The escalating conflict between the United States, Israel, and Iran—and, critically, Iran’s de facto closure of the Strait of Hormuz since early March 2026—has produced one of the most significant disruptions to global trade and energy markets in modern history. The consequences extend well beyond the shipping sector. Construction projects across the Gulf Cooperation Council (“GCC”) region face acute material shortages as steel, aluminium, and prefabricated components from East Asia are stranded at sea. Energy companies are grappling with the inability to export crude oil and liquefied natural gas (“LNG”) through the strait, which ordinarily handles approximately 20 million barrels of oil per day (approximately 20% of global petroleum liquids consumption) and roughly one-fifth of global LNG trade.[1] Supply chain contracts for petrochemicals, metals, and bulk goods are experiencing cascading delays and cost escalations.
Several major energy producers, including QatarEnergy, Kuwait Petroleum Corporation, Shell, and Bapco, have already declared force majeure on contractual commitments, an unprecedented step in the history of Gulf energy production. Brent crude has surged past US$126 per barrel, insurance premiums for vessels transiting the Gulf have multiplied several times over, and the landed cost of imported construction materials in Saudi Arabia is estimated to have risen by 25–40% since late February 2026. EUROCONTROL has reported that air traffic flows between Europe and the Middle East dropped by 66% on 28 February and 1 March 2026 compared to the same period in 2025, and remained down 52% year-on-year in the week of 9–15 March, while average jet fuel prices rose 87% over two weeks.[2] Gulf-bound hull war premiums have quadrupled to approximately 1% of vessel value for seven days’ cover.[3]
The disruption is compounded by concurrent factors: Iranian missile strikes on energy infrastructure across the GCC (including Qatar’s Ras Laffan complex and Saudi Arabia’s Ras Tanura refinery), airspace closures affecting regional logistics, port congestion at Gulf-facing ports such as Dammam, Jubail, and Jebel Ali, the resumption of Houthi threats against Red Sea shipping, and the evacuation of foreign workforces by major contractors. Saudi Arabia’s East–West pipeline to Yanbu on the Red Sea (long an underutilized contingency) is now operating near capacity but cannot absorb the full volume ordinarily routed through Hormuz.
For many parties, the instinctive question will be whether the conflict is a force majeure event. That is usually only the starting point. In sophisticated construction, energy, and infrastructure contracts, the better question is often: which contractual regime best captures the specific consequence that has occurred? The answer may lie not only in force majeure, but also in suspension or stoppage clauses, relief-event mechanisms, compensation-event, limitation and exclusion of liability or employer-risk provisions, change-in-law clauses, market disruption and price adjustment clauses, hardship rules under the governing law, or termination rights for prolonged disruption. A contract will usually distinguish between impossibility, delay or hindrance, increased cost or economic onerousness, government action, and an instruction requiring works to stop or be performed differently. Whether a party obtains time, money, suspension, termination, or no relief at all will depend on where the facts land within that structure.
This update identifies the principal contractual and legal issues that parties should consider where the performance of their agreements has been affected by the conflict. It is aimed primarily at parties to construction, infrastructure, energy, and supply chain contracts with operations in or connected to the GCC, though its analysis is relevant to any contract disrupted by the current crisis.
- The Disruption: Key Events and Their Commercial Impact
The immediate commercial effects of the conflict are now well-documented. Legally, however, those facts do not all lead to the same answer. A shipment that cannot lawfully or safely transit the Strait of Hormuz may support a force majeure or suspension claim. A delayed delivery that remains possible, but only later and at far higher cost, may instead raise hardship, market disruption, price adjustment, or variation issues. A stop-work direction, changed access regime, or resequencing instruction may belong under a change or compensation regime rather than force majeure. The principal categories of disruption, and their commercial significance, include:
– Strait of Hormuz closure: Iran’s IRGC declared the strait closed on 2 March 2026 and has carried out at least 19 confirmed attacks on vessels to date. Nearly 2,000 ships are stranded on either side of the waterway. Shipping traffic has been reduced to a near standstill,[4] with only a small number of Iranian-approved vessels transiting under a selective “toll booth” regime, reportedly for fees of US$2 million per vessel. This represents the physical impossibility or near-impossibility end of the spectrum: it is the strongest platform for force majeure and suspension claims.
– Port congestion and material shortages: Gulf-facing ports, including Dammam, Jubail, and Jebel Ali, have seen throughput collapse. Construction materials, equipment, and goods are stranded in transit. Project managers on major Saudi developments have reported that rebar stocks could be exhausted within weeks at current consumption rates. For contracts requiring delivery to Gulf-facing ports such as Dammam or Jubail, no sea route exists that bypasses the Strait of Hormuz; alternative supply must be redirected to Red Sea ports such as Jeddah or Yanbu and transported overland, adding materially to cost and time. For parties whose contracts require performance to be “prevented” rather than merely “hindered,” the question of whether delayed materials amount to prevention or just increased difficulty will be closely contested.
– Price shocks and freight escalation: Brent crude has surged past US$126/bbl. Freight rates have risen 50–80% on war-risk surcharges. Rerouting vessels around the Cape of Good Hope adds approximately two to three weeks to voyage times from Asia to Saudi Arabia’s Red Sea coastal ports and substantially increases delivered costs. These facts sit more naturally under market disruption, price adjustment, or hardship analysis than under force majeure, since performance may remain physically possible but commercially destabilized.
– Strikes on energy infrastructure: Missile and drone attacks have damaged energy assets across the GCC, including Qatar’s Ras Laffan LNG complex (reducing export capacity by approximately 17%, with repairs expected to take three to five years), Saudi Arabia’s Ras Tanura refinery, and facilities in Kuwait and Bahrain. QatarEnergy has declared force majeure on long-term LNG supply contracts with customers in China, Italy, Belgium, and South Korea.
– Airspace closures and workforce disruption: Regional airspace restrictions and security concerns have led to labour shortages and disruptions to the movement of specialist personnel. Several major contractors, including TotalEnergies, have evacuated staff from affected countries.[5]
- Available Contractual and Legal Remedies
2.1 Force Majeure
(a) Contractual force majeure clauses
Force majeure clauses remain the first clause to consider for most parties seeking relief. However, the ability to invoke such a clause—and the consequences of doing so—depend entirely on the facts, its specific wording and the governing law of the contract.
Force Majeure clauses are commonly found in major construction, supply, infrastructure and other agreements. As a first step, one hoping to rely on Force Majeure should ensure that it is properly expressed in the agreement at hand, because the absence of an expressed clause could mean that Force Majeure may be unavailable as a form of relief under the contract. Pertinently, under English law, which governs many international contracts in the GCC, force majeure has no autonomous legal existence. It is a purely contractual creature: if the contract does not contain an express force majeure provision, a party cannot rely on the doctrine at all. The analysis must therefore begin and end with the language of the clause itself. A statutory claim of force majeure however remains possible if the applicable law prescribes it to the extent that the parties do not agree to exclude liability for Force Majeure events altogether.
When analyzing a Force Majeure clause, the key questions are:
– Does the definition of “force majeure event” capture the current disruption? Many clauses include express references to “war” (whether declared or not), “hostilities,” “armed conflict,” “blockade,” “embargo,” “closure of ports or airspace,” “interruption of transport,” or “acts of foreign enemies.” Where the clause includes such language, there is a strong basis for arguing that the current conflict falls within its scope. However, clauses that rely on narrower or more generic language (such as “acts of God” or “events beyond the parties’ reasonable control”) will require a more fact-specific event characterization as to whether the particular disruption experienced is captured.
– What threshold of impact is required? This is a critical distinction. Some clauses require that performance be prevented, a high threshold that may not be met where materials are merely delayed or more expensive. Others apply a lower standard, granting relief where performance has been “hindered,” “delayed” or “materially affected.” The distinction matters enormously: a contractor whose steel supply is delayed by three weeks due to rerouting around the Cape of Good Hope may struggle to meet a “prevention” threshold, whereas it may comfortably satisfy a “hindered or delayed” standard. This is why parties should not treat force majeure as a universal solution where the real dispute concerns price shock, prolonged cost escalation, or a required change in the method of performance.
– The foreseeability challenge. This is one of the most significant legal issues arising from the current crisis. In June 2025, a 12-day air conflict between Israel, the United States, and Iran escalated regional tensions considerably. Iran’s parliament voted on 22 June 2025 in favor of closing the Strait of Hormuz, a largely symbolic measure at the time but one that was widely reported in international media.[6] War-risk insurance premiums for the strait increased sharply even before the February 2026 strikes. For contracts entered into or renewed after June 2025, the opposing party may argue that the risk of a Hormuz closure was reasonably foreseeable and therefore does not qualify as a force majeure event, particularly where the clause requires unforeseeability. The farther the contract date moves into the current crisis cycle, the more difficult this argument becomes. Parties should review whether their clause contains a foreseeability requirement, and if so, whether the specific disruption (as opposed to the general geopolitical risk) could genuinely have been anticipated at the time of contracting.
– A party relying on force majeure will usually need to do more than point to the existence of a war. It will need to show that the conflict caused the specific non-performance complained of. Where the clause requires the event to be the “sole and direct cause” of the non-performance (a formulation common in project agreements), the analysis becomes demanding. Where alternative routes, substitute suppliers, rescheduling, temporary workarounds, or partial performance were available, mitigation considerations will bear directly on the causation analysis.
– Mitigation obligations. Force majeure clauses routinely require the affected party to take reasonable steps to mitigate the impact. In the current context, this could include sourcing materials through alternative routes or suppliers, rerouting shipments via the Red Sea or the Cape of Good Hope, adjusting construction programmes, or using locally available substitutes. Parties should carefully document all mitigation efforts, whether successful or not, as this evidence will be critical in any subsequent dispute.
– Notice requirements. Force majeure provisions almost invariably contain detailed notice requirements. Compliance with these frequently operates as a condition precedent: a failure to give notice in the correct format or within the prescribed period may bar the affected party from relying on force majeure altogether, even where a qualifying event has indisputably occurred. Given the rapidly evolving nature of the crisis, parties should err on the side of serving protective or precautionary notices promptly, even where the full extent of the disruption is not yet clear.
(b) Statutory force majeure under GCC civil codes
Unlike English law, the civil codes of most GCC jurisdictions recognize force majeure as a statutory doctrine, available even in the absence of an express contractual clause. This is a crucial distinction for parties to contracts governed by Saudi, UAE, Kuwaiti, Bahraini or Qatari law.
Under the Saudi Civil Transactions Law (“CTL”),[7] Article 110 provides that where performance in a bilateral contract becomes impossible for a reason beyond the debtor’s control, the obligation and corresponding obligation are extinguished and the contract is automatically terminated save for obligations that remain performable. The applicable threshold remains one of impossibility—not merely difficulty or increased cost. Similar provisions exist under UAE law (Article 273 of the Civil Transactions Law)[8] and the civil codes of Kuwait and Qatar. Where a contractual force majeure clause is absent or insufficiently broad to capture the current disruption, parties governed by GCC law may therefore fall back on the statutory position. The CTL goes one step further to relieve the performing party from all liability, and consequently protect it from compensation claims, where it can demonstrate exclusive causation in relation to the event in question (Article 125).
(c) Frustration under English law
Where English law governs and there is no applicable force majeure clause, frustration may be considered as a fallback. The doctrine discharges both parties from their obligations where a supervening event renders performance either impossible or radically different from that originally contemplated. The threshold is high, and courts are reluctant to hold that a contract has been frustrated except in extreme circumstances. For most commercial contracts affected by the current conflict, the real battleground will be the wording of the relevant clause set, not frustration.
2.2 Exceptional Circumstances / Hardship
Where the current disruption makes performance significantly more onerous (but not impossible), parties to contracts governed by GCC law may have recourse to the doctrine of exceptional circumstances (hardship). This doctrine is a mandatory provision under most GCC civil codes, meaning that parties cannot contractually exclude or waive its application. The relevant statutory provisions include:
– Article 97 of the Saudi CTL (extraordinary unforeseeable events making performance excessively onerous);
– Article 249 of the UAE Civil Transactions Law (exceptional public circumstances making performance oppressive);
– Article 198 of the Kuwait Civil Code; and
– Article 171 of the Qatar Civil Code.
The conditions for invoking the doctrine are generally consistent across the region. The exceptional circumstance must be: (i) of a general nature (not personal to the affected party); (ii) unforeseeable at the time of contracting; (iii) such that performance becomes excessively onerous, threatening important loss to one or both parties; and (iv) beyond the parties’ power to prevent or overcome. Although this must be assessed case by case, local courts have generally found that warfare and hostilities are capable of qualifying as exceptional circumstances.
The consequences differ from force majeure in important respects. Under the Saudi CTL, the parties are first required to attempt renegotiation in good faith, without staying performance. If renegotiation fails, courts have the power to restore the contractual balance and reduce the obligation to a reasonable extent. Article 471(3) of the Saudi CTL is especially important for works and service contracts: where general exceptional circumstances upset the contractual balance, the court may restore that balance, extend time, increase or decrease fees, or terminate the contract.
The hardship doctrine is particularly relevant in the current crisis because it addresses the gap between impossibility and mere inconvenience. A contractor who can still perform but only at dramatically increased cost (due to rerouted supply chains, inflated freight rates, or material price surges) may not be able to invoke force majeure but may have a viable hardship claim under GCC law. In practical terms, where war has not made performance impossible but has made it oppressive, seriously loss-making, or commercially distorted, parties should not assume the analysis ends because force majeure is unavailable.
2.3 Suspension, Stoppage and Relief-Event Clauses
One of the clearest lessons from large project contracts is that war-related disruption is not always treated as classic force majeure. Many contracts (particularly in the PPP and infrastructure sectors) adopt a tiered approach that separates time-only relief from compensable employer-risk events. Parties to such contracts should pay close attention to how the event giving rise to the disruption is categorized, as this will determine not only whether relief is available, but what kind of relief.
A common drafting approach in GCC project agreements is to distinguish between:
– Compensation events, which entitle the affected party to both an extension of time and financial compensation for increased costs or lost revenue. Events in this category typically include acts of war (whether declared or not), invasion, armed conflict, blockades, acts of foreign enemies, embargoes, sanctions, political strikes, acts of terrorism, and government actions or failures. In a number of standard-form project agreements used in Saudi Arabia, these events are designed to rebalance the financial model so that the contractor is left “no better and no worse” when the relevant event occurs.
– Relief events, which entitle the affected party to an extension of time and protection from termination for default, but do not carry a right to financial compensation. Events in this category often include natural disasters, epidemics, pandemics, non-political strikes, and similar neutral supervening events.
The classification of the current disruption can have a material financial impact, particularly on long-duration projects where cost overruns from supply chain disruption could be very substantial. If the facts amount to an act of war, a blockade, or an embargo, they are more likely to fall into the compensable category. If the facts are characterized as a general disruption akin to a natural disaster, a party may receive time but bear the additional cost itself.
A further nuance, often missed, is that the same factual disruption may be classified differently depending on when it occurs and who bears the underlying risk. In complex project agreements, the same type of interruption may be compensable before completion but only relief-generating after service availability has started, or vice versa. Project contracts frequently ask not simply whether there has been a war event, but whether the resulting consequence falls in the works period, the operational period, and which party bears the risk in that given time. Parties should avoid assuming that a “war event” will be treated identically before and after completion.
The reason for the stoppage also matters. If works stop because cargo cannot safely move, because regional airspace is closed, or because a government measure affects lawful transit, the clause analysis may support suspension or extension of time relief. But if the underlying issue is that a contractor failed to order early enough, failed to secure alternatives, or is simply faced with a more expensive route, the contractor will have failed to mitigate and entitlement may look very different. Some project contracts go further and expressly exclude failures to pay money, funding problems, poor procurement planning, negligent late delivery, foreseeable conditions, or subcontractor failures that do not independently qualify as the defined event. In some contracts, the affected party can remain exposed to longstop dates, liquidated damages, and even default-style triggers unless the relief machinery is properly engaged, noticed, and evidenced.
2.4 Compensation Events, Variation and Change-Order Routes
In major projects, the strongest route to relief may sometimes be neither force majeure nor hardship, but a price adjustment or variation mechanism. This point is frequently overlooked in the initial crisis response, but it can be outcome-determinative.
If an employer or procurer directs a change to the logistics solution, restricts access, resequences the works, changes the required specification, steps in, or requires alternative routing or performance methods, the resulting disruption may fit better under a change or price adjustment regime than under force majeure. That distinction matters because price adjustment and variation clauses are much more likely to support both time and money. Force majeure typically provides time relief or temporary suspension, but not cost recovery unless the clause expressly says so.
This is especially important where performance remains possible, but only through a materially different supply chain or cost base than those previously agreed. In those cases, a purely force majeure framing may be commercially,legally and strategically weaker than a change-order or price-adjustment framing. A contractor who can demonstrate that the employer required or acquiesced in a different method of performance (rerouted materials, substitute specifications, alternative access arrangements) may have a stronger claim under the variation mechanism than under force majeure.
This is precisely why early analysis matters: parties should decide quickly whether their strongest case is suspension, extension of time, compensable change, hardship, or a negotiated re-baselining of the project.
2.5 Market Disruption, Price Shock and Allocation-of-Supply Clauses
The current conflict has produced exactly the type of market dislocation that force majeure clauses often handle poorly: fuel spikes, freight escalation, war-risk insurance premiums, scarcity of inputs, and distorted availability of shipping and logistics capacity. Where performance remains physically possible but commercially destabilized, parties should look beyond force majeure to any market disruption, price adjustment, indexation, allocation-of-supply, pass-through, or renegotiation provisions in their contracts.
In commodity and long-term supply contracts, the live issue is often not impossibility, but who bears scarcity and cost shock. In construction and energy projects, the same problem may surface through price adjustment provisions, change-in-cost clauses, or bespoke financial-adjustment machinery. The legal distinction between “cannot perform” and “can perform, but only at much greater cost” will be central to many disputes arising from this crisis. The former is closer to impossibility; the latter more naturally raises hardship or contractual rebalancing.
Allocation-of-supply clauses require particular attention where a supplier has multiple customers and limited stock due to the disruption. The contractual provisions governing how available supply is distributed among customers (whether pro rata, priority-based, first-come-first-served, or at the supplier’s discretion) should be reviewed carefully and early.
2.6 Change in Law and Official Measures
War-driven disruption will sometimes stem not only from hostilities themselves, but from official acts: airspace closures, emergency transport restrictions, export or import controls, changes to permit conditions, port restrictions, security directions, or labour and worksite instructions imposed by authorities. Where that occurs, the contract may classify the issue under change in law or government-action provisions rather than under force majeure.
In sophisticated project contracts, change-in-law regimes often ask very specific questions: what change to the works or services is required, what revenue impact follows, what capital expenditure becomes necessary or unnecessary, and how should the payment mechanism be adjusted? A government measure may point toward continued performance on modified terms (variation, repricing, revised programme, altered access, updated permits) rather than suspension or termination.
- Contracts Most Exposed
3.1 Shipping and charterparty contracts
We covered the impact on shipping contracts in detail in our earlier update, Shipping Contracts Under Pressure: Legal Implications of the Iran Conflict and Hormuz Blockage (March 2026), including force majeure, war risk clauses (CONWARTIME/VOYWAR), liberty clauses, and insurance. The key additional development since that publication is Iran’s selective passage regime, under which vessels may transit the strait only with IRGC approval, potentially on payment of a reported US$2 million fee. This raises further questions regarding the allocation of such costs under existing charterparties and the interaction with war risk provisions.
3.2 Supply chain contracts
Contracts for the supply of equipment, materials, petrochemicals, metals, and bulk goods are among the most directly affected. Key clauses to review include liability provisions for non-performance or delayed delivery, price adjustment and renegotiation mechanisms, allocation-of-supply provisions governing distribution of scarce stock among multiple customers, and termination rights triggered by prolonged price volatility or persistent supply failure.
3.3 EPC and infrastructure contracts
The impact on EPC and infrastructure contracts is largely indirect, flowing through the supply chain rather than from the conflict itself. The principal issues include extensions of time claims (where disentangling conflict-related delay from pre-existing issues will be critical), cost claims (where entitlement depends on whether the disruption is classified as a compensation event or a relief event), change orders and variations (which may provide a more flexible route to recovering both time and cost), and insurance recovery (where war or terrorism exclusions in project policies may limit coverage).
A sole event may qualify as a delay event now, only to also be characterized as a disruption event at the dispute settlement phase. The characterization will heavily impact the compensation routes and available remedies: a delay event will afford the contractor time-related relief and potentially prolongation costs as permitted by the contract, whereas a disruption event, although it does not delay completion and may only affect efficiency of performance, will entitle the contractor to claims of loss of productivity and potential additional costs pertaining to labour or resources. Parties are advised to engage a delay analysis expert early on in order to avoid later surprises, come arbitration or litigation.
Many project agreements exclude compensation for losses that are, or should have been, recoverable under the project’s insurance programme, an interaction that should be reviewed urgently.
3.4 Oil and energy contracts
The energy sector faces the most acute exposure. Crude oil supply agreements and LNG sale and purchase agreements are directly affected by the Hormuz closure. QatarEnergy’s force majeure declarations (with repairs to damaged Ras Laffan infrastructure expected to take three to five years) illustrate the potentially long-term nature of the disruption. Disputes are likely around delivery failure, nomination failures, refusal to take or pay, the basis for sourcing alternative supply, and alleged overreach in force majeure declarations by parties who may not in fact be prevented from performing.
3.5 Operating-period contracts
Parties should not overlook that operating-period contracts may be affected differently from construction-period contracts. The same event that delays completion or commissioning may later present as reduced availability, higher operating cost, maintenance disruption, or insurance difficulty. As noted at Section 2.3, major project contracts often classify disruption in the works period and the operational period under different regimes, so parties should avoid assuming that a “war event” will be treated identically across both phases.
- Immediate Steps for Affected Parties
The immediate priority is disciplined contract classification, not reflex invocation of force majeure. In practical terms, parties affected by the current conflict should now:
(a) Map your clause landscape
Review the relevant clauses across the entire set of contracts: force majeure, suspension or stoppage, relief or compensation events, change in law, variation and change order, market disruption, price adjustment, termination, and notice provisions. Identify the governing law and ask whether the facts point to impossibility, hindrance, delay, onerousness, government action, or an instructed change in performance. Check whether the clause requires the event to be the sole or direct cause, and what mitigation is expected.
(b) Build your contemporaneous record
Whatever claims are ultimately pursued, their success will depend on the quality of the contemporaneous evidence. Parties should immediately begin building and maintaining a detailed record of: all notices served and received; supplier and sub-contractor communications regarding disruption; documented disruptions to materials, equipment, and workforce availability; freight prices, insurance premiums, and evidence of cost increases; government directions, advisories, or restrictions; mitigation steps taken or considered (and reasons for rejecting alternatives); and detailed cost tracking of all additional expenditure attributable to the disruption.
(c) Serve protective notices promptly
Even where the full impact of the disruption is uncertain, parties should consider serving protective or precautionary notices under all applicable contractual mechanisms. Failure to comply with notice deadlines—many of which run from the date on which the party “becomes aware” of the event—can extinguish an otherwise valid claim. This applies not only to the primary contract, but also to subcontracts, collateral documents, and insurance policies. It is better to serve a notice and later withdraw it than to miss a deadline.
(d) Test mitigation before it is used against you
Parties should actively evaluate and, where possible, test mitigation options: alternative routing, substitute materials, resequencing, partial performance, stock drawdown, temporary suspension, and accelerated recovery measures. Even where mitigation is rejected as impracticable or disproportionately costly, the process of having evaluated it (and the reasons for the decision) should be documented. An opposing party or tribunal will ask what alternatives were available, and the answer should not be constructed after the event.
(e) Consider variation or negotiation before confrontation
Proactive, good-faith engagement with counterparties (including discussions about variations, alternative performance methods, interim arrangements, and cost-sharing) is likely to produce better commercial outcomes than an immediate force majeure confrontation. In many cases, the contract itself requires such engagement: the exceptional circumstances doctrine under the law of various GCC states mandates an attempt at renegotiation before either party may apply to the court. Where performance remains possible but through a materially different method, agreed re-baselining of the project may preserve the commercial relationship and avoid the risks of a contested force majeure claim.
(f) Check collateral documents
Parties should not overlook direct agreements, collateral warranties, key subcontracts, and related finance documents, which may contain their own notice, suspension, termination, and step-in machinery. A party that moves too quickly at subcontract level (for example, by terminating a supply agreement or declaring suspension) may find that upstream rights are constrained by intervention rights or notice periods in the project agreement or lenders’ direct agreement that are designed to preserve project continuity.
(g) Evaluate prolonged-disruption mechanics early
Where disruption is likely to continue (which the current geopolitical outlook suggests is a realistic scenario), parties should evaluate early the consequences of prolonged-event provisions, continuation rights, longstop exposure, and termination mechanics. Some warfare and hostilities clauses provide for automatic termination after a specified period. Others require a positive election by one or both parties. The financial consequences of termination (including compensation payable) will depend entirely on the contractual terms and the circumstances of termination.
- Dispute Resolution Considerations
The current crisis is likely to generate a significant volume of disputes across multiple sectors and jurisdictions. Parties should be thinking now about their dispute resolution strategy:
– Arbitration versus litigation: many international contracts in the GCC provide for arbitration, whether under the rules of the ICC, DIAC, SCCA, LCIA, or other institutions. Parties should review their dispute resolution clauses to understand the applicable rules, seat, and procedural requirements.
– Emergency and interim relief: where time-sensitive issues arise (such as a threat to terminate, a refusal to release materials, or a dispute over whether suspension has been validly invoked), parties should consider whether their arbitration rules permit applications for emergency arbitrator relief or interim measures.
– Expert determination and adjudication: some construction contracts provide for interim dispute resolution through adjudication or expert determination, which can provide rapid decisions on discrete issues (such as entitlement to an extension of time) pending final resolution.
– Preservation of evidence: the contemporaneous record discussed above is not merely good practice; it is the foundation on which any dispute will be decided. Parties should implement document retention protocols now, before the focus shifts from crisis management to dispute resolution.
Ontier’s Capabilities
At Ontier, we understand that the current crisis demands more than technical legal advice; it requires commercial pragmatism, speed of response, and deep regional knowledge. Our teams are actively advising clients across the construction, energy, infrastructure, and supply chain sectors on the contractual and strategic implications of the conflict.
Ontier’s Middle East Desk is supported by an extensive network of experts and deep experience in the Saudi, UAE, and wider GCC markets. Our Construction & Infrastructure, Energy, Litigation, and International Arbitration practices span Saudi Arabia, the UK, Spain, Italy, the US, and Latin America, providing a truly global capability.
We are positioned to assist with:
– rapid contract triage across your portfolio to identify the right contractual mechanism for each affected agreement;
– preparing and responding to force majeure, suspension, and disruption notices;
– advising on the interaction between contractual provisions, GCC statutory law, and English law;
– developing claim strategies for extensions of time, cost claims, variations, and compensable adjustments;
– change-order structuring, subcontract alignment, and project re-baselining;
– managing disputes before arbitral institutions (ICC, DIAC, SCCA, LCIA) and national courts; and
– identifying immediate risk mitigation steps to protect your position and preserve ongoing business relationships.
We would be pleased to discuss how we can assist you if your business has been affected by the current crisis.
Key Contacts
Kamal Khashoggi
Partner
Saudi Arabia
kkhashoggi@ontier.net | +1 617 4357691 / +966 530066212
Lojayne Shaheen
Partner
Saudi Arabia
lshaheen@ontier.net | +966 55 770 9752
Mercedes Romero
Partner
Spain
mromero@ontier.net | +34 648 81 62 36
Claire Morel de Westgaver
Partner
United Kingdom
claire.morel@ontier.co.uk | +44 7867 800879
This update is provided for general information purposes only and does not constitute legal advice. The information contained herein should not be acted upon without obtaining specific legal advice in relation to the particular circumstances of each case. Ontier accepts no responsibility for any loss arising from reliance on the contents of this update.
[1]U.S. Energy Information Administration, “Amid regional conflict, the Strait of Hormuz remains critical oil chokepoint” (16 June 2025); U.S. EIA, “About one-fifth of global liquefied natural gas trade flows through the Strait of Hormuz” (24 June 2025).
[2]EUROCONTROL, European Aviation Overview 2026 – Week 9 (5 March 2026) and Week 11 (19 March 2026).
[3]S&P Global Market Intelligence, “Marine war insurance for Hormuz dries up as Middle East war intensifies” (3 March 2026). See also S&P Global, Daily Update (6 March 2026).
[4]IATA, “Middle East Conflict Exposes Jet Fuel Supply Vulnerabilities” (6 March 2026).
[5]See, e.g., Reuters factbox, “Airlines cancel more flights as Middle East conflict escalates” (16 March 2026).
[6]See, e.g., CNBC, “Iran’s parliament backs blocking Strait of Hormuz” (23 June 2025); Newsweek, “Iran’s Parliament Votes to Close Strait of Hormuz After US Attacks” (22 June 2025). See also Freshfields Bruckhaus Deringer, “High stakes in the Strait of Hormuz: Force majeure and supply chain disruptions” (March 2026).
[7]Saudi Civil Transactions Law, Royal Decree No. M/191 (18 June 2023), official translation available at trans-lex.org.
[8]UAE Civil Transactions Law, Federal Law No. 5 of 1985, available at uaelegislation.gov.ae.
