How to Respond When Your Counterparty Invokes Force Majeure

When You Receive a Force Majeure Notice

Receiving a force majeure notice from a counterparty can feel alarming, but it does not automatically release them from their contractual obligations. Under UAE law, force majeure is a legal defence with strict requirements. Your first step is to carefully evaluate whether the claim is legitimate before deciding how to respond.

The way you respond in the first days after receiving a force majeure notice can significantly affect your legal position. A measured, documented response preserves your rights, while silence or informal acknowledgment could be interpreted as acceptance of the claim.

Step 1: Verify the Claim Against Article 273

Under Article 273 of the UAE Civil Transactions Law, force majeure requires three conditions to be met simultaneously:

• Impossibility — Performance must be genuinely impossible, not merely more difficult or expensive. If the counterparty can still perform but at higher cost, this is hardship (Article 249), not force majeure.
• Unforeseeability — The event must have been unforeseeable at the time the contract was formed. Events that were known risks when the contract was signed typically do not qualify.
• Unavoidability — The party must have been unable to prevent or mitigate the event through reasonable measures.

Ask yourself: has the counterparty demonstrated that all three conditions are met? If performance is still possible — even at greater cost or inconvenience — the correct framework may be hardship under Article 249 rather than force majeure, which allows judicial adjustment of obligations rather than their complete extinguishment.

Step 2: Review Your Contract

Many UAE commercial contracts include a force majeure clause that defines which events qualify and what procedures must be followed. Check for:

• Defined events — Does the clause list specific triggering events? If so, does the cited event fall within that list?
• Notice requirements — Most FM clauses require written notice within a specified period (often 7 to 30 days). Was the notice served within the contractual timeframe and in the correct format?
• Mitigation obligations — Many clauses require the invoking party to demonstrate steps taken to mitigate the impact. Has the counterparty described their mitigation efforts?
• Consequences — Does the clause provide for suspension, extension, or termination? The counterparty cannot claim broader relief than the contract allows.

Even where Article 273 provides a statutory right to claim force majeure, the contractual clause may impose additional procedural requirements. Failure to comply with these requirements can invalidate the claim regardless of the underlying circumstances.

Step 3: Distinguish Force Majeure from Hardship

This distinction is critical under UAE law. Force majeure (Article 273) applies when performance is impossible — the obligation is extinguished by operation of law, and the contract may be automatically cancelled. Hardship (Article 249) applies when performance is still possible but has become excessively burdensome — the court may reduce the obligation to a reasonable level, but the contract survives.

If you believe the counterparty's situation constitutes hardship rather than force majeure, this is an important point to raise in your response. A hardship claim may entitle them to relief, but not to complete discharge of their obligations.

Step 4: Respond in Writing

Your response should be in writing and should:

• Acknowledge receipt of the notice (this does not mean accepting the claim)
• Reserve all your rights under the contract and applicable law
• Request specific evidence supporting the force majeure claim
• Request details of the mitigation steps taken
• State your position on whether the claim meets the legal requirements
• Propose a timeline for further discussion or resolution

Respond promptly. While there is no statutory deadline for responding to a force majeure notice under UAE Federal Law, delay could weaken your negotiating position or create an inference of acceptance.

Step 5: Consider Negotiation

Even where a force majeure claim has merit, the outcome is rarely binary. Consider negotiating:

• Partial performance — Can the counterparty fulfill some obligations even if others are impossible?
• Timeline extensions — Would a reasonable delay resolve the issue?
• Cost sharing — If the event has increased costs, is a shared adjustment feasible?
• Alternative performance — Can the obligation be satisfied through different means?

DIFC and ADGM Considerations

If your contract is governed by DIFC or ADGM law, different rules apply. Both jurisdictions follow common law principles where force majeure is a purely contractual concept — there is no statutory force majeure right equivalent to Article 273. The strength of a force majeure claim in DIFC or ADGM depends entirely on the language of the contractual clause. Without a FM clause, the only alternative is the doctrine of frustration, which has a significantly higher threshold.

Practical Recommendations

• Get legal advice early — The financial stakes of force majeure disputes justify professional guidance, particularly for high-value contracts.
• Document everything — Keep records of all communications, the notice itself, your response, and any evidence exchanged.
• Respond promptly — Silence can be interpreted adversely. Even a holding response preserving your rights is better than no response.
• Consider your own position — The same circumstances affecting your counterparty may also give you grounds to invoke force majeure on other contracts.
• Check insurance coverage — Business interruption or trade credit insurance may cover losses arising from the counterparty's non-performance.