Contracts of supply, between buyers and sellers or vendors and clients, are likely affected by the coronavirus, and contracting parties may be evaluating the potential applications of force majeure and its relief on their respective agreements.
How is the occurrence of force majeure determined?
The UAE courts will ultimately determine what constitutes force majeure, its impact on the ability of the contracting parties to perform their contractual obligations, and the determination of fair relief to any aggrieved parties. Therefore, parties in supply contracts must be able to establish how the coronavirus has rendered it impossible for them to either fulfil fully or partially their contractual obligations. Allowing any party to a contract to avoid liability shall be the sole discretion of the court as settled in a 2011 case at the Dubai Court of Cassation.
What should I do if I cannot fulfil my obligation under the contract, or where I do not receive the expected goods or services due to the impact of coronavirus (such as borders closing, movement or travel restrictions or event cancellations)?
The first step would be to review your existing contract and establish if there are any provisions for relief in the event of a force majeure. Should you find your contract is silent, the provisions of Article 273 of the UAE Civil Code may apply and the determination of the existence of force majeure, its impact on the parties and the corresponding relief shall be at the sole discretion of the courts.
You can read the rest of the article on the Al Suwaidi & Co. website