By Sana Maroof Khan, Senior Associate, Esquare Legal
The Middle East has long demonstrated remarkable economic resilience in the face of geopolitical challenge. However, recent events have led to an increase in regional tension, inevitably forcing businesses to confront difficult questions about operational continuity, contractual obligations, workforce stability, and long-term risk management. For companies operating in the United Arab Emirates, the current environment presents a unique challenge. The UAE remains one of the world’s most sophisticated business hubs, yet businesses cannot ignore the possibility that external events may affect supply chains, transportation routes, financial flows, staffing arrangements, and commercial relationships.
The answer lies not in panic-driven decision-making, but in careful legal preparation and strategic risk management.
The First Question: Can the Business Continue Operating Normally?
When uncertainty emerges, many businesses instinctively focus on immediate operational concerns. Can service providers continue to deliver? Will employees be able to work? Are customers likely to delay payments? While these are important considerations, the legal implications often receive less attention until a problem has already materialized.
The ability of a business to continue operating is not determined solely by market conditions. It is also shaped by its contractual obligations, regulatory commitments, and corporate structure. Many companies have entered into long-term agreements with suppliers, landlords, distributors, technology providers, lenders, and strategic partners. These agreements were negotiated during periods of stability and may not adequately account for significant geopolitical disruption.
Force Majeure: Understanding the Limits of Contractual Protection
Whenever external events disrupt business operations, the term “force majeure” quickly enters the conversation. Unfortunately, force majeure is frequently misunderstood. Whether a force majeure clause can be relied upon depends largely on how the clause is drafted. Some provisions expressly cover war, armed conflict, sanctions, government restrictions, infrastructure failures, or transportation disruptions. Others may be drafted more narrowly and offer limited protection.
Even where a triggering event falls within the clause, businesses must usually satisfy additional requirements. Contracts often require prompt notice to counterparties, evidence of the impact on performance, and reasonable efforts to mitigate losses. Failure to comply with these procedural obligations can undermine an otherwise valid force majeure claim. Furthermore, invoking force majeure does not always terminate obligations — in many contracts, the consequence is merely a temporary suspension of performance.
Looking Beyond Force Majeure
Not every contractual challenge will be resolved through force majeure provisions. Businesses should also consider whether their agreements contain material adverse change clauses, hardship provisions, termination rights, or renegotiation mechanisms. In some circumstances, commercial negotiation may provide a more effective solution than formal legal remedies. Counterparties facing similar challenges may be willing to renegotiate timelines, adjust payment schedules, or modify delivery obligations that preserve the commercial relationship.
The Corporate Structure Question
One of the most significant lessons from recent global disruptions is that concentration risk can create vulnerability. Many businesses operating in the UAE have structured their operations around a single jurisdiction, a single operating company, or a single revenue-generating entity. Given the uncertainty, companies are considering whether portions of their operations should be diversified across multiple jurisdictions. A diversified corporate structure can provide greater resilience by reducing dependence on any single legal or operational environment.
Why Free Zone Businesses Should Pay Particular Attention
Businesses established within UAE free zones often enjoy significant commercial and regulatory advantages. However, these benefits are accompanied by specific compliance obligations. Companies operating through DMCC, ADGM, DIFC, or other free zones should carefully assess their ongoing licensing obligations, office requirements, reporting commitments, and employee sponsorship arrangements. Can the company continue satisfying substance requirements? Will staffing arrangements remain compliant if personnel relocate temporarily? These issues are often highly jurisdiction-specific and should be evaluated before any major restructuring decisions are implemented.
Special Considerations for Crypto and Fintech Businesses
Few sectors are as dependent on regulatory certainty as crypto and fintech. Regulated virtual asset businesses, payment providers, and digital asset projects operate under licensing frameworks that impose ongoing obligations regarding governance, custody, operational resilience, reporting, and risk management. A change in operational structure, relocation of personnel, migration of technology infrastructure, or transfer of customer-facing functions may have regulatory implications. Crypto and fintech businesses should ensure that any continuity planning is undertaken in parallel with regulatory analysis rather than as a purely operational exercise.
Business Continuity Is Ultimately a Legal Exercise
Business continuity planning is often viewed as an operational function. In reality, many of the most important continuity decisions are legal decisions. Whether a company can suspend obligations, relocate operations, restructure entities, transfer intellectual property, modify workforce arrangements, or change commercial relationships will ultimately depend on the legal framework governing those activities.
The businesses that navigate uncertainty most effectively are rarely those that react fastest. They are the businesses that understand their contractual rights, appreciate their regulatory obligations, and maintain sufficient structural flexibility to adapt when circumstances change. In uncertain times, legal readiness is not merely a defensive measure. It is a strategic advantage.
Sana Maroof Khan is a Senior Associate and Head of Business Development at Esquare Legal, advising on corporate structures, regulatory compliance, and business continuity across UAE, Pakistan, and Brazil. Contact Esquare Legal for a confidential review of your contractual and regulatory exposure.