With the escalation of hostilities involving Iran and its regional impact, contractors are increasingly asking whether war or armed conflict can be treated as a force majeure event in their Saudi‑law contracts. The answer is yes—but only if strict legal conditions are met.

Saudi law requires that, as a minimum, the event:

• Is beyond the contractor’s control;
• Was not foreseeable at the time the contract was signed;
• Is not avoidable or overcome;
• Is not attributable to the other party.

Under Article 110 CTL, this standard leads to true force majeure only when performance becomes impossible, not merely more expensive or delayed.

The parties have clearly the freedom to adjust their clause (as it is normally the case) provided that the requirements of Saudi Law are met.

For instance, the ICC Force Majeure and Hardship Clause (2020 / 2023) provides that:

• the impediment is beyond reasonable control;

• the impediment could not have been reasonably foreseen at the time of the conclusion of the contract; and

• the effects of the impediment could not have been reasonably avoided or overcome by the affected party.  

The reasonableness concept provides a lower threshold for invoking the clause than impossibility of performance. It remains an impediment which makes the performance no longer possible but within the limit of reasonableness.

Example: Iraq and Qatar oil‑supply contracts with force majeure

In the current context, Iraq and Qatar have declared force majeure on certain oil‑supply contracts with EU countries. From a Saudi‑law perspective, these declarations are likely to be scrutinised for:

• Whether the risks were foreseeable at the time of contracting (e.g., if the contract was signed after the tensions were widely known).
• Whether the exporters could still deliver via alternative routes or ports.
• Whether the event directly prevented loading or shipment, or only increased risk or cost.

These oil‑supply cases are instructive for contractors:

• If a Saudi construction project relies on materials or equipment that must pass through a high‑risk zone (e.g., ports or shipping routes affected by Iran‑linked tensions) and those routes become genuinely closed or impossible to use, the contractor may argue force majeure under Article 110 CTL and any incorporated ICC Clause.
• If the contractor can still obtain materials via alternative suppliers or routes, the situation is more likely to be treated as hardship under Article 97 CTL.

Practical example: a Saudi‑based contractor facing port closures

Consider a contractor working on a power‑plant project in Saudi Arabia that depends on turbine components shipped from Europe via the Persian Gulf. If:

• Iran‑related hostilities lead to closure of key ports or transit routes;
• Authorities issue temporary bans on certain vessels or routes;
• And there is no practical alternative route within a reasonable timeframe,

this may satisfy the force majeure standard. The contractor can then:

• Stop performance for the affected period;
• Avoid liquidated damages for that period;
• In the event of prolonged impossibility, seek termination of the contract under Article 110 CTL.

However, if the contractor can still obtain the turbines via alternative routes (e.g., longer maritime lanes or air freight), even at much higher cost, Saudi‑law‑oriented practitioners would likely treat this as hardship, not force majeure.

Tips for contractors

• Be clear on whether the event genuinely makes performance impossible or just more expensive.
• Collect evidence such as government orders, port‑closure notices, and shipping‑line communications.
• Issue a timely, written notice explaining the impact on the project and any mitigation steps taken.

In the current war‑linked environment, making this distinction correctly can help contractors preserve their rights and avoid being held liable for non‑performance when the real cause is an external, uncontrollable event.

You can read more on this topic HERE