Title
Amkhan, Adnan, The Effect of Change in Circumstances in Arab Contract Law, DIAC Journal 3 (April 2008-April 2009), 6
Content

6

The Effect of Change in Circumstances in Arab Contract Law*

by Adnan Amkhan

[...]

9

The Doctrine Of Intervening Contingencies In Modern Arab Contract Law

Civil and commercial contracts

Arab contract law has only recently recognized the doctrine of intervening contingencies. The 1949 Egyptian Civil Code was the first to provide for its application, with the rest of the Arab civil codes following suit. Courts and civil law commentators are at one that the juridical basis of the private law doctrine of intervening contingencies lies in the idea of justice and equitable considerations,16 and it mainly aims at restoring the lost economic equilibrium of a valid contract the continued performance of which would threaten one of the contracting parties with an overwhelming loss.17

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Statutory provisions

Although some differences do exist between the codal provisions which provide for the doctrine of intervening contingencies, they are, as we shall see presently, matters of form rather than of substance. Thus some Arab civil codes, for example, append the provisions for intervening contingencies to the article which states that a contract has the force of law for its parties; and that a valid contract is revoked, terminated or altered only by the mutual consent of its parties or due to reasons provided for by the law. Such a formulation indicates that the doctrine of intervening contingencies is meant to be an exception, which gives a contracting party the right unilaterally to request judicial intervention to redress the imbalance(s) which have occurred during the performance of a contract.18 Articles 147(2), 148(2), 147(2), 117(1), 107(1), 48 and 214 of the Egyptian, Syrian, Libyan, Sudanese, Algerian, Qatari and the new Yemeni Civil Codes, respectively, fall in this category. These articles are identical and read as follows: 

"However, due to exceptional, general and unforeseen events, the performance of the contractual obligation, without being impossible, becomes onerous on the obligor, with the result of threatening him with exorbitant loss; the judge may, after taking into account the surrounding circumstances and the interest of both parties to the contract, adjust the onerous obligation to a reasonable level. Any agreement to the contrary is null and void."19

Article 146(2) of the Iraqi Civil Code, although similar, differs in three respects: it replaces the word 'adjust' with 'reduce'; the phrase 'the surrounding circumstances' has been omitted; and the phrase 'if equity requires so' has been inserted after '... to a reasonable level'. 

The Jordanian, United Arab Emirates and Kuwaiti Civil Codes each devote a separate single article to the doctrine under examination. Thus articles 205 and 249 of the Jordanian and United Arab Emirates Civil Codes are identical to each other and similar to the above quoted provision, except that, as in article 146(2) of the Iraqi Civil Code, the phrase 'if equity requires so' has been inserted after '... to a reasonable level'.

Article 198 of the Kuwaiti Civil Code, while similar to the above mentioned provisions, is more elaborate and deserves to be quoted in full:

"If, after the conclusion of the contract and before it has been executed, the occurrence of exceptional and general events which were unforeseen when the contract was made make the performance of the contractual obligation, though not impossible, onerous on the obligor with the result of threatening him with exorbitant loss, the judge may, after considering the interest of both parties, modify [alter] the onerous obligation to a reasonable level, by either reducing it [the onerous obligation] or increasing the counter obligation. Any agreement to the contrary is null and void."  

[...]

* An earlier version of this article was published in the 9 "Arab Law Quarterly, 1994". Permission has been granted for its use by the author and by the Editor-in-Chief of the Arab Law Quarterly, Dr. Mark Hoyle.
16 For example, the Egyptian Explanatory Memorandum of the Civil Code states that 'the reason behind the adoption of this doctrine is to avoid exaggeration and rigidity in the interpretation of contracts; good faith, equitable considerations and the customary requirement of honesty in business transactions are factors which modify the binding effect of a contract and make it more just'. Vol. 2, p. 370. Moreover, the Syrian Court of Cassation ruled that the sanctity of a contract should be subject to considerations of justice, particularly when certain exceptional and unforeseen events materialize. See case no. 79, 14/12/1957; reproduced in Tu'mah. al-Taqnin al-Madani al-Suri, (1992) vol. 1, p. 643 (hereinafter referred to as Tu'mah). Again, the Iraqi Court of Cassation explained that 'the main purpose of the theory of intervening contingencies is to help the aggrieved contracting party to continue performing his contractual obligation; also, to minimize the hardship inflicted upon him by the supervening event. It is important, however, that the aggrieved party should have been, and still is, performing his obligations according to terms of the contract and in good faith.' Case no. 1229/Civil/1967. 17/1/1968; reproduced in Majallat al-Qada' al-Muqarn, (1968), no. 2, p. 218 at p. 222.
17 See e.g. Naji (Ghazi` Abd al-Rahman), al-Tawazun al-'Iqtisadi fi al-'Aqd Athna' Tanfidiih, (1986); al-Sadah (Abd al-Mun'im) Masadr al-'Iltizam, (1979), pp. 337-338; al-Sanhuri, al-Wasit fi Sharh al-Qanun al-Madani, vol. 1. p. 631 (hereinafter referred to as al-Wasit).
18 For a clear statement of this principle as a whole see the United Arab Emirates Federal Court case no. 14 of 24/6/1987; reproduced in al-Majallah al-`Arabiyyah lil-Fiqh wa al-Qada', (1988), p. 204 at p. 205.
19 Article 244 of the Unified Arab Civil Transactions Code contains identical provisions.

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