Amid escalating instability in the Middle East, businesses are under increasing pressure to maintain operations while navigating complex contractual obligations. In many cases, this has led parties to invoke force majeure clauses. However, reliance on such provisions is rarely straightforward. While one party may point to the “unforeseeability” of geopolitical conflict, the other may resist, seeking to hold them to their contractual commitments. The result is a growing tension at the heart of modern contract management.
Although force majeure is sometimes perceived as a contractual safety net, its effects are far from it for those on the receiving end. Its invocation can significantly shift risk between parties, often leaving one side protected while the other bears the commercial consequences. This imbalance is particularly evident in global supply chains.
For instance, giants like QatarEnergy (QE) and Aluminium Bahrain has recently invoked these clauses to suspend obligations as their primary shipping routes through the Strait of Hormuz are under threat. Qatar supplies 20% of liquefied natural gas globally, so the impact of QE shutting down its facility leads to a surge in gas prices as the world competes for supply. For manufacturers like Yeochun NCC Co. in South Korea and Chandra Asri in Indonesia, these declarations are “critical disruptions”, as they face feedstock shortages, forcing them to choose between a costly emergency pivot or a total plant shutdown.
I. The Legal Framework: Force Majeure and Doctrine of Frustration
In the context of escalating instability in the Middle East, the legal basis for suspending contractual responsibilities rests on two distinct foundations: the express doctrine of force majeure and the common law doctrine of frustration.
- Force Majeure Clauses
A force majeure clause is a contractual mechanism which excuses parties from performing their obligations where performance is prevented by events outside their control. Its significance lies in the fact that English law does not recognise force majeure as a standalone doctrine. Instead, it reflects the allocation of risk agreed between the parties themselves. In times of crisis, the law does not step in to rebalance fairness but enforces the agreement as drafted, often in conditions very different from those originally contemplated.
- Frustration
Where no such clause exists, parties may attempt to rely on the doctrine of frustration. However, this provides only limited relief. A contract will be frustrated where, following its formation, an event occurs which renders performance impossible, illegal, or completely different from what was originally contemplated. The threshold has set to be deliberately high. As confirmed in Davis Contractors Ltd v Fareham UDC, a contract is not frustrated merely because performance becomes more expensive or commercially inconvenient.
This position was reinforced in Canary Wharf (BP4) T1 Ltd v European Medicines Agency, where even the significant political and legal disruption caused by Brexit was insufficient to frustrate a lease. The courts therefore draw a clear distinction between true impossibility and mere hardship.
In practice, this means that where a contract contains a force majeure clause, it will almost always be the primary route relied upon. Where it does not, the doctrine of frustration offers a far narrower and less predictable alternative.
II. Invoking Force Majeure: Commercial Practice and Legal Challenges
In practice, invoking force majeure is not simply a legal exercise but a strategic one. However, its application is rarely straightforward and often turns on three key issues.
First, the definition of a force majeure event. This depends entirely on the wording of the clause. Some clauses provide a closed list of events, such as war, strikes, or natural disasters. Others adopt broader language, referring to events “beyond the reasonable control” of the parties. The distinction is significant. A narrow clause might leave out events you would expect it to cover, while a broader clause can make it unclear what actually counts.
The second issue is how seriously the event must affect performance before a party can rely on the clause. Clauses typically require that performance be “prevented”, “hindered”, or “delayed”. This becomes especially important in war-affected areas, where businesses might still be able to perform on paper, but in reality, it is not practical or sustainable.
Cases such as Thames Valley Power Ltd v Total Gas & Power Ltd and Tandrin Aviation Holdings Ltd v Aero Toy Store LLC demonstrate the courts’ reluctance to accept economic hardship or market shifts as sufficient to trigger force majeure. Even a significant increase in costs is not enough. In situations where conflict or supply chain disruption makes performance far more expensive, businesses may still be legally required to continue. In RTI Ltd v MUR Shipping, it was established that the party relying on force majeure to also show that it took reasonable steps to avoid or mitigate the effects of the force majeure event. In practice, this shifts the burden onto the performing party, forcing them to absorb losses that the contract was never realistically designed to handle.
Thirdly, the effect of the force majeure event on the contract. Clauses may provide for suspension of obligations, termination after a specified period, or a combination of both. The commercial consequences of each approach are markedly different and can determine how risk is ultimately distributed between the parties.
Finally, another issue arises where one party has discretion under the clause. In Dwyer (UK) Franchising Ltd v Fredbar Ltd, the clause allowed the franchisor to designate what constituted a force majeure event. On its face, this appears to give one party significant control. However, the court made it clear that this power cannot be used unfairly and must be exercised honestly and in good faith.
This introduces an important limitation. In practice, even if a contract appears to favour one party, they cannot rely on that wording however they like. This creates uncertainty, as the outcome depends not just on what the contract says, but on how that discretion is used in reality.
III. Geopolitical Instability and Contractual Risk in the Middle East
The Middle East presents a challenging environment for contractual performance. Unlike isolated events, geopolitical instability in the region is ongoing, evolving, and increasingly foreseeable. This means that in new contracts between businesses, a key limitation of both force majeure and frustration is that they are less likely to apply where the relevant event was foreseeable at the time of contracting. If disruption in the region becomes an accepted commercial risk, parties may find it harder to rely on such clauses unless they have been expressly drafted to cover it.
This shifts responsibility back onto the parties themselves. Contracts are no longer simply instruments of exchange, but important tools for anticipating and allocating geopolitical risk.
IV. The Strait of Hormuz: A Critical Chokepoint in Global Trade
At the centre of this instability lies the Strait of Hormuz, one of the most critical routes in global energy trade. Recent developments have highlighted how quickly disruption in this region can affect contractual performance. Reduced vessel movement and rising war-risk insurance costs have made transit through the Strait increasingly difficult and, in some cases, commercially unviable.
This raises a key legal issue. Under English law, force majeure will generally only apply where performance is prevented, not simply made more expensive or risky. In the context of the Strait of Hormuz, this distinction becomes difficult to apply. Performance may still be technically possible, but the level of risk and cost involved may make it unrealistic for businesses to proceed.
A further issue arises when considering alternative performance. Parties are often expected to take reasonable steps to overcome disruption. However, the Strait of Hormuz presents a structural limitation. There is no realistic alternative route capable of replacing the scale of energy transported through it. As a result, what appears to be a duty to mitigate may, in practice, be impossible to satisfy.
This creates a tension at the heart of force majeure. The doctrine assumes that disruption is temporary and exceptional. However, where a critical chokepoint is subject to ongoing instability, the issue is no longer whether disruption may occur, but whether it should still be treated as unforeseeable.
In practice, this shifts the focus away from isolated events and towards continuous risk. Businesses are no longer dealing with unexpected interruptions, but with a known and persistent constraint on performance, challenging the way contracts allocate risk in the first place.
V. The Redistribution of Risk Across Supply Chains
Perhaps the most significant consequence of force majeure in this context is the redistribution of risk across global supply chains.
When upstream suppliers invoke force majeure, they are relieved from their contractual obligations. However, this does not eliminate the underlying demand. Instead, we see a domino effect across the supply chain. Customers are left to deal with shortages, rising prices, and operational disruption, often without contractual protection.
In March 2026, Shell declared force majeure on LNG supply contracts linked to Qatar, citing disruptions to shipping routes through the Strait of Hormuz. This shows how quickly disruption in one key area can stop contracts from being performed across the supply chain. As mentioned above, customers bear the greatest impact. LNG buyers, particularly in Europe and Asia, are forced to seek alternative supply in an already constrained market. Uncertainty around delivery further increases market pressure. In some cases, businesses may be unable to secure replacement supply at all, placing operations at risk.
This creates a cascading effect, where disruption at one point reverberates across multiple industries and jurisdictions. While the supplier may be excused from performance, the customer remains bound by its own obligations further down the chain.
In practice, this means that risk is not eliminated but shifted. Those with stronger contractual protection are insulated, while others are left to absorb the commercial consequences. The result is an uneven allocation of risk that does not reflect the scale of the disruption itself, but the relative strength of each party’s contractual position.
This highlights a structural limitation. Force majeure clauses operate at the level of individual contracts, yet the risks they address are systemic. As such, they may protect individual parties but do little to manage the broader economic impact of disruption across interconnected global markets.
VI. Rethinking Force Majeure in an Uncertain World
Ultimately, force majeure is no longer a safety net, but a tool that determines who bears the impact of disruption. As instability becomes a constant feature of global trade, parties must move away from relying on general clauses and instead address risk directly at the drafting stage. If they do not, the clause will not prevent disruption, only pass it along the chain.
