Doctrines of Exceptional Circumstances and Force Majeure: Overview of Judgments in Egypt

16 min 16 sec May 20, 2026 (Edited) الترجمة العربية

Written by

Khaled Attia

Partner, Head of Dispute Resolution - Egypt

k.attia@tamimi.com View LinkedIn Profile

Abdelrahman Gomaa

Legal Director

ab.gomaa@tamimi.com View LinkedIn Profile

Zane Anani

z.anani@tamimi.com View LinkedIn Profile

The recent escalation of the conflict in the Middle East has had a profound impact on global supply chains, shipping routes, insurance markets, and cross-border commercial relationships. For businesses operating in or through Egypt — a critical nexus in regional trade by virtue of the Suez Canal and its strategic geography — the question of force majeure and exceptional circumstances has become urgently practical.

An important question that comes to mind is whether a party to a contract governed by Egyptian law can invoke force majeure or claim hardship under the exceptional circumstances doctrine when conflict, a pandemic, or an economic shock disrupts its ability to perform.

In a series of recent judgments, the Egyptian Court of Cassation has addressed the application of the doctrines of exceptional circumstances and force majeure to some of the most significant disruptive events of the past decade — including the COVID-19 pandemic, the November 2016 flotation of the Egyptian pound, and the security instability following the June 2013 revolution. These decisions, several of which were handed down in 2024 and 2025, offer authoritative guidance on critical questions of foreseeability, the timing of contract formation relative to the disruptive event, and the mandatory, public-order character of the hardship doctrine.

This article examines Egypt’s legal framework governing force majeure and hardship due to exceptional circumstances, drawing on the Egyptian Civil Code (as amended) and analysing these judgments, while offering practical guidance for lawyers navigating contractual disputes in Egypt amid the ongoing regional conflict.

The principle of pacta sunt servanda and Its limits

Egyptian contract law is rooted in the civil law tradition, heavily influenced by the French Code Civil, with an overlay of Islamic legal principles. The foundational rule is expressed in Article 147(1) of the Egyptian Civil Code: “The contract makes the law of the parties (Pacta sunt servanda). It may be revoked or altered only by mutual consent of the parties or for reasons provided for by law.”  This principle reflects the sanctity of contract — a concept that also finds deep resonance in Islamic jurisprudence, where the Arabic term ‘Aqd’ denotes a binding tie or covenant that parties are honour-bound to observe.

The sanctity of contract is further reinforced by Article 148(1), which requires that “[a] contract must be performed in accordance with its contents and in compliance with the requirements of good faith”. Egyptian law thus imposes a duty of good faith performance that operates alongside the binding force of the agreement itself.

However, the Egyptian legislature have recognised that rigid adherence to pacta sunt servanda could produce unjust outcomes when extraordinary events upset the equilibrium of the bargain. Accordingly, the Egyptian Civil Code provides two mechanisms for addressing such disruptions: the doctrine of exceptional circumstances (hardship) and the doctrine of force majeure (impossibility).

The doctrine of exceptional circumstances

Article 147(2) of the Egyptian Civil Code provides the statutory foundation for hardship: “When, however, as a result of exceptional and unpredictable events of a general character, the performance of the contractual obligation, without becoming impossible, becomes excessively onerous in such way as to threaten the debtor with exorbitant loss, the judge may according to the circumstances, and after taking into consideration the interests of both parties, reduce to reasonable limits, the obligation that has become excessive. Any agreement to the contrary is void.”

This provision departs from the strict rule of pacta sunt servanda in two significant respects:

1. it permits judicial modification of the contract without the mutual consent of the parties; and
2. it assigns to the judge/court a creative role — adjusting the obligation to a reasonable level — that goes beyond the traditional judicial function of interpreting, enforcing, or rescinding a contract.

The doctrine was not always part of Egyptian law. The Egyptian Court of Cassation initially refused to apply the doctrine, following the French Cour de Cassation, on the basis that the law contained no supporting text. It was the administrative judiciary that revived the doctrine, motivated by a concern for achieving justice between contracting parties where an economic imbalance had arisen.

The doctrine was ultimately codified in the current Civil Code, and Article 147(2) was deliberately declared to be a matter of public order — meaning that any agreement between the parties to exclude its application, whether concluded before or after the occurrence of the exceptional event, is void.

Application of exceptional circumstances doctrine

Four cumulative conditions must be satisfied for the doctrine of exceptional circumstances to apply.

1. The contract must be of a continuing or deferred nature. There must be an interval between the conclusion of the contract and its performance. The reason for the deferral is immaterial — it may arise from the nature of the contract (e.g. a periodic or time-based contract), or from the parties’ agreement (e.g. deferred payment in a sale). It suffices that the deferral exists in the obligations of one party alone.
2. Exceptional events of a general character must occur after the conclusion of the contract. The term “exceptional” is understood to mean events that rarely occur — such as earthquakes, wars, sudden strikes, the imposition of official price controls, and the spread of epidemics. The requirement that the events be “general” means they must affect a large number of people, not merely the individual debtor. The Egyptian Court of Cassation has confirmed this interpretation in Cassation Appeal No. 980 of Judicial Year 52, decided on 7 December 1987.
3. The events must have been unforeseeable. If the exceptional event could have been foreseen, the doctrine cannot be invoked. Events such as the annual flooding of the Nile, fluctuations in currency exchange rates, or the spread of cotton worms have been held to be foreseeable and therefore fall outside the scope of the doctrine. Moreover, an event that is foreseeable is also treated as one that can be resisted.
4. Performance must become excessively onerous, but not impossible. The event must cause the debtor to suffer extraordinary loss — loss that would not have occurred but for the exceptional event. If the loss falls within ordinary commercial risk, the doctrine does not apply. Critically, the assessment of onerousness is not measured against the debtor’s overall financial capacity, but against the specific loss that would result from performing the particular obligation. Accordingly, even the State, despite possessing a vast budget, may invoke the doctrine against its contracting counterpart.

Egypt/Israel war

In an Egyptian Court of Cassation judgment dated 11 January 1978 (Appeal No. 448, Judicial Year 43), the court addressed the issue of war and exceptional circumstances. In this case, the appellants were hotel tenants who argued that the 1967 Arab-Israeli War constituted an extraordinary event that had drastically reduced tourism income, thereby making the hotel rent disproportionately onerous.

The Court of Cassation rejected this argument. It reasoned that the state of war between Egypt and Israel had been continuous since the original conflict in 1948, and that the wars of 1956 and 1967 were merely successive episodes in an ongoing armed struggle. On this basis, the Court held that the element of unforeseeability was absent, since a reasonable person would have anticipated the possibility of renewed hostilities at any time.

The Court made several notable observations. It defined war, in international law, as armed conflict between two states, and held that the de facto state of belligerency between Egypt and Israel — possessing all the hallmarks of war — subsists until the underlying dispute is finally resolved or a peace treaty is concluded.

Furthermore, the Court held that military orders and presidential decrees defining the duration of active combat on the battlefield are merely internal administrative arrangements and have no bearing on the de facto continuance of a state of war. Likewise, political statements at the highest levels of government do not negate the reality of an ongoing state of war, given the political pressures that attend such declarations.

The implication is that war may in principle qualify as a force majeure or exceptional event, but only where the element of unforeseeability is genuinely satisfied — that is, where the armed conflict was truly a surprise. Where a state of belligerency is ongoing or where conflict is a reasonably foreseeable continuation of an existing dispute, the doctrine will not apply.

Covid-19 pandemic

In Egyptian Appeal Judgment No. 21724, Judicial Year 93, decided on 23 June 2025, the Court of Cassation overturned an appellate judgment that had refused to apply the theory of exceptional circumstances. The appellant had entered into an investment contract dated 4 February 2020 and argued that the Covid-19 pandemic caused severe financial losses to his business. The lower court had dismissed the claim on the grounds that the contract was concluded after the emergence of the pandemic.

However, the Court of Cassation noted that the first infection detected in Egypt was in a foreign national on 14 February 2020, and the first Egyptian national was diagnosed on 5 March 2020, as announced by the Egyptian Ministry of Health and the World Health Organisation. The declaration of a state of emergency did not occur until 28 April 2020.

The Court therefore held that the lower court had erred in concluding that the pandemic was foreseeable at the time the contract was signed (February 2020), and remanded the case for re-examination. The Court emphasised that the fulfilment of the conditions of the exceptional circumstances doctrine overrides any contrary contractual agreement, stating that realisation of this theory “invalidates the effect of any agreement contrary to its provisions”.

In another recent judgment, Egyptian Appeal Judgment No. 1348, Judicial Year 93, decided on 25 May 2024, the Court of Cassation considered the case of a tenant operating a sports gymnasium who had ceased paying rent during the pandemic. In this case, the Court noted that the prime minister had issued several decrees — including Decree Nos. 606/2020 and 1246/2020 — temporarily suspending all activities requiring large gatherings, and that the basis for all such decrees was the existence of a force majeure — namely, the Covid-19 pandemic.

The Court held that the pandemic was an exceptional circumstance that the tenant could not have foreseen, and that its effects rendered performance of the rent obligation onerous, threatening the tenant with grave loss. The lower court’s rejection of the tenant’s defence on the ground that the pandemic was foreseeable (because it had started in late 2019 and the tenant had been given several months’ grace) was found to be insufficiently reasoned and unsupported. The Court of Cassation overturned the judgment and remanded the case.

Egyptian currency float

There are also several judgments that address the Central Bank of Egypt’s decision of 3 November 2016 to float the Egyptian pound, which led to a dramatic depreciation and a surge in the cost of raw materials, construction supplies, and labour. Many cases were filed in Egypt invoking exceptional circumstances or force majeure as a result of this event.

In Egyptian Appeal Judgment No. 13526, Judicial Year 93 decided 5 May 2025, the Court of Cassation overturned a lower court’s decision to rescind a construction contract and award damages. The appellant-contractor had argued that the currency float constituted an exceptional event that rendered timely completion of his building obligation onerous, particularly given that over 90% of the contracted works had been completed.

The Court held that the lower court had erred by failing to examine the defence of exceptional circumstances and by failing to assess whether the non-performance was of minor significance relative to the obligation as a whole, as required by Articles 147(2), 658(4), 148, and 157 of the Civil Code.

In another similar case, Egyptian Appeal judgment No. 9507, Judicial Year 91, decided on 20 January 2024), the appellant-developer invoked exceptional circumstances arising from both the security instability following the June 2013 revolution and the post-float price increases. The lower court had dismissed this defence on the grounds that the contract was concluded during or after the exceptional events and that the developer could have foreseen them.

The Court of Cassation found this reasoning inadequate, holding that the lower court’s conclusion did not properly engage with the defence and that the fulfilment of the exceptional circumstances doctrine “invalidates the effect of any agreement contrary to its provisions”. The Court remanded the case for proper examination of whether the conditions under Article 147(2) were met.

Judicial remedies

When the conditions are met, the court may — upon the debtor’s application — reduce the obligation to a reasonable level. The court possesses broad discretion: it may suspend performance until the crisis subsides, reduce the quantity of goods to be delivered, or apportion the loss between the debtor and creditor equally.

Critically, the court may not rescind the contract under this doctrine, nor may the debtor who has already performed the onerous obligation claim restitution after the fact. However, the creditor retains the right to seek termination of the contract independently.

The Egyptian Court of Cassation has also held that the doctrine does not apply to aleatory contracts such as speculative transactions on the stock exchange, on the basis that such contracts inherently expose both parties to the risk of substantial gain or loss.

Application of force majeure doctrine

Where an exceptional event renders performance not merely onerous but wholly impossible, Egyptian law moves beyond the doctrine of hardship and engages the doctrine of force majeure. The key statutory provisions are as follows.

• Article 159: “When an obligation arising out of a bilateral contract is extinguished by reason of impossibility of performance, correlative obligations are also extinguished and the contract is rescinded ipso facto.”
• Article 215: “When specific performance by the debtor is impossible, he will be ordered to pay damages for non-performance of his obligation, unless he establishes that the impossibility of performance arose from a cause beyond his control.”
• Article 373: “The obligation shall be extinguished if the debtor proves that the performance of it has become impossible for him for force majeure in which he played no part.”
• Article 217(1): “The debtor may by agreement accept liability for unforeseen events and for cases of force majeure.”

Elements of force majeure

Although the Egyptian Civil Code does not provide a statutory definition of force majeure, the doctrine as applied by the courts requires three elements. The event must be:

1. unforeseeable;
2. unavoidable; and
3. external to the debtor — that is, the debtor must have played no part in bringing it about.

The absence of a statutory definition has been noted as creating a “battleground over the precise scope of the doctrine”.

The Islamic legal doctrine of excuse and the concept of ḍarūra (necessity) bear conceptual similarity to the civil law doctrines of hardship and force majeure, although their application in Egyptian positive law is mediated through the codified statutory provisions rather than through direct application of fiqh.

Article 1 of the Egyptian Civil Code provides that, in the absence of legislative provisions, the court shall adjudicate in accordance with custom, and failing that, in accordance with “the principles of Islamic Law (Shariah)”. Islamic law thus serves as a supplementary source, reinforcing the equitable objectives that underpin both Article 147(2) and Article 373.

Distinction between exceptional circumstances and force majeure

The principal difference between the doctrines of exceptional circumstances and force majeure lies in two dimensions.

1. Effect on performance. Under the doctrine of exceptional circumstances, the event renders performance excessively onerous but not impossible. Under the doctrine of force majeure, the event renders performance wholly impossible.
2. Legal consequence. The doctrine of exceptional circumstances permits judicial reduction of the obligation to a reasonable level. The doctrine of force majeure results in the complete extinguishment of the obligation and automatic rescission of the contract. In the case of hardship caused by exceptional circumstances, the debtor is burdened to the point of severe difficulty, whereas in the case of force majeure, the debtor faces outright impossibility. The former leads to judicial adjustment; the latter leads to discharge.

Specific applications under Egyptian law

The Egyptian Civil Code also contains sector-specific force majeure provisions that illustrate the doctrine’s breadth of application.

• Agricultural leases. Article 615 provides that if the lessee has, “as a result of force majeure, been prevented from preparing or sowing the land”, or if the seed has been destroyed thereby, the lessee may be relieved from payment of the rent in whole or in part.
• Construction contracts (muqāwala). Article 658(4) provides that where, “as a result of exceptional events of a general character which could not be foreseen at the time the contract was concluded, the economic equilibrium between the respective obligations of the employer and of the contractor breaks down”, the judge may grant an increase in the price or order the termination of the contract. Article 664 further provides that a contract for work terminates if performance becomes impossible.
• Public utility concessions. Article 673(2) provides that the service obligor may repudiate responsibility for interruptions or irregularities of abnormal length or gravity by proving that they were “caused by ‘force majeure’ not imputable to the operation of the service, or by a fortuitous event which could not have been foreseen or whose consequences could not have been avoided by any vigilant management acting without undue regard to economy”.
• Insurance law. Article 768 provides that an insurer is liable for damage resulting from “a fortuitous event or force majeure”, except for losses caused deliberately or fraudulently by the insured.

The regional geopolitical conflict

Applying the framework set out above, the regional geopolitical conflict is capable of satisfying the threshold requirements for both the doctrine of exceptional circumstances and force majeure, depending on its impact on the specific obligation in question.

The conflict and its associated consequences — military operations, shipping disruptions in the Red Sea and Strait of Hormuz, sanctions, supply chain interruptions, and government-imposed restrictions — are plainly “exceptional” in the sense that they are rare, abnormal events that affect a large number of people and businesses across the region.

Egyptian law recognises wars and epidemics as examples of exceptional events, and armed conflict between regional powers falls squarely within this category.  Foreseeability, however, is likely to be the most contested element. Courts will assess whether the specific impact of the conflict on the particular obligation could have been anticipated at the time the contract was concluded.

The fact that geopolitical tensions in the Middle East are not unprecedented does not automatically render a particular escalation “foreseeable” — just as the annual flooding of the Nile is foreseeable, but a specific catastrophic flood may not be. The relevant inquiry is whether the specific intensity and consequences of the conflict, as they affect the debtor’s obligation, were within the range of events that a reasonable person would have anticipated.

For contracts concluded before the outbreak or significant escalation of hostilities, the argument for unforeseeability is strongest. For contracts concluded after tensions were already well known, a court is more likely to find that the risk was assumed. This dimension is critical: the debtor must show that the contract was concluded before the event was foreseeable, and that performance fell due during or after the crisis.

Hardship vs. impossibility in the conflict context

The conflict’s impact on different contractual obligations will naturally vary. Where the conflict causes a dramatic increase in shipping costs, raw material prices, or insurance premiums — but performance remains physically possible — the appropriate doctrine is that of exceptional circumstances under Article 147(2).

If the debtor can demonstrate that performance would result in exorbitant loss beyond the ordinary commercial risk, a court may reduce the obligation to a reasonable level. Where, however, the conflict makes performance genuinely impossible — for example, because a shipping route is physically blocked, goods are subject to sanctions that render delivery unlawful, or a government order prohibits the relevant activity — the doctrine of force majeure under Articles 159, 215, and 373 will apply, leading to the extinguishment of the obligation and automatic rescission of the contract.If the debtor proves complete impossibility of performance attributable to the conflict, the court may cancel the debtor’s obligation entirely and rescind the contract.