This article was originally drafted and published in early 2020 by the International Lawyers Network (ILN). It formed part of a coordinated series of contributions by ILN member firms examining, from a legal perspective, whether the COVID-19 (coronavirus) crisis could constitute a force majeure event in their respective jurisdictions.
As part of his work with ILN, Ziad recently authored an insightful article discussing the COVID-19 pandemic as a potential force majeure event under UAE law.
The article explores the legal framework, the criteria for invoking force majeure, and how UAE courts may assess such claims on a case-by-case basis.
THE COVID-19 GLOBAL CRISIS - A FORCE MAJEURE EVENT UNDER UAE LAW?
On 30 January 2020, the World Health Organization declared the COVID-19 outbreak a ‘public health emergency of international concern’ and on 11 March 2020 declared it a pandemic. The question many legal practitioners are being faced with is, whether COVID-19 could be considered a force majeure event.
While UAE law does not specifically define what exactly a force majeure event is, Article 273(1) of Federal Law No. 8 of 1985 ("Civil Code") does provide that if a force majeure event makes performance under an agreement impossible, the associated obligations under such agreement will cease and the agreement will automatically terminate. Article 273(2) further provides that where performance is partially or temporarily impossible, that portion of the agreement will be extinguished - the obligor may nevertheless elect to terminate the entire agreement, provided the obligee is given notice of such termination.
However, such articles of the Civil Code do not provide for temporary reprieve where possible and/or practicable. Accordingly, it would likely be for the parties to agree to delay or postpone performance if they so wish.
Should a dispute arise, UAE Courts will likely look to the particular agreement in question as well as the facts of the matter, to ascertain whether the COVID-19 pandemic would constitute a force majeure event in those specific circumstances.
A party wishing to rely on the defence of force majeure should not only meet the high bar of impossibility of performance, but should also show (to the satisfaction of the court) that the event causing such impossibility fulfills the criteria for force majeure as generally established by UAE Courts in past jurisprudence. Namely, lack of: (a) foreseeability at the time the agreement was entered into; and (b) preventability.
Whether the UAE Courts will see the COVID-19 pandemic as a force majeure event remains to be seen. It will depend on the facts surrounding a given matter. The degree to which precautionary measures and rapidly deteriorating economic conditions make it impossible for parties to perform under their agreements will surely be an important factor for courts and arbitration tribunals to take into account. However, it should be noted that parties who have entered into agreements subsequent to the outbreak but who later wish to rely upon the pandemic as a force majeure defence for non-performance may have a harder time meeting the established criteria.
This article was originally drafted and published in early 2020 by the International Lawyers Network (ILN). It formed part of a coordinated series of contributions by ILN member firms examining, from a legal perspective, whether the COVID-19 (coronavirus) crisis could constitute a force majeure event in their respective jurisdictions.
As part of his work with ILN, Ziad recently authored an insightful article discussing the COVID-19 pandemic as a potential force majeure event under UAE law.
The article explores the legal framework, the criteria for invoking force majeure, and how UAE courts may assess such claims on a case-by-case basis.
THE COVID-19 GLOBAL CRISIS - A FORCE MAJEURE EVENT UNDER UAE LAW?
On 30 January 2020, the World Health Organization declared the COVID-19 outbreak a ‘public health emergency of international concern’ and on 11 March 2020 declared it a pandemic. The question many legal practitioners are being faced with is, whether COVID-19 could be considered a force majeure event.
While UAE law does not specifically define what exactly a force majeure event is, Article 273(1) of Federal Law No. 8 of 1985 ("Civil Code") does provide that if a force majeure event makes performance under an agreement impossible, the associated obligations under such agreement will cease and the agreement will automatically terminate. Article 273(2) further provides that where performance is partially or temporarily impossible, that portion of the agreement will be extinguished - the obligor may nevertheless elect to terminate the entire agreement, provided the obligee is given notice of such termination.
However, such articles of the Civil Code do not provide for temporary reprieve where possible and/or practicable. Accordingly, it would likely be for the parties to agree to delay or postpone performance if they so wish.
Should a dispute arise, UAE Courts will likely look to the particular agreement in question as well as the facts of the matter, to ascertain whether the COVID-19 pandemic would constitute a force majeure event in those specific circumstances.
A party wishing to rely on the defence of force majeure should not only meet the high bar of impossibility of performance, but should also show (to the satisfaction of the court) that the event causing such impossibility fulfills the criteria for force majeure as generally established by UAE Courts in past jurisprudence. Namely, lack of: (a) foreseeability at the time the agreement was entered into; and (b) preventability.
Whether the UAE Courts will see the COVID-19 pandemic as a force majeure event remains to be seen. It will depend on the facts surrounding a given matter. The degree to which precautionary measures and rapidly deteriorating economic conditions make it impossible for parties to perform under their agreements will surely be an important factor for courts and arbitration tribunals to take into account. However, it should be noted that parties who have entered into agreements subsequent to the outbreak but who later wish to rely upon the pandemic as a force majeure defence for non-performance may have a harder time meeting the established criteria.
