguishes only the affected part i.e. temporary impossibility in continuing contracts may allow suspension or cancellation at the option of the obligee (with notice).
Federal Decree-Law No. 25 of 2025 (the new Civil Transactions Law), which entered into force on 1 June 2026, largely retains this framework under Article 236. It clarifies treatment of partial and temporary impossibility, allowing either party greater flexibility to seek discharge of corresponding obligations, court rescission, or (in temporary cases) modification of the contract.
A related but distinct concept is the doctrine of exceptional circumstances (hardship) under Article 249 of the 1985 Civil Code (Article 224 of the new law). This applies where an exceptional, unforeseeable event of a public nature makes performance excessively onerous and threatens the obligor with serious loss, even though performance remains possible. Courts may reduce the obligation to a reasonable limit and any contrary agreement is void. Hardship preserves the contract through adjustment rather than termination.
For a force majeure claim to succeed, three cumulative conditions must generally be met:
- The event was unforeseeable at the time of contracting.
- It was beyond the party’s control and could not reasonably have been avoided or mitigated.
- It rendered performance objectively impossible (not merely more difficult, delayed, expensive or commercially unattractive).
Courts apply an objective test and require a direct causal link. The invoking party must also act in good faith and not already be in breach.
In free zones such as the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market (ADGM), force majeure is primarily contractual (or governed by frustration principles under their common-law-inspired regimes). There is no equivalent broad statutory fallback.
Application to Real Estate Transactions
Sale and Purchase Agreements (including Form F in Dubai)
Dubai Land Department Form F (the standard Memorandum of Understanding/Unified Sale Agreement for secondary-market transactions) and bespoke SPAs for off-plan or completed properties are binding contracts. Force majeure may apply even if the document lacks an express clause, because the Civil Code operates by statute. However, most modern contracts include tailored force majeure provisions that take precedence and define qualifying events, notice requirements, mitigation duties and consequences.
Courts have consistently held that a buyer’s inability to obtain bank financing, market price declines or personal financial hardship do not constitute force majeure. The buyer generally bears the risk unless financing is expressly made a condition precedent. Recent Dubai Court of Cassation authority has reaffirmed that mortgage rejection does not excuse performance under a standard Form F and that the seller may retain the deposit in cases of unjustified withdrawal.
Genuine examples of force majeure are rare but could include physical destruction of the specific property by an unforeseeable natural disaster before handover or a government prohibition that makes transfer or occupation legally impossible.
Off-Plan Developments and Construction-Related Obligations
Developers frequently rely on force majeure clauses (often aligned with FIDIC or local standards) to claim extensions of time for delays caused by supply-chain disruptions, labour shortages or government restrictions. Success depends on proving the event was unforeseeable at the time of the SPA, direct causation, proper notice, and mitigation efforts. Mere cost increases or logistics difficulties usually fail the impossibility threshold and may, at best, support a hardship claim.
Buyers seeking to cancel off-plan contracts due to regional instability or similar events face a high bar and courts require proof that performance has become impossible, not simply less attractive.
Lease Agreements
Force majeure may suspend or terminate a lease if the property becomes physically inaccessible or occupation is prohibited (e.g., destruction or government order). Rent payment obligations are often expressly excluded from force majeure relief in commercial leases, on the basis that the landlord continues to make the premises available. During the COVID-19 period, courts more readily applied the hardship doctrine to adjust rent rather than terminate leases under force majeure.
Practical Considerations and Drafting Tips
- Contractual clauses matter: Parties should define qualifying events with precision (war, hostilities, government action, epidemics, natural disasters, sanctions, supply disruptions, etc.), set clear notice periods (commonly 7–30 days), impose mitigation duties, and specify remedies (extension of time, suspension, termination rights, and treatment of deposits or payments already made).
- Notice and evidence are essential: Failure to give timely notice or to document the impact and mitigation efforts frequently defeats a claim.
- Mitigation is required: Parties must take reasonable steps to overcome or minimise the effects of the event.
- Governing law and dispute resolution: Onshore UAE law applies the statutory regime, DIFC/ADGM contracts follow different rules. Choice of forum (local courts, DIFC/ADGM Courts or arbitration) influences procedure and remedies.
- Interaction with regulatory frameworks: In Dubai, Real Estate Regulatory Agency (RERA) rules on cancellation, escrow accounts and refunds interact with force majeure outcomes. Similar considerations apply in other emirates.
COVID-19 illustrated the courts’ restrictive approach i.e. the pandemic was recognised as an exceptional event in some contexts, but it did not automatically excuse performance where partial or alternative performance remained possible. Regional geopolitical tensions have prompted similar scrutiny and indirect effects such as higher insurance costs, rerouted logistics or financing constraints rarely meet the impossibility threshold.
Conclusion
Force majeure under UAE law is a narrow, protective doctrine designed to address true impossibility rather than commercial risk allocation. In real estate transactions it offers limited relief and is applied with judicial caution. Parties are best served by carefully negotiated contractual clauses that allocate foreseeable risks, prescribe clear procedures, and provide tailored remedies. Where performance has become merely onerous, the hardship doctrine may offer a more realistic avenue for judicial adjustment. Professional legal advice tailored to the specific contract, facts and applicable regime (onshore versus free zone) remains essential before invoking or defending against a force majeure claim.
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