Impossibility of performance under the laws of the UAE and the DIFC: Services Contracts

Authored by Nikolai Budnetski, Counsel | 12 March 2026

Q: Can I escape from any liability for non-performance?

A: DIFC law

Yes, if an impediment beyond the party’s control could not reasonably have been foreseen, avoided, or overcome. The contract will be terminated in full.

Yes, if the contract expressly describes the events in which you are allowed not to perform.

No, if the above test is not satisfied, or it is a mere obligation to pay money. If the impediment is only temporary, you are excused from liability for this limited time period only.

UAE law

Yes, if you can demonstrate that the relevant event is external, there is a direct causal link to the failure to perform a specific obligation, and the impossibility of performance is objective. The contract is terminated in full.

No, if performance remains possible but becomes significantly more onerous (for example, due to logistics disruption or spiking insurance costs). This amounts to a so-called “hardship” case, allowing the judge to adjust / modify the parties’ obligations, rather than leading to termination.

 

Q: Can my counterparty withdraw from the contract?

A: DIFC law

Each case should be analyzed separately. If you accept performance from the other party, you risk affirming the contract as effective (rather than terminated).

UAE law

Depends on the circumstances. Counterparty’s silence / non-performance in response to your force majeure declaration is a sign of the contract termination.

Q: How can I declare force majeure?

A: DIFC law

Send a signed and sealed letter describing the impediment and its effect on your ability to perform the contract. Comply with the notices clause in the contract.

UAE law

Our recommendations are the same; there is a requirement to act in good faith.

NB: As for lasting obligations, consider the application of the new UAE Civil Code (Federal Decree-Law No. 25 of 2025) that has been published with an effective date of 1 June 2026 to repeal Federal Law No. 5 of 1985.