Construction amid war and hostilities: the principal issues under FIDIC

By Nicholas Gould, Partner

I was in Abu Dhabi on 28 February when the hostilities began across the region.1 Within hours of my arrival, airspace disruptions, attack interceptions (with the resulting missile debris) and the steady cadence of official alerts reframed the environment across the Gulf region. What was meant to have been a routine visit quickly became something quite different: a close-up view of a rapidly escalating regional conflict.

Though I am now back in the United Kingdom, many colleagues, clients and friends continue to live and work in the region during these uncertain times. This piece is written with them in mind, and with a sincere hope for the safety, security and stability of all those affected.

The present situation inevitably reminds me of the outbreak of the conflict in the Ukraine, when my colleagues and I dealt with the long tail of disputes that followed, and helped contractors and employers divert equipment to alternative projects once it became clear it could no longer be used in Kyiv or Odessa.

There are numerous lessons one can take from these conflicts, but I have kept my reflections to the impact on the principal issues arising under FIDIC-based construction contracts.

Force majeure (AKA exceptional events) and contractual relief under FIDIC

Many contracts in the region are based on standard FIDIC forms. The commonly used 1999 and 2017 standard versions of the FIDIC Rainbow Suite both have mechanisms for events that disrupt projects, referred to as “force majeure” in the 1999 edition and as “exceptional events” in the 2017 edition. In both editions, such events relieve the parties from performing their obligations under the contract. “War, hostilities (whether war be declared or not), invasion, act of foreign enemies” are listed as triggers for these mechanisms under both editions.

Generally (barring any relevant provisions under local codes) the application and effect of a force majeure or exceptional events clause depends on how it has been drafted, and whether contractual requirements are followed precisely.

Establishing force majeure

Whether an event qualifies as force majeure will often turn on a single issue: was it reasonably foreseeable at the time of the contract?

Assessing this relies on the facts: tribunals will examine what the parties knew, or ought reasonably to have known, taking into account project location and the prevailing conditions at the time. A contract agreed during a period of relative stability may support an argument that the scale or nature of the exceptional event could not reasonably have been anticipated. By contrast, where a project is located near military sites, major energy facilities or other sensitive locations, tribunals may find that certain risks were intrinsic to the nature of the project and should have been considered from the beginning.

Ultimately, “foreseeability” in FIDIC-based contracts depends upon context. Careful evidence of what was known at the time, what was genuinely unexpected and how the specific circumstances unfolded will be critical to establishing force majeure. Contemporaneous records often carry more weight than reports written after the fact. Parties seeking to rely upon force majeure will need to demonstrate not only that the event has occurred, but that it was beyond the parties’ control, could not have been provided against or reasonably avoided, and is not caused by the other party.

Notices

If the force majeure clause is to be relied upon, the procedural requirements of the contract must be followed. Under the 2017 FIDIC Rainbow Suite, the contractor must give a notice of a qualifying event in the proper way within 14 days of becoming aware, or when they should have become aware, of the exceptional event.

When qualifying events occur and where proper notification is made, the contractor is excused from performing contractual obligations that are impacted by the event. Typically, the contractor will be entitled to an extension of time, but they are not necessarily entitled to financial compensation. In cases of prolonged disruption, the parties may ultimately become entitled to terminate, although that will usually only arise if the situation persists for months rather than weeks.2

Parties to construction contracts must look out for any specific amendments made to the contracts which diverge from the template agreements. For example, it is common for parties to agree shorter notice periods. It is also essential that the parties follow the procedures and conditions precedent that the contract specifies. The exact wording of required notices will matter, as often there are prescriptive requirements that must be followed. A failure to meet the requirements of notice provisions often will result in a loss of entitlement.

Insurance and war-risk coverage

The insurance landscape is also becoming more volatile, which in turn impacts the construction disputes environment. In particular, war-risk insurance is being reassessed by insurers due to attacks on infrastructure and maritime chokepoints. As a result, premiums are increasing, cover is being restricted and, in some cases, war-risk insurance is being withdrawn altogether throughout the GCC.3

Beyond immediate shipping and insurance implications, this has downstream effects on contract performance and commercial risk allocation, particularly where insurance is a contractual condition of performance. Parties should review their policies carefully, identify any changes in cover and record the practical impact on project performance.

Supply chain disruption and material delays

Construction projects the world over are heavily dependent on international supply chains. Even in stable conditions, the timely delivery of materials, equipment and specialist personnel requires coordination across multiple jurisdictions. The current hostilities in the Gulf region have placed that system under strain: the closure of the Strait of Hormuz, together with airspace closures and restrictions on commercial flights, are slowing down or halting deliveries that these projects depend on. Where materials are significantly delayed, the consequences may extend beyond the immediate activity, potentially affecting sequencing and productivity across the programme, with cascading knock-on effects.

In such cases, the critical question is which party bears the risk under the terms of the contract. Parties may start to explore claims for extensions of time, delay damages or the need for variation orders where alternative materials or methods must be adopted. Contractors may seek relief through extension of time provisions, arguing that the delays arise from events beyond their control, while employers may scrutinise whether the contractor could reasonably have mitigated the disruption.

Project teams should proactively document delays and rerouting in real time, ensuring that any claims or notices are firmly grounded in contemporaneous evidence.

Cost escalation and price adjustment claims

If shipping routes are disrupted and insurance costs rise, as discussed above, contractors could face significant cost increases.

While FIDIC contracts include a cost escalation provision (see Sub-Clause 13.7 in the 2017 edition for example), it is common for parties to disapply these. In such instances, the contractor may be limited in their ability to recover additional cost, even where the underlying cause lies outside their control.

Attention is therefore likely to turn to other potential routes of relief. These may include change-in-law provisions, where government measures have had a direct impact on cost, or, in some jurisdictions, doctrines that allow for adjustment of contractual obligations in exceptional circumstances.

Under UAE Civil Code Article 249, for example, a court may reduce an obligation to a reasonable level where exceptional public events make performance excessively onerous. This is often referred to as “hardship”. In practice, this is not a quick or automatic remedy but can act as a type of safety valve if price adjustment measures are not present to effectively address the cost escalation.

Compliance, sanctions and geopolitical restrictions

United States sanctions on Iran, and potentially Iran’s countermeasures, could create compliance risks for companies operating in the region. Contractors will need to ensure that suppliers, subcontractors and logistics providers are not violating sanctions regimes. Even indirect dealings with Iranian-linked entities can create liability under US law.

Compliance in this area requires active management. Contractors and employers will need to understand the origin of materials, the ownership and control of counterparties and the routes by which goods are transported. In some cases, the steps required to ensure compliance may themselves contribute to delay or cost.

Where sanctions affect performance, the contractual consequences will depend on the drafting. In some cases, they may fall within force majeure or change-in-law provisions. In other instances, the position may be less clear.

Site safety, security and duty of care

Site safety and security have direct implications for construction operations. In recent weeks, incidents affecting civilian infrastructure and US military bases in the region have prompted increased scrutiny of safety arrangements, both in regard to occupied buildings and active construction sites.

Employers may be required to implement enhanced security measures, including stricter access controls, revised working practices and evacuation procedures. The standard of what constitutes reasonable precautions is likely to evolve as conditions change.

A failure to respond appropriately may expose parties to contractual claims and, depending on the jurisdiction, liability under local labour and safety laws. For international contractors, internal standards may impose additional obligations beyond those required by local law.

In practical terms, risk assessments should be updated to reflect current conditions rather than those assumed at tender stage. As previously advised, the existence of a clear and contemporaneous record will be important.

Government intervention and regulatory delays

Government intervention must also be considered. Regulations introduced for security or public safety reasons (including movement restrictions, temporary suspensions of work and changes to regulatory requirements) can have an immediate effect on project delivery.

Under FIDIC contracts, such regulations may give rise to excusable delays and, depending on the terms, entitlement to additional cost. The key issue is causation. It must be shown that the government intervention in question has affected the works in a way that triggers the relevant contractual provisions.

One feature of the present situation is the frequency of short-term interruptions. As I experienced myself while in Abu Dhabi, and as many of my colleagues in our Dubai office continue to experience, frequent security alerts, requiring temporary suspension of activity and advising individuals to find shelter, can be brief but still disruptive. In the construction context, they may disrupt operations that depend on continuity, such as lifting operations or concrete pours. Over time, these interruptions may have a cumulative effect on progress.

Capturing that impact requires careful record-keeping. Without it, the effect of repeated short-term disruption may be difficult to demonstrate.

Conclusions

The legal framework within FIDIC can address many of the issues listed above. The difficulty lies in its application to rapidly changing circumstances and whether parties properly followed the necessary procedure to preserve entitlement.

In practice, outcomes are likely to operate on the detail of a specific case: what was known at the time of contract, how the risk was allocated, whether notices were given in time and what the records show about the actual impact on the works.

For both employers and contractors, the immediate priority is therefore not only to respond to the operational challenges, but to ensure that their contractual position is protected as the challenges unfold. With that in mind, project teams should:

• review force majeure, exceptional event and wider risk-allocation clauses, and ensure that all relevant conditions precedent are met. The entitlements are due only if the procedures are properly followed, and failure to comply can doom otherwise valid claims;
• issue clear and timely notices to preserve entitlements. Prompt notification is often the single most important factor in dispute avoidance and resolution;
• reassess insurance arrangements, such as war-risk cover, and check exclusions or reductions in scope as markets tighten;
• map supply-chain vulnerabilities, including reliance on specific ports, airspace routes and long-lead items, and ensure that delays and disruptions are recorded as they occur;
• strengthen sanctions-compliance controls, and undertake proper due diligence on suppliers, subcontractors and logistics partners; and
• update safety and security protocols, to ensure that risk assessments, evacuation procedures and emergency response plans reflect the current realities on the ground and meet statutory duty of care requirements.

Your legal advisers will be able to support you in navigating these issues, and may recommend specialist input where the risks intersect with insurance, sanctions, security or local labour frameworks.

Lastly, my thoughts remain with those who continue to live and work in the regions affected by the ongoing hostilities. All of us who work in the Middle East will be hoping for stability and peace as soon as circumstances allow.

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• 1. Abdi Latif Dahir. (2026). “Iran Hits Back Across the Mideast, Targeting U.S. Bases and Allies.” New York Times, 28 February 2026. https://www.nytimes.com/2026/02/28/world/middleeast/iran-retaliatory-strikes-region.html.
• 2. Both the 1999 and 2017 editions of the FIDIC Rainbow Suite provide an option for termination “if the execution of substantially all the Works in progress is prevented for a continuous period of 84 days… or for multiple periods which total more than 180 days” due to the same qualifying event.
• 3. Julia Kollewe. “Maritime insurers cancel war risk cover in Gulf as Iran conflict disrupts shipping.” Guardian. 2 March 2026. https://www.theguardian.com/business/2026/mar/02/maritime-insurers-war-risk-cover-gulf-iran-shipping-strait-of-hormuz.