Protecting the GCC in times of trouble: legal remedies in English law and international law

Practical steps for affected investors and states

The Middle East crisis has vastly increased the risk environment across the Gulf. Shipping through the Strait of Hormuz has faced attempted closures, vessel strikes, and widespread GPS interference; major carriers have paused transits or rerouted vessels; and regional aviation and logistics hubs have experienced intermittent disruption.

In this context, early consideration of how investments and state assets in the region can be protected has become critical. Where contracts are English-law governed, most obviously there are force majeure clauses that may be invoked; but there are also common-law protections for parties under the doctrine of frustration.

Looking ahead, damage suffered during the conflict may be the target of claims and enforcement by affected states looking to recover considerable losses they have suffered.

In this article, we outline the key legal considerations for businesses and states affected by crisis.

Immediate disruption: force majeure and frustration under English law

English law does not contain a free‑standing doctrine of force majeure.

Protection exists only if the contract includes an express clause permitting non-performance in certain specified circumstances. These circumstances will typically include events that are quite obviously beyond a party’s reasonable control: war, terrorism, blockade, government action, or extreme climate events.

To rely on a force majeure clause, a party must generally:

• show a qualifying event has occurred;
• prove that the event in question prevented, hindered, or delayed their performance of the contract; and
• comply strictly with notice and mitigation requirements.

If the contract lacks a clause like this, the common‑law doctrine of frustration may be of assistance, but it is a narrow, fact‑specific remedy. It is also underdeveloped: it was often invoked during the First and Second World Wars (generally in relation to shipping which became stuck after war was declared), but has seen little use since. We saw numerous frustration cases during the Covid-19 pandemic, but even then, pandemic-related interruptions were rarely enough to excuse contractual performance (ie to deem the contract 'frustrated').

Frustration has historically arisen most often in the maritime sector, which, as seen during Covid-19, tends to be at the forefront of global disruption. At present, the Iranian authorities have sought to disrupt shipping in and around the Strait of Hormuz. Missile and drone incidents against merchant vessels, warnings purporting to close the strait, and electronic interference have caused navigational risk as well as the risk of real harm to crews.

In parallel, container carriers and tanker operators have diverted or suspended transits, leading to congestion at safe anchorages, extended voyages, and schedule collapse.

The practical effects are missed laycans, cascading demurrage, and cargo delivery delays.

We advise affected parties to carefully consider what contractual rights they may have before purporting to terminate or suspend performance. Do not take unilateral steps to terminate a contract without considering the legal position first. Termination without proper grounds can, and often will, give rise to a claim for damages which is difficult to defeat.

Short-term relief: key contractual remedies

• Force majeure: check what your contracts say. Charterparties often list war, hostilities, or blockade as circumstances that may excuse a party from contractual performance. Check whether the clause requires prevention or merely hindrance.
• War‑risk clauses: generally found in shipping contracts (for example the BIMCO CONWARTIME and VOYWAR provisions) typically allow a reasonable refusal to proceed into a war zone and permit alternative routing without breach.
• Evidence: preserve UKMTO reports, flag‑state circulars, insurer advisories, AIS and noon reports, port closure notices, and convoy/escort instructions, as well as any other contemporaneous evidence of the geopolitical situation as it is (for example, in the English context, FCDO advice on the region).
• Termination: tread carefully, whether invoking a force majeure clause or seeking to rely on the common-law doctrine of frustration. Triggering one of these clauses without proper basis can lead to a very substantial damages claim – and usually, once triggered in error, the error cannot be remedied.

Looking down the road: BIT claims arising from the crisis

Most of the states involved in the crisis are party to a number of Bilateral Investment Treaties (BITs). BITs can provide a direct cause of action where state conduct destroys, damages or unreasonably interferes with foreign investments. Typical protections include:

• Full protection and security: deliberate missile and drone attacks that foreseeably harm commercial assets or essential routes may ultimately constitute failures to offer full protection and security to investments under an applicable BIT.
• Indirect expropriation: severe, sustained interference that neutralises the value or control of an investment, even without formal transfer of title, may amount to indirect expropriation.
• Fair and equitable treatment: arbitrary, unpredictable conduct and deliberate economic disruption affecting protected investors can breach this standard, particularly where legitimate expectations were created by a stable operating environment.

GCC states may face BIT claims, however unwarranted, arising from the crisis. They should prepare to deal with them robustly.

Other legal avenues 

States affected by the crisis ought to consider pursuing broader state‑to‑state remedies. These might include claims for diplomatic protection or, where jurisdiction exists, proceedings at the International Court of Justice.

States benefit from sovereign immunity from suit and execution in most domestic courts, but immunity is not absolute. Many jurisdictions (including the UK) recognise a commercial‑use exception at the enforcement stage, permitting execution against state property used for commercial purposes (commonly real estate). The UK will also allow claims relating to 'personal injury' to be brought against a nation state in certain circumstances.

What next?

The Gulf’s legal and commercial landscape has shifted.

Hostilities affecting the Gulf have transformed operational risk for shipping, construction, and capital deployment. English law offers practical tools – well‑drafted force majeure provisions, targeted war‑risk and routing clauses, investment‑treaty protections, and carefully planned enforcement strategies – that can preserve value.

With disciplined notices, rigorous evidence, and proactive structuring, the GCC can navigate the present instability while safeguarding contractual and investment positions.

This publication is a general summary of the law. It should not replace legal advice tailored to your specific circumstances.

© Farrer & Co LLP, March 2026