Dubai Real Estate Contracts and Geopolitical Risks: Can 'Force Majeure' Justify Contract Termination?
Introduction
Dubai's real estate market maintains its stability, yet against the backdrop of regional instability, an increasing number of buyers are questioning whether they can cancel purchase agreements for off-plan properties (unfinished properties). The central focus is particularly on whether the "Force Majeure" clause, as stipulated in contracts, can be applied. This article, based on the insights of legal experts in the UAE, aims to explain this issue in an easy-to-understand manner for beginners.
What is Force Majeure?
First, let's understand the meaning of "Force Majeure." This is a legal concept where parties to a contract are exempted from liability if an unforeseen event, beyond the control of any party, occurs and renders the performance of the contract impossible. Examples include large-scale natural disasters or wars.
Conditions for Applying Force Majeure under UAE Law
While the concept of force majeure is recognized under UAE law, its application is subject to very strict conditions. According to experts, for an event to be considered force majeure, all of the following conditions must be met:
- Exceptional and extraordinary event: It must be an event that significantly exceeds the normal scope.
- Unforeseeable at the time of contract: It must have been impossible to foresee the occurrence of the event at the time the contract was concluded.
- Unavoidable: The parties could not have prevented the occurrence or impact of the event despite their efforts.
- Direct causal link to the impossibility of contract performance: It must be proven that the event rendered the fulfillment of contractual obligations "impossible."
It is crucial to note that merely finding it "difficult" or "economically unfavorable" to perform the contract is not sufficient for it to be recognized as force majeure.
Does the Current Regional Situation Qualify as Force Majeure?
Legal experts unanimously agree that claiming force majeure in off-plan property purchase agreements due to the current regional situation is not permissible at this time.
Bassel Boutros, a Partner at BSA LAW, points out that "daily life in the UAE continues as usual, and there has been no significant adverse impact on the real estate market." While Dubai courts make decisions based on evidence in individual cases, under current circumstances, it is difficult to prove that contract performance has become impossible.
As a past example, during the COVID-19 pandemic, a specific period was officially designated as an "emergency financial crisis" by Ministerial Resolution No. 5 of 2021. However, no such official measures have been taken regarding the current regional situation.
What Property Buyers Should Know
Andrew Thomson, a Partner at Al Tamimi & Co., concludes that it is difficult to successfully invoke a force majeure claim. Those considering a purchase or who have already entered into a contract should keep the following points in mind:
- Thorough review of the contract: Carefully examine the force majeure clauses included in the contract before signing or taking any action.
- Understanding conditions and limitations: Force majeure clauses often come with significant conditions and limitations. It is essential to accurately understand their content.
The increasing number of consultations with experts suggests that many buyers are seeking to better understand their legal options.
Conclusion
Dubai's real estate market maintains stability despite the regional situation. While force majeure is a recognized concept under UAE law, its conditions for application are extremely stringent. Under current circumstances, unilaterally canceling a real estate contract due to the regional situation is legally challenging. When considering a real estate purchase, it is crucial to fully understand the contract terms and seek expert advice if necessary.
Reference Article
- Khaleej Times (Published April 21, 2026): Dubai's real estate stability: Can buyers cancel contracts over regional conflict?