The Strait of Hormuz crisis is testing force majeure and hardship under the new UAE Civil Transactions Law. Here’s what has changed and how to protect your contracts.
Throughout 2026, the Middle East has been experiencing a period of significant regional transformation. While Dubai remains a beacon of commercial stability and a global logistics hub, recent geopolitical developments, specifically the de facto closure of the Strait of Hormuz in late February, have sent shockwaves through international supply chains. For businesses operating in the UAE, these are no longer distant risks, but immediate legal and commercial challenges.
The key question many companies now face is whether such instability can excuse or delay contractual obligations. The answer lies in the new Federal Decree-Law No. 25 of 2025 (UAE Civil Transactions Law), which introduces a clearer and more structured framework for addressing Force Majeure and Exceptional Circumstances.
At Al Riyami Advocates & Legal Consultants, we are actively advising clients on navigating these disruptions, helping them assess contractual risk, determine the applicability of legal relief, and adopt strategies that protect their commercial position in an increasingly uncertain environment.
The New 2026 Legal Standard: Impossibility vs. Hardship
The new UAE Civil Transactions Law, which came into force on 1 June 2026, has refined how courts assess contractual relief, introducing a clearer distinction between Force Majeure and Exceptional Circumstances. While the principle of fairness remains central, the 2026 framework applies a more structured and rigorous standard.
Force Majeure
Under Article 236 of the UAE Civil Transactions Law (Federal Decree-Law No. 25 of 2025), Force Majeure applies only where performance becomes objectively impossible, not merely difficult or unprofitable. The threshold is high: the event must be beyond the parties’ control, and increased cost or delay alone will not be enough. Where performance becomes wholly impossible, the corresponding obligations are extinguished and the contract is rescinded automatically. The new law also addresses partial and temporary impossibility: where performance is only partly impossible, a party may treat the affected obligation as extinguished or ask the court to rescind the contract, and where the impossibility is temporary in a continuing contract, a party may also seek modification of the contract instead of its termination.
Exceptional Circumstances
More commonly invoked in 2026, Article 224 of the UAE Civil Transactions Law (Federal Decree-Law No. 25 of 2025) applies where performance is still possible but has become excessively burdensome due to exceptional, general events that could not have been foreseen at the time of contracting, exposing a party to significant loss. In such cases, the court may, after balancing the parties’ interests, reduce the onerous obligation to a reasonable level or, as is now expressly provided, rescind the contract. This protection is mandatory: any contractual provision that tries to exclude it is void. Article 224 replaces Article 249 of the previous Civil Transactions Law (Federal Law No. 5 of 1985).
For construction and engineering contracts, the new Article 829(3) goes further, allowing the court to restore the contractual equilibrium, including by extending the time for completion or increasing or reducing the contract price. Unlike Article 224, parties may contract out of this provision, so it deserves particular attention when contracts are negotiated.
This distinction is critical for businesses navigating disruption, as it determines whether a contract ends entirely or is judicially adjusted to reflect new realities.
Which Law Applies?
The new law came into force on 1 June 2026, replacing Federal Law No. 5 of 1985. Events that occurred before that date, including much of the early disruption that followed 28 February 2026, may still be governed by the previous law, under which force majeure falls under Article 273 and exceptional circumstances under Article 249. Businesses should confirm which regime applies to their contract and to the events they rely on before serving notices or bringing a claim.
Applying the 2026 Standards: The Strait of Hormuz Crisis
The maritime disruption affecting key Gulf trade routes, particularly the de facto closure of the Strait of Hormuz from 28 February 2026 and the instability that has continued since, provides a critical real-world test of the UAE’s new framework for Force Majeure and Exceptional Circumstances. For businesses reliant on regional shipping corridors, the legal assessment now turns on two decisive factors: Foreseeability and the Duty to Mitigate.
Foreseeability
For a claim to succeed, the disruption must have been unforeseeable at the time the contract was concluded. Contracts concluded before 28 February 2026 may still support a Force Majeure or Exceptional Circumstances argument. However, agreements entered into after the escalation on or around 28 February 2026 may be treated differently, with courts potentially viewing the risk as foreseeable and already priced into the contract.
Duty to Mitigate
UAE courts expect parties to take reasonable steps to limit their losses, an approach reflected in decisions arising from the COVID-19 pandemic, and the same scrutiny is likely to apply to the current disruption. Parties should be able to show genuine efforts to reduce loss before relying on Force Majeure or hardship. In practice, this includes exploring alternative logistics routes such as overland transport via the Saudi corridor or switching to air freight. Failure to document such steps can significantly weaken a claim.
Ultimately, success under the 2026 framework depends not only on the existence of disruption, but on how proactively a business responds to it.
Digital Proof: The Role of Electronic Evidence in 2026
Under Federal Decree-Law No. 35 of 2022 on Evidence in Civil and Commercial Transactions, read together with Federal Decree-Law No. 46 of 2021 on Electronic Transactions and Trust Services, digital communication plays a central role in commercial disputes. The “integrity of the digital trail” is now central to proving contractual claims, particularly in Force Majeure and Exceptional Circumstances cases.
Emails, WhatsApp messages, and authenticated corporate communication platforms are admissible as evidence and can have the same legal effect as written evidence, provided their origin and integrity can be verified. This means the communication must be clearly linked to the sender, remain unaltered, and preserve a complete, traceable record.
As a result, formal notices, such as Force Majeure declarations issued via registered email or verified systems, can carry significant evidentiary weight, provided they can be attributed to the sender and shown to be unaltered. Original files and metadata should be preserved, as UAE courts have required electronic messages to be properly authenticated before relying on them. At Al Riyami Advocates & Legal Consultants, we ensure that all digital notices and supporting records are structured to meet judicial standards, making your claims procedurally strong, compliant, and enforceable.
Why Partner with Al Riyami Advocates?
In a 2026 landscape defined by regional disruption and evolving legal standards, effective dispute management requires more than legal interpretation; it demands a strategic, execution-focused approach. With over 25 years of experience and a track record of resolving complex commercial disputes, Al Riyami Advocates & Legal Consultants combines deep local expertise with international legal standards to guide clients through uncertainty.
We provide a structured roadmap for managing contractual risk and enforcement, focusing on three core pillars:
- Contractual Risk Assessment – identifying vulnerabilities in Force Majeure, Change in Law, and commercial risk clauses
- Evidence Structuring – preparing and organising documentation to substantiate claims of disruption, loss, and “grave hardship” under Article 224 (or Article 249 of the previous law, where it applies)
- Efficient Dispute Resolution – leveraging modern mediation frameworks to resolve disputes early and avoid prolonged litigation
This integrated approach ensures clients are not only legally protected but also commercially positioned to respond quickly and effectively to disruption.
Conclusion: Stability Through Strategy
In an era of uncertainty, your legal strategy is your most valuable asset. The 2026 regional crisis is a test of contractual resilience. By understanding the shift from the 1985 Civil Transactions Law to the new law in force since 1 June 2026, and by acting with transparency and speed, your business can navigate these turbulent waters.
At Al Riyami Advocates & Legal Consultants, our mission is to provide the legal certainty you need when the world around you is in turmoil. We remain dedicated to protecting the interests of the UAE’s business community, ensuring that “Exceptional Circumstances” do not lead to exceptional failures.
Is your supply chain or project timeline currently impacted by regional disruption? Contact Al Riyami Advocates & Legal Consultants today for a confidential risk assessment and contract review.
Note: This article is for general information only and does not constitute legal advice. Specific advice should be sought on the facts of each matter. It reflects the law as at October 2026.
