Force majeure is a recognised concept under UAE law and does feature in property contracts, but invoking it successfully is difficult, say lawyers.
Legal experts said force majeure is recognised under Dubai law, but its application depends on stringent legal and evidentiary requirements and is assessed on a case-by-case basis by the courts.
Bassel Boutros, Partner at BSA LAW, said for an event to qualify as force majeure, it must be exceptional and extraordinary, unforeseeable when the contract was signed, and unavoidable or impossible to prevent. There must also be a direct causal link between the event and the inability or delay in fulfilling contractual obligations.
He added that a party cannot rely on force majeure if the delay or non-performance was caused by its own fault, particularly if it was already in default before the alleged event occurred.
“The burden of proof lies with the party invoking force majeure,” Boutros said, noting that the party must show the failure to perform was directly caused by the event rather than by earlier breaches or unrelated circumstances.
He said Dubai courts have broad discretion in deciding whether an event constitutes force majeure, based on the evidence presented in each case.
Boutros also noted that certain events can be formally classified as exceptional circumstances through legislative or regulatory measures. During the Covid-19 pandemic, Cabinet Resolution No. 5 of 2021 designated the pandemic as an “emergency financial crisis” for a defined period.
However, he said invoking force majeure in relation to off-plan sale agreements is not tenable under current circumstances.
“Normal life in the UAE continues uninterrupted, and there are no material adverse effects impacting the real estate market,” he said. “The market remains governed by the fundamental principles of supply and demand and is operating consistently with its prior conditions.”
He added that while some parties may attempt to use prevailing circumstances to avoid contractual obligations, such conduct does not satisfy the legal threshold for force majeure.
“In our assessment, the requisite conditions for invoking force majeure are not met, and accordingly, there is no valid basis for the termination of off-plan sale agreements by either party,” Boutros said.
Enquiries
Andrew Thomson, partner and head of real estate at Al Tamimi & Co., said force majeure is a recognised concept under UAE law and does feature in property contracts, but invoking it successfully is difficult.
“A party seeking to rely on force majeure must demonstrate that the event was truly unforeseeable, beyond their control, and made performance of the contract impossible – not merely more difficult or financially inconvenient,” Thomson said.
He said buyers sometimes look to force majeure clauses as a possible exit route during uncertain periods, but regional tensions alone do not automatically meet the legal threshold.
“Courts and arbitral tribunals in Dubai tend to scrutinise these claims carefully, and the specific wording of each contract matters enormously,” he said.
Thomson said law firms are receiving more enquiries from clients wanting to understand their legal options.
“Our consistent advice is to review your contract carefully before taking any steps,” he said. “What looks like a force majeure clause may come with significant conditions and limitations.”
He added that seeking early legal advice is the most sensible approach, warning that premature action can sometimes create more problems than it solves.
News Source: https://www.khaleejtimes.com/business/property/dubais-real-estate-stability-can-buyers-cancel-contracts-over-regional-conflict?_refresh=true
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