Oil and gas implications in the Middle East
The ongoing regional conflict in the Gulf has brought force majeure back into sharp focus for oil and gas companies operating in the Middle East. The legal position, however, is more nuanced than many counterparties assume. Conflict, even armed conflict, will not automatically excuse performance in many cases. Much depends on the governing law, the contract wording, and whether the relevant event has made performance truly impossible as opposed to merely more difficult or expensive.
Why this matters for the energy sector
That distinction is especially important in an oil and gas context. Projects in the sector are typically built around long-term, interdependent arrangements. A disruption affecting one part of the chain can quickly trigger notices and claims across several contracts at once. Countries that are likely to be commercially implicated include the UAE, Saudi Arabia, Qatar, Oman, Kuwait, Bahrain, Iraq, Egypt, Jordan, Israel, Lebanon and Yemen.
The UAE position: force majeure is not automatic
Under UAE law, force majeure is not purely a contractual concept, it is also addressed by statute. Article 273 of Federal Law No. (5) of 1985 Concerning the Issuance of the Civil Transactions Law of the United Arab Emirates (the UAE Civil Code) provides as follows:
“(1) 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.
(2) In the case of partial impossibility, that part of the contract which is impossible shall be extinguished, and the same shall apply to temporary impossibility in continuing contracts, and in those two cases it shall be permissible for the obligee to cancel the contract provided that the obligor is so aware.”
In broad terms, force majeure is established only where an event that was unforeseeable at the time of contracting and beyond the parties’ control, renders performance objectively impossible. It is not enough that performance has become inconvenient, delayed or more expensive; it must be impossible. This threshold is high. Where performance has not become impossible but exceptionally burdensome, the related UAE law doctrine of hardship may instead be engaged (for discussion, see Hardship is different from force majeure section below).
Although UAE case law does not constitute binding precedent in the common law sense, decisions addressing COVID-19 and similar geopolitical events indicate that a force majeure claim will only succeed if the following requirements are met:
- the event must arise from an external cause for which the obligor is not responsible;
- it must have been reasonably unforeseeable when the contract was made;
- it must have been unavoidable in the sense that the obligor could not have prevented it by reasonable steps; and
- the event must be the direct cause of the non-performance and must make performance impossible; it is not enough that the event simply contributed to the breach, or that it made performance more difficult or expensive while still leaving performance possible, in those circumstances, Article 273 is generally not engaged.
In the oil and gas context, that means regional hostilities will not amount to force majeure merely because they create operational pressure or commercial disruption. The key issue is whether the conflict has directly caused the specific contractual obligation to become impossible to perform. A physical inability to access a facility, the closure of essential infrastructure, government restrictions that legally prevent performance, or damage to critical transport routes may satisfy that test. Increased freight costs, rerouting, insurance premium increases, market volatility or supply chain strain, without more, usually will not.
If Article 273 applies, the consequences can be significant. Where performance has become impossible, the obligation may be extinguished and the contract cancelled to that extent. In that respect, force majeure under UAE law can resemble the English law doctrine of frustration more closely than the purely contractual force majeure clauses familiar in common law drafting (for discussion, see How English law differs section below).
Importantly, however, although Article 273 refers to a contract or a provision thereof being “automatically cancelled” where performance has become impossible, this should not be understood as occurring in a procedural vacuum. In practice, where one party seeks to bring the contract to an end and the other does not agree, implementation will generally require a request by the relevant party and a court order, unless the contract itself provides for automatic termination.
The statutory position should always be read alongside the parties’ contractual force majeure regime, if any, incorporated into the written contract. Parties are generally free to agree that force majeure may be invoked not only where performance is prevented or impossible, but also where it is hindered or delayed. In that case, the contractual threshold may be materially broader than the baseline position under UAE law, because the parties may define for themselves the circumstances in which contractual relief becomes available. A party is not prevented from seeking the input of the court where it wishes to rely on force majeure relief available under UAE law.
Contracts will also often prescribe specific procedural steps for relying on force majeure, including strict notice requirements, time limits, information obligations and ongoing mitigation duties. Failure to comply with those contractual requirements may itself bar or prejudice a force majeure claim, even though UAE statutory force majeure provisions do not themselves expressly impose an equivalent notice regime. This reflects the general approach of the UAE courts, which tend, so far as possible, to give effect to what the parties have agreed in the contract, consistent with the principle of freedom of contract as recognised under UAE law.
We note that Federal Decree Law No. 25 of 2025 Issuing the Civil Transactions Law (the New UAE Civil Code) will come into force on 1 June 2026. The New UAE Civil Code, however, contains no substantive changes to the provisions relating to force majeure and/or hardship.
Temporary impossibility does not necessarily end the contract
That said, it does not follow that every force majeure event results in automatic and permanent termination of the underlying contract. This is particularly important in the oil and gas sector, where parties often seek to preserve long-term arrangements despite temporary interruption.
Article 273 distinguishes between three types of impossibility: (i) total, (ii) partial, and (iii) temporary.
If the impediment is temporary, it seems that UAE law will not generally force immediate termination. This is because Article 273(2) gives the obligee a right to cancel in cases of partial or temporary impossibility, rather than always mandating immediate final termination of the underlying contract or the affected provisions of it. In practice, termination typically requires: (i) agreement between the parties, or (ii) a court order, if only one party wishes to effect a termination (unless the contract expressly provides for automatic termination rights). Where both parties wish to continue the contract, that commercial intention is generally consistent with the statutory framework, subject to the contractual terms and the facts.
Hardship is different from force majeure
The distinction between force majeure and hardship is equally important. Article 249 of the UAE Civil Code addresses exceptional circumstances of a general nature which could not have been foreseen and which render performance oppressive, though not impossible, such that the obligor is threatened with grave loss. In that case, the court may reduce the oppressive obligation to a reasonable level if justice so requires.
For energy companies, seeking to rely on this may be the more commercially realistic approach in many conflict-related cases. If a gas supply obligation can still be performed, but only at dramatically increased cost because of, for instance, transport disruption, sanctions screening delays, or severe regional instability, the issue may be hardship rather than force majeure. The remedy then is in principle adjustment of the underlying obligation by the court under Article 249, not discharge.
The UAE and English law positions are materially different. Under English law, force majeure is not a free-standing doctrine: it operates only if the parties have included a force majeure clause in the contract, and the scope and effect of the clause are determined by ordinary principles of contractual interpretation. Where the contract makes express provision for the supervening event, that provision will generally displace frustration.
Under English law, if there is no such clause, the only possible route is frustration. This is a doctrine applied narrowly by the courts. The modern test is whether the supervening event has made performance radically or fundamentally different from that originally undertaken, not merely more onerous or expensive. That approach is reflected in the leading authorities of Davis Contractors Ltd v Fareham UDC [1956] AC 696 and Tsakiroglou & Co Ltd v Noblee Thorl GmbH [1962] AC 93, which show that increased cost or difficulty is normally insufficient. Similarly, the Court of Appeal affirmed in Edwinton Commercial Corp v Tsavliris Russ (The Sea Angel) [2007] EWCA Civ 547 that frustration is not lightly invoked.
Where frustration is established, its effect is automatic: the contract is discharged forthwith, releasing the parties from further performance without the need for election. But the doctrine offers little flexibility short of that. The all-or-nothing nature of frustration is one reason why the doctrine offers far less remedial flexibility than an express force majeure clause.
In that respect, UAE Civil Code force majeure sits closer to English frustration than to purely contractual force majeure, because it may operate by force of law and can result in automatic extinguishment where performance has become impossible. However, the UAE regime remains structurally different: it forms part of a broader and more flexible statutory framework that may also permit temporary suspension or judicial adjustment, whereas English frustration does not offer those intermediate solutions and, indeed, will typically be displaced where a contractual force majeure clause exists.
A mixed contractual landscape
The contrast matters for clients whose contractual suite mixes governing laws. An LNG sale and purchase agreement may be governed by English law, while a processing agreement, transportation arrangement or local services contract may be subject to UAE law or another Gulf state civil law system. The same regional event may therefore produce different legal consequences depending on which agreement is in issue. Businesses should be careful not to assume that a force majeure notice valid under one contract will translate neatly across the wider project structure.
Practical takeaways for clients
For clients operating in the Middle East energy sector, the practical message is straightforward: before invoking force majeure, parties should identify the governing law, analyse the specific obligation said to be affected, and assess whether performance has truly become impossible, or whether it has been hindered, delayed or materially impeded. Parties should also distinguish between permanent and temporary impediments, and between impossibility and severe onerousness. In many cases, preserving the contractual relationship through suspension, mitigation and negotiated adjustment may be both legally more sound and commercially preferable to asserting termination rights too quickly.
Equal care should be taken when drafting force majeure provisions in future contracts. Those provisions should be sufficiently detailed, balanced and commercially workable, with express thought given to whether they should be triggered only where performance is “prevented” or also where it is “hindered” or “delayed”.
Provisions should also include a clear and detailed mitigation framework, requiring the affected party to use reasonable endeavours to avoid, overcome and minimise the effects of the force majeure event. This may include, where appropriate, obligations to identify and implement alternative sources of supply, alternative transport or shipping routes, substitute goods, replacement personnel, temporary workarounds, and other practical continuity measures; to allocate available resources in a fair and commercially reasonable manner; to comply with any agreed business continuity or contingency plan; and to keep the counterparty informed through prompt notice, regular updates and supporting evidence of the disruption and the steps being taken. The provision should also address the consequences of any failure to mitigate, and may usefully require the parties to consult in good faith on reasonable measures to reduce delay, maintain partial performance and preserve the commercial relationship. Including this level of mitigation detail helps ensure that force majeure operates as a practical risk-management mechanism rather than a broad excuse for non-performance.
Expanding the trigger in this way may, where commercially appropriate, lower the threshold for contractual relief and move the analysis away from the stricter UAE law concept of impossibility, thereby creating more scope for suspension and other proportionate responses short of termination. This is particularly beneficial in the energy sector, where supply chain interruptions, transport constraints, regulatory measures and other operational disruptions may hinder timely performance without rendering performance strictly impossible, and where preserving continuity of supply and long-term commercial relationships is often critical.
Conclusion
The ongoing conflict creates genuine legal and operational risks for the oil and gas sector. But under UAE law, as under many civil law systems in the Gulf region, the existence of conflict is only the beginning of the analysis. This does not in itself constitute force majeure, per se. The real question is not whether there is war in the region, but whether the war has made the relevant contractual obligation objectively impossible to perform. That distinction is likely to shape outcomes for clients across the Middle East in the months ahead.
