Protecting Your Position: Key Contractual Considerations for Construction Projects in the Middle East

A practical guide for employers, contractors, and project participants navigating force majeure, delay, cost escalation, and risk allocation across the UAE, Saudi Arabia, Qatar, Kuwait, and Bahrain.

Introduction

On 28 February 2026, the United States and Israel carried out targeted military strikes against Iranian military and nuclear facilities. The resulting conflict has escalated rapidly and now directly affects all six GCC states. Iranian retaliatory strikes have hit airports, ports, energy infrastructure, residential areas and desalination plants across the UAE, Saudi Arabia, Qatar, Bahrain, and Kuwait. The Strait of Hormuz – through which approximately 20% of global oil and LNG transits – has been effectively closed to commercial shipping since early March, with traffic reduced by approximately 95% from pre-conflict levels. Iran has imposed a de facto “permission to transit” regime and a reported USD 2 million toll on vessels seeking passage.

As of 26 March 2026, the conflict has entered its fourth week. On 25 March, it was reported that U.S. President Trump had paused strikes on Iranian energy infrastructure following warnings from Gulf states that escalation against Iran’s power grid would trigger unlimited Iranian retaliation against their energy and desalination facilities.

Force majeure is no longer a theoretical risk in the Gulf. It is now being invoked in live energy and commodity contracts. QatarEnergy has declared force majeure on LNG supply contracts with China, Italy, Belgium and South Korea following Iranian missile strikes on 18 and 19 March that damaged the Ras Laffan industrial complex, eliminating approximately 17% of Qatar’s LNG export capacity, with repairs estimated at three to five years. Bapco Energies in Bahrain declared force majeure following disruption to the Sitra refinery complex. Kuwait Petroleum Corporation has declared force majeure on crude and refined product exports. Aluminium Bahrain (Alba) – the world’s largest single-site aluminium smelter – has declared force majeure on deliveries and cut output by 19%. Qatalum in Qatar has commenced a controlled production shutdown due to natural gas shortages.

For the construction sector, the consequences are severe and worsening. This briefing identifies the specific areas of construction law across the UAE, Saudi Arabia, Qatar, Kuwait, and Bahrain that are affected by the conflict, and sets out the key contractual and statutory frameworks that project participants should be considering.

At a Glance

• Force majeure is being invoked in live contracts across the Gulf. QatarEnergy, Kuwait Petroleum Corporation, Bapco Energies, and Aluminium Bahrain have all declared force majeure. This is no longer a theoretical exercise.
• The Strait of Hormuz is effectively closed. Shipping traffic has fallen by approximately 95%. Maersk and other major lines have imposed emergency freight increases of USD 1,800 to USD 3,800 per container across the region.
• Energy infrastructure has been directly affected in Qatar (Ras Laffan), Saudi Arabia (Shaybah, Berri oil fields), the UAE (ADNOC refinery, Shah gas field, Fujairah oil installations, Abu Dhabi crude oil pipeline), Bahrain (Sitra refinery, desalination plant), and Kuwait (fuel storage at Kuwait International Airport).
• Construction materials – cement, steel, aluminium, concrete – are subject to severe supply disruption. Aluminium prices have risen approximately 8% in two weeks. Gulf states produce approximately 9% of global primary aluminium, rising to over 20% excluding China.
• All five jurisdictions – UAE, KSA, Qatar, Kuwait, and Bahrain – distinguish between force majeure (impossibility) and hardship/exceptional circumstances (excessive onerousness). The distinction carries materially different legal consequences.
• Contractors must serve protective notices within strict FIDIC deadlines (14 or 28 days) or risk losing entitlements entirely. Notice failures are fatal to claims in all five jurisdictions.
• For new contracts, the conflict’s foreseeability must now be expressly addressed, as it may defeat standard force majeure claims for agreements entered into after 28 February 2026.

1. Force Majeure: From Theory to Practice

Force majeure is no longer a theoretical risk in the Gulf. It is now being invoked in live energy contracts.

Current reporting indicates that, as of 26 March 2026, major state-linked energy suppliers in parts of the Gulf have declared force majeure, or equivalent contractual relief, in response to attacks on energy infrastructure and severe disruption to shipping through the Strait of Hormuz. The principal examples reported to date are:

• Qatar: QatarEnergy, in relation to certain LNG contracts with China, Italy, Belgium and South Korea, following Iranian missile strikes on the Ras Laffan industrial complex on 18 and 19 March 2026 that damaged two LNG processing trains and a gas-to-liquids facility, eliminating approximately 17% of Qatar’s LNG export capacity with repairs estimated at three to five years.
• Bahrain: Bapco Energies, following disruption linked to the Sitra refinery complex.
• Kuwait: Kuwait Petroleum Corporation, in relation to crude and refined product exports.
• Bahrain/Qatar (Aluminium): Aluminium Bahrain (Alba) has declared force majeure on deliveries and cut output by 19%. Qatalum has commenced a controlled production shutdown due to natural gas shortages.

That said, precision matters. The legal position is not that “the Gulf countries” have issued a single blanket declaration. The more accurate point is that certain affected suppliers, many of them state-owned or state-linked, appear to have invoked force majeure under specific contracts.

For parties operating in oil and gas, shipping, construction, logistics, and downstream supply chains, the issue is not the label. It is whether the applicable contractual and evidential threshold has been met.

The key considerations will usually be:

• Does the clause cover war, hostilities, infrastructure attacks, navigational disruption, blockade, or government intervention?
• Has the event genuinely prevented performance, or only made it slower, more difficult, or more expensive?
• Have notice requirements been complied with strictly and on time?
• What mitigation steps were reasonably available?
• What is the contractual consequence: for example suspension, extension of time, cost allocation, price adjustment, or termination?
  In disputes of this kind, outcomes are dependent on clause wording, causation, contemporaneous records, and the quality of the notice.

2. The Contractual Framework: FIDIC

Most construction contracts across the Gulf are based on or influenced by FIDIC standard forms. A notable exception is public sector contracts in Saudi Arabia, which are governed by the Government Tenders and Procurement Law (GTPL).

Under FIDIC (Clause 19 of the 1999 Edition; Clause 18 of the 2017 Edition), a force majeure or “Exceptional Event” must satisfy a four-limb test: the event must be (i) beyond the party’s control; (ii) not reasonably foreseeable at the contract date; (iii) not reasonably avoidable; and (iv) not substantially attributable to the other party.

War and hostilities are expressly listed as qualifying events – and critically, the FIDIC formulation applies “whether war is declared or not,” which is directly relevant given that no formal declaration of war has been issued by the U.S. Congress.

Key Considerations

• Foreseeability: For contracts entered into after 28 February 2026, the conflict may be deemed foreseeable, materially weakening force majeure claims. New contracts should address this expressly.
• Geographic limitations: Many contracts require force majeure events to occur “within the country where the works are being performed.” Since the armed conflict originates in Iran, the indirect effects on projects in the UAE, KSA, Qatar, Kuwait, and Bahrain (supply chain disruption, airspace closures, shipping embargo) may not automatically qualify unless the clause is broadly drafted.
• Notice requirements: Under FIDIC, notice must be given within 14 days (1999 edition) or 28 days (2017 edition). This operates as a strict condition precedent. Late notice can result in total forfeiture of entitlement. In the 2017 edition, excusal runs only from the date the notice is given, creating an unexcused gap for any period of delay before notice. Protective notices should be issued promptly, even where the full extent of disruption is not yet known.
• Causation: The contractor must demonstrate a direct causal link between the conflict event and its inability to perform – the “but-for” test. A general atmosphere of regional tension is unlikely to suffice. Claims should identify specific disrupted activities and their nexus to the conflict.
• Mitigation: The affected party must use “all reasonable endeavours” to minimise delay. Failure to explore alternative logistics routes, substitute materials, or mitigate workforce shortages may undermine a claim.
• Ongoing duty to update: Under the 2017 edition, the affected party must provide periodic updates every 28 days while the event continues.

3. The Statutory Framework: A Comparative Overview

All five jurisdictions draw a critical distinction between force majeure (impossibility) and hardship/exceptional circumstances (excessive onerousness). The distinction carries materially different legal consequences.

3.1 United Arab Emirates

• Force Majeure – Article 273, Civil Code: The threshold is impossibility. The event must be unforeseeable, unavoidable, and must render performance impossible – not merely more costly or inconvenient. Where impossibility is established, the obligation is automatically extinguished and the contract terminates by operation of law. For partial or temporary impossibility, Article 273(2) permits suspension or partial termination. Article 287 confirms that a party is not liable for harm caused by factors beyond its control.
• Hardship – Article 249, Civil Code: Where performance has not become impossible but has become excessively onerous due to exceptional events of a general nature, the court may reduce the burdensome obligation to a “reasonable level.” This is a mandatory provision – any agreement to the contrary is void.
• Contractual force majeure clauses generally take precedence over the statutory provisions. However, Article 273 operates as a statutory fallback even where the contract is silent.

3.2 Saudi Arabia

• Force Majeure – Article 110, Civil Transactions Law (CTL): If performance becomes impossible for a reason beyond the debtor’s control, the obligation and the corresponding obligation are extinguished and the contract is automatically terminated by operation of law. For partial impossibility, only the affected part is extinguished. For temporary impossibility in time-based contracts, the same principle applies.
• Article 125, CTL: Provides that a person is not liable for harm caused by events beyond their control, such as force majeure, unless otherwise agreed. This is a general liability defence.
• Exceptional Circumstances – Article 97, CTL: Where extraordinary events, unforeseeable at the time of contracting, make performance excessively onerous so as to threaten “heavy losses,” the debtor may invite the other party to renegotiate without undue delay. If renegotiation fails, the court may reduce the obligation to a reasonable level. This is a mandatory provision – Article 97(4) expressly states that any contrary agreement is void. Crucially, the debtor cannot unilaterally suspend performance while invoking this provision.
• Construction-Specific – Article 471(3), CTL (Muqawala): Specifically addresses construction contracts. Where exceptional circumstances of a general character disrupt the contractual balance and undermine the basis of the financial estimate, the court may order restoration of the contractual balance, including extending the execution period, increasing or decreasing the fees, or ordering termination. Unlike Article 97, this provision does not require the party to first attempt renegotiation, but it lacks mandatory language, potentially allowing parties to exclude its operation.
• Article 174, CTL: Unlike exceptional circumstances, force majeure is not a mandatory rule of public policy. Parties may contractually agree that “the effects of force majeure be borne by the debtor.” Where the contract contains a force majeure clause, it takes precedence.
• Article 179, CTL: Courts may reduce liquidated damages if the rate is unreasonably high, punitive, or if the contractual obligation was partially fulfilled.
• Government Tenders and Procurement Law (GTPL): Public sector construction contracts in KSA are governed by the GTPL rather than standard FIDIC forms. The GTPL contains its own risk allocation and force majeure framework, and parties must review its specific provisions.

3.3 Qatar

• Force Majeure – Article 188, Civil Code: Where an extraneous event beyond the control of the parties, which could not reasonably have been foreseen and cannot be prevented, renders performance impossible, the corresponding obligation is extinguished, the obligor is released from liability, and the contract is deemed rescinded by operation of law. Where impossibility is partial, the obligee may enforce the contract to the extent possible or demand termination. Article 188 is not mandatory – force majeure may be made subject to contractual agreement. Article 258 confirms that a party is not liable for harm caused by force majeure.
• Hardship – Article 171(2), Civil Code: Where exceptional, unforeseeable events render performance excessively onerous, threatening excessive loss, the court may intervene to restore the contractual equilibrium. This is a mandatory provision – contractual risk allocation clauses do not exclude the court’s discretion to intervene where the statutory conditions are met.
• Practical note: QatarEnergy’s force majeure declarations on LNG contracts demonstrate that the threshold is being met in practice for energy contracts directly affected by the Ras Laffan strikes. However, for construction contracts where performance is merely more expensive or slower – rather than impossible – the hardship doctrine under Article 171(2) may be the more appropriate avenue.

3.4 Kuwait

• Force Majeure – Articles 214, 215 and 437, Civil Code: An obligation is extinguished if its performance becomes impossible due to an external cause for which the debtor is not responsible (Article 214). For partial impossibility, the obligation is extinguished only in that part (Article 215). In bilateral contracts, if an obligation is extinguished due to impossibility, the corresponding obligations are also extinguished and the contract is automatically dissolved (Article 437). Force majeure requires an event that is external, unforeseeable, and impossible to prevent.
• Hardship – Article 198, Civil Code: If exceptional general circumstances arise that could not have been foreseen, and as a result the performance of the contractual obligation, although not impossible, becomes burdensome to the debtor such that it threatens him with severe loss, the judge may reduce the burdensome obligation to a reasonable limit.
• Article 295, Civil Code: It is permissible to agree that the obligor will bear liability for cas fortuit and force majeure – meaning parties can contractually allocate force majeure risk.
• Practical note: Iranian strikes have directly targeted Kuwait, including fuel storage tanks at Kuwait International Airport and other civilian infrastructure. Kuwait Petroleum Corporation has declared force majeure on exports. For construction projects in Kuwait, the direct attacks on Kuwaiti territory should strengthen the causation nexus for force majeure claims, subject to clause wording and notice compliance.

3.5 Bahrain

• Force Majeure – Article 165, Civil Code (Decree No. 19/2001): A party is not liable for damages arising from a “foreign cause” beyond their control, such as force majeure, unforeseen incident, or the fault of a third party. The Bahraini Court of Cassation has held that the foreseeability test is objective: the event must be unforeseeable not only to the debtor but also “to the most alert and insightful of persons” (Challenge No. 145 J.Y. 2002). Three conditions must be satisfied: the event must be (i) unforeseeable, (ii) unavoidable despite reasonable efforts, and (iii) must render performance impossible – not merely more costly or commercially burdensome.
• Impossibility – Article 145, Civil Code: In bilateral contracts, if a force majeure event renders performance impossible, the corresponding obligation is discharged and the contract is automatically terminated. For partial impossibility, the affected party may demand either enforcement of the remainder or termination of the contract.
• Article 216, Civil Code: Where specific performance becomes impossible or is delayed, the debtor must compensate the creditor unless the non-performance was due to a foreign cause beyond their control. There is a presumption that the debtor is at fault; force majeure operates as a defence to rebut that presumption.
• Articles 218 and 219, Civil Code: Except in cases of fraud or gross fault, the parties may contractually agree to waive the defence of force majeure. This is a notable distinction – Bahrain permits contractual exclusion of force majeure defences.
• Hardship – Article 130, Civil Code: Applies where performance is possible but has become more onerous due to events beyond the reasonable contemplation of the parties at the time of contracting. Unlike force majeure, hardship does not require impossibility. The court may intervene to adjust the obligation. The two doctrines – hardship and force majeure – are distinct and must not be conflated.
• Practical note: Bahrain has been directly affected by Iranian attacks, including strikes on the Sitra refinery complex, a desalination plant, and residential areas in Manama. Bapco Energies has declared force majeure on its group operations. The direct physical impact on Bahraini territory provides a strong causation basis for force majeure claims by contractors working on projects in Bahrain, subject to the usual requirements of clause wording, impossibility, and timely notice.

4. Liquidated Damages and Extension of Time

Where the conflict causes unavoidable delay, contractors should be entitled to an extension of time (EOT), which operates as a defence against liquidated damages (LDs).

• FIDIC Clause 19.4 (1999): Entitles the contractor to EOT for force majeure events. Where the event falls within the listed “political” categories (war, hostilities, rebellion), the contractor is also entitled to cost recovery – but not profit.
• FIDIC Clause 17.3 (Employer’s Risk): War and hostilities are listed as an Employer’s Risk independently of the force majeure regime. This provides a separate route to EOT and rectification costs where physical damage to the works or site occurs. There is no foreseeability threshold. Parties are advised to plead both regimes in the alternative.
• Under the regional Civil Codes: If the obligation to complete on time is rendered entirely impossible, that obligation is “extinguished” and falls away. The time for completion will extend to when the works can be completed, or there is no longer any obligation to complete at all.
• Saudi CTL – Article 179: Courts may reduce liquidated damages if the rate is unreasonably high or if the contractual obligation was partially fulfilled.
• Saudi CTL – Article 471(3): The court may expressly order an extension of the execution period as part of restoring the contractual balance.

The critical risk: if a contractor fails to serve timely notice, it may lose its EOT entitlement entirely, leaving it exposed to the full application of LDs despite genuine conflict-related delays. This risk is common to all five jurisdictions.

5. Supply Chain Disruption and Cost Escalation

The Strait of Hormuz has been effectively closed since early March 2026. Shipping traffic has fallen by approximately 95%. Maersk has imposed emergency freight increases of USD 1,800 to USD 3,800 per container across all Gulf ports. War-risk insurance premiums for ships transiting Hormuz have increased twelvefold in some cases, with some policies cancelled on 72-hour notice. Iran has imposed a reported USD 2 million “toll” on vessels seeking transit permission.

Construction materials directly affected include:

• Aluminium: Gulf states produce approximately 9% of global primary aluminium (over 20% excluding China and Russia). Alba has declared force majeure and cut output by 19%. Qatalum has shut down. Prices have risen approximately 8% in two weeks, reaching close to a four-year high of USD 3,370 per tonne.
• Steel, cement, and concrete: All either produced in or shipped through the Gulf, now subject to severe logistics disruption.
• Specialty gases: Qatar produces approximately 98% of Gulf specialty gas exports and approximately one-third of global helium – essential for semiconductor fabrication. Spot helium prices have increased approximately 40% in a single week.

Contractual Implications

• Under FIDIC Clause 19.4, increased material costs may be recoverable as “Costs” incurred as a result of force majeure (including all expenditure reasonably incurred, on or off site, but excluding profit).
• Many bespoke Middle East public sector contracts delete or modify the FIDIC price adjustment mechanism. The precise contractual wording must be reviewed.
• Under Saudi CTL Article 471(3), the court may order an increase or decrease in the contract price where exceptional circumstances have undermined the basis of the financial estimate.
• Under UAE Article 249, Qatar Article 171(2), Kuwait Article 198, and Bahrain Article 130, the court may reduce an excessively onerous obligation to a reasonable level – potentially allowing contractors to claim relief from cost escalation that falls short of impossibility.

6. Change in Law

Government directives issued in response to the conflict – airspace closures, safety protocols, restrictions on site access, new security requirements – may qualify as a “change in law” under FIDIC Clause 13.7. This is significant because a change in law claim can entitle the contractor to both time and money, unlike force majeure which, under many bespoke contracts, may be limited to time only.

However, some Middle East public sector contracts restrict change in law entitlements to legislative changes only, excluding executive or regulatory action. The precise contractual definition should be carefully reviewed. Where the facts support it, contractors may advance both force majeure and change in law claims supported by concurrent notices.

7. Disruption and Productivity Claims

Distinct from outright delay, the conflict is causing reduced productivity on sites across the region. This arises from workforce inability to reach site due to airspace closures or security concerns, disrupted material delivery sequencing, government safety directives limiting site operations, and psychosocial impacts on workforces operating under threat of missile and drone attack.

The evidential threshold for disruption claims is high. Contractors must demonstrate a reduction or loss in productivity caused by the force majeure event, supported by contemporaneous records – including correspondence, meeting minutes, site reports, photographs, and resource allocation data – showing planned versus actual progress. As conditions normalise, force majeure entitlement weakens proportionally, and contractors must maintain granular, date-stamped records demonstrating which specific activities remained impacted at each stage.

FIDIC Clause 8.4 may also afford relief where completion is delayed by an unforeseeable shortage in the availability of personnel or goods caused by governmental actions.

8. Labour and Workforce

The Gulf’s construction sector depends heavily on migrant labour. The International Labour Organization estimates over 24 million migrant workers in the region. Foreign workers constitute over 92% of the workforce in the UAE. The majority are engaged in construction, domestic work, seafaring, and caregiving, drawn primarily from India, Bangladesh, the Philippines, Kenya, Senegal, and Indonesia.

Several source countries have suspended deployment of workers to the Middle East. Thousands of residents have been stranded abroad due to flight cancellations and airspace closures, with the UAE briefly closing its airspace on multiple occasions. A significant proportion of civilian casualties in the Gulf has consisted of foreign nationals.

For EPC projects with complex, multi-jurisdictional supply chains, the cumulative effect of labour shortages on project scheduling may be substantial. The question of whether the loss of key personnel – engineers, site managers, specialist subcontractors – generates a compensable claim will depend on whether those personnel are key personnel, whether their functions can be substituted, and how long the disruption lasts. A formal government evacuation recommendation is strong supporting evidence.

9. Insurance and Coverage Gaps

Standard property and casualty policies, including most Contractor’s All Risks (CAR) policies, exclude war as standard. Only specialist political violence and war-on-land policies are designed to cover damage arising from armed conflict. The effective closure of the Strait of Hormuz and the widespread cancellation of existing war risk insurance coverage has created what has been described as the biggest shock to energy and global supply chains in 50 years.

Key issues for project participants include:

• Coverage disputes are expected over “denial of access” versus “physical damage” triggers – businesses often lose access or control before anything is physically damaged.
• War-risk shipping insurance premiums have surged, with some policies cancelled on 72-hour notice. Mutual insurers have issued Notices of Cancellation of War Risks coverage for certain areas.
• Political risk insurance and political violence products may fill non-damage gaps – but only if the definitions and exclusions fit the specific scenario (seizure, denial of access, contract frustration) and any sanctions clause is understood.
• Contractors should verify whether their programmes cover (a) physical damage, (b) non-damage denial of access, and (c) deprivation by government or de facto authorities, and how those grants interact with exclusions.
• The distinction matters: “The Iran war disrupted our supply chain” is not one loss – it is a category encompassing property damage, loss of access, seizure or detention, contract frustration, contingent business interruption, cargo delay, and more. Each type of loss maps to different coverage grants, exclusions and conditions.

10. Variations, Omissions and De-scoping

The conflict may result in changes to the design, intent, and sequencing of ongoing projects. This may lead to variations, omissions, de-scoping, or the substitution of materials. The variation or omission clauses of the contract may offer relief.

Under FIDIC Clause 13, variations are to be approved by the Engineer and the contractor is normally entitled to additional cost arising from a variation. If works are omitted or de-scoped and awarded to another contractor without valid justification, the existing contractor may be entitled to loss of profit and damages.

11. Suspension and Termination

If force majeure persists for a continuous 84 days or a cumulative 140 days, either party may terminate the contract under FIDIC Clause 19.6 with 7 days’ notice. As at 26 March 2026, the conflict has been ongoing for 26 days. If disruption continues at the current level, the 84-day threshold would be reached in late May 2026.

On termination for force majeure, the contractor is entitled to:

• Payment for work done, priced in accordance with the contract;
• The cost of plant and materials delivered to site;
• The cost of repatriation of contractor’s staff and labour; but
• No loss of profit on unperformed work.

Under the regional Civil Codes:

• UAE (Article 273): Full impossibility – automatic termination, parties returned to pre-contractual positions.
• KSA (Article 110 CTL): Full impossibility – obligations extinguished, contract automatically terminated.
• Qatar (Article 188): Full impossibility – contract deemed rescinded by operation of law.
• Kuwait (Article 437): Full impossibility – corresponding obligations extinguished, contract automatically dissolved.
• Bahrain (Article 145): Full impossibility – corresponding obligation discharged, contract automatically terminated. Parties returned to pre-contractual positions; where restoration is not possible, the court may order equivalent performance (Articles 142 and 147).

In all five jurisdictions, a premature assertion of impossibility may itself constitute a repudiatory breach. The threshold is demanding and should be approached with caution.

12. Financing and Project Viability

The conflict is placing significant strain on real estate financing and project viability across the Gulf. Bond markets have effectively closed for new issuances by UAE developers. Share prices of major developers have fallen sharply. International lenders are reported to be reducing new loan exposure to the region.

The FIDIC Red Book does not protect the employer against an inability to make payments during force majeure. The contract assumes the employer’s payment obligation remains absolute. Employers reliant on project finance or capital markets should review their contractual exposure and consider bespoke provisions to address liquidity risk.

The wider economic impact is profound. Brent crude has traded above USD 112. QatarEnergy’s force majeure declaration represents an estimated USD 20 billion in lost annual revenue. The semiconductor industry faces helium supply disruption, with approximately one-third of global helium supply originating from Qatar’s Ras Laffan facility.

13. DIFC, ADGM and QICDRC Governed Contracts

Contracts governed by the laws of the DIFC, ADGM, or QICDRC are subject to common law principles rather than civil law. Under English common law (which applies on an “evergreen” basis in the ADGM), there is no statutory force majeure. Force majeure is purely a contractual concept – it exists only where the parties have expressly provided for it.

Absent a force majeure clause, parties may seek relief under the doctrine of frustration, which requires that performance be rendered objectively impossible (not merely more difficult or expensive). The DIFC Contract Law (Article 82(1)) does, however, imply a force majeure-like term into contracts, excusing non-performance caused by an impediment beyond the party’s control – with a notable exception for mere obligations to pay.

For multi-jurisdictional projects with layered contractual structures, the governing law of each agreement in the contractual chain must be identified. It is not uncommon for a single project to have an EPC contract governed by English law, subcontracts governed by local law, and supply agreements governed by a third jurisdiction – producing materially different outcomes for different parties in the chain. This fragmentation can mean that parties lower down the chain receive relief while the EPC contractor at the top does not.

Practical Recommendations

• Serve protective notices immediately – even where the full scope of disruption is not yet known. The 14-day (FIDIC 1999) or 28-day (FIDIC 2017) deadline is a strict condition precedent to entitlement. Provide periodic updates every 28 days under FIDIC 2017.
• Maintain granular, date-stamped records of every disruption, identifying which specific activities are affected and when. As conditions normalise, force majeure entitlement weakens proportionally.
• Plead both Clause 19 (force majeure) and Clause 17.3 (Employer’s Risk) in the alternative where physical damage to the works or site has occurred.
• Review change in law provisions – government safety directives may provide an additional route to both time and money, depending on the contractual definition.
• Audit insurance coverage for war exclusions, denial-of-access gaps, and contractor’s all-risks limitations. Standard CAR policies are unlikely to respond. Political violence and war-on-land cover should be reviewed urgently.
• In Saudi Arabia, consider both Article 110 (impossibility) and Article 97/471(3) (exceptional circumstances) and be aware that the court’s power under Article 471(3) specifically extends to adjusting the contract price and extending the execution period.
• In Qatar, distinguish between Article 188 (impossibility – rescission) and Article 171(2) (hardship – judicial rebalancing) and note that Article 171(2) is mandatory and cannot be excluded by contract.
• In Kuwait, note that Article 198 hardship relief requires the “severe loss” threshold and that Articles 214/437 force majeure requires objective impossibility.
• In Bahrain, note that Articles 218/219 permit contractual waiver of the force majeure defence (except for fraud or gross fault). Review whether your contract contains such a waiver. The hardship doctrine under Article 130 provides a separate avenue where performance is possible but excessively burdensome.
• For new contracts, expressly address the conflict’s foreseeability, incorporate robust price escalation mechanisms, and broaden force majeure drafting to capture indirect effects and geographic spill-over.
• Map the contractual chain – identify the governing law of each agreement and assess whether misalignment between different tiers of the contractual structure creates gaps in relief.

Conclusion

The Iran conflict is the most significant geopolitical disruption to the Gulf construction sector since the COVID-19 pandemic – and in terms of physical damage to infrastructure and direct threat to personnel, it is without precedent in the modern history of the GCC states. Its effects cut across virtually every major area of construction law – from force majeure and delay, to cost escalation, insurance, labour, and financing.

Force majeure is now being invoked in live energy contracts. The question is no longer whether it will be invoked in construction contracts. It is whether individual claims will meet the contractual and evidential thresholds required.

The legal aftershocks of this conflict will outlast the headlines. Disputes are expected to rise significantly in the coming months, with arbitration institutions such as DIAC, ICC, ArbitrateAD, and the Qatar International Court likely to see increased caseloads.

We strongly recommend that all project participants review their contractual positions, serve protective notices where appropriate, maintain detailed records of all disruptions, and seek legal advice at the earliest opportunity.

This briefing is intended for general information purposes only and does not constitute legal advice. Hadef & Partners advise on the laws of the UAE. Accordingly, summaries of applicable laws of other GCC countries are for guidance only. Please contact us for advice tailored to your specific circumstances.

For further information, please contact: Humayun Ahmad at hm.ahmad@hadefpartners.com, Partner, Head of Construction Disputes.