When roughly translated, force majeure means superior force. It refers to unforeseeable events taking place that are beyond our control. They aren’t particularly attractive, especially in business agreements.
Although contracts have plans for potential possibilities or events, generally. However, they are somehow expected. On the other hand, force majeure are events that you can’t always predict. The most common ones are natural calamities and certain types of changes in the law. Back in the day, these were referred to as Acts of God. Nowadays, numerous other things fit the description.
Major global events and changes in international law occur due to human activity. You cannot call them natural entirely. Some of them can be unpredictable, sure, but they can impact businesses significantly. And when such things happen, parties mutually decide not to follow the original clauses of the contract. Take a tenancy contract, for example. If a natural disaster damages the property, the contracts normally have a Force Majeure clause that leads to immediate termination of the agreement so the owner can repair the damage.
Force Majeure in UAE
This is the clause that is rather well-known and used across many industries. It is usually found in tenancy contracts in the UAE mostly. It is also used in the construction industry. A natural disaster negatively impacts a project, sometimes rendering it impossible to reach the completion stage. Secondly, the country aspect is also there. The construction industry in the UAE is huge. Dubai is particularly well-known; however, the land where it is situated is comparatively stable.
The UAE Civil Code
For contract-related matters, the UAE relies on the UAE Civil Code – Federal Law Number 5 of 1895. Section 5 talks about the dissolution of contracts, and Article 273 demonstrates force majeure. Here, it says that if an event takes place that makes the completion of the agreement impossible, both parties will not have any obligation, and the contract’s cancellation may become known.
Nonetheless, there are occasions where some aspects of the contract remain doable while others are impossible. In this case subsection, 2 of Article 273 states that the elements impacted by the force majeure will be terminated. As for the rest of the contract, it will be carried out in the usual manner. Moreover, the agreement’s obligor can cancel the contract, provided the obligee informed of the cancellation.
The UAE civil code basically covers the UAE mainland. Although multiple free zones follow the Civil Code, there are some such as DIFC and ADGM, that have their own regulations. DIFC Law Number 6 of 2004 covers the contracts within the free zone’s jurisdiction. On the other hand, Article 82 of the law takes care of law regarding force majeure clauses and instances.
According to subsection 1 of this Article, in case of non-performance of the obligations mentioned in the contract, a party can be excused if they have proof that the incompletion occurred due to uncontrollable circumstances. Subsection 2 mentions temporary roadblocks. The obligations may be held off in case of temporary roadblocks until a suitable time comes and continuing is possible.
Subsection 3 says that the party must give notice if it is unable to complete its obligation as soon as they become aware of the problem. Lastly, subsection 4 says that if the party wants to dissolve the contract because of a force majeure event, they are entitled to do so.
Force majeure is a standard clause that is used all over the world. The clause provides as much stability as it can in the face of the instability of the world that comes with various unpredictable and uncontrollable natural disasters. Also, the human-made changes in the legal system that occur via government acting on national and international fronts.
Force majeure is both specific and unclear in terms of its outcomes and possibilities. It greatly depends on the legal system of the nation. There is a possibility of numerous regulations regulating the use of the clause, with most of the common law jurisdictions having similar attitudes towards it. The civil law may have their own opinion. You can take further information regarding it from law firms in Dubai. But you should bear in mind that the basic outlook on the matter remains the same.