What the Hormuz crisis means for construction claims

This disruption is now feeding directly into construction costs, resulting in extensive delays and additional costs incurred on live projects and the stalling of new projects. Recent data suggests that overall, project awards in the United Arab Emirates have already fallen 18.5% year-on-year.

This pattern is a familiar one. Covid-19 and Russia's invasion of Ukraine followed the same sequence: disruption hits operations, feeds into costs, and then crystallises into disputes. Signing the contract does not mean you simply carry the risk. Amid the ongoing conflict in the Middle East, the potential for construction claims continues to rise. The question remains which legal tools are available and what evidence you need to use them.

Remedies to consider

Force majeure is often the first port of call. Under common law it is purely a creature of contract, so the analysis begins with the wording. ‘Prevent’ requires legal or physical impossibility, not mere difficulty or increased cost. ‘Hinder’ and ‘delay’ have wider scope.

Under FIDIC Yellow Book 1999 (cl. 19), an event must be beyond the party's control, not reasonably foreseeable at contract date, and not reasonably avoidable. War and hostilities are expressly listed. Successful claims can provide relief from performance obligations, extensions of time, and, in some cases, cost recovery.

Price fluctuation clauses reimburse a contractor for input cost changes beyond its control, typically using index-based formulas. If no such clause exists, the contractor generally bears the price escalation risk, though employer-caused delay during a period of high inflation may support a separate damages claim.

Unforeseeable change of circumstances clauses apply when performance remains possible but has become excessively onerous. Unlike force majeure, it does not require impossibility. The usual route is renegotiation, with judicial adaptation or termination as a fallback. This is known as an ‘imprévision’ in French law and is referenced in article 97 of the KSA Civil Transactions Law. Courts in both France and Saudi Arabia have applied these doctrines following previous Covid-19 and energy price shocks.

A change in law may apply where new port security rules, vessel inspection requirements or routing restrictions have affected contract performance after the base date. Under FIDIC Yellow Book 1999 (cl. 13.7), post-base-date legal changes can entitle the contractor to price adjustment, an extension of time, and additional cost, subject to notice.

In the event of unforeseeable shortages of personnel or goods caused by epidemic or governmental action, a contractor may be entitled to an extension of time under FIDIC Yellow Book 1999 (cl. 8.4(d)), provided that the shortage was not reasonably foreseeable at tender, and notice is given within 28 days of the contractor becoming aware.

The evidence problem

The crisis has evolved through distinct phases from March – critical risk and possible prevention – through April to June – US-facilitated transits and hindrance rather than blockage – to July – alternatives coming under pressure.

The legal analysis must be tied to those specific dates, because foreseeability, severity, and available mitigation all shifted as the crisis developed. A reopening headline does not end the evidential enquiry.

Every claim requires the same three things: the contractual criterion you are relying on; the specific consequence you suffered and could not avoid; and contemporaneous evidence created before the dispute.

That evidence should include United Kingdom Maritime Trade Operations (UKMTO) and Joint Maritime Information Centre (JMIC) advisories captured on the dates relied upon, incident logs, insurer notices, carrier refusals, voyage records, and internal decision minutes. Security evidence proves the operating conditions, while commercial records prove your loss. Both are essential to successfully make a claim.

What tribunals actually decide

Tribunals tend to be conservative. They are generally reluctant to rewrite a commercial bargain simply because performance has become more expensive or difficult. If a risk was expressly addressed in the contract through a sanctions clause, take-or-pay structure or FIDIC extension-of-time mechanism it will be treated as a priced-in risk, making it very hard to argue that the same event constitutes force majeure. Russia-linked sanctions have consistently been treated by tribunals as a known regulatory risk, not an unforeseeable shock.

Where tribunals are more flexible is on restitution and quantum. Where money has been paid and no corresponding value has been received, unjust enrichment and good faith arguments have found more traction, even where force majeure defences have failed.

The practical message for contractors is straightforward: capture advisories on the day you rely on them; keep every carrier refusal or insurance cover withdrawal; minute the decisions you make and why; and log every alternative you explored and rejected. When the employer asks you to show them your claim, you should be able to produce dated contemporaneous records as evidence.

This article is a summary of a presentation delivered at Singapore Convention Week 2026 by Frédéric Gillion and Connor Clark, construction disputes specialists at Pinsent Masons, Dr Fang Yang, Asia maritime security analyst at Ambrey, and Arno Janssens, head of Middle East at SIAC