The Impact of War on Contractual Obligations: Application of Exceptional Circumstances and Force Majeure

4 min 40 sec March 9, 2026 (Edited) الترجمة العربية

Written by

Mohamed Al Marzouqi

Partner,
Head of Office – Abu Dhabi,
Co Head of Dispute Resolution

m.almarzouqi@tamimi.com View LinkedIn Profile

Dr. Omar Al Azawe

Of Counsel

o.alazawe@tamimi.com View LinkedIn Profile

The principle of contractual autonomy, commonly referred to as “freedom of contract,” stands as one of the foundational pillars of contract law. This principle honours the freedom of individuals to enter into agreements and determine their terms. Closely associated with this is the principle of binding force of contracts, often expressed through the maxim pacta sunt servanda (“agreements must be kept”), which mandates that parties must perform their contractual obligations as a private law between them. Consequently, a contract may only be amended or terminated by mutual consent or for reasons prescribed by law, thereby ensuring stability in legal and commercial transactions.

However, exceptional circumstances or force majeure events such as wars, natural disasters, or pandemics may arise, necessitating the application of exceptional legal provisions to achieve justice. This approach is reflected in numerous comparative legal systems, including the UAE Civil Transactions Law No. 5 of 1985 (the new Civil Transactions Law No. 25 of 2025 will come into force on 1 June 2026). UAE legislation contains provisions governing both hardship/exceptional circumstances (Article 249) and force majeure (Article 273), each with its distinct applications and requirements.

Current Geopolitical Context

In the event of war and its consequential legal implications across various sectors—such as freight shipping and the disruption of maritime navigation through strategic straits—significant challenges emerge. A pertinent example is the current situation in the Strait of Hormuz, arising from the ongoing conflict in the Middle East. This has resulted in adverse consequences including delays in the delivery of goods and increased shipping and insurance costs. Notably, the International Transport Workers’ Federation (ITF) and the Joint Negotiating Group (JNG) have classified the Strait of Hormuz as a high-risk zone due to escalating military tensions and attacks on vessels. This classification has led to increased transit restrictions and the suspension of voyages by major global shipping companies.

Beyond the maritime sector, other industries are also expected to face disruptions, including construction, real estate project delivery delays, and various other affected sectors.

The Doctrine of Exceptional Circumstances/ Hardship Under UAE Law

Article 249 of the UAE Civil Transactions Law governs the theory of hardship. In essence, this provision states that where exceptional and general events occur that could not have been foreseen, and the occurrence of such events renders the performance of a contractual obligation—while not impossible—excessively onerous for the obligor such that it threatens severe loss, the court may, depending on the circumstances and after balancing the interests of both parties, reduce the onerous obligation to a reasonable extent if justice so requires.

Conditions for the Application of Article 249

Based on judicial precedent, the following conditions must be satisfied for the doctrine of hardship to apply:

• An exceptional event must occur — one that is rare in its occurrence.
• The event must be general in nature — not specific to the obligor or a limited number of individuals.
• The event must have been unforeseeable at the time of contract formation, assessed according to the standard of a reasonable person.
• The event must be unavoidable — it must be impossible to avert the event or prevent its consequences through reasonable efforts. This criterion is also assessed objectively rather than subjectively.
• The event must occur after the conclusion of the contract but before full performance.
• The event must render performance significantly onerous for the obligor, resulting in substantial and unusual losses. This does not require that performance becomes absolutely impossible.

Burden of Proof and Judicial Discretion

The burden of proving the occurrence of exceptional circumstances/ hardship event rests with the claimant, in accordance with Article 249.

The discretionary authority of the competent court extends to several matters, including:

• Verifying whether the conditions for exceptional circumstances/hardship have been satisfied.
• Assessing the threshold of hardship affecting the contractual parties.
• Achieving an equitable balance of contractual obligations to a reasonable extent.

Prohibitions Relating to Article 249

The most significant prohibitions concerning the application of Article 249 include:

• Prior contrary agreements are void — the parties may not agree in advance to provisions that contravene Article 249. Any agreement purporting to deprive the obligor of the protection afforded by this article shall be deemed null and void, and the court shall disregard it.
• Self-induced hardship is not protected — hardship in performance must not result from the obligor’s own fault or actions that contributed to the increased burden.

Force Majeure: A Distinct Legal Concept

Article 273 of the UAE Civil Transactions Law governs the concept of force majeure, which is distinct from the doctrine of exceptional circumstances/ hardship. The fundamental difference lies in the nature of the impediment: force majeure applies where there is total or partial impossibility of performance, rather than merely onerous performance causing severe burden to the obligor as in the case of hardship.

The legal consequences also differ: under force majeure, the obligation is extinguished to the extent that impossibility is established, and the contract is automatically terminated.

Conditions for Invoking Force Majeure

The conditions for invoking force majeure may be summarised as follows:

• Unforeseeability – the force majeure event must have been unforeseeable, a requirement shared with the doctrine of exceptional circumstances/hardship.
• Unavoidability – it must be impossible to avoid the force majeure event, whether in whole or in part.
• Causal Link – there must be a causal link between this event and the non-performance of the obligation by the obligor.

Conclusion

Contracts affected by the current conflict in the Middle East will give rise to the application of exceptional legal provisions. This necessitates that companies and individuals accurately ascertain their legal positions and understand the consequent implications, including claims for compensation or the termination of contracts in sectors affected by the prevailing exceptional circumstances in the region.