The ongoing conflict in the Middle East is having direct, tangible consequences across the Gulf Cooperation Council (GCC) and the wider Middle East – regions that sit at the heart of global energy, logistics and construction supply chains.
With maritime chokepoints under threat, war‑risk insurance being withdrawn or repriced, and airspace restrictions affecting personnel and cargo movement, construction projects across the region are increasingly exposed to delay, disruption and cost escalation. These developments are no longer theoretical risks to be addressed in future contracts – they are live issues affecting ongoing projects today.
Against this backdrop, employers, contractors, subcontractors and consultants are asking urgent questions:
- Does the current situation amount to force majeure?
- Is this a case of hardship or “exceptional circumstances”?
- What relief is available – time, cost, suspension, termination, or contractual rebalancing?
This client brief note provides a practical framework for navigating these issues across the GCC and the Middle East, with a particular focus on the legal regimes of Qatar, Saudi Arabia and the United Arab Emirates.
Force Majeure vs Hardship: a critical distinction
Force majeure applies where an external event beyond a party’s control renders contractual performance objectively impossible, whether on a temporary or permanent basis.
Under UAE law, force majeure is primarily understood as a basis for suspending contractual obligations for the duration of the force majeure event, where performance is temporarily prevented by circumstances that could not reasonably have been anticipated, avoided or overcome. During this period, the affected party is generally relieved from liability for non‑performance or delay, provided that the applicable contractual requirements – particularly in relation to notice and mitigation – are complied with.
Where the force majeure event continues to such an extent that performance becomes permanently impossible, or where delay reaches a point at which the underlying contractual purpose can no longer reasonably be achieved, the affected obligation may ultimately be extinguished, with the contract becoming capable of termination in accordance with Article 273 of the UAE Civil Transactions Law.
Qatari law adopts a broadly similar approach under Articles 187 and 188 of the Civil Code, recognising suspension of obligations during the force majeure period and extinguishment only where performance becomes definitively impossible or can no longer be completed within the contractual framework.
In the construction context, force majeure is therefore most commonly relied upon to excuse delay, justify extensions of time, support temporary suspension of obligations, and relieve contractors from exposure to delay damages for the duration of the force majeure event. Entitlement will, however, depend heavily on the precise contractual wording and on strict compliance with procedural requirements, including timely notice and reasonable mitigation efforts.
By contrast, hardship (also referred to as exceptional circumstances) applies where contractual performance remains legally and physically possible, but has become excessively onerous, threatening severe or disproportionate loss as a result of exceptional and unforeseeable events. In such circumstances, the law does not excuse performance but instead allows for judicial intervention to rebalance the contract.
Article 249 of the UAE Civil Code and Article 171 of the Qatari Civil Code empower the courts to reduce an oppressive obligation to a reasonable level where exceptional events of a public nature disrupt the contractual equilibrium. Saudi Arabia’s Civil Transactions Law, which entered into force in December 2023, codifies a similar doctrine, reinforcing the regional distinction between impossibility and excessive hardship.
Crucially, hardship does not excuse non‑performance. It is not a basis for suspending or abandoning works, but rather a mechanism aimed at restoring contractual balance – typically through renegotiation or judicial determination – while performance continues.
How current events are affecting construction projects
Scenarios more likely to support force majeure include government or security restrictions preventing access to sites or ports, sanctions‑related prohibitions that make payment or procurement legally impossible, and airspace closures preventing mobilisation of critical personnel or equipment.
By contrast, scenarios more likely to fall under hardship include withdrawal or repricing of war‑risk insurance, rerouting of vessels leading to extended transit times, and sharp increases in material, fuel and logistics costs driven by regional instability. While commercially severe, these impacts often render performance more expensive rather than impossible.
Practical steps to take now
Project participants should urgently:
- Review contractual risk allocation;
- Issue protective notices without delay;
- Document causation and impact carefully; and
- Demonstrate reasonable mitigation efforts.
Early, disciplined contract administration is often decisive in preserving entitlement and avoiding unnecessary disputes.
How we can help
We are actively supporting clients across the GCC and the wider Middle East in navigating the contractual fallout of the current geopolitical situation. Whether you are assessing force majeure or hardship exposure, preparing or responding to claims, renegotiating contracts under pressure, or seeking to optimise outcomes and avoid disputes, we are here to help.
Please do not hesitate to reach out to discuss how these developments may affect your projects and how best to protect your position.
This article is provided for general information purposes only and does not constitute legal advice.
