UAE Law and Practice Contributed by: Abdelhak Attalah and Ghassan Hidar, Attalah Legal Consultancy
9. Implications of Non-Performance, IMO 2020, Trade Sanctions and International Conflict 9.1 Force Majeure and Frustration Under UAE law, the concept of force majeure is rec - ognised, and there is relevant case law addressing situations such as pandemics. Force majeure refers to events that, if they occur, make it impossible for a party to fulfil its contractual obligations, as outlined in Article 273 of the Civil Transactions Code. In the case of the COVID-19 pandemic between 1 April 2020 and 31 July 2021 and other specific cases, UAE courts recognised an emergency financial crisis under the previous Federal Decree Law No 9 of 2015 on bank - ruptcy, along with its amendments. Therefore, circum - stances like late delivery, non-arrival of a chartered vessel or delays in loading or discharging could be considered force majeure if they meet the criteria of making performance impossible under the contract. 9.2 Enforcement of the IMO 2020 Rule Limiting the Sulphur Content of Fuel Oil Since 1 January 2020, the UAE has implemented the IMO 2020 regulations, which limit the sulphur content of fuel oil used on board ships to 0.50% mass by mass (m/m). This regulation applies to vessels oper - ating within UAE territorial waters and calling at UAE ports. The Ministry of Energy and port authorities are responsible for enforcing the sulphur content limita - tions in the UAE. Vessels are required to comply with these regulations by either using compliant fuel (with sulphur content not exceeding 0.50%) or by having an approved alter - native means of compliance, such as an exhaust gas cleaning system (scrubber). Fuel Compliance Vessels refuelling at UAE ports with high-sulphur fuel oil (HSFO) must provide an International Air Pollution Prevention (IAPP) certificate, which confirms that the vessel has a working scrubber system. This allows the vessel to continue using HSFO while complying with the sulphur limit. Vessels entering UAE territorial waters or ports with non-compliant fuel must submit a fuel oil non-availa -
bility report (FONAR). However, submitting a FONAR does not exempt the vessel from the requirement to
carry compliant fuel. Enforcement Actions
While there have been no reported enforcement actions or sanctions for violations as of now, the UAE authorities are monitoring compliance actively. Any violations would typically lead to penalties or sanc - tions, but the exact measures are not publicly detailed. 9.3 Trade Sanctions The UAE legal system enforces international trade sanctions, but it does not enforce unilateral sanc - tions imposed by countries such as the USA or the UK unless they are consistent with United Nations (UN) resolutions. The UAE implements UN Security Council sanctions resolutions, ensuring compliance with international trade sanctions as mandated by the UN. However, the UAE has not adopted specific sanctions against Russia under its domestic law. As a result, these sanctions do not directly impact Russian citizens or entities conducting business in the UAE. However, although the UAE has not enacted specific sanctions against Russia, the global economic shifts and changes in trade routes may indirectly affect the UAE. The country has maintained a neutral stance on the conflict, and there have been no direct reports of sanctions-related impacts on the UAE’s trade activi - ties. While the UAE central bank monitors compliance to avoid violations of international law, the UAE does not have special committees that grant permits for trade activities otherwise prohibited by sanctions. How - ever, entities in the UAE are expected to comply with international sanctions when applicable and may seek guidance from regulatory bodies like the central bank to ensure compliance with international laws. 9.4 International Conflict Since the onset of the Russia-Ukraine conflict, the UAE has experienced some disruption in the supply of raw materials, particularly affecting sectors reliant on imports from these countries. While there is no spe - cific public data detailing the full extent of this impact, there have been legal cases before UAE courts involv - ing breaches of contract between Russian or Ukrain -
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