The ongoing Covid-19 pandemic has created unforeseen circumstances that resulted in unprecedented disruption of businesses across the globe. Businesses and organizations are sourcing their current contracts for identifying avenues of relief. In a majority of cases, pages containing the force majeure clause will be the first ones to turn in order to survive safely through this economic turbulence.
Are these clauses even applicable under the ongoing circumstances? Is the Covid-19 pandemic qualifying as force majeure under the UAE law? We are going to answer all these frequently asked queries of our readers..
What is Force Majeure?
The term force majeure originates from French civil law and is literally translated as ‘superior force’. This clause is specifically defined under the UAE law, i.e., Federal Law No. 8 of 1985 clearly defines the clause of force majeure and contains numerous articles of law pertaining to it. It mainly deals with the circumstances under which the parties binding by a contract can invoke force majeure and levitate from their binding responsibilities.
Force Majeure Clause in Contracts
Under the UAE law, parties are free to mutually agree on contractual terms as long as these terms aren’t contrary to the law. This is why the incorporation of force majeure clauses in contracts is quite wide and frequent. They are effective in the same way as any other clause.
For instance, whether or not a party can invoke force majeure will largely depend on the language used in the contract. Is there any definition of pandemics or epidemics as an event if invoking force majeure or not? Similarly, further action can also depend on the intervention of the government because it is clear that the proximate cause of business disruption isn’t the pandemic but the policies implemented by the government.
In case a contract already mentions the effectiveness of the force majeure clause in the event of pandemics and epidemics as well as government actions, parties can invoke it. However, there can be a situation in which the contract covers the clause of force majeure. But it doesn’t clearly define the conditions under which the parties can provoke it. Then the parties have to provide clear grounds of how current circumstances are affecting their working as an event of force majeure.
Moreover, in case the parties evoke force majeure under the contract, they’ve to ensure that they follow the proper procedure.
What To Do in Case There Isn’t Any Force Majeure Clause in The Contract?
If there is no force majeure clause in the contract, you can still rely on it as an excuse for non-performance. Under the UAE Civil Code, Article 273 provides the ground on which parties can provoke it and they are as follows:
- In contracts binding both parties, if force majeure supervenes making it impossible to perform under the contract. The corresponding obligation will cease and the contract will automatically get cancelled.
- In case it’s partially impossible to abide by the contract, the part of the contract that isn’t possible to fulfil will extinguish while the others will hold valid. However, if both parties mutually agree, they can cancel the contract.
Under Article 273, the invoking of force majeure lies on impossibility. Even though there’s no clear definition of impossibility under UAE law, it is generally considered to take impossibility as literally.
Relief under Article 249
If unforeseen events that weren’t previously predicted occur, which makes it difficult to perform contractual obligations, the judge can give permission for the provoking of force majeure. However, they do it after considering the interests of both binding parties. This rule applies even if performing the duties as per the contract are impossible.
Any party that intends to seek relief under Article 249 has to establish that an extraordinary event of general nature occurred that was unpredictable. As a result, the party isn’t able to perform its obligations, binding them under the contract.
These Articles 273 & 249 are the principal provisions of the UAE law that are relevant to invoking force majeure under Covid-19 conditions. Other than these two, Articles 287, 893 & 894 can also be applied under special conditions.
In a nutshell, Covid-19 has given rise to unprecedented circumstances that require special attention. Invoking force majeure is one of them. However, if you want to seek relief from the court in lieu of force majeure, we recommend involving a reputable law firm such as Davidson to take up the case on your behalf.
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