Middle East conflict: force majeure not automatically imported into sub-contracts

Doha-based Pamela McDonald of Pinsent Masons, who supports businesses in the energy and infrastructure sector in resolving disputes, was commenting in the context of force majeure declarations made by energy companies operating in the region, including QatarEnergy, Kuwait Petroleum Corporation (KPC) and Bapco Energies (Bahrain), amidst the ongoing conflict.

Force majeure clauses are clauses that alter parties' obligations and/or liabilities under a contract when an extraordinary event or circumstance beyond their control prevents one or all of them from fulfilling those obligations.

Depending on their drafting, such clauses may have a variety of consequences, including: excusing the affected party from performing the contract in whole or in part; excusing that party from delay in performance, entitling them to suspend or claim an extension of time for performance; or giving that party a right to terminate.

“Where major employers have issued formal force majeure notices, the downstream effect on contractors and suppliers is not automatic,” said McDonald. “Most Middle East construction contracts – particularly FIDIC standard forms – require contractors at each tier to issue their own notice within a specified contractual window, often 28 days. A contractor cannot simply rely on the developer’s force majeure declaration to protect its own position.”

“Pass-through rights must be expressly provided for in the contract; absent such a clause, the contractor's entitlement is governed by its own agreement and applicable civil code principles independently. Commercial teams should check their contracts, and audit every tier of their supply chain as a matter of priority, issue back-to-back notices promptly, and document the causal link between the declared force majeure event and the specific downstream impact, if that is the appropriate contractual outcome,” she said.