As the conflict in the Middle East continues, growing disruption across global supply chains is placing increasing strain on businesses’ contractual rights and obligations. For companies with exposure to the region, or whose operations depend on goods, services or infrastructure affected by events there, the key question is often whether those events excuse delay or non-performance under existing contracts.
In this context, as in earlier crises such as the Covid-19 pandemic and the war in Ukraine, force majeure has become an increasingly important legal concept. This article looks at the issue from a practical perspective and addresses some questions that businesses may face when considering whether force majeure may apply to their contracts under English law.
What is force majeure?
English law does not have a general rule on force majeure, unlike many civil law systems. A party can rely on it only if the contract includes it. This means that whether force majeure applies, and what it means, depends on the wording of the contract, especially the force majeure clause, rather than on any general common law doctrine.
Where a contract includes a force majeure clause, it will usually change the parties’ rights and obligations if an unforeseen and exceptional event, or something beyond a party’s reasonable control, prevents that party from performing the contract, in whole or in part. These clauses often list specific trigger events, such as fire, flood or war, and may also include broader wording such as “any other cause beyond a party’s reasonable control”. When negotiating the contract, parties should consider in advance the circumstances in which they may be unwilling or unable to perform particular obligations, or to provide the goods or services required, and try to include wording that addresses those situations where possible.
A force majeure clause will also usually say how seriously performance must be affected before it applies, and what the consequences are. These may include suspension of obligations, an extension of time, or termination of the contract.
Does the Middle East conflict fall within the clause?
There is no single answer to whether the Middle East conflict amounts to a force majeure event under English law. The starting point will always be the contract itself: which events are listed, how broadly they are defined, what level of disruption is required, and what steps must be followed.
As noted above, many force majeure clauses specifically mention events such as war, armed conflict, government action or similar events beyond a party’s reasonable control. If that is true of the contract, and a party is affected, it may be able to rely on the clause. However, even if the clause includes those terms, the party must still show that all the requirements of the clause are met. In particular, it must show that the event has actually affected its ability to perform the relevant obligations. That is the next step in the analysis.
The wording matters: “prevented”, “hindered” or “delayed”
If the conflict falls within the clause, the next important question is to check the impact required. Contracts often include words such as “prevented”, “hindered”, “impeded” or “delayed”, and these terms do not all mean the same thing.
If the clause says performance must be “prevented”, the party relying on it will usually need to show that performance is genuinely impossible, not merely more difficult or expensive. If the clause uses words such as “hindered” or “impeded”, there may be slightly more flexibility, but the party must still show a real and significant effect on its ability to perform.
This distinction is especially important in the current climate. A manufacturer facing higher raw material costs, or a trader dealing with more expensive or complex transport routes because of the conflict, may still be expected to perform, as performance is merely more expensive or more complicated, not impossible.
That is to say, increased cost, lower profitability or commercial unattractiveness will not usually be enough on their own, even if the contract says otherwise. English courts have held that a change in economic circumstances is not, by itself, a force majeure event. So, even if the contract includes wording showing that the parties specifically negotiated and agreed the point, a court may still decide that the event does not qualify as force majeure in light of earlier case law.
Causation remains central
Another important point is causation. A party seeking to rely on force majeure must usually show a clear link between the event, in this case the conflict, and its failure to perform. In other words, it must show that the event caused the default, delay or disruption in the way required by the clause.
If the failure to perform is caused by a mix of factors, including issues not covered by the clause or problems that already existed, it will be harder to rely on force majeure. This is particularly likely where a party was already facing weak supply chains, labour shortages or financial pressure. In that situation, it may be difficult to show that the Middle East conflict was the real cause of the failure to perform.
Reasonable steps to avoid or mitigate disruption
Force majeure clauses often require the affected party to take reasonable steps to avoid, overcome or mitigate the consequences of the event. Even where the clause is not explicit, the practical question will often be whether the party could have performed by alternative means.
As a result, suppliers should consider whether there are other ways to continue performing the contract, even if those options are more expensive. For example, if goods can no longer be sourced from the usual supplier, they should consider whether they can be obtained elsewhere. Other options may include rerouting shipments, changing delivery arrangements, using substitute inputs, or taking other practical steps to reduce the impact of the disruption.
Notice requirements should not be overlooked
Many force majeure clauses include notice provisions, which may specify when notice must be given, what information it must contain, how it must be served and whether supporting evidence is required. In some contracts, compliance with those requirements will be a condition precedent to relief.
This means that even where a triggering event has occurred, a party may lose the protection if it does not follow the contractual procedure. Businesses should therefore act quickly to review the clause, and make sure any notice is given in the required way.
What are the consequences of force majeure?
If the parties can rely on the clause, its effect will again depend on the wording of the contract. In many cases, it will not immediately terminate the contract. More often, it will suspend performance, extend deadlines, or otherwise adjust the parties’ obligations for as long as the event continues.
Once the event ends, the affected obligations will often resume. Some clauses also give parties the right to terminate if the disruption continues for a set period. It is also important not to read the force majeure clause on its own. Its effect may be influenced by other parts of the contract, such as provisions on termination, exclusive remedies, price adjustments, cost allocation, renegotiation or cumulative rights.
If force majeure is unavailable, can frustration help?
Where there is no applicable force majeure clause, a party may consider whether the contract has been frustrated. Under English law, frustration may arise where an event happens after the contract is signed, without either party being at fault, and makes performance impossible, unlawful or radically different from what the parties originally agreed. If that happens, the contract comes to an end automatically and the parties are released from further performance.
In practice, however, frustration is very difficult to establish and rarely applies. The threshold is high, and a party cannot rely on it simply because performance has become more expensive or more time-consuming, although the courts will always look closely at the specific facts. Frustration may also be commercially unattractive, because its effect is to bring the contract to an immediate end, whether or not that is what the parties want (a contract is either frustrated as a whole or it is not).
Practical steps for businesses
For businesses considering whether to invoke force majeure, or responding to a force majeure notice, a careful and evidence-based approach is essential. In practical terms, that means:
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reviewing the clause and the contract as a whole;
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identifying the precise event relied on and whether it falls within the wording and process described;
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assessing whether performance has actually been prevented, hindered or delayed to the degree required;
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gathering (or reviewing, as appropriate) evidence of causation; and
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documenting (or reviewing, as appropriate) efforts to mitigate or overcome the event.
The Middle East conflict is a reminder that geopolitical events can put real pressure on contractual risk allocation. As the legal routes to relief remain limited, businesses should avoid assumptions, draft contracts carefully, and take legal advice both at the contracting stage and before asserting or rejecting a claim.
If you would like to discuss how the conflict may affect your contracts, supply arrangements or force majeure position, please get in touch with us.
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