The Iran War: Immediate Legal Implications for Businesses Operating in the UAE

Iran War Business Impact – Operational Disruption, Contracts and Workforce Management

The Iran war business impact will largely depend on the duration of the conflict and the extent to which regional or global actors become further involved. The escalation of the 2026 Iran war has already begun to affect commercial operations across the Gulf region, including the United Arab Emirates. Missile and drone attacks, airspace closures, and disruptions to key transport routes have created significant uncertainty for businesses operating in or through the Middle East.

The effects extend far beyond security concerns. Companies are now facing operational challenges affecting contracts, workforce mobility, supply chains, logistics, and insurance coverage.

In this first article of our Crisis Legal Series, we examine the immediate legal issues businesses should be addressing and the practical steps they should consider taking.

1. Disruption to Transport, Trade and Logistics due to Iran War Business Impact

The current conflict has led to airspace closures across multiple Gulf countries, grounding thousands of flights and severely disrupting passenger travel and air freight.

At the same time, tensions around the Strait of Hormuz — through which roughly one-fifth of global oil trade passes — are affecting shipping routes and insurance costs, increasing the risk of supply delays and price volatility.

Many multinational companies operating in the UAE rely on the region’s hub model, where Dubai or Abu Dhabi serve as logistics centers for operations spanning Europe, Asia, and Africa. When aviation, ports, or digital infrastructure are disrupted, operational delays can quickly cascade across multiple jurisdictions.

As a result, companies are already experiencing:

• Delayed shipments and supplier non-performance

• Inability to meet delivery deadlines

• Cancelled or postponed projects

• Temporary suspension of logistics operations

From a legal perspective, these disruptions raise immediate questions regarding contractual obligations and liability exposure.

2. Force Majeure and Contractual Performance

One of the most important legal mechanisms during times of crisis is the doctrine of force majeure, which may allow contractual obligations to be suspended where performance becomes impossible due to extraordinary and unforeseeable events.

Under UAE law, force majeure may relieve a party from liability if performance becomes impossible due to circumstances beyond its control, provided contractual notice and mitigation requirements are properly followed.

However, companies should avoid assuming that the existence of a conflict automatically triggers force majeure protections. In practice:

• The exact wording of the contract is critical

• Many clauses require formal notice within strict time limits

• Businesses must demonstrate reasonable mitigation efforts

• Some clauses only cover specific events such as war, government actions, or transportation disruptions

Failure to comply with these procedural requirements can result in loss of contractual protection.

Companies should therefore conduct urgent reviews of key contracts, including:

• Supplier agreements

• Distribution contracts

• Construction and infrastructure contracts

• Logistics and freight agreements

• Service agreements with international partners

3. Workforce Disruption and Employment Law

The conflict has also created significant workforce disruption, particularly where employees are stranded abroad due to flight cancellations or security concerns.

In the UAE, expatriates make up the majority of the workforce, meaning travel restrictions can quickly create employment complications.

Employers may face questions such as:

• Whether employees unable to return to the UAE must still be paid

• Whether absence can be treated as leave or unpaid leave

• Whether remote work arrangements must be formalized

• How visa status should be managed if employees remain abroad

While UAE labour law allows flexibility in extraordinary circumstances, employers should document decisions carefully to avoid later disputes.

Companies should also consider implementing temporary crisis policies, including:

• Remote work data protection rules

• Cybersecurity protocols

• Emergency communication channels with employees

4. Insurance and Risk Allocation under the Iran War Business Impact

Another area of uncertainty concerns business interruption and war risk insurance.

Many companies assume they are protected, but insurance coverage often excludes:

• Acts of war

• Terrorism

• Political violence

• Government shutdowns of transport routes

Determining whether coverage exists requires careful review of policy wording, endorsements, and exclusions.

Even where coverage applies, insurers often require strict notice procedures and documentation of losses.

Companies that delay reporting may inadvertently compromise potential claims.

5. Supply Chain and Commercial Disputes

The wider economic consequences of the conflict are already being felt across global markets, including rising energy prices, logistics disruptions, and shortages of raw materials.

In practice, these conditions often lead to:

• Supplier defaults

• Contract renegotiations

• Payment delays

• Increased disputes between commercial partners

Companies should therefore adopt a proactive legal strategy that focuses on early engagement and documentation rather than reactive dispute management.

Practical Steps Businesses Should Consider

Companies operating in the UAE or relying on Middle East logistics should consider taking the following immediate actions:

1. Review key commercial contracts for force majeure, termination, and notice provisions

2. Document operational disruptions affecting contractual performance

3. Establish remote work policies and cybersecurity measures

4. Assess insurance policies for business interruption and political risk coverage

5. Engage suppliers and counterparties early to negotiate temporary solutions where possible

Early legal assessment can significantly reduce exposure to future disputes.

Looking Ahead – Beyond the Iran War Business Impact

The situation remains fluid and the long-term economic impact will depend on how the conflict evolves in the coming weeks.

In the next articles of this Crisis Legal Series, we will examine:

• Force majeure and contract termination in greater depth

• Insurance and war risk coverage for businesses

• Employment law implications of travel disruption

• Commercial dispute risks arising from supply chain failures

Rubert & Partners continues to assist companies operating in the UAE and internationally in navigating the legal consequences of the current crisis.

Businesses affected by operational disruption may benefit from conducting an urgent legal risk assessment to identify contractual exposure and protective measures.

We invite you to explore the following Rubert & Partners resources, where you will find practical information and guidance on legal and corporate matters in the United Arab Emirates:

R&P Help Center – providing direct answers to frequently asked questions on UAE legal and corporate topics.

R&P Publications – offering more comprehensive insights and analysis on key legal, regulatory, and business issues affecting companies and individuals operating in the UAE.

Maria Rubert’s YouTube Channel – offering insights on UAE law and practice.

Should you have any questions or require tailored legal advice, please do not hesitate to contact our team:

Email: info@rubertpartners.com
Telephone: +971 4 528 0625
WhatsApp: +971 50 351 4036

Disclaimer

The information provided in this publication is for general informational purposes only and does not constitute legal advice. While every effort has been made to ensure the accuracy of the information at the time of publication, laws, regulations, and their interpretation may change. Readers should not act or refrain from acting based on this material without seeking professional legal advice tailored to their specific circumstances. Rubert & Partners accepts no responsibility for any loss arising from reliance on the information contained herein.