UAE Trends and Developments Contributed by: Amir Alkhaja, Areen Jayousi, Gulsun Ozmen and Alia AlMarzooqi, Habib Al Mulla & Partners
into after the New CTL came into force. The body of case law applying Article 249 has grown substantially, and in 2026 remains a live tool in disputes across the real estate, construction, hospitality and long-term services sectors, where shifts in market conditions, regulatory changes or external shocks have altered the economic balance of contracts. UAE courts, and particularly the Dubai courts and the Abu Dhabi courts, have issued a substantial body of jurisprudence on Article 249 of the Old CTL, and that case law will inform the interpretation of Article 224 of the New CTL. The threshold for judicial interven - tion remains high under both provisions. Courts have consistently emphasised that the hardship remedy is one of last resort. Parties are expected to negotiate in good faith before seeking judicial intervention, and a party that has not made genuine efforts to renegoti - ate may find that a court is reluctant to exercise its revisionary or rescissionary powers. This reinforces the practical importance of including hardship renegotiation clauses in commercial con - tracts provisions that require the parties to enter into good-faith negotiations when specified triggering conditions are met, before either party may resort to litigation. The relationship between hardship and force majeure Force majeure and hardship are distinct but related doctrines, and they are not mutually exclusive. A sin - gle event, such as a global pandemic, a war or a sud - den regulatory change, or a sanctions measure, may simultaneously: • render certain specific obligations impossible (engaging force majeure); and • make the overall performance of the contract excessively burdensome without rendering it impossible (engaging hardship). Careful contract drafting should address both doc - trines separately, referencing both the force majeure and hardship provisions by their applicable article numbers (Article 273/Article 236 for force majeure; Article 249/Article 224 for hardship, depending on when the contract was entered into), and parties in
litigation should consider whether both grounds are available on the facts of their dispute. The Civil Transactions Law: Old and New Federal Law No 5 of 1985 on Civil Transactions (the Old CTL) governed civil obligations in the UAE for four decades. Federal Decree-Law No 25 of 2025 (the New CTL) came into force in 2025 and now governs contracts entered into after its commencement date. Both laws share the same doctrinal architecture for force majeure and hardship, but the New CTL intro - duces important refinements that parties to current and future contracts must understand. Good faith and interpretation Both the Old CTL and the New CTL require contracts to be performed in good faith. The New CTL under Article 221 expressly reinforces this, stating that a contract must be performed in accordance with its contents and in a manner consistent with the requirements of good faith, and that a contract is not limited to its express terms but extends to requirements arising from law, custom and the nature of the obligation. The New CTL also expands the rules of contractual interpretation under Article 218, including a new requirement that contracts be interpreted in a manner that achieves justice and good faith between the parties. This has practical implications for how force majeure and hardship situations must be handled under both the Old CTL and the New CTL. A party that invokes force majeure or hardship in bad faith, for instance by manufacturing a triggering event or by refusing to negotiate a reasonable adjustment, risks not only losing the protection of the doctrine but also being exposed to liability for acting contrary to the good faith obligation that both laws embed in the contrac - tual relationship. Adhesion contracts and unfair terms A noteworthy addition in the New CTL is Article 223, which empowers courts to modify or exempt a party from arbitrary or unfair clauses in contracts concluded by adhesion. This provision has direct relevance to force majeure and hardship analysis: a limitation of liability clause, a force majeure carve-out or a clause excluding the right to seek revision that appears in a standard- form contract of adhesion may be subject to judicial
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