Ongoing armed hostilities and regional instability in the Middle East are already affecting construction projects in ways that extend far beyond ordinary price escalation. Delayed shipments, disrupted airspace, restricted site access, evacuation measures, labour dislocation, increased security costs and interrupted mobilisation are now affecting time, cost and project viability across the region.
For contractors and employers operating under the FIDIC 1999 forms, the starting point remains contractual discipline. The contract must be read first, the facts must be proved carefully and notices and claims must be given promptly. But the answer rarely lies in one clause alone. In the present climate, relief may arise under the force majeure provisions, the Employer’s Risks regime, change in law provisions and, depending on the governing law, statutory doctrines of impossibility and hardship.
The first principle: not every disruption is the same
It is essential to distinguish between:
- Physical damage to the Works, Plant, Goods or Site;
- Prevention of performance caused by war, hostilities, terrorism, civil unrest, airspace closure, port disruption or mandatory site restrictions;
- Government measures restricting movement, access, labour or cargo; and
- Severe cost escalation or productivity collapse which makes performance commercially oppressive, even if not strictly impossible.
These categories should not be conflated. Each may trigger a different contractual or legal route to relief.
Clause 19: Force Majeure under FIDIC 1999
Under the 1999 FIDIC forms, Clause 19 defines Force Majeure as an exceptional event or circumstance which is beyond a party’s control, could not reasonably have been provided against before contract, could not reasonably have been avoided or overcome and is not substantially attributable to the other party.
War, hostilities, invasion, act of foreign enemies, rebellion, terrorism, revolution, insurrection, military or usurped power, civil war, riot and disorder are all expressly contemplated in the clause. That does not, however, make entitlement automatic. The affected party must still prove that the event prevented performance of a contractual obligation.
That distinction matters. Clause 19 of FIDIC 1999 is not a general hardship clause. It is aimed at prevention, not inconvenience. A contractor who can still perform, albeit at greater cost or with reduced efficiency, may struggle to bring the case within Clause 19 alone.
Time relief is often easier than cost relief — but cost may still be available
The common assumption that force majeure under FIDIC 1999 gives time but not money is only partly correct.
Where the Contractor is prevented from performing by a notified Force Majeure event, Clause 19.4 entitles the Contractor to an extension of time. In addition, where the event is of the kind described in Sub-Clause 19.1(i) to (iv), the Contractor may also recover Cost. For events under Sub-paragraphs (ii) to (iv), the event must occur in the Country. For Sub-paragraph (i) events — war, hostilities, invasion, or act of foreign enemies — the wording is broader.
This is important in the current environment. If war or hostilities, or closely connected unrest, directly prevent performance and generate additional cost, the claim is not confined to a rise-and-fall mechanism. On the right facts, the Contractor may have a direct contractual Cost claim under Clause 19.4 itself.
Employer’s Risks: often overlooked, often decisive
Where war-related events cause physical loss or damage to the Works, Goods or Contractor’s Documents, Clause 17 becomes critical.
Under Sub-Clause 17.3, war, hostilities, invasion, civil war, rebellion, terrorism, riot, commotion and disorder are listed as Employer’s Risks in defined circumstances. If one of those risks causes loss or damage to the Works, the Contractor must rectify as instructed and under Sub-Clause 17.4 may claim both time and Cost for that rectification.
This route is strategically important because it is analytically distinct from Clause 19. A party should therefore consider whether to advance Clause 17 and Clause 19 in the alternative, or cumulatively where the facts permit.
Travel bans, evacuation measures and shelter-in-place orders
Current conditions in the region raise a more difficult but increasingly common problem. Performance may be affected not because the Site is damaged, but because:
- key personnel cannot enter or remain in the country;
- embassies or state authorities have issued evacuation recommendations or mandatory evacuation orders;
- cargo movements are restricted;
- airspace closures delay specialist labour, materials or equipment; or
- authorities issue intermittent public safety directions requiring personnel to shelter in place.
These facts may support a Clause 19 claim where they genuinely prevent performance. They may also support a separate claim under a change in law or government action clause, depending on the wording of the Particular Conditions.
The legal position becomes more nuanced where the event does not make performance impossible, but renders performance excessively onerous. In Middle East civil law systems, including the UAE, Qatar and the Kingdom of Saudi Arabia, the doctrines of impossibility and hardship are distinct. Impossibility may justify release from performance. Hardship, by contrast, generally points toward adjustment or rebalancing rather than termination.
Why the impossibility / hardship distinction matters
In projects governed by Middle East laws, parties should not stop at the contract.
Under UAE law, impossibility and hardship are treated differently. Article 273 addresses supervening force majeure which renders performance impossible. Article 249 addresses exceptional and unforeseeable circumstances that make performance oppressive and threaten grave loss, allowing the court or tribunal to reduce the obligation to a reasonable level.
Under Saudi law, the Civil Transactions Law similarly distinguishes between impossibility and hardship and also contains construction-specific machinery capable of restoring financial equilibrium in a Muqawala context.
For current projects, this means that a contractor facing evacuation of key staff, closure of routes, severe supply interruption, insurance spikes, or dramatic cost escalation may have more than one legal route to relief. The correct characterisation of the facts matters. If performance is prevented, Clause 19 and impossibility principles may apply. If performance remains physically possible but commercially oppressive, hardship may be the better framework.
Change in law may be more valuable than force majeure
Government directives are particularly important.
Where state authorities restrict site access, impose emergency safety protocols, limit labour movement, close airspace, restrict cargo, or require evacuation, the first instinct is often to label the event force majeure. That may be correct. But it may not be the best claim.
If the contract includes a suitably broad change in law mechanism, executive orders, regulatory directives, or formal government decisions may support entitlement to both time and money. By contrast, force majeure arguments under standard drafting are often stronger on time than cost unless the event fits squarely within Clause 19.4.
Accordingly, parties should resist the temptation to frame every war-related disruption as force majeure only. In many cases, the prudent course will be to give concurrent notices under all potentially applicable clauses.
Cost escalation: not merely a rise-and-fall issue
One of the most commercially important features of the present disruption is that cost escalation is not always operating through ordinary inflation.
In many projects, the real impact lies in conflict-linked consequences: rerouting cargo, loss of shipping lanes, port congestion, security premiums, scarcity pricing, specialist workforce replacement, demobilisation and remobilisation, longer procurement routes, standby costs, reduced productivity and delay-linked financing effects.
Those costs are not always adequately addressed by a standard price adjustment clause, even where one exists. In many Middle East projects, escalation clauses have been deleted or heavily amended in any event.
That does not mean there is no claim. It means the cost case must be framed correctly. The question is not whether the market moved generally. The question is whether the current unrest caused a compensable event under the contract or governing law and whether the claimed cost is causally and contemporaneously linked to that event.
Notice discipline is not optional
The recent case law from the DIFC Courts is a warning to the market. Clear contractual notice machinery will be enforced.
Under standard FIDIC 1999 wording, a party affected by Force Majeure must give notice under Sub-Clause 19.2. The Contractor must also comply with Sub-Clause 20.1 if claiming time and/or additional payment. A late or defective notice may destroy what would otherwise have been a strong claim.
This is not a technicality. It is often the decisive issue.
Phased return-to-work and partial reopening
A further trap lies in the transition from full disruption to partial reopening.
As conditions normalise, the case for impossibility weakens. Under FIDIC, force majeure relief lasts only for so long as the qualifying prevention persists. Once partial mobilisation becomes possible, the affected party must demonstrate with precision which activities remained prevented, which resumed and what mitigation was undertaken.
Hardship arguments may, however, outlast impossibility arguments. Productivity loss, reduced labour availability, inefficient sequencing, heightened security measures, or persistently elevated logistics costs may continue to affect the project even after access is restored.
That is why the records must be granular and date-stamped.
What contractors should do now
Contractors should act on five fronts immediately:
- Review the General Conditions and Particular Conditions clause by clause.
- Issue protective notices early, even if the full effect is not yet known.
- Preserve detailed contemporaneous records linking each disruptive event to specific programme and cost consequences.
- Analyse causation activity by activity, not at headline level.
- Consider alternative and cumulative bases of claim: Clause 19, Clause 17, change in law, suspension, variation consequences and any available statutory hardship or impossibility doctrine.
The evidence should include government announcements, embassy notices, port and airport restrictions, site access records, labour attendance, logistics records, updated programmes, supplier correspondence and measured cost consequences.
What employers should do now
Employers should not treat every notice as opportunistic, nor accept every notice at face value.
The proper response is disciplined scrutiny. Employers should:
- acknowledge notices promptly and reserve rights clearly;
- test whether the event truly prevented performance or merely made it more difficult;
- require proof of causation to the critical path and to specific heads of cost;
- insist on evidence of mitigation and alternative sourcing; and
- evaluate whether a pragmatic interim arrangement is preferable to a formal dispute.
In periods of regional instability, good contract administration is often more valuable than positional correspondence.
The practical takeaway
For projects using FIDIC 1999 in the Middle East, the present unrest is not a one-clause problem.
War and unrest may engage Clause 19 Force Majeure. Physical damage may engage Clause 17 Employer’s Risks. Government action may trigger change in law. Severe but non-impossible disruption may invoke local law hardship doctrines. In the right case, more than one route may be available at the same time.
The parties who will protect their position best are not those who rely on broad labels such as “force majeure” or “escalation”. They are those who identify the exact disruptive event, match it to the correct contractual or legal mechanism, give timely notice, document mitigation and prove causation with discipline.
In the present market, that is the difference between a viable claim and an avoidable dispute.
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| Martin van der Schyf, Partner Martin@tft-legal.com | Paul Woodward, Partner Paul@tft-legal.com |