In recent times, many individuals and businesses have been facing financial constraints and commercial losses due to ongoing global situations. One of the primary concerns arising from such situations is the inability of tenants and landlords to fulfil their obligations under tenancy contracts, particularly when they wish to terminate the lease before the tenancy period expires.

The concept of force majeure is one of the most significant contractual mechanisms designed to protect parties against unforeseen circumstances. Tenancy contracts are among the most used agreements, and fulfilling contractual obligations during periods of uncertainty can become extremely difficult. Force majeure refers to an unforeseeable and exceptional event beyond the control of the parties that renders the performance of contractual obligations impossible.

Force Majeure Under UAE Law

  1. Article 273 of Federal Law No. (5) of 1985 concerning the Civil Transactions Law of the United Arab Emirates provides that if a force majeure event occurs after the conclusion of a contract and makes the performance of the obligation impossible, the corresponding obligation shall automatically cease. In such cases, the contract may be cancelled by operation of law.
  2. However, for force majeure clause to be used impossibility must be absolute and not merely a situation where performance has become difficult or financially burdensome.
  3. This principle has been reiterated by several UAE courts, including the Abu Dhabi Court of Cassation, which clarified that force majeure applies only where contractual performance becomes completely impossible.
  4. If only part of the contractual obligations becomes impossible, then only that part may be extinguished. In continuing contracts, temporary impossibility may suspend the affected obligations for the duration of the relevant period.

Force Majeure in Commercial Lease Agreements

  1. Most commercial lease agreements contain force majeure clauses addressing circumstances such as natural disasters, wars, government restrictions, or other extraordinary events.
  2. Generally, force majeure clauses do not excuse a tenant from paying rent merely because business conditions have become difficult, provided that the landlord continues to make the property available for use.
  3. Financial hardship alone may not be sufficient to terminate a lease agreement.
  4. However, if the leased property becomes unusable or occupation becomes impossible due to extraordinary circumstances, tenants may seek relief from their rental obligations and, in certain cases, may also seek termination of the tenancy agreement.
  5. A tenancy agreement may also be considered a continuing contract. Therefore, where the impossibility is temporary, the obligations under the contract may be suspended during the affected period instead of being permanently terminated. This principle may become relevant for businesses affected by ongoing global disruptions that temporarily prevent the use or operation of leased premises.

Application of the Hardship Doctrine

  1. Apart from force majeure, Article 249 of the UAE Civil Transactions Law provides relief in situations involving exceptional circumstances. Under this provision, if unforeseen public exceptional events occur and make the performance of contractual obligations excessively onerous, though not impossible, the affected party may approach the court seeking a reduction or adjustment of the obligations.
  2. Unlike force majeure, the hardship doctrine applies where performance remains possible but becomes excessively burdensome and threatens substantial loss to one of the parties. In such cases, the court has wide discretionary powers to restore balance between the parties’ obligations.

In the current global climate, ongoing conflicts and economic disruptions have caused financial strain for many businesses and individuals. UAE courts may, depending on the facts of each case, consider certain conflicts or extraordinary events as force majeure circumstances. However, the affected party must establish that the event directly prevented contractual performance.

The Dubai Court of Cassation has previously recognised the Russia–Ukraine war as a force majeure event in certain circumstances, observing that the war was unforeseeable and had rendered contractual performance impossible in that specific case. Parties affected by similar circumstances may also consider seeking temporary relief from the courts under the hardship doctrine where performance has become excessively difficult rather than impossible.

At the same time, parties should carefully review the force majeure and hardship clauses contained in their tenancy agreements, as the contractual wording and the factual circumstances of each case will play a significant role in determining the available remedies under UAE law.

Force majeure plays a significant role in tenancy contracts during times of unforeseen global situations. However, under UAE law, force majeure does not automatically excuse all contractual obligations or permit termination of a lease agreement. Each case depends on the wording of the contract, the nature of the event, and whether the obligations became genuinely impossible to perform.

We at Aysha Al Dhaheri Advocates and Legal Consultants assist landlords and tenants in reviewing force majeure clauses, resolving tenancy disputes, and advising on contractual rights and obligations during exceptional circumstances.