In this context, equivalent project relief (EPR) provisions, which typically operate as back-to-back mechanism, are becoming increasingly important, particularly where parties are seeking to manage the downstream effects of upstream disruptions.
EPR provisions are intended to align risk across the contractual chain by linking a subcontractor’s entitlement to time and/or cost to the contractor’s ability to recover the same relief from the employer.
Practical risks under EPR provisions
In the current environment, this link can create several practical risks:
- Force majeure upstream but not downstream: employers may rely on force majeure under the main contract, while the subcontract wording may not provide the same level of protection.
- Procedural barriers: upstream relief may fail where notice, substantiation or mitigation obligations have not been followed strictly.
- Partial or reduced recovery: even where entitlement exists, the amount recovered may be limited by caps, settlement positions or broader commercial considerations.
Middle East legal considerations
In jurisdictions such as the United Arab Emirates and the Kingdom of Saudi Arabia, EPR provisions are broadly recognised, but they do not operate in isolation from wider legal principles. Courts and tribunals may consider whether:
- the contractor took reasonable steps, in good faith, to pursue upstream relief;
- strict reliance on the clause results in an outcome that appears disproportionate; and
- denying recovery would allow one party to retain a benefit without proper justification.
These considerations mean that the contractual wording is important but may not always be determinative of the outcome, particularly where the overall impact appears commercially unbalanced.
Practical considerations
In the current environment, parties should focus on how EPR provisions operate in practice, rather than relying solely on the clause. In particular:
- ensure upstream claims are being pursued in full compliance with notice, substantiation and mitigation obligations;
- understand how the clause operates where recovery is partial, delayed or unsuccessful;
- assess whether downstream entitlements are strictly conditional on upstream recovery; and
- maintain transparency across the contractual chain, particularly where the upstream position is still developing.
Key takeaway
EPR provisions remain an important risk management tool in Middle East projects. However, in the current conflict environment, outcomes will depend not only on the drafting of the clauses but on how claims are managed day-to-day. A measured, transparent and proactive approach will put parties in a stronger position to manage risk and avoid disputes as projects continue to face regional disruption.
