The Middle East Wars 2026: Revisiting Force Majeure

Starting Point: Governing Law and the Contract

Most international engineering construction contracts contain a force majeure clause. While the language may differ, the basic criteria are usually consistent in that:

• an extension of time may be granted for the duration of the force majeure event but there is no entitlement to cost, unless the contract expressly provides for financial compensation; and
• a force majeure event must be unforeseeable at the time of entry into the contract, unavoidable, and prevent either or both parties from discharging their respective obligations under the contract and cause an actual delay to the progress of the work.

Common law (e.g. English Law), Civil Code based law and Islamic law each treat force majeure or its equivalent differently but ultimately the same principles apply – neither party is responsible for the force majeure event and each bear their own costs resulting from it with the contractor excused for the delay caused.

Under English law there is no general relief for force majeure. A force majeure clause has to be written into the contract for it to apply.

Examination of the relevant provisions of the contract and the governing law must therefore be the first step in ascertaining whether the actual condition(s) encountered might qualify as a force majeure event(s). However, it is the facts appertaining to the actual events that are crucial in determining causation and entitlement.

In civil law jurisdictions, force majeure is not a creature solely of contract; it exists as a statutory doctrine. However, without a contractual clause, parties are left with the default legal regime, which is typically narrow and not commercially tailored. Parties may nevertheless agree their own force majeure provisions to allocate risk and define the consequences of such events more clearly. In civil jurisdictions, other relief may be available in addition to what is included in the contract.

Analysing The Actual Conditions Encountered

The reality is that there are two wars: USA and Israel against Iran and Israel against Hezbollah in Lebanon. Except for the USA, whose territory has not been attacked, the military interventions in Iran, Lebanon and Israel are likely to qualify as acts of war within the meaning of force majeure clauses.
Although the Gulf States have suffered missile & drone attacks by Iran, it is questionable whether these constitute acts of war within the meaning of force majeure. By way of example:

1. A direct attack on a facility where construction work is being undertaken and causes damage to the works and / or is such as to prevent the temporary continuation of work is likely to qualify as force majeure.
2. Conversely a direct attack on an operating facility that causes damage resulting in the shut-down of one unit may qualify for the owner / operator as force majeure in terms of the lost output from that unit. However, if on the same facility where new construction is being undertaken that has not been attacked or damaged, but the employer has closed the entire facility for safety or other reasons, this is unlikely to qualify as force majeure. It may be considered as an action by the employer for which it bears liability for delays to the contractor’s works and costs resulting in EOT and financial recovery. In this example even if the employer’s motive stems from a force majeure type event the impact on the contractor is not the force majeure event but the employer’s decision to order the shut-down.
3. Similarly, if communities involved in construction work are under immediate threat of attack and the authorities mandate that people resort to sheltering in bunkers, then this might qualify as force majeure but the duration would only be for the period of time spent getting to, remaining in and returning to the normal place of work after the threat recedes – while highly disruptive this is unlikely to result in significant delay and extension of time and certainly no cost recovery. Again there is a question over the cause of the event – if new laws have been enacted to give authorities such powers this could be a change in law. More likely though authorities will rely on existing emergency powers, which is not a change in law.

Therefore, it is essential to establish the facts appertaining to the actual conditions encountered and their effects and analyse these in the context of the contractual and legal provisions.
However, where the event causing delay is not itself the force majeure but something else, interventions by employers and / or governments may result in employer liabilities for not only EOT but also compensation of the costs incurred by the contractor.

Remoteness From The Theatre Of War

The closure of the Straits of Hormuz by Iran resulting in fluctuations in oil and gas prices and the emerging impact upon global trading and economies, as well as the USA imposed limitations on sea transport into and out of the Gulf, has been generally reported. As of mid June 2026, the circumstances are continuing and the full effects worldwide remain to be experienced.

Furthermore, ship-owners’ – and their insurers’ – unwillingness to allow their vessels to pass through the Straits until the risk of attack has ended or significantly subsided, even if the Straits are no longer formally closed by Iran or blockaded by the USA, simply exacerbates the impact.

Since these are acts of governments or decisions by industry organisations, and thus far there has been limited reported military action in the Straits and its environs, these circumstances may not of themselves qualify as force majeure within the meaning of individual construction contracts.

While the consequences of these circumstances may give rise to significant delays and increased costs on engineering construction projects globally, most contracts do not have the capacity and regulatory provisions to provide the relief and remedy necessary to address and resolve the effects of such circumstances. Simply, the circumstances are unprecedented and remote from individual projects and their contracts and therefore beyond reasonable contemplation.

Nevertheless, a significant and growing problem exits for the engineering construction industry worldwide – owners / investors / employers, contractors, supply network / manufacturers, service providers.

Force Majeure And Other Considerations

While, in certain circumstances, the actual conditions might, in principle, qualify as force majeure within the meaning of the relevant construction contract, causation must also be proven – not only that the force majeure event has occurred but it has prevented performance. The actual delay caused by the force majeure event is required to secure the corresponding extension of time entitlement.

In this context, the effects of force majeure on the work performance must be segregated from the impact of other pre-existing matters that have occurred or are occurring on the project – for example delays for which the contractor is liable, exceptionally inclement weather (potentially itself also force majeure), changes and other regularly occurring ‘project issues’, employer and / or government decisions / actions, and the impact of USA government tariffs.

Accordingly, project teams must be very familiar with what has been contracted (scope, price, time) and acutely aware of, and record and report on, the day-to-day occurrences on the project in terms of events and circumstances actually affecting or likely to affect work performance, time for completion and cost.

Although legal teams can provide advice regarding the legal and contractual provisions regarding force majeure, the value of such advice is dependent upon the relevant project records that qualify events as being force majeure and identify the effect. The records are necessary to convert the occurrence of the event into an extension of time.

Alternatives To Force Majeure

Although an extension of time arising from a force majeure event provides the contractor with the commercial benefit of avoiding delay liquidated damages or penalties, it does not, except in specific circumstances, give rise to recovery of additional costs. Costs resulting from force majeure, usually irrecoverable, are likely to be very significant.

Where employers and / or governments give instructions, make decisions and / or take actions with regard to a specific project, then subject to the terms of the contract and the relevant legal provisions, the contractor may be entitled to extension of time and recovery of additional costs.

Where there are acts of governments or decisions by industry organisations and similar circumstances that are not related to a specific project and the consequences give rise to significant delays and increased costs and there are no relevant provisions in the contracts or the relevant law to provide the relief and remedy to resolve the effects of such circumstances, then an alternative solution is required.

In this context, neither party (employer & contractor) on a specific project are responsible for the situation but both are affected by it. There is common interest in finding a solution that satisfies both parties (or that both parties can accept). In most instances the employer requires its project completing, and the contractor is the only party that can do this effectively and economically – particularly where other contractors are all experiencing the same issues. The time required to achieve completion should be relatively easily agreeable by both parties adopting a reasonable and realistic approach.

The additional costs are a different matter. Both parties are likely to incur costs that were not foreseeable and not included in their respective budgets. However, the parties are not equal in this respect. The employer will ultimately earn or obtain benefit from the project over its operational lifetime whereas the contractor’s earnings are confined to the contract price. This is very unlikely to contain margin sufficient to cover the additional costs without the contractor incurring costs that could, worst case, lead to business collapse. Therefore, it is in the interests of both parties to find an agreement that is, in the circumstances, fair and reasonable.

While an agreement would be ultimately enshrined in a formal legal document such as a side agreement or contract variation, the process of arriving at an agreement cannot refer to or rely upon the normal contractual arrangements. It must instead be based upon good will, transparency and trust.

As experienced during the onset of the Covid pandemic, finding such solutions outside of the contract means both parties may share in the benefit of the completed project. While force majeure provisions may provide interim time relief (if they apply) they are at best considered as triage and not a complete or satisfactory solution to the issues faced.

Join us at our forthcoming webinar, co-hosted with Freeths LLP, where we will discuss how such solutions outside of the contract may be achieved.

Meanwhile, if there is anything in this article that you would like to discuss, then please feel free to contact us.

Carmen Velasco – Managing Partner, Kingsfield Academy, carmen.velasco@kingsfieldacademy.com

Alex Johnson – Partner – Freeths LLP, alex.johnson@freeths.co.uk