While the drivers of the present disruption sit outside the construction sector, the consequences are contractual. For many contractors, the immediate challenge is how to manage risk, minimise business disruption, protect cashflow and preserve legal positions, while equally trying to avoid the unnecessary escalation of issues into formal disputes.
Understanding contractual relief and risk allocation
For most contractors, the starting point in response to present events will be the force majeure or exceptional event provisions within their contracts. Whether operating under FIDIC‑based or bespoke forms, these clauses typically require an event to be beyond the reasonable control of the affected party and to prevent, or materially impede, contractual performance.
Measures arising from regional instability – such as government action, sanctions, airspace and/or port closures, or restrictions affecting the movement of labour or materials – may, in principle, fall within these provisions. However, contractors should avoid assuming that force majeure relief will automatically apply. Much will depend on the precise drafting and whether performance is genuinely prevented, rather than merely rendered more difficult or expensive.
Alongside force majeure, contractors should consider other contractual mechanisms that may be engaged, including:
- extensions of time for employer‑risk or neutral delay events;
- change in law provisions where new government measures impact performance or cost;
- suspension rights where works cannot safely or lawfully proceed; and
- termination provisions where disruption becomes prolonged.
A careful analysis is essential before positions are adopted or notices are issued.
Notices, mitigation and records
One recurring issue we see across the region is the risk created by late or inadequate notices. Most construction contracts impose strict notice requirements and failure to comply can significantly undermine otherwise valid claims.
Contractors should ensure that protective notices are issued promptly, even where the full impact of the disruption is not yet known. Notices should clearly identify the relevant events and articulate how those events are affecting progress or cost.
Equally important is the obligation to mitigate. Employers and arbitral tribunals will expect to see evidence of reasonable steps taken to manage disruption, whether through alternative sourcing, resequencing or revised programming. Detailed contemporaneous records remain critical.
Insurance considerations in a disrupted environment
Insurance is another area requiring careful attention in response to current events. Many contractors assume that disruption linked to geopolitical events will be insured. In practice, this is often not the case.
CAR policies commonly contain war, hostilities and sanctions exclusions, which may apply even where the project itself is far from any active conflict. Increased premiums, higher deductibles and more cautious underwriting, particularly for projects with international supply chains, will inevitably follow recent developments. Delay in start‑up cover typically requires physical damage, meaning that purely logistical or transit‑related disruption may fall outside policy protection altogether.
Contractors should review policy terms carefully, engage early with their brokers and insurers, and ensure that notification obligations are met. A clear understanding of what is, and is not, insured is essential when deciding strategy.
Final thoughts
Periods of disruption tend to expose weaknesses in contract administration long before they result in formal disputes. Parties best placed to protect their position are those contractors who act early, comply rigorously with contractual machinery and take a measured, evidence‑based approach to risk allocation, mitigation and insurance.
From Qatar, the impact of the current situation is immediate and real – and is already being felt across projects in the GCC. Those assessing exposure, managing live disruption or seeking to prevent issues crystallising into disputes may find value in early advice. We are advising clients across the region on issues arising from current events and are available for discussion if considered helpful.
