Force Majeure & Variation Clauses in Construction Contracts:The Legal Impact of the Ongoing Middle East Conflict
INTRODUCTION
Force majeure in construction contracts is a critical concept within modern Construction & Projects Disputes, particularly because large-scale projects are vulnerable to unforeseen events that disrupt performance, delay timelines, and increase cost. Whether arising from extreme weather, pandemics, war, regional rebellion, political events, supply chain breakdowns, or regulatory changes, force majeure events test the end-to-end realities of contractual risk allocation. Understanding how force majeure clauses operate, how claims must be notified and proven, and how tribunals assess entitlement is essential for both employers and contractors seeking to manage project disruption effectively.
The current conflict in the Middle East, owing to the Iran war crisis, is causing significant disruption across the Gulf states. In the context of construction projects, there have been significant delays in the completion of various proposed projects due to unprecedented coincidental delays in the logistics sector, including limited transport routes, reduced cargo movement, and shipment availability. The unprecedented stoppage of logistics has directly impacted every sector of society. Shortages of necessary goods in the Food, IT, and construction sectors have caused serious market implications, which in turn lead to a chaotic environment due to the lack of timely delivery of necessities. The shortage of goods has directly led to a rapid increase in market prices for all goods.
In times like these, contractors would raise Force Majeure claims if their performance of the contract has been impacted. It is essential for Employers and Contractors to fully understand the contractual processes governing such claims, the applicable legal jurisdictions, the practical consequences of Force Majeure events, and the key considerations that will shape their response strategy. It is always advisable that contracting parties take suitable measures for prompt and timely communication; discussing potential issues will be critical to avoid subsequent legal claims.
FORCE MAJEURE IN CONSTRUCTION CONTRACTS
In contracts binding on both parties, if force majeure supervenes which makes the performance of the obligation impossible, the corresponding obligation shall cease, and the contract shall be automatically cancelled.
Article (273) (1)
Under a typical FIDIC-based contract regime, for an event or circumstance to qualify as “Force Majeure” (or an “Exceptional Event” in more recent versions), it must satisfy each of the following requirements:
· The event must be beyond the affected party’s control.
· The event must be one that could not reasonably have been provided against before the contract was entered into.
· Once the event has arisen, it must be unavoidable or not reasonably capable of being overcome.
· The event must not be substantially attributable to the other party.
Some contracts also include specific examples of qualifying events; these typically include:
· War and hostilities.
· Invasion and acts of foreign enemies.
· Rebellion, revolution, and civil war.
· Riot, commotion, and disorder.
Contracts often require that such events occur within the country where the works are being performed. Employers and Contractors should pay close attention to any geographical limitations in their contracts, as these may affect whether the current regional disruption qualifies.
The procedural requirements for Force Majeure claims are equally important. The affected party is typically required to give notice upon becoming aware of the event, detailing the nature of the event and its impact on the party’s contractual obligations. This notice must usually be provided within a prescribed timeframe. Under FIDIC’s default provisions, notice must be given within 14 days of the party becoming aware (or should have become aware) of the relevant event or circumstance. Failure to comply with notice requirements can be fatal to a claim.
Exceptional Circumstances (Article 249)
Often confused with Force Majeure, Article 249 addresses “Hardship.” This applies when performance is not impossible but has become excessively onerous (e.g., a sudden 100% spike in material costs due to a global crisis). Unlike Force Majeure, this does not terminate the contract; instead, it grants the judge or arbitrator the power to adjust the obligations to restore a fair balance.
In this case, the UAE courts will have a discretionary power – that may not be excluded by contract – to assess the impact of the event on the contract, and to reduce the onerous obligation accordingly. Therefore, the remedy under Article 249 is different to that under Article 273, where the impossibility of performance will often lead to termination.
IMPACT OF THE ONGOING MIDDLE EAST CONFLICT ON CONSTRUCTION PROJECTS
Ø Supply chain disruptions.
Ø Shipping and logistics delays.
Ø Material Shortages and Price Escalation.
Ø Labour shortages and workforce mobility restrictions.
Ø Increased insurance, transportation, and security costs.
Ø Effects on project completion timelines and contractual performance.
VARIATION CLAUSE & EXTENSION OF TIME
A variation refers to any change to the originally agreed scope of works. Most construction contracts, including FIDIC and bespoke UAE contracts, allow employers to instruct variations during the life of a project. These changes may impact time, cost, quality, or methodology, and must be evaluated according to the contract’s procedural and financial rules.
Common Types of Variations
Ø Changes to drawings, specifications, or technical requirements.
Ø Alterations to the quantity of work (increase or omission)
Ø Modifications to materials or workmanship standards.
Ø Adjustments to sequencing or construction methodology.
Ø Additional work required due to unforeseen conditions.
Ø Compliance-driven changes resulting from regulatory updates.
Whether a change constitutes a valid variation depends on the terms drafted in the contract and whether the instruction originates from an authorized representative.
FIDIC (1999 & 2017) Clause 13 – Variations and Adjustments
Under FIDIC Red Book Clause 13, only the Engineer has the power to instruct a variation. The contractor must execute the variation and is entitled to an adjustment to the Contract Price and, where delay results, to the Time for Completion. Under FIDIC 2017, Clause 20.2 introduced a strict 28-day notice period for claims arising from variations, making early notification non-negotiable.
o Variation by instruction (Clause 13.1)
o Variation by request for proposal (Clause 13.3)
o Contractor’s right to object (Clause 13.1)
o Daywork valuation procedure (Clause 13.6)
In most Construction Contracts in the UAE, particularly those based on FIDIC forms, the primary relief for a Force Majeure event is an Extension of Time (EOT).
Extension of Time – This protects the contractor from liquidated damages for construction delays under UAE law. If you can prove the delay was directly caused by an “Exceptional Event,” you are legally entitled to more time.
Cost Relief: Generally, Force Majeure is a “loss-where-it-falls” event. While contractors are often granted time, they are rarely granted additional costs (prolongation costs) unless the contract specifically includes “Employer’s Risk” events or “Political Force Majeure.”
Most major UAE construction projects use FIDIC contracts, typically the 1999 Red Book (employer-designed projects) or Yellow Book (design-build). The 2017 editions are increasingly adopted.
Sub-Clause 8.4 (Extension of Time for Completion) lists the grounds for extension of time, including:
o Variations (unless an adjustment to the Time for Completion is agreed)
o Cause of delay giving entitlement to extension under any other Sub-Clause
o Exceptionally adverse climatic conditions
o Unforeseeable shortages in the availability of personnel or Goods caused by epidemic or governmental actions
o Any delay, impediment or prevention caused by or attributable to the Employer
CONTRACTUAL FORCE MAJEURE CLAUSES
Given the UAE’s position as a global commercial hub, force majeure clauses are particularly relevant in cross-border transactions. Although UAE law expressly provides statutory relief, commercial agreements should typically include explicit force majeure clauses. These clauses serve to clarify the scope of events that may trigger relief and to regulate the procedure for invoking such relief. As stated earlier, commercial contracts often include a list of events such as natural disasters, war, terrorism, governmental action, labor strikes, epidemics, and infrastructure failures. These lists are frequently followed by broader language covering events beyond the reasonable control of the parties.
Thus, force majeure clauses commonly perform several functions such as:
Ø Defining the events that constitute force majeure.
Ø Establishing notification procedures.
Ø Specifying the consequences of such events.
Ø Allocating the risk of non-performance between the parties.
Ø Role of Force Majeure in Commercial Contracts
Force majeure clauses play a particularly significant role in commercial contracts across several sectors. Some of these sectors are listed below.
Construction and Infrastructure – Large-scale infrastructure projects are highly susceptible to delays caused by weather conditions, supply disruptions, or government actions. Construction contracts therefore should contain detailed provisions addressing force majeure events and their consequences.
International Trade and Supply Agreements – Supply chain disruptions, port closures, trade sanctions, or transportation failures may trigger force majeure clauses in international trade agreements and thus should be minutely looked into.
Technology and Service Agreements – Technology service contracts should comprehensively address events such as cyberattacks, telecommunications failures, or government restrictions affecting digital infrastructure.
Legal Consequences of Force Majeure
When force majeure is successfully invoked under UAE law, several legal consequences may arise depending on the nature of the event and the contractual provisions involved.
Suspension of Obligations – Where the force majeure event is temporary, the contractual obligations may be suspended for the duration of the event. Performance is resumed once the impediment ceases.
Extension of Time – In certain commercial arrangements, particularly construction contracts, the affected party may be granted an extension of time for performance.
Termination of the Contract – If the event results in permanent impossibility of performance, the contract may be automatically terminated pursuant to Article 273 of the Civil Code.
Exemption from Liability – The party affected by the force majeure event is generally relieved from liability for damages resulting from the non-performance of the contractual obligation.
Article 287 – Exemption from Liability
Article 287 of the UAE Civil Code further reinforces the protection afforded to parties affected by force majeure. The provision states that a person shall not be liable to compensate for damage if it arises from a cause beyond their control and played no part such as natural disaster, unavoidable or sudden accident, force majeure or the act of a third party or act of the person suffering loss unless there is any legal provision or agreement to the contrary. This provision establishes an important defense against claims for damages. Thus, if contractual obligations cannot be performed, the party affected by the force majeure event may rely on Article 287 to avoid liability provided that the causal connection between the event and the failure to perform can be established.
THE NEW UAE CIVIL CODE – KEY CHANGES AND PRACTICAL IMPLICATIONS
Federal Decree Law No. 25 of 2025 (the new Civil Code) entered into force from June 1, 2026. It repealed and replaced Federal Law No. (5) of 1985 (the old Civil Code).
It does not apply retroactively. Parties negotiating and entering into new contracts after June 1, 2026 will be governed by the new Civil Code in their negotiations, contract administration, and future disputes.
The New Civil Code reinforces force majeure as a core legal concept recognised in the UAE, and expressly identifies circumstances where unforeseen events, including conflict, render performance so onerous that it justifies rescinding a contract. This is particularly relevant in today’s geopolitical landscape in the Middle East.
Article (224)
If exceptional, general circumstances arise that could not have been foreseen at the time of contracting, and as a result of their occurrence, the performance of the contractual obligation becomes onerous for the debtor, threatening them with serious loss, the court may, depending on the circumstances and after balancing the interests of the parties, reduce the onerous obligation to a reasonable limit or rule for the rescission of the contract. Any agreement to the contrary shall be void.
Article 224 of the New Civil Code expands the existing position under Article 249 of the Old Civil Code in relation to unforeseeable exceptional circumstances of a public nature. The New Civil Code maintains the ability to reduce ‘oppressive’ obligations but also allows a court to rescind a contract.
Article (236)
1. In bilateral contracts, if a force majeure arises rendering performance of an obligation impossible, the corresponding obligations are extinguished, and the contract is rescinded automatically.
2. If the obligation becomes partially impossible, either of the contracting parties may invoke the extinguishment of the corresponding obligation or request the court to rescind the contract.
3. If the impossibility is temporary in continuing contracts, either of the contracting parties may invoke the extinguishment of the corresponding obligation or the modification of the contract, or request the court to rescind the contract.
The provisions governing circumstances of force majeure, which render performance of a contract wholly or partially impossible, are maintained in the New Civil Code under Article 236. UAE courts are given the discretionary power to:
(i) Reduce onerous obligations;
(ii) Modify or rescind contracts in exceptional and unforeseeable circumstances; or
(iii) Dissolve contracts where performance is genuinely impossible.
The broader scope introduced by Article 236 of the New Civil Code is a welcome development, affording greater certainty to parties whose contracts have been impacted by force majeure. It also enables the courts to intervene more effectively and grant broader statutory relief where appropriate.
Article (249)
If a person proves that the harm arose from an external cause beyond their control, such as an act of God, a sudden accident, force majeure, the act of a third party, or the act of the injured party, they shall not be liable for compensation, unless the law or the agreement provides otherwise.
Exceptional Circumstances Affecting Construction Contracts
For parties to construction and engineering contracts, the New Civil Code contains a new provision that has significant potential to overcome this issue – by allowing courts and tribunals to restore the contractual equilibrium and financial basis of such contracts.
A key feature of the New Civil Code is Article 829(3), a new provision that has no equivalent in the Old Civil Code. This provision is similar to the exceptional circumstances provisions of Article 224 of the New Civil Code and Article 249 of the Old Civil Code. However, Article 829(3) applies only to muqawala contracts (i.e., work contracts, such as construction and engineering contracts) and goes further in terms of available relief.
Article 829(3) of the New Civil Code provides as follows:
“If the contractual equilibrium between the obligations of both the employer and the contractor is disrupted due to general exceptional circumstances that could not have been foreseen at the time of contracting, thereby undermining the basis upon which financial assessment of the Muqawala contract was founded, the court may, depending on the circumstances and after balancing the interests of both parties, order the restoration of the contractual equilibrium, including the extension of the execution period, the increase or reduction of the remuneration, or may order the rescission of the contract.”
Article 829(3) grants a court or tribunal very wide discretion to grant relief in exceptional circumstances affecting construction contracts. Article 829(3) will be welcomed by Contractors specifically because it contemplates granting extensions of time and additional costs, particularly since the conflict has caused many projects across the region to suffer not just delay, but also disruption and massive price escalation.
Unlike Article 224 of the New Civil Code, Article 829(3) is not expressed to be mandatory – in other words, parties may contract out of this provision. Parties wishing to rely upon Article 829(3) specially, contractors must be vigilant when negotiating contracts to ensure this potential route to relief is preserved.
BURDEN OF PROOF & NOTICE PROVISIONS
The burden of proof lies with the party invoking force majeure, who must demonstrate that non-performance was directly caused by the force majeure event. If negligence is found, the debtor cannot rely on force majeure as a defence. UAE courts adopt a case-by-case approach, considering the contract terms, the nature of the disruption, and efforts made by the affected party to mitigate losses. Parties are expected to act in good faith and take reasonable steps to reduce their losses, including providing timely notice to the other party.
Notice Provisions
The Old Civil Code does not expressly address notice obligations.
Article 816(3) of the New Civil Code adopts a stricter approach, requiring the contractor to notify the employer immediately if events or circumstances arise that may impede the proper execution of the work. It also provides that if the contractor fails to give due notice, it bears the consequences arising from such event or circumstances. A failure to give the required notice may therefore result in a contractor being liable for damages, or precluded from an entitlement to additional time to complete the work or additional payment. Article 816(3) of the New Civil Code does not specify what constitutes proper notice, and this will be subject to interpretation by the onshore UAE courts.
PRACTICAL STEPS AND RECOMMENDATIONS
Employers and Contractors should consider taking the following practical steps in response to the current regional disruption:
1. Compile and maintain comprehensive evidence – Document the impact of the disruption on your projects, including records of supply chain delays, transport disruptions, and communications with Employers, Contractors and suppliers. Continue to monitor the evolving situation and update your records accordingly.
2. Review and monitor all contractual processes and requirements – Identify the applicable Force Majeure provisions, notice periods, and procedural requirements in each of your contracts. Establish internal systems to track incoming notices, assess claims and ensure timely responses.
3. Consider engaging with counterparties early – Proactive dialogue between Employers, Contractors and suppliers can help identify practical solutions, manage expectations, and reduce the risk of adversarial disputes. Early engagement also provides an opportunity to clarify the evidence required to support any claims and to remind contractors of their mitigation obligations.
4. Seek legal advice promptly – The interaction between contractual provisions and applicable governing law can be complex. Early legal input will help ensure that your response is both commercially sensible and legally robust.
CONCLUSION
The changes arising from the New Civil Code are a welcome development, aligning with international practices and enhancing several provisions under the Old Civil Code. It is significant that the New Civil Code only applies to contracts entered into from 1 June 2026 onwards, so it is crucial to check which law applies to your contract. UAE courts interpret force majeure strictly and require clear evidence demonstrating that the event was unforeseeable, unavoidable, and directly responsible for the failure to perform. Accordingly, parties entering into commercial agreements governed by UAE law must ensure that force majeure clauses are carefully drafted to align with the statutory framework and judicial practice. A well-structured force majeure clause not only provides contractual clarity but also ensures that the parties’ rights and obligations remain balanced in the face of extraordinary circumstances. In an increasingly interconnected global economy, such clauses remain indispensable for managing commercial risk and preserving contractual stability.
