Civil Law and UAE: Pandemic-Era Civil Liability Lessons and Reforms

1. Introduction

The COVID-19 pandemic created an unprecedented test for UAE civil law. Businesses were closed, international borders restricted, employees were unable to travel, supply chains were interrupted, construction projects were delayed, commercial premises became inaccessible, and insurance claims increased.

The central civil-law questions included:

When does a pandemic constitute force majeure?

Does government lockdown automatically excuse contractual non-performance?

Can a party suspend payment obligations?

Who bears pandemic-related losses?

What happens where performance is merely more expensive rather than impossible?

Can courts modify or terminate contracts because circumstances have fundamentally changed?

How should employment and commercial obligations be treated?

What reforms are necessary for future pandemics?

The UAE experience showed an important distinction:

The existence of a pandemic does not automatically discharge every contractual obligation. The legal consequences depend on the contract, the applicable law, the nature of the obligation, the government measures involved, causation, foreseeability, mitigation and the actual effect of the pandemic on performance.

The pandemic therefore accelerated the UAE's movement toward clearer force-majeure clauses, hardship provisions, electronic justice, insurance drafting, business-continuity planning and digital dispute resolution.

2. UAE Legal Framework

The pandemic affected disputes governed by several different legal regimes.

A. Mainland UAE civil law

Historically, the 1985 Civil Transactions Law contained important rules concerning:

contractual performance;

force majeure;

unforeseen circumstances;

hardship;

compensation;

causation;

direct and consequential damage.

For current mainland disputes, an important legislative development must be remembered: Federal Decree-Law No. 25 of 2025 promulgating the new Civil Transactions Law entered into force on 1 June 2026 and repealed the former Federal Law No. 5 of 1985. Therefore, post-1 June 2026 disputes must be analysed under the new Civil Transactions Law where applicable. (DIFC Courts)

B. DIFC

DIFC disputes are governed by DIFC legislation, including its Contract Law and related laws.

Article 82 of the DIFC Contract Law contains a particularly important force-majeure rule:

non-performance caused by an impediment beyond the party's control may be excused;

the impediment must satisfy the statutory requirements;

temporary impediments provide relief only for a reasonable period;

notice must be given;

importantly, a mere obligation to pay money is excluded from the force-majeure excuse under Article 82. (DIFC Courts)

This distinction became particularly important during and after COVID-19.

3. Pandemic as Force Majeure

A pandemic can potentially qualify as force majeure where it prevents or legally restricts performance.

But there are two separate questions:

Question 1

Was COVID-19 or the related governmental restriction a force-majeure event?

Question 2

Did that event actually prevent the particular contractual performance?

The second question is crucial.

For example:

Pandemic → government closes restaurant → restaurant cannot operate → performance of event contract becomes impossible

is stronger than:

Pandemic → business revenue falls → party cannot afford to pay debt

The first involves a direct impediment to performance.

The second may merely involve financial hardship.

4. Pandemic Does Not Automatically Excuse Performance

One of the most important lessons from UAE pandemic litigation is:

COVID-19 is an event; legal excuse depends upon its effect on the particular obligation.

A party normally needs to establish:

the relevant pandemic event;

the relevant government restriction or consequence;

contractual/statutory force-majeure provisions;

inability or substantial impediment to performance;

causal connection;

compliance with notice requirements;

mitigation.

Simply saying:

“COVID-19 caused financial difficulty”

is generally not equivalent to proving force majeure.

5. Case Law 1: Lerdan Rental LLC v Linana Engineering LLC [2020] DIFC SCT 330

This is an important direct COVID-era UAE case.

The defendant had leased equipment for a project. The project was halted during the COVID-19 pandemic and the defendant argued that UAE lockdown measures prevented it from using the equipment.

The defendant argued that the pandemic constituted force majeure and should relieve it from its contractual payment obligations.

The DIFC Small Claims Tribunal examined the contract and the force-majeure argument rather than treating COVID-19 itself as an automatic discharge of contractual obligations. (DIFC Courts)

Lesson

The pandemic's existence did not by itself determine the outcome.

The court had to consider:

the actual contractual terms;

the nature of the obligation;

the effect of the pandemic;

whether the contractual requirements for force majeure were satisfied.

Principle

A pandemic must be connected to the specific contractual failure before force-majeure relief can arise.

6. Case Law 2: Minni v Mithal [2021] DIFC SCT 354

This case concerned a contract containing a detailed force-majeure clause.

The clause expressly referred to:

act of God;

government regulations;

disaster;

pandemic;

curtailment of transportation facilities;

circumstances making performance illegal or impossible.

The wording was particularly significant because the parties had specifically contemplated a pandemic-related event. (DIFC Courts)

Lesson

Contract drafting matters enormously.

A contract that expressly addresses:

pandemic + government restrictions + transportation disruption

provides substantially clearer guidance than a contract containing only a generic reference to “force majeure.”

Principle

Pandemic risk should be allocated expressly rather than left entirely to judicial interpretation.

7. Case Law 3: LALS Holdings Ltd v Emirates Insurance Company & SIACI [2024] DIFC CA 002

This is one of the most important UAE pandemic-era cases.

LALS claimed that from approximately 12 March 2020 it suffered business-interruption losses arising from the COVID-19 pandemic.

The claim was made under business-interruption insurance policies.

LALS also alleged that the insurance broker had breached contractual and/or tortious duties by failing to obtain appropriate insurance or properly advise on the suitability of the insurance policies. (DIFC Courts)

The case therefore raised several important questions:

Was pandemic loss covered?

How should insurance wording be interpreted?

What did the policy actually insure?

What obligations did the broker owe?

What is the relationship between contractual and tortious liability?

Lesson

Pandemic liability frequently depends upon risk allocation before the pandemic occurs.

If a business wants pandemic interruption protection, the policy wording must clearly address:

infectious diseases;

government closure;

access restrictions;

supply-chain interruption;

loss of premises use;

causation;

exclusions.

Principle

Insurance disputes are fundamentally disputes about contractual allocation of pandemic risk.

8. Case Law 4: Lorelei v Leia Hospitality, Dubai Design District – Leah Restaurant Ltd [2020] DIFC SCT 134

This case concerned employment during the COVID-19 crisis.

The employer terminated the employee because of the financial difficulties caused by the pandemic and argued that the business could not afford the contractual payment.

The Court nevertheless found that the contractual entitlement to notice pay remained due. The employer's financial difficulty caused by COVID-19 did not automatically extinguish the agreed contractual entitlement. (DIFC Courts)

Lesson

Economic hardship is not necessarily equivalent to legal impossibility.

A business may suffer:

loss of revenue

without becoming legally entitled to disregard:

an existing contractual obligation.

Principle

Financial consequences of a pandemic do not automatically cancel contractual rights.

9. Case Law 5: Leighton v Laneyl House Hospitality/Luden Restaurant [2020] DIFC SCT 136

The employee was terminated during the COVID-19 crisis.

The employer argued that the pandemic had severely damaged its financial position and that it therefore could not make the contractual notice payment.

The Tribunal held that the employee remained entitled to the contractual payment, along with other employment entitlements. (DIFC Courts)

Lesson

The pandemic did not itself operate as a general contractual exemption.

The case demonstrates the difference between:

business hardship

and

legal discharge of an obligation.

Principle

Pandemic-related financial difficulty does not automatically extinguish accrued contractual employment rights.

10. Case Law 6: Lakshit v Lakhi Restaurant, Lounge & Bar LLC [2021] DIFC SCT 035

This case concerned employees affected by temporary restaurant closure during the COVID-19 pandemic.

The restaurant had closed in accordance with government guidance and employees were placed on unpaid leave.

The dispute required consideration of contractual employment rights against the extraordinary circumstances created by COVID-19. (DIFC Courts)

Lesson

Government-mandated closure can be highly relevant to contractual obligations, but it does not necessarily mean that every contractual right disappears.

The legal analysis must distinguish between:

lawful closure;

temporary suspension;

unpaid leave;

termination;

accrued entitlements;

statutory employment protections.

11. Case Law 7: DIFC Investments LLC v Mohammed Akbar Mohammed Zia [2017] DIFC CFI 001

Although this case predates COVID-19, it is an important DIFC authority for understanding force majeure.

The Court considered Article 82 of the DIFC Contract Law and emphasised that the statutory provision does not excuse a mere obligation to pay. It also considered notice and termination consequences. (DIFC Courts)

Importance during COVID-19

This pre-pandemic case became particularly useful for interpreting the scope of force majeure during the pandemic.

Principle

Under DIFC law, force majeure does not automatically excuse monetary payment obligations.

This is one of the most important lessons for pandemic-era commercial disputes.

12. Case Law 8: Eshraq Investments PJSC v Shehab M. Gargash & Others [2021] DIFC CFI 077

This case involved a detailed contractual force-majeure provision.

The clause covered circumstances beyond reasonable control, including:

natural disasters;

government acts;

government orders;

utility failures;

construction accidents;

contractor failures;

other circumstances preventing performance.

The contract also required the affected party to notify the other party and take reasonable measures to minimise the effects of the event. (DIFC Courts)

Lesson

A carefully drafted force-majeure clause can itself establish:

qualifying events;

causation requirements;

notification;

mitigation;

consequences.

Principle

Pandemic-era litigation demonstrated the importance of detailed contractual force-majeure machinery rather than merely inserting the words “force majeure.”

13. Pandemic and Monetary Obligations

This was one of the most controversial issues.

Suppose:

Tenant owes AED 500,000 rent.

COVID-19 causes:

restaurant closure → no customers → loss of revenue.

Does that automatically excuse rent?

Not necessarily.

Under DIFC Article 82, the statutory force-majeure defence expressly excludes a mere obligation to pay. The Court's later interpretation confirms the importance of maintaining this distinction. (DIFC Courts)

The recent MAG Development Services Ltd v The Collection Club Restaurant Ltd [2026] DIFC CFI 092/2024 and subsequent appeal provide a useful confirmation: Article 82 distinguishes non-monetary performance from a mere obligation to pay, and the Court rejected the argument that financial hardship itself converted rent into an excusable obligation. (DIFC Courts)

Pandemic lesson

Loss of income and inability to pay are not necessarily the same thing as impossibility of performance.

14. Impossibility vs Hardship

This distinction is central.

Impossibility

Performance cannot legally or physically occur.

Example:

Government prohibits an event from taking place.

The event cannot legally be performed.

Hardship

Performance remains possible but becomes much more difficult or expensive.

Example:

Raw material prices increase by 70%.

The seller can still perform, but performance is commercially painful.

Pandemic example

A restaurant is prohibited from opening:

Potential impossibility/restriction.

A restaurant is allowed to operate but loses 80% of customers:

Potential economic hardship.

The legal consequences can be very different.

15. Unforeseen Circumstances

Pandemic disputes also demonstrated the importance of hardship/unforeseen-circumstance doctrines.

The conceptual difference is:

Force majeure

Performance is prevented or legally/physically impeded.

Hardship

Performance remains possible but circumstances have fundamentally altered the contractual equilibrium.

The court may therefore have different powers depending upon whether the case involves:

impossibility;

excessive hardship;

temporary interruption;

permanent impossibility.

16. Causation: The Central Pandemic Issue

A party must connect the pandemic to the particular loss.

Consider:

COVID-19 → government closure → no business → loss

This causal chain is relatively direct.

But:

COVID-19 → general economic downturn → poor management → bankruptcy

is more complicated.

The court may ask:

Was the pandemic the actual cause?

Was the government restriction the immediate cause?

Did another event intervene?

Could the claimant have mitigated the loss?

Would the loss have occurred anyway?

Thus:

Pandemic + loss ≠ automatic liability.

17. Mitigation of Pandemic Losses

A party seeking relief generally should consider reasonable steps to reduce loss.

Examples:

alternative suppliers;

remote performance;

delivery arrangements;

online sales;

temporary relocation;

revised schedules;

substitute employees;

insurance claims;

government support;

renegotiation.

A party cannot necessarily remain passive and then attribute all resulting loss to COVID-19.

18. Notice Requirements

Pandemic-era disputes demonstrated the importance of timely notice.

A force-majeure clause may require:

“The affected party shall notify the other party within seven days.”

Failure to comply may affect entitlement to relief.

Article 82(3) of the DIFC Contract Law specifically addresses notification and provides for damages resulting from late notification. (DIFC Courts)

Reform lesson

Contracts should expressly state:

method of notice;

time period;

required information;

evidence;

consequences of delay.

19. Government Action as a Separate Risk

The pandemic involved not merely a disease but extraordinary governmental measures:

lockdowns;

travel restrictions;

quarantine;

business closures;

capacity restrictions;

border closures;

visa restrictions;

transportation restrictions.

Therefore, modern force-majeure clauses should distinguish:

pandemic itself

from

governmental measures resulting from the pandemic.

This distinction can determine causation.

20. Employment Liability Lessons

The COVID-19 period demonstrated that employers could face disputes involving:

termination;

notice pay;

unpaid wages;

leave;

remote work;

travel restrictions;

benefits;

accommodation;

insurance.

The DIFC cases such as Lorelei, Leighton, and Lakshit demonstrate that employers could not simply assume that COVID-19 eliminated existing contractual or statutory employment obligations. (DIFC Courts)

Reform lesson

Employment contracts should address:

remote work;

temporary closure;

emergency leave;

salary adjustment mechanisms;

travel restrictions;

government orders;

business continuity.

These provisions must remain consistent with mandatory employment legislation.

21. Insurance Liability Lessons

The LALS litigation demonstrates one of the most important pandemic lessons:

Pandemic risk should be expressly insured or expressly excluded.

Businesses should examine whether insurance covers:

infectious disease;

government closure;

loss of access;

supply-chain disruption;

business interruption;

contingent business interruption;

event cancellation.

Ambiguous drafting increases litigation risk.

22. Supply-Chain Liability

The pandemic demonstrated that a supplier may be affected by several interconnected events:

Factory closure → shipping delay → port restriction → customs delay → buyer's production failure.

The legal issue becomes:

Which event legally caused the contractual breach?

A modern contract should therefore identify:

supplier failure;

transport failure;

border closure;

governmental restrictions;

material shortages;

alternative sourcing;

allocation of increased costs.

23. Construction and Infrastructure

Construction disputes during the pandemic frequently involved:

worker shortages;

material shortages;

site closure;

travel restrictions;

delayed approvals;

supply-chain interruption;

subcontractor failure.

A force-majeure clause should distinguish:

delay caused by government closure

from:

delay caused by contractor inefficiency.

The latter may not qualify merely because COVID-19 existed in the background.

24. Force Majeure and Contract Drafting Reform

One of the clearest reforms is moving from generic language such as:

“Force majeure means events beyond the parties' control.”

toward detailed drafting.

A modern clause could identify:

Event

epidemic;

pandemic;

public-health emergency.

Government action

quarantine;

lockdown;

closure;

border restriction;

travel restriction.

Consequence

prevention;

delay;

suspension;

increased cost.

Procedure

notification;

evidence;

mitigation.

Duration

temporary suspension;

renegotiation;

termination after a specified period.

25. Digital Justice as a Pandemic Reform

COVID-19 accelerated UAE adoption of:

electronic filing;

remote hearings;

electronic evidence;

digital signatures;

virtual mediation;

online case management.

The pandemic demonstrated that civil justice could not depend entirely on physical court attendance.

The later UAE framework for mediation and conciliation further institutionalised online processes, including remote proceedings and electronic settlement mechanisms.

Reform lesson

Business continuity must include judicial continuity.

26. Electronic Evidence

Pandemic disputes increasingly depended on:

emails;

WhatsApp communications;

electronic contracts;

electronic invoices;

online meetings;

digital signatures;

delivery records;

government notifications.

The UAE's electronic transactions and evidence frameworks therefore became increasingly important.

A modern civil-liability system must preserve:

authenticity;

integrity;

confidentiality;

admissibility;

chain of custody.

27. Alternative Dispute Resolution

The pandemic also demonstrated the importance of:

mediation;

negotiation;

arbitration;

online dispute resolution.

Many businesses could not afford lengthy litigation during a period of severe cash-flow pressure.

Therefore, modern contracts increasingly benefit from:

Negotiation → Mediation → Arbitration/Litigation

as a structured escalation process.

28. Pandemic and Commercial Hardship

A major lesson is that contracts should distinguish among:

Category 1 — Impossible performance

No realistic means of performance.

Category 2 — Temporary impediment

Performance becomes impossible for a limited period.

Category 3 — Excessive hardship

Performance remains possible but becomes extraordinarily burdensome.

Category 4 — Financial difficulty

Party simply lacks funds.

These categories should not automatically produce the same legal consequences.

29. Pandemic and Rent Disputes

Commercial rent became one of the most difficult pandemic issues.

Consider:

Restaurant closed by government order.

The tenant may argue:

force majeure;

frustration/hardship;

rent adjustment;

temporary suspension;

impossibility of using premises.

The landlord may argue:

rent is a monetary obligation;

the lease remains valid;

the tenant retains possession;

the pandemic does not automatically terminate the lease.

The precise result depends on the applicable law, lease wording, government measures and facts.

The DIFC treatment of monetary obligations demonstrates why payment obligations require particularly careful analysis. (DIFC Courts)

30. Pandemic and Professional Liability

Professionals also faced new risks.

Examples:

auditors;

accountants;

lawyers;

financial advisers;

insurance brokers;

architects;

engineers.

COVID-19 changed assumptions about:

business continuity;

financial projections;

insurance;

project completion;

compliance.

The LALS litigation demonstrates how pandemic losses can produce both contractual and tortious claims against professional intermediaries, particularly insurance brokers. (DIFC Courts)

31. Pandemic and Tort Liability

COVID-19 also raised potential tort questions involving:

negligent health and safety measures;

unsafe premises;

failure to protect workers;

misleading health representations;

negligent professional advice;

supply of defective protective products.

The basic civil-liability analysis remains:

Duty → breach/fault → damage → causation.

The pandemic does not automatically establish fault.

32. Pandemic and Force-Majeure Notice

A modern pandemic clause should provide:

“The affected party must notify the other party within X days, identify the event, explain its impact, estimate duration, provide supporting evidence and take reasonable mitigation measures.”

This would reduce disputes concerning:

whether notice was valid;

when the party became aware;

whether the pandemic actually prevented performance;

whether the party waited too long.

33. Pandemic and Evidence

Courts may need to determine:

when restrictions began;

when they ended;

whether a particular business was legally prohibited from operating;

whether alternative performance was available;

whether transportation was actually unavailable;

whether the claimant had alternative suppliers;

whether the claimed loss resulted from COVID-19.

Therefore, businesses should retain:

government orders;

correspondence;

supplier notices;

transportation records;

financial records;

insurance correspondence;

mitigation evidence.

34. Pandemic and Causation Chain

A useful examination diagram is:

Pandemic

↓

Government/market restriction

↓

Actual impediment

↓

Contractual non-performance

↓

Damage

↓

Causation

↓

Liability/remedy

If one link is missing, the claim may fail or be reduced.

35. Lessons from the UAE Cases

The cases collectively reveal several themes.

Lesson 1

COVID-19 did not automatically terminate contracts.

Lesson 2

Financial hardship is different from impossibility.

Lesson 3

The wording of the force-majeure clause matters.

Lesson 4

Monetary obligations require special attention.

Lesson 5

Government restrictions can be more legally significant than the disease itself.

Lesson 6

Notice and mitigation are important.

Lesson 7

Insurance wording is critical.

Lesson 8

Employment entitlements did not automatically disappear because of pandemic-related financial difficulty.

Lesson 9

Digital dispute resolution became an essential component of civil justice.

Lesson 10

Future contracts should allocate pandemic risks expressly.

36. Pandemic Case-Law Revision Table

37. Major Reforms Suggested by Pandemic Experience

A. Express pandemic clauses

Contracts should specifically address pandemics and public-health emergencies.

B. Government-action clauses

Contracts should separately address government restrictions.

C. Hardship mechanisms

Long-term contracts should include renegotiation mechanisms where circumstances fundamentally change.

D. Digital performance

Contracts should permit:

electronic signatures;

electronic notices;

remote meetings;

digital delivery;

electronic evidence.

E. Business continuity

Commercial parties should establish alternative methods of performance.

F. Insurance review

Businesses should periodically review pandemic exclusions and coverage.

G. Supply-chain clauses

Contracts should address alternative suppliers and transportation disruptions.

H. Clear termination mechanisms

Long-term contracts should explain when prolonged disruption permits termination.

I. ADR

Contracts should include mediation and arbitration mechanisms suitable for remote operation.

J. Evidence preservation

Businesses should preserve digital evidence demonstrating the pandemic's actual effect.

38. Model Pandemic Liability Framework

A modern UAE contract can use the following conceptual structure:

Pandemic event

↓

Government restriction / direct effect

↓

Performance affected

↓

Notice

↓

Mitigation

↓

Temporary suspension / renegotiation

↓

Continued impossibility

↓

Termination if contract permits

This framework is more precise than treating every pandemic-related problem as automatic force majeure.

39. Important Distinction: Pandemic Event vs Pandemic Consequence

This is an excellent examination point.

Pandemic event

COVID-19 itself.

Pandemic consequence

lockdown;

travel ban;

factory closure;

supply shortage;

employee absence;

government prohibition.

Financial consequence

loss of revenue;

inability to pay;

reduced demand.

These are legally different.

For example:

Government prohibition on operating may directly prevent performance.

Whereas:

Reduced profits may merely make performance economically difficult.

40. Pandemic and Liability Allocation

The central allocation can be represented as:

41. Relationship Between Pandemic and Civil Liability Reform

The pandemic showed that traditional civil-law concepts remain useful but require better contractual and procedural adaptation.

Traditional concepts such as:

force majeure;

hardship;

causation;

fault;

mitigation;

damages;

termination

were not rendered obsolete.

Instead, COVID-19 demonstrated that these concepts must be applied to:

global supply chains;

digital commerce;

remote employment;

electronic evidence;

insurance products;

cross-border transactions.

42. The New UAE Civil Transactions Law

For current UAE study, the transition to the 2025 Civil Transactions Law is particularly important.

The new law came into force on 1 June 2026, replacing the 1985 Civil Transactions Law. (DIFC Courts)

Therefore, pandemic-era cases decided before 1 June 2026 may be historically important, but their statutory foundations must be checked carefully when applying them to current disputes.

Exam warning

Do not write:

“Article X of the 1985 Civil Transactions Law is the current UAE rule.”

without considering the 2025 legislative replacement.

Instead state:

“The pandemic-era jurisprudence developed under the former Civil Transactions Law; current mainland UAE disputes must be assessed under the Civil Transactions Law effective from 1 June 2026, subject to transitional rules.”

43. Overall Legal Principles

The UAE pandemic experience supports the following propositions:

1.

Force majeure is fact-sensitive.

2.

Pandemic does not automatically excuse every breach.

3.

Impossibility and financial hardship are different.

4.

Payment obligations may receive special treatment.

5.

Contractual wording remains central.

6.

Notice requirements matter.

7.

Mitigation matters.

8.

Insurance wording can determine loss allocation.

9.

Employment rights cannot simply be ignored because of economic hardship.

10.

Digital courts and ADR are important components of civil-law resilience.

44. Exam-Oriented Answer Formula

For a pandemic civil-liability problem, write:

Identify the contract → identify the pandemic event → identify the actual impediment → examine force majeure/hardship → examine contractual wording → check notice → examine causation → examine mitigation → determine liability → determine remedy.

This provides a systematic framework for analysing almost any UAE pandemic-related civil dispute.

45. Conclusion

The UAE's pandemic-era civil-liability experience demonstrated that extraordinary circumstances do not eliminate ordinary legal analysis.

COVID-19 created extraordinary disruption, but courts continued to examine:

the exact contractual language;

the nature of the obligation;

whether performance was impossible or merely more difficult;

whether a government restriction actually prevented performance;

whether notice requirements were satisfied;

whether the claimant mitigated its loss;

whether insurance covered the relevant risk;

and whether the claimed loss was caused by the pandemic.

The cases of Lerdan Rental, Minni v Mithal, LALS Holdings, Lorelei, Leighton, Lakshit, DIFC Investments and Eshraq Investments provide important UAE/DIFC lessons. They demonstrate that pandemic risk is best managed through precise contractual allocation rather than assuming that COVID-19 itself automatically produces legal immunity. (DIFC Courts)

Final Revision Formula

Pandemic ≠ Automatic Force Majeure

Force Majeure = Event + Impediment + Causation + Contract/Applicable Law

Hardship ≠ Impossibility

Financial Loss ≠ Automatic Discharge

Notice + Mitigation = Critical

Insurance Wording = Risk Allocation

Digital Justice = Pandemic Resilience

Current Mainland Framework = 2025 Civil Transactions Law from 1 June 2026. (DIFC Courts)