Dubai Issues New Guide to Help Businesses Navigate Force Majeure and Contract Disruptions
Dubai has issued a new practical guide to help businesses determine when an unexpected event genuinely qualifies as force majeure — and when disruption, higher costs or delays remain part of the commercial risks companies are expected to manage.
The Dubai Department of Economy and Tourism (DET) developed the guide in partnership with Dubai Chambers and global law firm Baker McKenzie, as companies face increasingly complex disruptions spanning supply chains, shipping routes, construction costs and regional instability.
The guidance is designed for Dubai-based businesses, business owners and legal, finance and operations teams dealing with disrupted contracts under UAE law.
At the heart of the guide is a distinction that can have major consequences for companies: a difficult contract is not necessarily an impossible one.
Under the framework outlined by DET, force majeure generally involves an exceptional event outside the parties’ control that makes contractual performance objectively impossible, rather than simply more expensive, slower or commercially burdensome.
That means events such as rising construction costs, inflation, supply-chain delays, changes to shipping routes, higher fuel prices or regional instability do not automatically release a company from its contractual obligations. Whether force majeure applies depends on the specific circumstances, the wording of the contract and the legal framework governing it.
Force majeure and hardship are not the same
The guide also draws a clear line between force majeure and what UAE law treats as exceptional or hardship circumstances.
In a force majeure situation, contractual performance becomes objectively impossible. Depending on the circumstances and the applicable legal regime, the affected obligation may therefore be extinguished or suspended.
A hardship situation is different.
Performance remains possible, but an exceptional and unforeseeable event makes fulfilling the obligation excessively burdensome and exposes one of the parties to a substantial loss.
The distinction is important because the remedies available to businesses can differ significantly depending on which legal concept applies.
The guide also notes that payment obligations that have already fallen due generally remain payable and enforceable unless the contract expressly provides otherwise.
A new Civil Transactions Law changes the legal backdrop
The guidance comes at a particularly important time for companies operating in the UAE.
Federal Law No. 25 of 2025, introducing the UAE’s new Civil Transactions Law, came into force on June 1, 2026, updating the rules governing force majeure and hardship.
As a result, businesses may now be managing contracts subject to different legal regimes depending largely on when those agreements were signed.
DET advises companies to begin by identifying the date of the contract, which will generally help determine whether the previous civil law framework or the new legislation applies.
The new law preserves the fundamental distinction between impossibility caused by force majeure and excessive hardship, while introducing a more updated framework for exceptional events.
Four conditions businesses should examine
The guide identifies four central factors when assessing whether a disruption may amount to force majeure: whether the event was unforeseeable, whether it could reasonably have been avoided, whether performance has become objectively impossible and whether there is a direct causal link between the event and the failure to perform.
That assessment places considerable importance on evidence.
Companies are encouraged to document the disruption, preserve communications and records, review contractual notification requirements and demonstrate the steps they took to mitigate the impact.
The guide also covers payment issues, renegotiation, mediation and dispute-resolution options available in Dubai.
Its practical message is that companies should not wait until a dispute reaches court before examining their contractual position.
A business facing disrupted deliveries, for example, would need to determine not only whether the underlying event was outside its control, but whether alternative routes, suppliers or other reasonable measures could have allowed it to perform.
That is why a change in shipping routes, on its own, does not automatically amount to force majeure.
A playbook for an era of repeated disruption
The publication reflects a business environment in which events once considered exceptional have become increasingly relevant to day-to-day contract management.
Global supply-chain disruptions, geopolitical instability and sudden changes in transportation routes can affect delivery schedules and costs without necessarily making contractual performance impossible.
Dubai’s new guidance effectively gives businesses a framework for separating genuine legal impossibility from commercial difficulty — before deciding whether to suspend performance, renegotiate terms or pursue a dispute.
DET stresses that the guide is intended as general information rather than legal advice, and businesses should seek tailored legal guidance before taking decisions based on the circumstances of individual contracts.