Introduction: Navigating Uncertainty in UAE Maritime Deals

Maritime transactions form the backbone of international trade, underpinning the logistics, energy, and commodities sectors in the United Arab Emirates. With Dubai’s rapid elevation as a global shipping and logistics hub, the reliability and adaptability of maritime contracts have never been more critical. However, global disruptions—ranging from pandemics to sanctions and climate-induced events—have thrust the legal concepts of force majeure and hardship into the limelight. For businesses operating in the UAE and the Dubai International Financial Centre (DIFC), understanding and incorporating DIFC-aligned standards for force majeure and hardship is no longer an academic exercise, but a vital aspect of risk management and contract sustainability.

This expert analysis draws on UAE federal laws, DIFC regulations, and international best practices to guide executives, in-house counsel, and maritime practitioners through the intricacies of force majeure and hardship in the UAE. We examine the requirements for effective contract drafting, analyze the significant 2025 legal updates, and provide actionable recommendations to secure your maritime investments in a landscape defined by volatility and legal evolution.

Table of Contents

Defining Force Majeure and Hardship

Force majeure refers to unforeseen events beyond the control of contracting parties, which prevent the fulfillment of contractual obligations. In contrast, hardship involves situations that, while not making performance impossible, render it excessively onerous for one party, often due to circumstances that fundamentally alter the contract’s economic balance.

Unlike mere obstacles or commercial inconvenience, force majeure and hardship have specific legal thresholds, requiring careful clause drafting and judicial interpretation. In the maritime context—where deals span jurisdictions and face unique risks from piracy, sanctions, or environmental regulations—clear allocation of these risks is vital to preserve business continuity.

Relevance in 2025: Legislative Evolution

The year 2025 marks the continued development of UAE contract law, with an increased focus on international best practices, especially for sectors exposed to global uncertainties. Recent reforms—such as Federal Decree Law No. (42) of 2022 on Civil Procedure and the DIFC’s Contract Law (DIFC Law No.6 of 2004) (as amended)—reflect this trend by modernizing remedies and the contractual freedom of parties operating in the UAE and its free zones.

UAE Legal Framework for Maritime Contracts

Overview: The Federal Civil Transactions Law

The primary legal instrument governing contracts in the onshore UAE is the Federal Law No. (5) of 1985 on the Civil Transactions Law of the UAE (as amended) (Civil Code). Articles 273 and 249 address the consequences of unforeseeable events on contractual obligations, laying the groundwork for force majeure and hardship defenses:

  • Article 273: Provides for the automatic termination of contracts when performance becomes impossible due to a force majeure event.
  • Article 249: Allows adjustment of contracts judged as excessively onerous due to exceptional, unforeseen general events.

This statutory framework is supplemented by sector-specific regulations, such as the UAE Maritime Code (Federal Law No. (26) of 1981), which governs sea carriage and charterparty agreements, and provides some flexibility in dealing with events like blockades, piracy, or other perils peculiar to maritime commerce.

Ministerial Guidelines and Regulatory Circulars

The UAE Ministry of Justice and UAE Ministry of Energy and Infrastructure frequently issue circulars interpreting the application of force majeure in the context of port closures, embargoes, and international sanctions—common risks in maritime trade. Updates in guidance since 2022 have emphasized the need for contract parties to be specific in their force majeure definitions, to maintain the enforceability of their risk allocations.

DIFC Guidance and International Standards

The DIFC Regime: A Hybrid Approach

The Dubai International Financial Centre (DIFC)—a leading common law jurisdiction within the UAE—offers a progressive legal system, distinct from UAE civil law, that is aligned with English law principles and international best practices. The DIFC Contract Law No. (6) of 2004 (as amended in 2022) specifically addresses ‘Force Majeure’ (Section 82) and ‘Unforeseen Circumstances’ (Section 83), giving parties flexibility to tailor force majeure/hardship clauses and invoke judicial relief if performance is impeded or radically altered.

Recent DIFC consultations and the publication of practical guides for contract drafting in the wake of geopolitical and global health crises have stressed the importance of:

  • Express enumeration of force majeure events (e.g., war, pandemic, embargo)
  • Inclusion of notice and mitigation obligations
  • Careful delimitation of what does not constitute force majeure (e.g., mere market fluctuations)

By aligning onshore UAE maritime contracts with these DIFC standards, parties can achieve greater resilience and predictability in their contractual relationships.

Global Benchmarks: ICC Force Majeure and Hardship Clauses

Many UAE maritime deals now incorporate, or adapt, the International Chamber of Commerce (ICC) Force Majeure and Hardship Clauses (2020), which are widely accepted for their clarity and balance. The ICC clauses provide a ‘closed list’ of force majeure events and outline notice procedures, time limits, and consequences for suspension or termination—features increasingly found in well-drafted UAE maritime contracts post-2022 legal updates.

Drafting and Negotiating Force Majeure Clauses

Elements of an Effective Force Majeure Clause

An enforceable force majeure clause in a UAE maritime contract should be:

  • Specific and Tailored: Enumerate relevant events, referencing both natural disasters and man-made disruptions (e.g., canal closures, cyber-attacks, trade embargoes).
  • Objective Thresholds: Articulate that the event renders performance impossible, not merely impractical or less profitable, unless parties agree otherwise.
  • Procedural Obligations: Specify prompt notice requirements and insist on mitigation steps—often neglected in older contracts.
  • Remedial Consequences: Set out clearly whether obligations are suspended, adjusted, or terminated, and whether either party can claim damages or renegotiate terms.

Sample Clause: DIFC-Aligned Draft for Maritime Contracts

As a consultancy-led best practice, the following model can be adapted for UAE maritime transactions:

“Neither party shall be liable for any failure or delay in performing its obligations where such failure is due to an event beyond its reasonable control, including but not limited to war, embargo, government restriction, epidemic, or interruption of shipping routes. The affected party must notify the other party in writing within seven (7) days of the event’s occurrence. The parties shall use all reasonable endeavors to mitigate the effect of the event. Should the event continue for more than thirty (30) days, either party may terminate the contract with written notice.”

This clause is consistent with DIFC law and is adaptable for onshore UAE, provided it does not contravene public order or mandatory rules under the Civil Code.

Visual Suggestion: Force Majeure Checklist

  • Clear definition of qualifying events
  • Notice procedure and time limits
  • Mitigation and duty to minimize loss
  • Remedies: suspension, adjustment, termination clauses

Include as an infographic or call-out box for quick reference.

Invoking Hardship in Maritime Contracts

Hardship Under the UAE Civil Code

Article 249 of the Civil Code empowers UAE courts to rebalance contracts rendered excessively onerous for one party due to exceptional circumstances of a general nature, not anticipated by the parties at contract formation. Unlike force majeure, which provides for termination or suspension, hardship doctrine allows judicial adjustment so as to restore fairness, a provision that finds increasing relevance amid fluctuating commodity prices and logistics costs in the maritime sector.

DIFC Law: A Contractual Approach to Hardship

The DIFC system distinguishes itself by favoring contractual solutions: Section 83 of DIFC Contract Law lets parties agree up front on how to share risks arising from unforeseen economic changes. Parties often stipulate for renegotiation, mediation, or even specific formulas for price adjustment if economic equilibrium is disrupted—a practice increasingly recommended for sophisticated maritime contracts.

Example: Hardship Price Adjustment Mechanism

Where container fuel prices double due to a global energy crisis, a hardship clause could require good faith renegotiation of freight rates, failing which the matter is referred to expedited arbitration. This avoids contract collapse and preserves relationship value for both carrier and charterer.

Aspect UAE Pre-2022 UAE 2025 Updates DIFC Law ICC Clauses
Force Majeure Events General references; undefined Emphasizes specificity and closed lists Detailed, requires enumeration Closed list, express definition
Notice & Duty to Mitigate Implied; rarely specified Obligatory, compliance enforced Mandatory prompt notice and mitigation Detailed procedural steps
Remedies Judicial discretion prevails Contractual/flexible; judicial only as backup Suspension, adjustment, termination Clear process outlined
Hardship Court adjustment under Article 249 Improved clarity on economic hardship Contractual mechanisms preferred Agreed negotiation/adjustment

Case Studies and Hypotheticals

Case Study 1: Suez Canal Blockage

A UAE-based shipper contracted to deliver goods within strict deadlines encountered the 2021 Suez Canal blockage. The force majeure clause—citing only ‘natural disasters’—was challenged in court. Under pre-2022 law, the clause was not enforced; under the 2025 updates (and by incorporating DIFC/ICC standards), a well-drafted clause naming ‘blockade, port closure, or obstruction of navigable waters’ would have allowed the shipper to suspend or terminate performance without penalty.

Case Study 2: Pandemic-Induced Port Closures

A UAE energy company chartered LNG tankers to Asia in early 2023. A subsequent Covid-19 surge led to closure of key Asian ports. Under DIFC model clauses, pandemic and government-imposed closures were listed as force majeure, obliging both parties to mitigate losses and renegotiate schedules. Non-compliance with notice procedures, however, would have voided the defense.

Hypothetical Example: Economic Hardship in Freight Rates

A container line faces a sudden quadrupling of fuel prices post-conflict. While the contract is not impossible to perform, it is now ruinously expensive. If the contract included an ICC-style hardship clause referencing fuel price escalation as an event, the parties would be compelled to negotiate rate adjustments, preserving the deal.

Risks, Penalties, and Compliance Strategies

Risks of Non-Compliance with Modern Standards

  • Judicial Non-Enforcement: Vague or generic force majeure clauses risk judicial refusal to enforce, exposing parties to unmitigated liabilities and potential damages.
  • Business Continuity Risks: Failure to address pandemic, cyber, or geopolitical risks can cause business interruption, lost cargo, and insurance disputes.
  • Regulatory Non-Compliance: In certain regulated sectors (e.g., strategic ports or energy), failure to maintain robust force majeure provisions could trigger penalties under Federal Decree Laws and Ministry circulars.

Compliance Checklist for UAE Maritime Contracts (2025)

  • Review and update all standard contracts to reflect explicit, event-specific force majeure clauses
  • Integrate DIFC/ICC-based hardship provisions, particularly for long-term or high-value deals
  • Train legal and commercial teams on notice requirements and documentation standards
  • Monitor regulatory updates and sectoral guidance from the UAE Ministry of Justice and other authorities
  • Test response procedures through regular drills or tabletop exercises

Visual Suggestion: Compliance Roadmap Diagram

Illustrate the step-by-step approach to reviewing, updating, and enforcing force majeure/hardship clauses.

Best Practices for UAE Maritime Businesses and Legal Teams

Proactive Contract Management

  • Adopt the “DIFC-aligned” approach, even in onshore contracts, for clarity and international enforceability
  • Engage in pre-contract risk mapping to identify and specify relevant force majeure/hardship events
  • Negotiate notice, mitigation, and dispute resolution mechanisms up front
  • Consider sector-specific risks—such as energy sanctions, critical infrastructure attacks, or regulatory embargoes—in all clauses
  • Establish a rapid response team empowered to invoke force majeure/hardship defenses when necessary

Coordinating with Insurers and Stakeholders

Ensure that the language of contractual force majeure/hardship clauses is harmonized with the terms of marine insurance, P&I club coverage, and upstream/downstream contracts to prevent coverage gaps and cascading liability. Liaise with insurers and port authorities to maintain compliance with Ministry guidelines on reporting force majeure incidents.

Conclusion: Future Trends and Proactive Compliance

The legal landscape for force majeure and hardship in UAE maritime contracts is evolving rapidly. The convergence of UAE federal reforms, DIFC common law influences, and widespread acceptance of ICC standards offers unprecedented opportunities for businesses to defend against operational shocks and market volatility. However, the risks of generic drafting and non-compliance have never been higher, particularly in an era when courts and regulators are increasingly scrutinizing contractual allocations of risk.

Going forward, the most successful UAE maritime operators will be those who:

  • Regularly update their contracts to reflect legal and regulatory trends
  • Train their legal and commercial teams on evolving standards
  • Proactively manage risk through tailored, enforceable clauses
  • Engage credible legal advisors to ensure compliance and contract sustainability

In a domain where the next global disruption may be only one port closure or geopolitical flashpoint away, clear, DIFC-aligned drafting is the first—and best—line of defense.

References

  • Federal Law No. (5) of 1985 on the Civil Transactions Law of the UAE
  • Federal Decree Law No. (42) of 2022 on Civil Procedure
  • UAE Maritime Code (Federal Law No. 26 of 1981)
  • DIFC Contract Law No. (6) of 2004 (as amended)
  • ICC Force Majeure and Hardship Clauses (2020 Edition)
  • UAE Ministry of Justice: www.moj.gov.ae
  • UAE Government Portal: www.government.ae
  • Relevant Ministry Circulars and Legal Notices