The outbreak of war in Iran has sent shockwaves through global energy markets. In its immediate aftermath, a leading Qatari energy company announced the suspension of liquefied natural gas (LNG) production and associated products — and, crucially, declared force majeure, effectively shielding itself from liability towards its buyers. It was not alone for long: this approach was immediately followed by a company from Bahrain and, reportedly, by Saudi, Iraqi and Kuwaiti companies. The dominoes are falling. And for the counterparties left holding unfulfilled contracts, the clock is ticking. While the legal weight of these declarations will ultimately depend on the specific contractual arrangements in place, affected buyers will likely not afford a wait and see approach. This note provides a concise overview of the key legal doctrines these producers are likely to invoke to escape liability — and, critically, of the conditions that must actually be met for those defences to succeed: those conditions, as we shall see, are not necessarily automatic.
The war in Iran is giving rise to several collateral (but perhaps foreseeable) effects, involving the (lack of) performance of energy contracts for entities whose operations or fields have been affected by the war.
In particular, after Iranian strikes and military operations disrupting navigation through the Strait of Hormuz: (i) on 3 and 4 March 2026 the major Qatari energy company announced its decisions to stop production of liquefied natural gas (LNG) and associated products and to declare force majeure precluding performance of contracts with its affected buyers; and (ii) on 9 March 2026 also a company from Bahrain declared force majeure on affected operations. Reportedly (iii) on 7 March 2026 a company from Kuwait began cutting oil output and declared force majeure; (iv) on 20 March 2026, Iraq too declared force majeure on all oilfields developed by foreign oil companies; and (v) on 23 March 2026, the world's top oil exporter from Saudi Arabia has cut crude supply to Asian buyers for a second month in April.
While the systemic effects of these decisions can be heavily impacting (as many Countries, in large part, depend on energy coming from States affected by the war in Iraq), the precise legal consequences of these declarations on ongoing energy contracts are unclear, mainly depending on whether the parties foresaw and regulated this kind of scenarios.
Contractual wording providing for the consequences of war over the parties’ relationship
A careful assessment of the contracts regulating the relationship between energy producers and other parties is the essential first step to develop a proper legal strategy.
First, some contracts may foresee the automatic suspension of performance (or termination) in case of war. This kind of clauses may be complex to be interpreted, because it will be necessary to understand what the parties (and, in their silence, the applicable law) meant for “war”, as the reference may apply to a formal state of war, episodic attacks to the territory of the State where a certain entity is based or even the sole risk of attacks based on reliable sources or on a situation of hostility. Quite to the contrary, practice shows that sometimes the parties excluded the risk of war from the causes justifying a termination or suspension of the contract.
A second critical variable is the specific wording of the force majeure clause itself. These clauses are far from uniform: many contain exhaustive lists of qualifying events, and the threshold question will therefore be whether Iranian strikes and/or the disruption of navigation through the Strait of Hormuz fall within the scope of what the parties originally contemplated and contractually defined as a force majeure event.
Once that threshold is crossed — or contested — attention must turn to the consequences and the available remedies. Two sets of questions become central: first, whether the triggering event entitles the affected party to treat the contract as terminated outright, or merely to suspend performance pending resolution of the disruption; and second, whether the party invoking force majeure has complied with any procedural obligations attached to the clause — such as notice requirements or mitigation duties — and whether the steps actually taken meet that standard.
Contractual wording not providing for the consequences of war over the parties’ relationship
In the lack of a clear contractual wording providing for the effect of war over the parties’ relationship, the analysis shall turn on substantive applicable law. A force majeure or hardship declaration is not a blank shield. As shown below, both doctrines come with strict substantive and procedural conditions — including notice obligations — that must be rigorously satisfied. Fall short on any of them, and the non-invoking party retains every right to hold the other side to its contractual commitments.
Public international law
Customary (public) international does not contain any principle providing for the effects of war on contracts and it is difficult to say that force majeure can apply to contracts between private parties as a form of general principle of law grounded in international law. The same reasoning applies to hardship.
A provision on force majeure is not even contained in the 1980 Vienna Convention on the International Sale of Goods (which, generally speaking and unless the parties opted out, is applicable to contracts of sale of goods between parties whose places of business are in different State). War-related events, however, are not necessarily without remedy under the Convention, as Article 79 — in Section IV ("Exemptions") — is widely treated as the Convention's hardship clause. According to this provision “(1) [a] party is not liable for a failure to perform any of his obligations if he proves that the failure was due to an impediment beyond his control and that he could not reasonably be expected to have taken the impediment into account at the time of the conclusion of the contract or to have avoided or overcome it, or its consequences”. The exemption has effect for the period during which the impediment exists and, to be effective, it is subject to a quite strict notice requirement: “(4) [t]he party who fails to perform must give notice to the other party of the impediment and its effect on his ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, he is liable for damages resulting from such non-receipt”.
A regulation of force majeure is offered by Article 7.1.7 of the Unidroit Principles on International Commercial Contracts - a soft-law instrument frequently incorporated by reference or used as an interpretive guide in international contracting -, whereby non-performance is excused when the defaulting party proves that: the cause was an impediment beyond its control; that impediment was not reasonably foreseeable at the time of contracting; and that neither the impediment nor its consequences could reasonably have been avoided or overcome. When the impediment is only temporary, the excuse shall have effect for such period as is reasonable having regard to the effect of the impediment on the performance of the contract. However, the party who fails to perform must give notice to the other party of the impediment and its effect on its ability to perform. If the notice is not received by the other party within a reasonable time after the party who fails to perform knew or ought to have known of the impediment, it is liable for damages resulting from such nonreceipt.
Finally, Article 6.2.2 of the same Unidroit Principles provides for a definition of hardship, whereby “[t]here is hardship where the occurrence of events fundamentally alters the equilibrium of the contract either because the cost of a party’s performance has increased or because the value of the performance a party receives has diminished, and (a) the events occur or become known to the disadvantaged party after the conclusion of the contract; (b) the events could not reasonably have been taken into account by the disadvantaged party at the time of the conclusion of the contract; (c) the events are beyond the control of the disadvantaged party; and (d) the risk of the events was not assumed by the disadvantaged party”. The remedial framework for hardship is then laid down in Article 6.2.3. Upon the occurrence of hardship, the disadvantaged party acquires the right to request renegotiation of the contract, provided it does so without undue delay and sets out the grounds for its request. This right, however, is expressly limited: it does not entitle the requesting party to suspend or withhold performance pending negotiations. Where renegotiations prove unsuccessful within a reasonable timeframe, recourse to a court becomes available to either party. If hardship is confirmed, the court retains a discretion — to be exercised where reasonable — to: (a) terminate the contract, specifying the effective date and applicable terms; or (b) adapt the contract with a view to restoring its original contractual equilibrium.
Domestic legal systems
How domestic legal systems handle the effects of war on contracts is a question worth examining — though with one important qualification. The doctrine of "trading with the enemy" operates differently across legal traditions: common law systems have historically prohibited such dealings outright, while civil law systems have generally taken no such position. Putting that specific issue to one side, however across all major legal systems, doctrines and mechanisms exist that are capable, in principle, of addressing and mitigating the legal consequences of war on contracts between private entities.
In common law systems, the following doctrines are usually relevant:
All in all, while war can undeniably cast a long shadow over contractual obligations, the path to invoking its legal consequences is anything but simple or predictable. Across all legal systems examined, the disruption caused by war must be truly unforeseeable, its impact on the parties' relationship unavoidable, and its invocation subject to strict and unforgiving notice requirements. Precisely because the legal landscape surrounding war and contracts is so complex and uncertain, the greatest lesson to be drawn is the importance of anticipation and preparation. Rather than waiting for chaos to strike and scrambling to find a legal lifeline, savvy contracting parties would be well-advised to identify and negotiate their options well in advance — crafting tailored contractual provisions that leave as little as possible to the unpredictability of the law.
Parties dealing with entities somehow affected by the war in Iran should immediately look at the wording of their contracts, in order to understand whether the effects of the war may somehow affect performance.
More generally, legal advice should be looked to be well aware of the remedies actually available to the party potentially claiming the application of force majeure or hardship, as not always the substantive and notice requirements for the application of these doctrines are easily met.
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