The Strait of Hormuz is not merely a geographic chokepoint. For commercial lawyers advising clients with Middle East supply, delivery, and offtake obligations, it has become the axis around which a sprawling and consequential body of contract law now turns. The Iran conflict and the force majeure declarations it has already generated from QatarEnergy, Bahrain Petroleum, and a cluster of major Asian petrochemical producers, has compressed into a matter of days a legal question that ordinarily unfolds over months of negotiation and litigation: does your force majeure clause actually work?
The honest answer, as any experienced contract lawyer will tell you, is that it depends and that the variables which determine the answer are ones that most companies have not examined recently enough, or carefully enough, or with the specific facts of March 2026 in mind.
“The boilerplate force majeure clause that felt adequate in a stable world is now being tested against one of the most significant supply disruptions in decades. The question is not whether your clause was drafted with this scenario in mind. The question is whether you can make it work, under your governing law, with the language you have.”
I. The Three-Part Test: Where Most Claims Fail
The most dangerous misconception circulating among commercial teams right now is that any force majeure clause referencing “war” or “embargo” confers automatic protection. It does not. Under New York law, English law, and most civil law systems applied to cross-border energy and supply contracts, courts and arbitral tribunals apply a demanding conjunctive test, all three limbs of which must be satisfied.
Limb One: Does the Event Qualify?
The triggering event must fall expressly within the contractual definition of a force majeure event. War, government action, sanctions, embargo, and recognised political catastrophes are commonly listed, but the drafting matters enormously. There may be material differences in how a tribunal interprets “act of war” versus “armed conflict” versus “acts of terrorism.” Courts have consistently held that force majeure clauses are to be construed strictly and that war, being a foreseeable risk that sophisticated parties can anticipate and address at the drafting stage, will not be implied into a clause that does not expressly include it.
For the downstream disruptions now rippling outward from the Strait of Hormuz, oil price spikes, refinery disruptions, energy market volatility, and withdrawal of Gulf sovereign investment, the analysis is harder still. These are not acts of war. They are economic consequences of acts of war. Whether a catch-all provision extends to capture them will depend on the ejusdem generis principle: a catch-all is typically read to cover only events of the same character as those expressly listed. A clause listing only natural disasters will not capture geopolitical supply chain disruption, however severe.
Limb Two: Does the Event Prevent Not Merely Burden, Performance?
This is the limb on which the largest number of force majeure claims founder. The threshold is not commercial inconvenience, increased cost, or eroded margin. Courts across jurisdictions have been unequivocal: a higher charter rate for an alternative vessel, an elevated energy input cost, a reduction in profit, none of these amounts to prevention of performance.
The Uniform Commercial Code and Restatement (Second) of Contracts speak of “impracticability” a standard more flexible than strict impossibility but still demanding. A war that causes a marked increase in cost or prevents a seller from securing supplies necessary to performance may qualify. A war that simply renders a transaction less economically attractive does not.
Practitioners advising clients must be forensically precise here. The question is not whether performance is harder. It is whether performance is legally or physically impossible, and whether the specific obligation affected, delivery at a named port, shipment through a designated route, supply from a particular facility, has been rendered genuinely unperformable. A company with access to alternative suppliers, routes, or delivery points faces a substantially higher burden.
Limb Three: Notice and Mitigation
Even a claim that clears the first two limbs can be extinguished entirely by procedural failure. Many contracts impose notice obligations that run from the moment the force majeure event arises or becomes known to the affected party. Missing a 48-hour or 5-day notice window, particularly in a fast-moving crisis, can forfeit protection regardless of how compelling the underlying facts are.
Mitigation obligations run in parallel. The non-performing party cannot simply declare force majeure and cease all effort. Courts have required parties to demonstrate that they explored alternative personnel, facilities, routes, or supply sources, and have denied force majeure protection where such exploration was absent or cursory. What constitutes “reasonable” mitigation is highly fact-specific and will be scrutinised closely in any dispute.
Practical Note: The Protective Notice Strategy
Given the notice trap, experienced counsel universally advise issuing protective or contingent force majeure notices immediately, before certainty is established, under all contracts where performance is at risk. Courts and arbitral tribunals have generally upheld protective notices issued pending full legal assessment, provided they are properly documented. Issue now; assess fully in parallel. Every notice should record the date, time, method, and recipient, with delivery confirmations preserved.
II. The Governing Law Fault Line
Cross-border contracts in the energy and commodity sectors are routinely governed by English law, New York law, or UAE/Qatari law and the outcome of a force majeure claim may differ sharply across these systems. A declaration that is valid under one governing law may constitute a repudiatory breach under another. For companies with counterparties in multiple jurisdictions, a jurisdiction-by-jurisdiction assessment is not optional.
English Law
Force majeure under English law is a creature of contract, not implied doctrine. There is no general common law force majeure principle, if the clause does not cover the event, the party bears the risk. English courts construe force majeure provisions strictly, require that performance be legally or physically impossible (not merely more onerous), and typically treat force majeure as suspending obligations rather than permanently excusing them. Payment obligations are rarely subject to suspension. English law also places significant weight on foreseeability: if the risk was reasonably foreseeable at the time of contracting, a court may hold that the parties allocated it by their silence.
New York / U.S. Law
U.S. courts apply both the contractual force majeure analysis and where no clause exists or as a gap-filler, the common law doctrine of commercial impracticability under UCC § 2-615 and Restatement § 261. These doctrines require satisfaction of a presupposed condition and demand that the non-occurrence of the condition was a basic assumption of the contract. Critically, U.S. courts examine whether the risk was foreseeable and whether it was allocated elsewhere in the agreement, insurance provisions, pricing mechanisms, and market flex language all feed into this analysis.
Civil Law Systems (UAE, Qatar, French)
Civil law jurisdictions often treat force majeure and hardship (improvision) as parallel doctrines. Sovereign prohibitions and government bans may receive broader treatment, and parties may have a right to request renegotiation before seeking termination. For companies with significant Middle East counterparty exposure, the possibility of a price review or contract rebalancing claim, rather than strict force majeure, may be the more viable and commercially realistic avenue.
III. Adjacent Risks That Cannot Be Ignored
Force majeure does not exist in legal isolation. The crisis in the Strait of Hormuz has simultaneously engaged several other contractual and regulatory regimes that commercial lawyers must assess in parallel.
- Sanctions. Sanctions and Export Controls: U.S., EU, and UK sanctions relating to the Iran conflict may independently prohibit performance and may or may not qualify as force majeure under the governing law of the contract. A sovereign ban that is itself imposed in response to sanctions does not automatically translate into force majeure protection. The interaction between sanctions compliance obligations and contractual performance obligations requires specialist analysis.
- Change-in-Law. Change-in-Law Clauses: Sovereign bans or new regulatory prohibitions may trigger separate change-in-law provisions, with different notice periods, different cost allocation mechanics, and different consequences from force majeure. A company that issues only a force majeure notice may inadvertently waive rights under a change-in-law clause with a shorter notice window.
- Hedging Exposure. Hedging and Financial Instruments: Disruption to physical delivery can trigger margin calls, payment obligations, or events of default under linked hedging contracts. In energy markets in particular, the financial exposure embedded in derivative instruments can dwarf the value of the physical delivery obligation, and both must be reviewed simultaneously.
- MAC Provisions. MAC Clauses: In offtake agreements, project finance structures, and long-term supply arrangements, Material Adverse Change provisions may be triggered independently of force majeure, particularly where disruption affects counterparty creditworthiness or the commercial viability of an underlying project. MAC triggers and force majeure triggers are not coextensive and conflating them is a common and costly error.
IV. The Litigation Horizon
Companies that experienced COVID-19 force majeure disputes know what the next twelve to eighteen months are likely to look like. The Strait of Hormuz disruption will generate a wave of claims across English, New York, and civil law jurisdictions, tested against contract language drafted in an era when the closure of the world’s most important oil transit corridor was a scenario analysis rather than a present fact.
The litigation and arbitration landscape will be shaped by several structural features of the current crisis. First, the directness of causation will be litigated intensively. In the COVID-19 cases, courts scrutinised whether disruption was truly caused by the pandemic or by collateral management decisions made in response to it. The same analysis will apply here: carriers, producers, and buyers whose performance failures are partly attributable to their own operational decisions will face arguments that those failures are not within the force majeure protection.
Second, the foreseeability question will be central. The Iran conflict did not emerge without warning. Companies that were on notice of escalating tensions and failed to activate contingency planning will face arguments that they assumed the risk. Evidence of pre-crisis risk assessments, board-level discussions, and contingency planning will become relevant to the foreseeability analysis.
Third, the interaction between force majeure and long-term contract renegotiation will become increasingly prominent. For contracts that permit only suspension, not termination, the parties face the prospect of resumed obligations into a fundamentally altered commercial landscape. The pressure to renegotiate will be significant, and the legal basis for doing so (or for resisting it) will depend heavily on governing law and specific contract architecture.
V. What Contract Lawyers Should Be Doing Right Now
The actionable priorities, in order of urgency, are straightforward even if the underlying analysis is not.
- 1. Emergency Contract Audit. Conduct an emergency audit of all at-risk contracts, mapping force majeure, hardship, MAC, change-in-law, and notice provisions against the specific disruption events now unfolding. Do not assume that clauses drafted in the same style across a portfolio operate identically: governing law, counterparty jurisdiction, and specific drafting variations will produce materially different outcomes.
- 2. Issue Protective Notices Now. Issue protective notices under all contracts where performance is at risk. Do not wait for commercial or legal certainty. Document everything: date, time, method, recipient, content, and delivery confirmation.
- 3. Preserve Evidence. Preserve contemporaneous evidence of disruption: carrier communications, port authority notices, government decrees, sanctions updates, and market price data. The evidentiary record assembled in the first weeks of a crisis is often the most important.
- 4. Review Financial Exposure. Assess linked financial instruments and hedging positions for knock-on obligations or defaults triggered by physical delivery disruption. Engage financial and legal advisers simultaneously.
- 5. Engage Specialist Counsel. For contracts with significant value or cross-border governing law, engage counsel with multi-jurisdictional expertise without delay. The interaction between English law, New York law, and civil law force majeure doctrines is not amenable to a one-size-fits-all analysis.
VI. Looking Forward: Drafting Lessons from the Crisis
For contracts currently under negotiation or renegotiation, the crisis presents an opportunity to address deficiencies that COVID-19 exposed but that many parties failed to correct in subsequent drafting cycles. Practitioners should consider:
- Defining triggering events expressly to include “armed conflict,” “acts of war,” “embargo,” “sanctions,” “energy crisis,” “commodity shortage,” and “geopolitical instability,” rather than relying on vague catch-all language.
- Ensuring catch-all language is drafted broadly enough to capture downstream economic consequences of geopolitical events, not merely direct physical disruption.
- Specifying clearly what happens at the end of a force majeure period, whether obligations resume, whether either party has termination rights, and what notice is required.
- Expressly addressing disruptions to supply chains, energy markets, access to financing, and sovereign investment flows.
- Carving out payment obligations from force majeure protection only where truly intended and being precise about which payment obligations are in scope.
- Including hardship or renegotiation provisions alongside force majeure, particularly in long-term supply agreements, to create a structured path for commercial adjustment without the all-or-nothing stakes of a termination dispute.
Conclusion: Precision Over Assumption
If the present crisis has exposed anything, it is this: force majeure is not a commercial escape route, it is a narrowly calibrated legal mechanism that rewards precision and punishes assumption. Too many parties approach it as a shield of convenience; in reality, it is a doctrine of discipline.
The Iran conflict will not merely disrupt supply chains; it will redraw the practical boundaries of contractual risk allocation. Those boundaries will not be determined by the scale of the disruption, nor by the commercial hardship suffered, but by the exact words chosen at the drafting table, the speed and accuracy of notices issued in the early days of crisis, and the evidentiary record preserved when events first began to unfold.
In the months ahead, courts and arbitral tribunals will not ask whether the situation was extraordinary. They will ask whether the contract, as written, anticipated it; whether performance was truly prevented; and whether the party invoking force majeure acted with the rigour the doctrine demands.
For contract lawyers and their clients, the lesson is both immediate and enduring. Risk is not eliminated by force majeure. It is allocated, often imperfectly, in advance. When the disruption arrives, there is no rewriting the clause, only living with it.
And that is the uncomfortable truth at the centre of every force majeure claim now emerging from the Strait of Hormuz: the outcome will turn not on the crisis itself, but on the quality of the drafting that preceded it.
This article is for informational purposes only and does not constitute legal advice. Readers should consult qualified legal counsel in the relevant jurisdiction before acting based on this analysis.
