Cancellation of all events, temporary closure of most business units,
mandatory lockdown and restrictions on local and international travel, not
exactly how we all were presuming 2020 to be!
The aftermath of coronavirus outbreak is devastating and its impact on
businesses and global economy is now easily discerned as catastrophic.
Nonetheless, a common question, which is being raised among legal intellects, is
that whether the impact of coronavirus will be considered as a Force Majeure
Although most legal practitioners do not recognize outbreak of coronavirus as a
force majeure event and do not see it as a reason for effecting any contractual
commitments, however, I sincerely disagree with them and have laid down my
reasons in the following paragraphs.
Force Majeure- Literally
Legally expressing, force majeure clauses are generally mentioned in commercial
contracts, which can be invoked in specific circumstances preventing the
performance of contractual obligations by either party.
Wherein, such circumstances are beyond the control of individuals or are
governed by act of god or such event is considered as unforeseen like a natural
Upon happening of such unforeseen events, whether or not the exact situation is
mentioned in the contract, it is usual that such clause highlights the rights
and remedies of the parties and precautions to mitigate the impact of such event
on the performance of contractual duties.
Federal Law Number 5 of 1985 regarding Civil Transactions Law discuss about
force majeure events in two specific articles that Article 249 and 273 as
Article 249: In any event if any exceptional and unpredictable circumstance
arises and happening of such event has made the execution of a contractual
obligation impossible or burdensome in a manner causing serious threat of
significant loss, the judge may, bearing in mind the circumstances and comparing
the interests of both the parties may reduce the burdensome obligation to a
certain limit and any agreement in opposition will be considered as null and
- In a contract, if an event of force majeure supervenes making the
performance of the contract completely impossible, the corresponding
obligation shall cease and contract will be deemed terminated
- In the case of partial impossibility of performing obligation; the
part of the contract, which is impossible to undertake, shall be removed and
the same shall apply to temporary impossibilities in the continuing
contracts. Importantly, in those two cases, it shall be permitted to the
obligor to seek termination of the contract, subjected that the obligee is
so aware of the situation.
In addition, UAE Civil code does not have an exhaustive list of events to be
considered as force majeure, however, they are circumstantial, majorly
following under two broad categories natural or legal impossibilities. As
the term suggest, natural impossibility is more or less an act of god beyond
human control. On the other hand, legal impossibility would be amendment in
COVID-19- A Force Majeure Event in UAE
The judges of superior courts in the country mostly determine categories of
force majeure events, which are not declared in the Law. In furtherance, apart
from two major categories (impracticability and illegality), it is vital for any
force majeure event to be unforeseen or unpredictable, preventing either or both
parties to foresee the future change of events resulting in failure to perform
their obligations under the contract with good intentions.
In such circumstances, if either party has failed to mitigate the damages due to
an unforeseen event, it may invoke the force majeure clause as an excuse for
failing to perform its contractual obligations and may seek assistance of the
courts to either restore their position prior to the contract or may award
compensation, if relevant.
Analyzing the present set of events, coronavirus is confirmed as a
pandemic/epidemic by World health Organization propelling all countries to go
under complete lockdown to prevent the further spread of the virus, bearing in
mind the deterioration it has already caused.
In our point of view, outbreak of coronavirus is indeed a force majeure event
not only because it has prevented many businesses to temporarily shut their
activities (as per government rules and regulations), but also for how long this
situation will continue is what makes it unforeseen and unpredictable.
Since the outbreak of coronavirus and its future impact cant be predicted and
the current situation cant be avoided, it has made it impossible for many
service providers to perform their job such as aviation sector, gyms, parlors,
nightclubs, malls and cinemas will be closed until further notice for preventing
the further spread of the virus.
In such event these business units may legally argue that force majeure is the
factor that has impacted their liabilities as it prevented them to normally
It is quite apparent that such outbreak is to be qualified as a force majeure
event especially for aviation industry or other businesses in the country, as
they are prohibited by the Law to conduct their activities until any further
notice issued by the government, resulting in an unforeseen event. Additionally,
this infectious disease is no less than a natural calamity or an act of god, as
prevention of its spread requires individual or businesses to not perform their
regular activities and avoid human contact, causing havoc in the market.
Other service industry such as restaurants that are only allowed to deliver food
and not to accept any clients in their premises, these service providers may
claim that although the situation did not create a force majeure, however, it
made the execution of their obligations very burdensome by referring to Article
249 of the Civil Transaction Law.
More specifically, the Courts of Cassation of Abu Dhabi in an old judgment
number 16 of the year 2010, where one party referred to force majeure event, the
court opined that under a general principle, it is not permitted for either
party of the contract to revoke or amend it except by a mutual consent of the
contracting parties or if the situation is qualified as the one mentioned in
Article 249 of the Civil Transactions Law and the judge intervened to reduce the
commitment to a reasonable extent, if there were general exceptional incidents
that could not be foreseen at the time of signing the contract.
Importantly, the occurrence of such event has impacted the implementation of the
contractual commitment and that of it has become impossible or it is exhausting
for the obligor that it threatens a heavy loss to establish a form of balance
between the interests of the two parties. The court further stated that the
Court of first Instance have the right to understand the facts of the case from
the documents submitted during the hearing, without the supervision of the
Courts of Cassation.
Generally the most common points which are used in determining the force majeure
event is primarily the change in regulations issued by the government, which is
some what applicable in the present scenario and secondly that such event is
an act of God and with no doubt, coronavirus outbreak can be argued as an act of
At present, the situation of coronavirus and the length at which it will disrupt
the society is very unpredictable; therefore, we may witness huge number of
claims for invoking force majeure provision in light of the restrictions caused
by the government to prevent the spread of virus. In such situation, it is
always advisable to seek legal assistance from Top Lawyers of Dubai to determine
the probable solutions.
On an international level, several courts around the world are already
witnessing force majeure claims due to coronavirus pandemic. For instance, the
recent judgment issued by the Court of Appeal in Colmar, France on 12 March
2020 wherein the court considered corona pandemic in the ranks of force majeure.
The case is regarding a Senegalese national, who sought asylum in Spain as the
exceptional circumstances prevented him to be presented in the court, thus the
court authorities placed the situation within the framework of force majeure,
specifying its features as insurmountable as its beyond the control of human
being and is unpredictable.
China Council of Promotion of International Trade has lately confirmed the
issuance of approximately 4800 force majeure certificates due to this pandemic
for local and international contracts worth billions of dollars. The government
affirms that such documents will assist Chinese local markets to prevent filing
cases against each other as default in the performance of duties was due to
force majeure, however, the veracity of such certificate in international market
is yet to discovered.
In addition, Government of India has issued a recent circular clarifying the
disruption of supply chain due to the widespread of coronavirus in China and
other countries will be considered as a natural calamity and a force majeure
clause can be invoked, whenever it is deem necessary.
Although, keeping in mind the foregoing situation, it has to be noted that the
application of the new circumstances of COVID 19 will have different impact on
each sector and the court holds a discretionary power in deciding whether to
accept COVID-19 situation as force majeure in the concerned sector or not.
We are of the opinion that regardless of what unfolds in future due to the
outbreak of coronavirus, either party in a commercial contract signed before the
declaration of this pandemic who has been prevented or is restricted to perform
its duties under the contract may have the right to invoke force majeure clause,
depending upon the impact on their sector and their impossibility to perform
Nevertheless, it is pertinent for all our readers to note that the forgoing
information does not have to be necessarily true to all extent as it is a
personal point of view, which may or may not be accepted by the courts and does
not necessarily has to be followed as every situation is unique and has
different circumstances and consequences.
Therefore, it is strongly recommended to not directly act on the above opinion,
but to seek legal advice from Legal Consultants in Dubai.