Recent instability in the Middle East is a reminder of how geopolitical events can quickly disrupt ordinary commercial arrangements. For UK businesses, the immediate concerns are practical rather than political: interrupted supply chains, increased freight and insurance costs, payment delays and heightened sanctions risk. When performance becomes more difficult or costly, the starting point under English law is always the contract itself.
English law does not provide any general relief simply because circumstances have changed. A party is not released from a bad bargain because transport routes are disrupted or costs increase. The key question is whether the contract allows performance to be suspended, varied or terminated. In practice, the most relevant provisions are force majeure, sanctions, pricing, termination and notice clauses.
Force majeure
Force majeure is not implied under English law. It only applies if the contract expressly provides for it, and the scope of protection depends entirely on the drafting. Clauses may refer to war, sanctions, government action or interruption to transport routes, but many are narrower and will not assist where performance is merely more expensive or delayed.
A party relying on force majeure must generally show that the relevant event falls within the clause, that it has prevented or hindered performance to the required standard, that reasonable steps have been taken, and that strict notice requirements have been complied with. Failure on any of these points can undermine an otherwise valid claim.
Sanctions and illegality
Ongoing sanctions risk is a critical consideration. Performance may become unlawful not only due to a sanctioned counterparty, but because of affected banks, insurers, vessels or other intermediaries in the supply chain. While many contracts now include sanctions-specific wording, parties should also consider illegality and compliance obligations more generally. Sanctions due diligence should be an ongoing process, not a one-off exercise at contract inception.
Limited scope
Where force majeure is unavailable, parties sometimes look to frustration. The threshold is high. English courts will not usually treat increased cost, delay or inconvenience as sufficient. Rerouting cargo or increased insurance are unlikely, on their own, to frustrate a contract. Frustration is generally confined to situations where performance has become impossible, illegal or fundamentally different from what was agreed.
Look beyond headline clauses
Many of the practical issues arise elsewhere in the contract. Pricing mechanisms may determine whether additional costs can be passed on. Exclusivity and supply obligations may continue to apply unless there is clear relief. Termination and suspension rights require close attention to notice requirements, evidence and cure periods. Even with a strong position, failure to follow contractual process can weaken a party’s leverage.
Practical steps for businesses
Businesses should prioritise a focused review of exposed contracts, asking:
- Which arrangements are most vulnerable to shipping, energy or payment disruption?
- Do force majeure, sanctions or termination clauses cover the events in question?
- What notices are required, and when?
- Who bears increased costs under the pricing provisions?
- What mitigation steps are available and properly documented?
- Do insurance policies respond, or are there relevant exclusions and should the identified risks be discussed with insurance brokers?
Early engagement with counterparties is often sensible but should be done with a clear understanding of the contractual position. Poorly drafted notices can create unnecessary risk. Where contracts are being renegotiated, businesses should take the opportunity to tighten drafting around force majeure, sanctions, cost allocation and evidential requirements.
Final thoughts
Recent events underline that contractual protection under English law depends on precise drafting, evidence and procedure. Reviewing contracts early allows businesses to consider where they face exposure and may provide an opportunity toto manage future disruption and preserve key commercial relationships.