SAKURA Law Office | LEGAL UPDATE No.50
Original research reference date: 19 October 2026
Analysis cut-off and final revision: 27 October 2026
SAKURA Law Office | Managing Partner Kenshiro Michishita
The consequences of changing conditions in the Middle East are not confined to physical damage to a company’s local facilities. Equipment destined for a Dubai sales company may be held at another port, personnel may be unable to reach a maintenance site in Bahrain, and yet payments to the Japanese supplier, local rent and bank-guarantee deadlines may continue to fall due. In those circumstances, the commercial decision whether to continue operating and the legal question whether contractual liability is excused proceed under different standards and on different timelines. Information from the International Maritime Organization (IMO) concerning the Middle East and the Strait of Hormuz, government security advisories, and notices from carriers and insurers are important inputs. None, however, automatically determines the outcome under a contract between businesses. [1][18][19]
The legal framework relevant to those decisions has also changed during 2026. The United Arab Emirates’ (UAE) new Civil Transactions Law, promulgated by Federal Decree by Law No. 25 of 2025, took effect on 1 June. A practical guide published by Dubai’s Department of Economy and Tourism (DET), in partnership with Dubai Chambers and Baker McKenzie, addresses force majeure, hardship, notice and mitigation while distinguishing the new law from its predecessor. In April, the Dubai International Financial Centre (DIFC) Court of Appeal examined force majeure and payment obligations in a lease dispute connected with the 2024 floods. The International Chamber of Commerce (ICC) Banking Commission also published guidance in April on trade finance rules in the context of the Middle East conflict. Businesses therefore need to consider changes in contract law, insurance terms and banking practice alongside security updates. [2][3][5][15]
With an analytical cut-off date of 27 October 2026, this Update examines the initial response to business interruption, contractual variations, maritime transport, insurance, payments, personnel protection and dispute resolution for Japanese companies, executives, General Counsel, financial institutions and overseas businesses with operations or transactions in the UAE, including Dubai, and Bahrain. Rather than repeating the general sanctions and export-control analysis in Legal Update No. 46, it addresses a different problem: even where a transaction may lawfully proceed, what must each party continue to do, which losses must it bear, and which rights should it preserve when performance can no longer take place as planned?
The discussion distinguishes legislation, judicial decisions, administrative commentary, industry model clauses and insurers’ own notices according to their legal status. It does not offer a general assessment of regional safety or predict the availability of shipping routes. Nor does it assume that particular hostilities, airspace restrictions or port closures currently affect every transaction. The corporate-response examples are illustrations for analysing contracts and operations, not findings of fact in particular matters.
Executive Summary
The need to suspend operations for safety reasons is separate from whether the resulting contractual non-performance is excused. Management should prioritise personnel protection while immediately identifying the affected contracts and obligations, the specific impediments, available alternatives and notice deadlines. A notice referring merely to conditions in the Middle East does not, by itself, establish the causal relationship between an impediment to performance and the claimed loss, or satisfy contractual procedural requirements.
Contracts governed by the UAE’s general civil law, DIFC law and Bahraini law involve different approaches to impossibility, excessive burdens, payment obligations and relief. It is particularly important not to confuse the UAE law that entered into force in 2026 with its predecessor, to treat the Bahraini courts’ power to adjust an onerous obligation as a unilateral right to increase prices, or to read the DIFC force majeure provision as excusing every payment. [2][3][4][5]
Maritime carriage and insurance do not form a single contract. Even where a shipowner has a right to avoid a voyage because of war risks, that right does not necessarily excuse the cargo interest under its sale contract. All-risks cargo conditions contain exclusions, including for specified war risks and delay, and adding war risks insurance does not insure every commercial loss. Insurers’ 2026 notices must be examined for the particular products, effective times, excluded waters and reinstatement terms to which they apply. [7][8][11][12][13][14]
For payments, interruption of the bank’s own operations must be distinguished from transport or liquidity difficulties affecting its customer. The ICC’s 2026 guidance explains that the Middle East conflict does not automatically alter trade finance rules. Unless the currency, paying bank, method of documentary presentation, guarantee expiry and treatment of unperformed obligations are addressed through arrangements effective against both the commercial parties and the relevant bank, an operational workaround may not match the legally required payment process. [15][16]
The practical objective extends beyond deciding whether an event constitutes force majeure. Personnel safety, control of additional costs, recovery for completed performance, insurance rights, conditions for restarting operations and remedies in a dispute must be secured together. Negotiated interim arrangements, supported where necessary by protective measures and arbitration, should preserve the company’s ability to continue, scale down or withdraw. That is the central task of legal planning for business continuity.
1. Initial Response: Assess Safety and Contractual Responsibility in Parallel
When conditions change abruptly, the first document a business needs is not a declaration of force majeure across the region, but a record identifying what has happened to its own operations. Restrictions imposed by a port authority, a carrier’s navigation decision, changes in an insurer’s cover, flight cancellations, employee evacuation and a bank’s payment review have different authors, reasons and legal effects. Treating an administrative order as equivalent to a private company’s commercial decision leaves the business exposed when its counterparty questions causation or the absence of alternatives. Preserve the original notice, the affected leg of the journey, the commencement time, any scheduled review and the connection to the company’s orders and performance. Those records provide the foundation for later negotiations. [1]
Consider a transaction involving a Japanese equipment manufacturer, a Dubai sales subsidiary and an installation site in Bahrain. Shipment from Japan may remain possible, but an inability to receive equipment at the final site can create questions about storage charges, the insurance period and commencement of the warranty. Conversely, temporary closure of the sales company’s office does not make every obligation impossible if orders and remittances can still be processed remotely. Separating supply, carriage, installation, maintenance and payment obligations, and avoiding unnecessary suspension of the parts that remain performable, reduces both loss and disputes.
The corporate group must not be treated as a single contracting party. Although Japanese headquarters may lead negotiations, the entity entitled to the price, the entity arranging vessel capacity, the insured and the local employer may be different companies. A headquarters decision to stop a subsidiary’s payments or provide another group company’s guarantee requires examination of authority, approvals and the allocation of responsibility. Crisis decisions must be rapid, but uncertainty over who made which commitment on behalf of which company can survive long after operations resume.
The governing law of each contract should also be identified at this stage. A Dubai address does not itself make DIFC law applicable, and an English-language contract is not necessarily governed by English law. Substantive governing law, court jurisdiction or the arbitration agreement, the seat of arbitration and mandatory local rules require separate analysis. Nor does the generic description ‘free zone’ establish that the zone has the same distinct civil and commercial legal system as the DIFC. Where connected contracts choose different laws, one may permit suspension while another leaves liability for late delivery intact. [2][5][20]
Safety decisions should not await completion of that contractual analysis. Necessary evacuation or movement restrictions should proceed first, with records of the reasons, the possibility of substitute personnel or remote performance, the time for reassessment and communications with counterparties. Whether internal safety standards have been incorporated into contractual suspension rights, or remain internal policy alone, is a separate question. Advisories from Japan’s Ministry of Foreign Affairs and other authorities are important to the safety assessment, but cannot simply be treated as termination triggers for every contract. [17][18][19]
An initial notice should specify the contract and obligation, the impediment that has been established, its effects so far as then known, the steps being taken to limit loss and the proposed timing of the next update. Even where the evidentiary record is incomplete, a required initial notice may need to be served and supported with further material later. A general reservation of rights does not invariably cure a defect in the addressee, form, deadline or required particulars. Force majeure notices, extension-of-time requests, insurance notifications and communications with banks must each meet their own requirements. [2][5][15]
2. Impossibility and Commercial Hardship: Relief under UAE, DIFC and Bahraini Law
A contractual force majeure analysis must examine more than whether war, government action or port closure appears in a list of events. It must establish the required degree of interference with performance and the relief available as a consequence. A clause requiring impossibility calls for different evidence from one extending to impediment or delay. Notice, reasonable efforts to avoid the consequences, partial performance, subcontractor disruption and termination after prolonged interruption must be read as part of the contract’s overall risk allocation. The ICC model clauses likewise distinguish force majeure from hardship, but their existence does not automatically supply terms missing from an individual contract. [6]
For the UAE, commentary citing the former Civil Transactions Law should not be presented without qualification as an explanation of the new law. Federal Decree by Law No. 25 of 2025 introduced the new Civil Transactions Law with effect from 1 June 2026. The DET-hosted guide explains the general non-retrospective approach and the continuing relevance of the former law to earlier contracts absent express provision otherwise. Performance after commencement does not by itself establish that every earlier contract has migrated to the new regime. Counsel must identify the relevant dates, events, contract type and transitional provisions before examining foreseeability, avoidability, objective impossibility, direct causation and any fault of the party seeking relief. [2][3]
Article 236 of the new law, as reproduced in that guide, distinguishes complete impossibility in a bilateral contract, with extinguishment of corresponding obligations and automatic rescission, from partial impossibility. In the latter case, either party may invoke extinguishment of the corresponding part of the reciprocal obligation or apply to the court for rescission. Temporary impossibility in a continuing contract is treated separately, with possible extinguishment of the corresponding reciprocal obligation, a request for amendment, or an application for judicial rescission. The scope and duration of impossibility, and the party entitled to seek each remedy, therefore matter; the former Article 273 should not simply be relabelled. This account is confined to matters established from official legislative information and the guide’s reproduced provision and explanation. [2][3]
Events falling short of impossibility should not, conversely, be assumed to leave no scope for legal adjustment. The DET-hosted guide explains that performance which remains possible may raise hardship questions where exceptional, unforeseeable circumstances create an excessive burden threatening substantial loss, potentially engaging judicial adjustment and other relief. That is not an immediate entitlement to increase a quotation or abandon the work. Ordinary price movements must be distinguished from exceptional burdens, and the applicable statutory and contractual requirements, negotiated adjustments, judicial remedies and accounting for completed performance must be considered separately. [2][3]
Article 130 of Bahrain’s Civil Code makes the distinction particularly clear. It addresses exceptional circumstances of a general nature arising after the contract and before completion of performance, which could not have been foreseen at formation and make the obligation excessively onerous, threatening the debtor with grave loss, without making performance impossible. After balancing both parties’ interests, the judge may restore the obligation to a reasonable level by reducing its scope or increasing the counter-performance. An agreement to the contrary is void. Ordinary input-price fluctuations or a liquidity problem peculiar to the debtor cannot, however, automatically be treated as satisfying those exceptional requirements. [4]
Article 145 of the same Code addresses reciprocal contracts where an obligation becomes impossible because of an external cause not attributable to the party owing it. It provides for the extinguishment of that obligation and the corresponding counter-obligation, with the contract ending by operation of law. Where impossibility is partial, the creditor may, depending on the circumstances, retain the remaining possible performance or seek termination. Total impossibility, partial disruption and severe deterioration in profitability therefore cannot be dealt with through a single undifferentiated force majeure notice. In a continuing supply relationship, delivered goods, outstanding deliveries and future minimum-purchase commitments should be separated, and the statutory effects and scope for contractual adjustment assessed under the relevant local law. [4]
In the DIFC, the character of the payment obligation is critical. CA 006/2026, The Collection Club Restaurant Limited and others v Mag Development Services Limited, concerned an appeal against orders excluding a force majeure defence to rent-related claims, rather than a final determination of every issue under the lease. Reasons dated 24 April 2026 explain the dismissal recorded in the order of 14 April. Applying Articles 82 and 83 of the DIFC Contract Law, the Court examined the particular obligation, not the contract as a whole. The rent was consideration for ten years’ exclusive possession and was not connected to another act or service which the tenants themselves were obliged to perform. Payments connected to such performance were not necessarily placed in the same category. The proceedings concerned the 2024 floods and financing difficulties, not war-related rent suspension. [5]
Article 82(3), reproduced in the decision, attaches liability for loss caused by non-receipt where notice of the impediment and its effect does not reach the other party within a reasonable time after the affected party knew or should have known of it. This should not be restated as automatic forfeiture of all relief for late notice; contractual notice conditions require separate analysis. Article 82(4) also preserves specified rights concerning termination, withholding performance and interest. The Court further distinguished English-law frustration from Article 82 force majeure. The DIFC’s common-law background does not, by itself, justify importing English frustration doctrine into its Contract Law. [5]
The practical lesson is not to suspend payments indiscriminately merely because office or retail revenues have fallen, employees cannot attend, or a disaster has occurred. Nor should the decision be read as rejecting every other lease provision dealing with unusable premises, a counterparty’s prior breach, or other relief under the applicable law. Identify the affected obligation and the nature of the impediment. Negotiating a temporary reduction or deferral before the due date generally preserves more options than disputing the position only after non-payment has triggered termination or a call on a guarantee.
Under each framework, a claim for relief needs both evidence and economic analysis. An alternative port that can be used at greater cost, a legal or physical barrier that prevents any alternative, and a particular supplier’s inability to obtain vessel capacity are different cases. Separate additional-cost estimates, reasons alternatives cannot be adopted, pre-existing delay and delay newly caused by the regional developments. Explaining the conditions under which performance could continue need not undermine a claim for relief. It helps avoid excessive demands and supports both negotiation and subsequent proof.
3. Maritime Contract Chains and Additional Costs:
A Carrier’s Right to Avoid a Voyage Is Not the Seller’s Defence
When sea transport is interrupted, the notice a cargo interest receives from its carrier does not directly establish a defence under the sale contract. Shipowner and charterer, carrier and shipper, seller and buyer, and main contractor and subcontractor are governed by different agreements. Even where a shipowner may refuse a voyage as a contractually permitted safety decision, the seller may still need to consider another carrier or another means of delivery. Conversely, where the buyer nominates the vessel capacity, responsibility for deficiencies in those arrangements or in receipt of the goods must be examined. The legal response should not end with forwarding the notice received by the logistics team.
BIMCO’s CONWARTIME 2025 addresses responses to war risks and associated costs in time chartering, while VOYWAR 2025 does so for voyage charters. The former deals with the master’s or owners’ reasonable assessment of danger and avoidance of navigation or continued presence in an area; the latter addresses the positions before and after loading and the use of alternative routes. BIMCO’s notice of 3 March 2026 likewise encouraged review of these clauses in light of the circumstances then prevailing. The relevant text, however, is the version and amended wording actually incorporated by the company or the relevant contracting parties, not simply the latest model. Incorporation into a bill of lading and the relationship with the sale contract require their own analysis. [7][8][9]
Additional premiums should not be accepted merely because market prices have risen. Under CONWARTIME 2025(d), reimbursement concerns costs actually incurred, net of voyage-related discounts and benefits, including no-claims returns, and is due within 15 days after receipt of invoices and supporting documents. On request, owners must also substantiate reasonable efforts to obtain appropriate cover and terms. This is not unconditional pass-through of the notified figure. Separately, paragraph (b) addresses war risks already existing when the charter was concluded as well as later risks: that contractual allocation should not be confused with statutory force majeure tests of foreseeability. Check the incorporated wording, route, period and documentary basis for each claim. [7]
Rerouting costs are not necessarily measured by additional distance alone. VOYWAR 2025(c) and (d) contemplate freight adjustments for alternative discharge or routing by reference to documented estimated time and/or expenses incurred or saved. Adjustments can reduce as well as increase freight. Bunkers, demurrage, transhipment, storage, security and crew-related expenses should be reconciled with the applicable clause and amounts already included in freight or premiums to prevent duplicate recovery. [8]
Authority and timing also matter. In the post-loading circumstances under paragraph (c), owners request nomination of a safe discharge port; failure to nominate within 72 hours after receipt permits owners, subject to the clause, to select a safe port, including the loading port. The pre-loading nomination opportunity under paragraph (b) applies conditionally where the charter provides a range of loading or discharge ports. It is not a universal 72-hour grace period before every war-risk cancellation. The recipient should establish both the time of receipt and the applicable contractual mechanism immediately. [8]
Under the sale contract, identify the selected Incoterms rule and edition and the named port or place, then reconcile its allocation of delivery, risk and costs with the transport contract. Transfer of risk to the buyer during transit, completion of the seller’s delivery obligation, conformity of the shipping documents and the due date for payment are not invariably a single question. An operational decision to change the destination port or split a shipment may require corresponding amendments to the letter of credit, the insured destination and the installation schedule. Incoterms should not be used as a substitute for the provisions addressing force majeure, title or termination; the relevant clauses must work together. [10][15]
When choosing a workable alternative, compare total cost, including customs clearance, local storage, repacking, temperature control, theft exposure, acceptance and the start of warranty cover, rather than transport cost alone. Delivery to an alternative port may be lawful and safe, but if the buyer is not obliged to collect there, the seller may retain both the equipment and non-payment risk. An interim agreement should settle the revised delivery point and costs, who instructs the carrier, and who communicates with the insurer and bank. Managing interrupted logistics requires the decision to move the goods and the decision to adjust the rights attached to those goods to be made together.
4. War Risks Insurance: Geographic Exclusions, Duration of Cover and Preservation of Claims
Asking whether insurance exists does not establish who will ultimately bear a crisis-related loss. Damage to cargo, damage to the vessel, a carrier’s third-party liability, interruption of business, non-payment of receivables and the cost of evacuating employees ordinarily raise different insurance products and conditions. A contractual liability cap or counterparty indemnity does not automatically expand the insurer’s obligation to pay. For each transaction, identify the property or interest insured, the insured person, the covered risk and the relevant period and territory.
The 2009 Institute Cargo Clauses (A) provide broad cover but exclude delay-related loss under Clause 4.5 and specified war risks under Clause 6. The 2009 Institute War Clauses (Cargo) also exclude delay-related loss under Clause 3.5. Both delay exclusions, however, preserve expenses payable under their respective Clause 2; qualifying general average and salvage charges are not categorically excluded merely by association with delay. This carve-out does not generally insure lost sales, contractual delay damages or business losses. The policy edition and endorsements, cause of loss, type of damage and legal character of the expense must be examined separately. [11][12]
Duration requires equal care. Subject to the special provisions in Clauses 5.2 and 5.3, Clause 5.1 of the 2009 War Clauses attaches cover on loading aboard the overseas vessel and terminates it on discharge at the final discharge port or place, or 15 days from midnight on the day of the vessel’s arrival there, whichever occurs first. Transhipment is not covered indefinitely either: Clause 5.2 generally measures its 15-day period from midnight on the vessel’s arrival day, with post-discharge cover restricted to the cargo remaining at that port or place. Ordinary cargo transit cover should not be assumed to carry war cover continuously through warehousing, road carriage and reshipment. [12]
For a change of destination, Clause 6 requires prompt notification and agreement on rates and terms. It also addresses a loss occurring before agreement, but the availability of cover at reasonable commercial market rates and terms is material; this is not unconditional continued cover. Confirmation should precede movement instructions, with necessary endorsements, reattachment, additional premium and the commencement and termination of cover recorded for each leg. [12]
Gard’s dated notices illustrate why cover is not static. Notice 01/2026 of 1 March cancelled the war risks element of listed products and reinstated it with specified geographic exclusions from 00:00 GMT on 5 March. Notice 08/2026 of 12 August expanded the existing Red Sea exclusion towards the Indian Ocean and Gulf of Aden for specified products from 00:01 GMT on 16 August. Each notice identifies its scope and expressly excludes the Excess War Risks cover under mutual P&I insurance from the change. These are examples of measures at particular dates, not evidence that present cover under every cargo policy has disappeared. [13][14]
A business needs confirmation of which notices and endorsements apply to its own policy, not merely the insurer’s general market commentary. Check the policyholder, insured and co-insureds, the time zone governing commencement, the definition of the affected waters, treatment of cargo or vessels already in the risk area, and the availability of cover for an additional premium. Geographic names alone are insufficient: coordinates and coastal-water exceptions should be compared with the actual route. Obtaining a premium quotation is different from the insurer binding cover. Departure or transhipment should not proceed on the assumption of cover while a necessary approval remains outstanding.
Following an incident, prioritise safety and loss mitigation while preserving timely notification, the loss investigation, expense records and rights against third parties. A broad release given to settle quickly with the carrier, or disposal of physical evidence, can prejudice the insurer’s investigation or subrogated recovery. Approval of emergency measures, admission of liability and final settlement should be treated as separate decisions. The continuity plan should reflect disputed losses, deductibles, payment timing and liquidity needs not met by insurance, rather than counting the full expected insurance recovery as an assured receipt before it is established.
5. Payment Deadlines May Continue Despite Interrupted Deliveries:
Banks, Currency, Credits and Guarantees
A delayed remittance in a Middle East transaction may arise from a closed payment route, sanctions screening, insufficient identity or transaction information, a bank’s own risk policy, or simply insufficient funds. A bank’s refusal to handle a transfer does not itself establish that the law prohibits every means of performance. Equally, a contractual obligation to pay does not permit a transfer contrary to applicable sanctions or funds-transfer restrictions. Identify the parties, transaction purpose, goods, currency and intermediary banks, distinguish legal prohibitions from bank-specific conditions, and discuss lawful alternatives on that basis.
The ICC Banking Commission’s guidance on the Middle East conflict, dated 8 April 2026 and published on 20 April, explains that disruption does not automatically change the application of UCP 600, URDG 758, URC 522 or ISP98, the international frameworks governing documentary credits, independent guarantees, collections and related instruments. In assessing the rules on force majeure, the relevant question is whether the bank’s own operations are interrupted. Where the bank remains operational, difficulties in shipping goods or funding payment on the applicant’s or beneficiary’s side cannot simply be characterised as force majeure affecting the bank. The position of the commercial parties and that of the bank owing obligations under the credit or guarantee must be examined separately. [15]
For example, where original shipping documents cannot be dispatched, the counterparty’s receipt of an emailed copy does not necessarily constitute a complying presentation to the bank. The ICC guidance considers copies and electronic alternatives where delivery of originals is disrupted, subject to the relevant agreements and rules. It distinguishes the need expressly to incorporate eUCP or eURC from the existing provisions for electronic presentation under URDG. Confirm the branch, place and deadline for presentation, the contents of transport documents and necessary amendment approvals. An agreement between seller and buyer alone should not be assumed to bind the bank. [15]
The UK Supreme Court’s judgment of 15 May 2024 in RTI Ltd v MUR Shipping BV [2024] UKSC 18 illustrates the currency issue. The contract required US dollars, and payment in euros with conversion costs covered was offered. Paragraph 9 records that the parties agreed the dollar payment itself was not prohibited by sanctions; the concern was likely delay through banking processes. Absent clear wording, the reasonable-endeavours requirement in a force majeure clause did not oblige acceptance of non-contractual performance. That principle must be distinguished from interpreting a specific sanctions-cooperation or alternative-performance clause. This English-law decision is not a rule of UAE or Bahraini general law, but warns against assuming that economic equivalence alone compels acceptance of a substitute currency. [16]
The parties should agree on the substitute currency, the conversion date and time, the exchange rate, charges, any shortfall on receipt, and the point at which the original-currency obligation is discharged. If the payment account changes, verify that the account holder corresponds to the person contractually entitled to receive payment and authenticate the instruction through a known contact channel. Disruption should not become a pretext for casually permitting payment to an unrelated account or routing changes that obscure the transaction. A lawful change in payment method must be distinguished from disguising parties or routes to circumvent sanctions or other restrictions.
For credits and guarantees, a dispute under the underlying contract is separate from whether a demand or presentation can be made to the bank. An agreed delivery extension or work suspension does not necessarily amend a guarantee’s expiry or presentation conditions; conversely, exposure to a demand may remain while the guarantee continues. Separate disputed additional costs from the price of goods already delivered and accepted, and consider payment of undisputed sums first. A deferral agreement should address default interest, acceleration, the effect on security and guarantors, and the consequences of breach, rather than leaving the arrangement in an informal email between operational contacts.
Regional working capital must be assessed on the same timeline as delayed receipts. A company may have a strong legal claim yet be unable to sustain operations if customer collections stop while payments to employees, warehouse operators, insurers and banks remain due. Management should distinguish sums still payable, sums open to legal challenge, sums for which a deferral has been negotiated, and cash actually available. Asserting force majeure and securing liquidity are different outcomes. Legal rights must therefore be translated accurately into the cash-flow plan.
6. Protecting Dubai and Bahrain Operations:
Personnel, Authority, Information and Restart Conditions
A business continuity plan is not a plan for everyone to remain locally and perform the same work. It is a plan for preserving essential decisions, customer service, payments, information and preparations to restart while protecting life and health. For employment contracts governed by Japanese law, Article 5 of the Labour Contract Act provides the foundation for the employer’s duty to take appropriate safety measures. The Ministry of Health, Labour and Welfare’s explanation includes both physical and mental health within that protection and calls for precautions appropriate to the work, workplace and other specific circumstances. The presence of Japanese headquarters does not, however, make the same Japanese rules automatically applicable to every local employment relationship. [17]
For expatriates, business travellers, locally recruited employees, secondees and contractor personnel, the plan should distinguish the employing and directing entities, authority to order evacuation, communications, transport, family arrangements, medical support and responsibility for costs. Strong demands from a customer cannot substitute for a safety assessment by the party requiring attendance or travel. Equally, when evacuation is ordered, the subsequent workplace, salary and allowances, treatment of leave and working communications should not be left unresolved. Local employment, immigration and work-authorisation rules and the relevant contracts must be checked. A crisis does not automatically suspend wages or the employment relationship.
Japan’s Ministry of Foreign Affairs maintains UAE and Bahrain pages linking country-specific security information with regional advisories and notices from diplomatic missions. Companies should not treat a previously reviewed advisory as a fixed basis for future decisions. Record the issuing authority, update time and geographic scope, and reassess alongside information from local authorities, airlines, medical providers and assistance services. A group-wide standard based only on country names can miss the window for reaching an airport or the risks associated with particular facilities and tasks. Where safety-based suspension or restart criteria conflict with promised service levels, the contract terms themselves may need adjustment. [18][19]
In a small local office, the absence of a single manager can halt access to bank accounts, authentication devices, signatures, payroll and contract renewals. Delegation priorities, multiple-approval arrangements and the distinction between acts that can be performed remotely and those requiring local presence should be settled in advance and reflected in mandates registered with banks and key counterparties. Any expansion of emergency authority should be limited by activity, amount and duration, with subsequent reporting and withdrawal of the authority once the crisis subsides. Corporate continuity should not depend solely on an individual’s goodwill or access to a personal device.
The movement of data and evidence requires the same care. In anticipation of local system unavailability, lawfully back up contracts, orders, invoices, logistics records, insurance notices and approval histories, with access from another location to the extent required. Evacuation should not justify unrestricted transfer of customer personal information or confidential material to private cloud accounts. Applicable data-protection, sectoral and contractual restrictions, access rights and service providers must be reviewed so that recoverability and lawful information governance are maintained together.
Restarting operations is a separate decision. Resumption of flights, reopening of a port or renewed operations at neighbouring businesses does not establish that the company’s own personnel, equipment, insurance, permits, spare parts and payment arrangements are all ready. Define the scope of a phased restart and responsibility for verifying that its conditions are satisfied. Where an acquisition or new investment proceeds in parallel, interruption and restart conditions, reliance on local key personnel, additional costs and uninsured losses should inform price, retained funding, closing conditions and the post-acquisition plan. Protecting the regional business requires crisis planning and investment decisions to use the same factual and financial assumptions.
7. Beyond a Choice between Suspension and Performance:
Interim Agreements, Arbitration, Protective Relief and Board Accountability
Even where force majeure is disputed, a company need not immediately choose between full performance and abandoning the contract. Before facts and responsibility are finally determined, an interim agreement may provide for partial performance, alternative transport, revised delivery dates, provisional expense payments, payment of undisputed amounts and further negotiations. If the counterparty cannot continue operating, recovery of the company’s own receivable may become more difficult. Preserving legal positions while stopping avoidable loss from accumulating is not simply a concession; it is dispute management informed by the prospects of recovery.
An interim agreement should state what changes and what does not. A single document should address the relevant period and orders, caps and evidence for additional costs, revised delivery dates, guarantees and insurance, reservations of rights, final reconciliation and review dates. It should not leave uncertain whether a party admits breach of the original contract, releases historic claims or agrees to apply the same terms to future similar events. An agreement merely to continue discussions does not necessarily stop litigation or arbitration deadlines, or contractual claim periods, from running. Any required extension should be addressed expressly and separately.
New contracts should allocate regional risks already known at formation separately from new impediments arising later. The ICC force majeure and hardship models provide a starting point, but copying them does not complete the treatment of known route risks, geographic insurance exclusions, cost escalation, payment obligations or prolonged suspension. Define the events covered, the required degree of interference, alternative performance, price adjustment, notice and the consequences of termination. The agreement should also identify who may adjust or end the contract, and through what process, if renegotiation fails. [6]
DIAC Arbitration Rules 2022, Article 20.1, begins with the agreed legal seat. If no seat is specified but a location or venue is agreed, that location or venue is treated as the seat unless otherwise agreed. Only where neither has been agreed does the DIFC become the initial seat, subject to the tribunal’s final determination. Holding a hearing elsewhere or remotely is distinct from changing the seat. Selecting DIAC does not also select DIFC substantive law; Article 30 addresses the law applicable to the merits separately. The framework agreement, purchase orders, guarantees and variations should therefore use compatible dispute provisions rather than rely on the name of a city or institution. [20]
The BCDR 2022 Rules provide for emergency relief before tribunal appointment under Article 14 and tribunal-ordered interim measures under Article 26. An Article 14 application accompanies or follows submission of the Request for Arbitration. Articles 14.12 and 26.5 preserve recourse to courts for interim measures without treating it as a waiver of arbitration. DIAC Appendix II likewise provides emergency and interim procedures, but Article 2.15 permits a written opt-out from the emergency-arbitrator provisions. Availability must therefore be checked against the adopted rules, timing and any exclusion agreement. An emergency arbitrator’s order does not automatically bind a bank or another third party; the assets, respondent and deadline should guide comparison with relief from a competent local court. [20][21]
Early evidence management is essential to making rights effective. Bring the event, notices, specific impediments, alternatives, costs and management decisions into a single chronology so that the contracting, logistics, insurance, finance and HR teams and the regional office do not present different factual accounts. The preparation and circulation of advice requests, internal assessments and external notices should also reflect confidentiality protections and disclosure procedures in each relevant jurisdiction. A negotiating label or general confidentiality marking does not ensure that a document will be protected from disclosure in every country.
The final explanation to the board should go beyond stating that conditions are unstable. Compare alternative courses of action by reference to the personnel to be protected, activities to continue, obligations to suspend, recoverable claims, agreed additional burdens, uninsured losses and residual obligations on withdrawal. Identify which changes in the facts would alter the decision and assign owners and deadlines for reassessment. The purpose of business-continuity legal planning for Middle East developments is not to eliminate every risk through drafting. It is to preserve rights that can safely be performed, limit the growth of losses where performance is not possible, and retain the company’s ability to choose whether to restart or exit.
Frequently Asked Questions — Middle East Developments, Contracts and Business Continuity
Q1. Do hostilities or navigation problems in the Middle East
constitute force majeure under every contract?
No. The applicable law, contract terms, particular obligation impeded, causal connection, alternative performance and notice requirements must be examined. The same event may have different consequences for suspended transport, increased cost and payment for goods already delivered. A general regional notice does not establish a defence for each individual contract. [2][4][5]
Q2. Is a contract with a Dubai company necessarily governed by DIFC law?
No. An address, the language of the document or a free-zone designation does not determine the answer. Substantive governing law, jurisdiction or arbitration arrangements, the seat and mandatory local rules require separate analysis. For the UAE’s general civil law, the relationship between the new law effective from June 2026 and its predecessor must also be considered. [2][5][20]
Q3. May a supplier unilaterally raise its price when freight or insurance premiums increase sharply?
Not automatically. Review the price-adjustment and additional-cost provisions and the applicable law. Article 130 of Bahrain’s Civil Code permits judicial adjustment of an excessively onerous obligation in specified exceptional circumstances. It is not a rule for ordinary deterioration in profitability or a general permission to increase prices unilaterally. [4][7][8]
Q4. Can rent be withheld when an office or shop closes temporarily?
Closure alone is insufficient. DIFC CA 006/2026 concerned exclusion of a force majeure defence to rent-related claims, not final resolution of every lease issue. Distinguish a mere payment obligation from payment connected to another act or service, and examine the premises, separate terms and other remedies. Where possible, negotiate relief before payment falls due. [5]
Q5. If a carrier refuses carriage because of war risks, is the seller also excused towards the buyer?
Not automatically. The carriage or charter contract supporting the carrier’s right is separate from the sale contract imposing the seller’s delivery obligation. Reconcile the incorporated war risks clause, Incoterms, alternative carriers or ports and allocation of additional costs. [7][8][10]
Q6. Do all-risks cargo insurance and war risks insurance also cover delay losses?
Not generally. Both 2009 wordings exclude delay-related loss while preserving qualifying expenses under their respective Clause 2, including specified general average and salvage charges. That carve-out does not generally cover lost profits, delay damages or business interruption. Distinguish physical damage from the character of expenses and check the policy and endorsements. [11][12]
Q7. Does war risks cover continue unchanged after discharge at a different port?
Not automatically. The 2009 War Clauses contain termination rules based on discharge or 15 days from midnight on the vessel’s arrival day, together with special transhipment provisions. Destination changes also engage notice and conditions. Do not assume uninterrupted cover through storage, road carriage and reshipment; confirm before directing movement. [12]
Q8. Is a payment obligation extinguished if the transaction bank says it cannot process the transfer?
That fact alone does not extinguish it. Distinguish legal prohibitions, bank-specific decisions, payment-network interruption and insufficient funds. The ICC’s 2026 guidance likewise separates interruption of the bank’s own operations from difficulties in its customer’s commercial transaction. Lawful amendments concerning currency, alternative banks, documents and deadlines should be discussed. [15][16]
Q9. Must a counterparty accept an equivalent amount in euros instead of US dollars?
Not necessarily. RTI v MUR Shipping involved likely sanctions-related banking delay, not a prohibition on the dollar payment itself. Absent clear wording, reasonable endeavours did not compel acceptance of non-contractual performance. Examine governing law and any alternative-performance clause, and expressly agree currency, conversion and discharge. [16]
Q10. Must force majeure be conclusively established before employees are evacuated?
No. Necessary safety measures should not await completion of the contractual analysis. Record the reasons for evacuation and the consideration of alternative performance, while assessing contractual responsibility separately. The safety duty under employment contracts governed by Japanese law, local labour and work-authorisation rules, and the individual contracts must also be examined. [17][18][19]
Q11. Does an arbitration clause prevent an application to a court for urgent protective relief?
Not categorically. BCDR Articles 14.12 and 26.5 and DIAC Appendix II, Article 1.13, preserve compatible recourse to judicial interim relief. Separately examine emergency-arbitrator eligibility and opt-outs, court jurisdiction, effects on third parties and enforceability before selecting relief. [20][21]
Q12. What should management determine first?
Secure personnel safety and decision-making authority, then identify interrupted activities and the payment and notice deadlines that remain. Bring the remedies under each contract, alternatives, additional costs, insurance and recovery into one plan. Rather than merely predicting when the crisis will end, define the facts that will trigger suspension, restart or a reduction in operations.
About the Legal Update Series by Managing Partner Kenshiro Michishita
Through the Legal Update series by Managing Partner Kenshiro Michishita, SAKURA Law Office publishes legal analysis on corporate law, international transactions, M&A, financial regulation, international disputes and corporate crisis management. The emphasis is on connecting legal developments with corporate decisions, contractual rights and responsibilities, and the practical conduct of disputes.
Unlike earlier Updates on sanctions and export controls, international arbitration and Guyana’s resources sector, No. 50 addresses circumstances in which Middle East developments disrupt performance, payments and personnel deployment across connected businesses. Its focus is on transactions involving Dubai and Bahrain, separating safety decisions from entitlement to relief, carriers’ rights from cargo interests’ obligations, and insurance cover from contractual liability, before bringing those questions together in a business-continuity response.
SAKURA Law Office — Official Website
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How SAKURA Law Office Can Assist
SAKURA Law Office accepts instructions concerning Middle East-related market entry and international transactions, including review of contracts and transaction structures; force majeure and hardship notices and negotiations; variations to sale, works, maintenance and outsourcing agreements; payment, guarantees and debt recovery; preservation of contractual rights connected with insurance claims; crisis decision-making; and international disputes. Japanese-side contractual and governance arrangements should be aligned with the verification and response required locally.
Authoritative advice on the interpretation and application of UAE general law, DIFC law, Bahraini law, local litigation, arbitration and enforcement, employment and immigration, maritime and insurance law, and specific regulatory requirements requires lawyers and other professionals appropriately qualified and authorised in the relevant jurisdiction. The response should identify the necessary local review and each adviser’s responsibilities by reference to the companies, transactions, assets and personnel concerned.
Contact
For enquiries concerning Middle East-related international transactions, contractual performance or suspension, business continuity, debt recovery or international disputes, please contact SAKURA Law Office.
SAKURA Law Office
4F Ark Hills South Tower, 1-4-5 Roppongi, Minato-ku, Tokyo 106-0032, Japan
Managing Partner Kenshiro Michishita
Principal References
The numbered citations and source titles link to the corresponding materials, checked on 27 October 2026. The notes distinguish legislation, decisions, official guidance, model clauses, arbitration rules and insurer notices, identifying versions and relevant passages where available. No unverified publication date is assigned to an undated or continuously updated page.
1. International Maritime Organization (IMO), Middle East — Strait of Hormuz
Official information hub concerning the Middle East and the Strait of Hormuz, including vessel and seafarer safety, confirmed incidents and maritime security information. Updated over time; it does not guarantee navigability at a particular date or time.
Official DET-hosted guide (PDF; no publication date stated in the text). Pages 3–4 address the two Codes and reproduce Article 236; pages 6 and 10–11 address conditions and hardship. Not legislation. The new-law box on page 5 also labels contracts as pre-commencement; this Update instead uses the explanation and quotation on pages 3–4 with official legislative information. For DIFC law, source 5 is relied upon rather than the guide’s general comparison.
3. UAE Legislation, Federal Decree by Law No. (25) of 2025 Promulgating the Civil Transactions Law
Official legislative entry. Issued 1 October 2025; effective 1 June 2026. Article 236 and related provisions. Direct retrieval of the full law was restricted during this review; official indexed information and the quotations and explanation in source 2 were used for corroboration. English material is a reference; authoritative wording and transitional provisions require transaction-specific verification.
WIPO Lex No. BH083. The Arabic text and English translation of Articles 130 (judicial adjustment for exceptional hardship) and 145 (non-attributable impossibility, including partial impossibility) were compared, with corroboration from the LLOC’s publicly indexed information. This is the version incorporating amendments through 2017, not a complete legislative history through 2026.
Court of Appeal: Chief Justice Wayne Martin, Justice Robert French and Justice Sir Peter Gross. Order dated 14 April 2026; reasons dated 24 April. Appeal concerning exclusion of a defence; paragraphs 19–25, 37–50 and 56–60. A lease dispute associated with the 2024 floods, not a war case or final disposition of all claims.
6. International Chamber of Commerce (ICC), ICC Force Majeure and Hardship Clauses
Official material on the model clauses published on 24 March 2020, covering force majeure and hardship, long and short formulations, and contractual incorporation. These are not mandatory legislation or rules automatically applicable to every contract.
7. BIMCO, War Risks Clause for Time Chartering 2025 (CONWARTIME 2025)
2025 model wording, including paragraph (b) on pre-existing war risks and paragraph (d) on net insurance costs and reimbursement within 15 days of receiving invoices and supporting documents. Includes drafting-body commentary. Incorporation and amendments must be checked.
8. BIMCO, War Risks Clause for Voyage Charter Parties 2025 (VOYWAR 2025)
2025 model wording. Conditional 72-hour safe-port nomination under paragraphs (b) and (c); upward or downward freight adjustments under paragraphs (c) and (d). Contractual mechanisms, not statutory cancellation rights or tariffs.
9. BIMCO, Remember the BIMCO War Risks Clauses
3 March 2026. Guidance from the clause-drafting organisation on reviewing contracts and applying war risks provisions in light of Middle East developments. It does not establish that the models apply automatically to all contracts.
Official guidance on allocation of transport, delivery, risk and costs between seller and buyer. Application presupposes identification of the selected rule, edition and named place in the contract.
11. Institute Cargo Clauses (A), 1/1/09 — published by Mitsui Sumitomo Insurance
Standard wording dated 1 January 2009. Clause 1 on cover; Clause 4.5 on delay with the carve-out for Clause 2 expenses; Clause 6 on war risks. Published by an insurer; not confirmation of an individual policy or endorsement.
12. Institute War Clauses (Cargo), 1/1/09 — published by Mitsui Sumitomo Insurance
War wording dated 1 January 2009. Clause 3.5 and the Clause 2 expense carve-out; Clauses 5.1–5.3 on duration and transhipment; Clause 6 on destination change. The 15-day calculation must be distinguished from earlier termination on discharge and other special conditions.
13. Gard, 01/2026 Notice of cancellation for war risks
Dated 1 March 2026. Cancellation and reinstatement with geographic exclusions for specified products from 00:00 GMT on 5 March. Does not affect mutual P&I Excess War Risks cover. Cited as a dated measure, not confirmation of current individual cover.
14. Gard, 08/2026 Notice of cancellation for war risks
Dated 12 August 2026. Expansion of the existing Red Sea exclusion for specified products from 00:01 GMT on 16 August. Does not affect mutual P&I Excess War Risks cover. Product scope, waters and later notices require individual review.
Document dated 8 April 2026 and published on 20 April. Guidance concerning UCP 600, URDG 758, URC 522 and ISP98 during disruption, including interruption of a bank’s own operations, documentary transmission and electronic presentation. It does not amend the rules.
16. UK Supreme Court, RTI Ltd v MUR Shipping BV [2024] UKSC 18
Judgment dated 15 May 2024; UKSC/2022/0172. Lord Hodge, Lord Lloyd-Jones, Lord Hamblen, Lord Burrows and Lord Richards. Paragraph 9 on lawful dollar payment and anticipated delay; paragraphs 26 and 100–103 on reasonable endeavours and non-contractual performance. An English-law decision.
2024 revised edition, page 8, in Japanese. Article 5 safety duty, physical and mental health, and precautions appropriate to the particular circumstances. It does not establish that Japanese law governs all overseas employment.
18. Japan Ministry of Foreign Affairs, Overseas Safety Website — United Arab Emirates
Updated country page linking security, incident-specific and regional advisories and diplomatic-mission information. The latest material must be checked when travel or evacuation is undertaken. In Japanese.
19. Japan Ministry of Foreign Affairs, Overseas Safety Website — Bahrain
Updated country page linking security, incident-specific and regional advisories and diplomatic-mission information. Information supporting a safety decision is distinct from a determination of contractual relief. In Japanese.
20. Dubai International Arbitration Centre, DIAC Arbitration Rules 2022
2022 Rules. Articles 20.1–20.2 on seat and venue; Article 30 on merits law; Appendix II, Articles 1.13 on judicial interim relief and 2.15 on emergency-arbitrator opt-outs. Seat, hearing location and substantive law are distinct.
21. Bahrain Chamber for Dispute Resolution, 2022 Rules of Arbitration
2022 consensual arbitration rules. Article 14 on emergency relief accompanying or following the Request and before tribunal appointment; Article 26 on interim measures; Articles 14.12 and 26.5 on court applications. Distinct from the BCDR’s statutory judicial jurisdiction.
22. SAKURA Law Office — Official Website
Firm information and enquiries.
23. SAKURA Law Office — Managing Partner Kenshiro Michishita’s Profile
Author information: Kenshiro Michishita, Managing Partner, SAKURA Law Office.
Disclaimer
This Update provides general legal information based on public materials reviewed as of 27 October 2026. It is not a legal opinion concerning any particular contract, payment, insurance, employment relationship, journey, shipping route or investment, nor a guarantee of safety or a recommendation to transact. The application of legislation, transitional provisions, mandatory rules, individual contracts, arbitration agreements, insurance policies and endorsements depends on the parties, contract date, events, performance and proceedings involved.
The account of the UAE’s new Civil Transactions Law is confined to matters established from official legislative information and the DET-hosted guide; direct retrieval of the complete statute was not achieved. For Bahrain, the relevant provisions were checked against the Arabic text and English translation of the 2017 consolidated version in WIPO Lex, with corroboration from publicly available LLOC information, but the complete subsequent amendment history was not exhaustively verified. The temporal and substantive application of those laws to an individual contract requires authoritative local-law confirmation. The DIFC discussion relies on the cited decision and provisions reproduced in it; English authority is considered within its own jurisdiction. This Update does not establish subsequent procedural history or final disposition of every claim in either case.
Contractual adoption of ICC and BIMCO models and rules, and their relationship with applicable law, must be verified. Insurers’ notices are limited to the products, territories and periods they identify. The explanation of policy wording does not confirm cover under the reader’s own insurance arrangements. Security information, shipping routes, banking practice, insurance terms and external websites may change. Before taking action, businesses should obtain current original materials and appropriate confirmation from local professionals, relevant authorities, banks and insurers.