Examining the New UAE Civil Code – Part 1: Force Majeure Exceptional Circumstances and Relief in Times of Crisis

On 1 October 2025, the United Arab Emirates government issued Federal Decree Law No. 25/2025 promulgating the new UAE Civil Transactions Law (the "New Civil Code").  The New Civil Code takes effect on 1 June 2026 and repeals UAE Federal Law No. 5/1985 (the "Old Civil Code").

The New Civil Code contains a number of important changes to the law governing civil matters in the UAE, including several that affect commercial relationships.  Many of these changes largely clarify the existing law, particularly by better reflecting the practical application of the existing law in the express provisions of the New Civil Code.

However, the New Civil Code contains significant new and revised provisions that will impact civil and commercial relationships.  These include the New Civil Code's provisions relating to force majeure, exceptional circumstances and other provisions that may provide relief in times of crisis.  While the UAE legislator may not have had it in mind when issuing the New Civil Code, the current regional conflict will inevitably cause these new and revised provisions to take on even greater importance.

Accordingly, Part 1 of our series on the New Civil Code begins by examining these provisions and considering their potential impact in the current climate and beyond.¹

Force Majeure under the New Civil Code

At the outset of the conflict, the immediate reaction of many commercial parties and their legal advisers was to invoke force majeure as the obvious route to relief – indeed, war is an archetypal force majeure event in many contracts across the region.

However, what became clear early on is that relief was not always available for force majeure.  Further, where relief was available, it was often not the relief that was truly needed.

Under the Old Civil Code, the mere occurrence of force majeure does not entitle a party to relief – the force majeure event must make performance of the contract wholly or partially impossible.  This is a high threshold that was rarely met where the main consequences of the conflict were delay, disruption and massive price escalation. 

Moreover, the available relief is the termination of the contract in whole or part.  Accordingly, even where this high threshold could be met, the available relief was unlikely to address the main consequences of the conflict – other than to "stop the bleeding."

The New Civil Code largely replicates the Old Civil Code's force majeure provision regarding total impossibility.  Article 236(1) of the New Civil Code provides as follows:

"In bilateral contracts, if a force majeure arises rendering performance of an obligation impossible, the corresponding obligations are extinguished, and the contract is rescinded automatically."

The New Civil Code contains important changes in relation to partial and temporary impossibility.  Articles 236(2) and (3) of the New Civil Code provide as follows:

"2.  If the obligation becomes partially impossible, either of the contracting parties may invoke the extinguishment of the corresponding obligation or request the court to rescind the contract.

3.  If the impossibility is temporary in continuing contracts, either of the contracting parties may invoke the extinguishment of the corresponding obligation or the modification of the contract, or request the court to rescind the contract."

Accordingly, in the case of partial or temporary impossibility, a party may apply to a court (or tribunal) for termination of the entire contract.  Further, in cases of only temporary impossibility, the contract may itself be amended. 

It remains to be seen whether any such amendment could provide appropriate relief from the main consequences of the conflict.  Even so, this alternative to outright termination is a positive development that is likely to give comfort to parties in long-term contractual relationships – irrespective of the current conflict.

Exceptional Circumstances and "Hardship" under the New Civil Code

As the conflict and its consequences have continued, the doctrine of exceptional circumstances – sometimes referred to as hardship or imprévision – has taken on greater importance as a potential route to relief. It applies where unforeseen events of a general and exceptional nature render the performance of a contractual obligation, whilst not impossible, excessively onerous in a manner that threatens a party with grave loss.  Under Article 249 of the Old Civil Code, in these circumstances, a court or tribunal may reduce the relevant obligation to a reasonable level.

This doctrine is contained in Article 224 of the New Civil Code:

"If exceptional, general circumstances arise that could not have been foreseen at the time of contracting, and as a result of their occurrence, the performance of the contractual obligation becomes onerous for the debtor, threatening them with serious loss, the court may, depending on the circumstances and after balancing the interests of the parties, reduce the onerous obligation to a reasonable limit or rule for the rescission of the contract.  Any agreement to the contrary shall be void."

Article 224 largely reflects the existing position, save for two exceptions:

• the requirement that the exceptional circumstances could not have been foreseen at the time of contracting;² and
• termination of the contract being part of the available relief.

Article 224 is of particular significance because of its mandatory nature – any agreement to the contrary is void. This means that, even where a contract purports to exclude or limit relief for events that qualify as hardship or unforeseen circumstances, Article 224 provides a statutory safety net that cannot be excluded.

While this represents a significant protection for contracting parties, the "excessively onerous" threshold is high. Moreover, the available relief – reduction of the burdensome obligation – may not adequately address the grave losses that a party may face.  This is particularly the case where adequately addressing that loss might require the other party to incur its own costs.

Exceptional Circumstances Affecting Construction Contracts

For parties to construction and engineering contracts, the New Civil Code contains a new provision that has significant potential to overcome this issue – by allowing courts and tribunals to restore the contractual equilibrium and financial basis of such contracts.

A key feature of the New Civil Code is Article 829(3), a new provision that has no equivalent in the Old Civil Code.  This provision is similar to the exceptional circumstances provisions of Article 224 of the New Civil Code and Article 249 of the Old Civil Code.  However, Article 829(3) applies only to muqawala contracts (i.e., work contracts, such as construction and engineering contracts) and goes further in terms of available relief.

Article 829(3) of the New Civil Code provides as follows:

"If the contractual equilibrium between the obligations of both the employer and the contractor is disrupted due to general exceptional circumstances that could not have been foreseen at the time of contracting, thereby undermining the basis upon which financial assessment of the Muqawala contract was founded, the court may, depending on the circumstances and after balancing the interests of both parties, order the restoration of the contractual equilibrium, including the extension of the execution period, the increase or reduction of the remuneration, or may order the rescission of the contract."

Article 829(3) grants a court or tribunal very wide discretion to grant relief in exceptional circumstances affecting construction contracts.  Contractors across the region will welcome the fact that Article 829(3) specifically contemplates granting extensions of time and additional costs, particularly since the conflict has caused many projects across the region to suffer not just delay, but also disruption and massive price escalation.

However, Article 829(3) is unlikely to be a panacea.  Fundamentally, the exceptional circumstances potentially giving rise to relief must disrupt the contractual balance and undermine the financial basis of the contract.  Further, the court's or tribunal's discretion to grant relief is not unfettered: that discretion must be aimed at restoring the contractual equilibrium, and both parties' interests must be considered.

For instance, a court or tribunal is unlikely to provide relief to a contractor by simply shifting the burden of project delay or increased costs to the employer.  In practice, it seems likely that courts and tribunals will order relief that results in the consequences of the exceptional circumstances being shared between employers and contractors, albeit in a manner that reflects the original financial risk allocation.

In the current climate, it is important to note that the exceptional circumstances must not have existed at the time of contracting.  At first glance, therefore, parties entering into contracts after the conflict began on 28 February 2026 are expected to have factored it into their financial assessments.  However, what exceptional circumstances and effects contracting parties should have factored in is likely to become increasingly contentious the longer the conflict continues and evolves.

Finally, unlike Article 224 of the New Civil Code, Article 829(3) is not expressed to be mandatory – in other words, parties may contract out of this provision.  Parties wishing to rely upon Article 829(3)  (particularly contractors) must be vigilant when negotiating contracts to ensure this potential route to relief is preserved.

Good Faith and Abuse of Rights

Underpinning all contractual rights and obligations are the UAE law doctrines of good faith and abuse of rights.  These doctrines may provide alternative routes to relief in times of crisis.

The New Civil Code's good faith provisions are consistent with the Old Civil Code.  Article 221(1) of the New Civil Code provides as follows:

"The contract shall be performed in accordance with its contents and in a manner consistent with the requirements of good faith."

Importantly, this is a positive duty of good faith.  In other words, a party arguing that this duty has been breached does not need to demonstrate bad faith – it only needs to demonstrate a lack of good faith.

The New Civil Code's abuse of rights provisions are likewise consistent with the Old Civil Code.³  Article 106 of the New Civil Code provides as follows:

"1. Whoever unlawfully exercises their rights shall be held liable.

2. The exercise of a right shall be deemed unlawful if:

a. The intent to cause harm is present.

b. The interests sought to be achieved through such exercise are contrary to the provisions of the law, public order, or public morals.

c. The anticipated interests are disproportionate to the harm inflicted upon others.

d. Such exercise exceeds what is established by custom and usage."

These mandatory provisions of UAE law will be familiar to many commercial parties and practitioners.  It would perhaps be an understatement to say that commercial parties and practitioners tend to rely heavily on these doctrines in times of crisis and disputes.

At their core, these doctrines are concerned with fairness and avoiding the harsher consequences of a literal application of contractual rights and obligations.  They may provide relief from the exercise of a strict contractual or legal right (for example, termination of a contract where the breach was minor and / or the consequences would produce a disproportionately harsh outcome).

In practice, therefore, the relief available under these doctrines – while likely to be welcomed in many cases – might not address fully the risks that contracting parties face in times of crisis.

What Should You Be Doing?

The implementation of the New Civil Code should prompt contracting parties to take stock of the current circumstances, as well as their current and potential future rights and entitlements, and to take appropriate action.

Most contracting parties will have promptly served the required notices in the earliest days of the conflict and will have provided updates at regular intervals as required under their contracts.  However, the implementation of the New Civil Code, which contains a new set of rights and obligations, may give rise to additional claims and therefore additional notice obligations.  Moreover, the changing circumstances of the conflict as it continues will potentially give rise to new claims, while losses associated with others cease and fully crystallise.

Contracting parties, therefore, should:

• consider carefully the current circumstances, the resulting impact on their contractual performance and the potential new routes to relief under the New Civil Code; and
• then, where applicable, serve any notices required under their contracts.

Further, parties currently negotiating contracts will need to factor the conflict and its current consequences into their negotiations.  If those are construction or engineering contracts, parties need to ensure that, where potentially available relief is excluded, this is done deliberately and not inadvertently.

Keep an eye out for Part 2 of our series, where we will be looking at the New Civil Code's muqawala provisions and others most relevant to construction and engineering contracts.