The current regional developments in the GCC have led to shipping route suspensions, insurance withdrawals, logistics issues, which are now majorly affecting ongoing construction projects across the UAE, particularly those dependent on imported materials, specialist equipment, or cross-border subcontractors. These developments have resulted in multiple issues within the construction sector.

The Dispute Landscape: What Claims Are Emerging?

Delay and Disruption Claims

There have been significant delays in shipments, rerouting of vessels, and port congestion, all of which have extended the delivery timelines.

This has already led to:

  1. Extension of Time claims grounded in force majeure or “exceptional events”;
  2. disruption and prolongation claim for extended preliminaries and site overheads;
  3. productivity loss claims due to labour shortages and inefficient sequencing;
  4. and employer counterclaims alleging concurrent delay, poor planning, or inadequate mitigation.

Lowered Productivity and Disruption Costs

Productivity on construction sites has been adversely affected due to shortages of labour and resources, transportation issues, security concerns, and site access limitations. Such productivity losses may lead to substantial claims by contractors, although proving the financial impact generally requires expert analysis and contemporaneous project records.

Material, Equipment, and Workmanship Disputes

Supply chain pressures have forced contractors to source alternative materials, substitute manufacturers, or rely on unfamiliar subcontractors. This increases the risk of:

  1. non-compliance with agreed specifications,
  2. latent defects,
  3. compromised quality,
  4. and workmanship disputes.

Cost Escalation and Increased Project Costs

The regional conflict has also affected fuel prices, shipping expenses, insurance premiums, and the cost of raw materials. Under construction contracts, entitlement to recover these increased costs depends heavily on the wording of:

  1. price adjustment clauses,
  2. force majeure provisions,
  3. and contractual risk allocation mechanisms.

Force Majeure Under UAE Law: Onshore vs Offshore

Onshore UAE Law

Onshore projects are governed by the UAE Civil Transactions Law (Federal Decree Law No. 25 of 2025), under which force majeure is recognised as a statutory concept rather than a purely contractual one. There is also the concept of exceptional circumstances or hardship, which may be relied upon in construction claims.

UAE courts generally apply force majeure narrowly. The event must render contractual performance objectively impossible, not merely more expensive or inconvenient. Shipping delays, inflation, and logistical disruption alone may not satisfy this threshold unless performance is genuinely prevented.

The concept of exceptional circumstances may also be invoked by applying to the court for relief or an adjustment of obligations where performance becomes excessively burdensome.

Offshore Jurisdictions

DIFC

In the DIFC, Article 82 of the DIFC Contract Law (DIFC Law No. 6 of 2004) provides that a party may be excused from performing its contractual obligations if the failure was caused by an event beyond its control.

The event must be one that:

  1. could not reasonably have been predicted at the time the contract was signed;
  2. could not have been avoided;
  3. and whose consequences could not reasonably have been overcome.

If the force majeure event is temporary, the excuse from performance only applies for a reasonable period during which the event affects the contract.

Failure to provide timely notice may make the affected party liable for damages caused by the delay in notification. Even where force majeure applies, the other party may still retain certain rights, including:

  1. terminating the contract,
  2. withholding its own performance,
  3. or claiming interest on unpaid amounts.

ADGM

The ADGM applies English common law principles and does not recognise statutory force majeure. Relief depends primarily on contractual drafting, while the doctrine of frustration is interpreted narrowly.

FIDIC 2017 in the UAE

Onshore UAE Position

Under onshore UAE law, the FIDIC Red Book operates within a mandatory statutory framework anchored in the UAE Civil Code.

Even where the contract expressly allocates risk under:

  1. Exceptional Events,
  2. Claims,
  3. Delay Damages,

courts and tribunals may still override contractual outcomes based on statutory principles.

 Offshore Position

In offshore jurisdictions, particularly the ADGM, FIDIC is generally treated as a self-contained contractual risk allocation mechanism.

Exceptional Events under the FIDIC will not excuse performance unless:

  1. the contractual definition is satisfied,
  2. causation is clearly established,
  3. notice requirements are complied with,
  4. and mitigation efforts are properly evidenced.

This creates a significantly stricter environment for contractors seeking relief.

Courts declaration of force majeure

For a force majeure clause to be enforced, the court must recognise the current geopolitical conflict as a force majeure event. There have been earlier instances where courts have treated the Russia–Ukraine war as a force majeure event in shipping-related cases. Therefore, unless and until the court formally recognises the present situation as a force majeure event, the concept of force majeure can only be applied upon such judicial determination.

Conclusion

The current geopolitical climate in the GCC has created significant operational and legal challenges for the construction sector across the UAE. Delays in shipping, increased costs, labour shortages, and supply chain disruptions are likely to result in an increase in construction disputes and contractual claims.

However, the success of such claims will depend on several factors, including the governing law, contractual wording, compliance with notice requirements, and the ability of parties to demonstrate causation and mitigation. The distinction between onshore UAE law and offshore jurisdictions such as the DIFC and ADGM is particularly important, as the same factual circumstances may lead to different legal outcomes.

We at Ayesha Al Dhaheri & Associates emphasise the importance of judicial recognition and strict contractual compliance when relying on force majeure provisions in construction disputes arising from ongoing geopolitical developments.