Practical strategies for managing construction claims amid conflict in the Gulf
21st April 2026
Haroon Niazi
Partner, Construction Lead, EMEA
Franco Mastrandrea
Partner
United Kingdom
Derek Nelson
Partner
United Kingdom
Deliveries of critical materials and equipment are being delayed by the effective closure of the Strait of Hormuz. Safety alerts trigger temporary site closures and even demobilisation. The regional conflict in the Gulf is not only disrupting construction and engineering projects currently underway – spiking energy prices, supply chain disruption, and inflation in logistics, insurance and other costs are causing repercussions for projects across the Gulf and beyond as the effects ripple outward.
Amid this uncertainty, senior construction professionals, project owners, in-house counsel, and dispute advisers managing contractual risk and claims on Gulf-region projects urgently need practical strategies to manage inevitable delays and disruption. Three experts from HKA addressed several scenarios in a recent webinar hosted by MEC magazine, covering issues from pre-contract positioning to claims management, pre-existing delays to mitigation.
Contractual considerations amid the Gulf conflict
If conflict arises before the contract is signed
Given the Gulf’s healthy pipeline of projects, many contracts will be on the verge of execution, based on costs and timelines already negotiated. Where a contract has not yet been signed, it makes sense for contractors to discuss special arrangements with employers for the duration of the difficulties – perhaps deferring the start of works in earnest.
Rather than pressing ahead with a full mobilisation and triggering the contract’s provisions for such events, the parties could agree on costs for a limited mobilisation instead. This would include key management resources dedicated to the project, ensuring it can proceed in full as soon as conditions allow.
Protecting against escalation amid conflict
Cost escalation may be inevitable, but proving the additional amounts incurred raises its own risks and challenges. Fluctuation provisions – allowing changes in costs to be tracked and compensated – not only give a contractor greater commercial protection, but they also increase certainty for the project owner.
Without such provisions, contractors face a heavier burden: demonstrating that escalation is above and beyond what could reasonably have been anticipated over the project’s life. As well as justifying original benchmark estimates, they must track rising costs and demonstrate mitigation efforts to substantiate a claim. An agreed set of price indices removes much of that uncertainty, saving time and reducing risk for both sides.
Considerations for claims during a conflict
Force majeure and employer obligations in conflict situations
Other contract terms demand close attention, especially express provisions regarding exceptional events and force majeure. Contractors should determine precisely which events qualify, how they must be notified, and when. In common law jurisdictions, these are conditions precedent to any relief and must be strictly observed. Whilst ‘good faith’ principles may be prayed in aid elsewhere, there are no guarantees that such provisions will not be given effect.
Relief may be limited to extensions of time, while separate provisions allow recovery of associated costs. Matters have been further complicated by extensive post-COVID amendments to force majeure clauses, particularly across the Middle East. Consulting legal counsel early is essential to ensure that notices are correctly drafted and served.
Employers, too, must take their obligations seriously. Outright rejection of valid contractor claims would be a dangerous strategy – tribunals expect to see evidence of genuine appraisal. Employers liable for financial relief must prepare for additional costs in transport, materials and insurance, and should be ready to rearrange programmes. The knock-on impact on their own internal costs for engineering, architectural and other third-party services should be anticipated.
If they haven’t already, project owners should also review their project insurance and cover for business interruption amid stop-start working and rising costs. Given the scale of capital investment across the region, owners should have cover in place to offset or recover some costs. As well as notice requirements, they need to take account of the transactional costs of processing claims.
The challenge of proving disruption
Turning to disruption, our statistics on claims are sobering. A review of 316 judgments by courts and tribunals found that only 37% of disruption claims succeeded. The most common failure was not in quantifying the disruption, but in demonstrating the basic entitlement to claim in the first place, he explained. Two further steps – establishing a compensable breach and proving causation through contemporaneous site records – are also critical.
Causation tends to be the weakest link. The consequences of any given event for the wider project will rarely be obvious at the time. Simply asserting that an event must have caused disruption warranting compensation is wholly inadequate. Conflicts are no exception to this.
A generic disruption claim is unlikely to succeed. Contractors should break down the impact and evidence each constituent element. Take a security alert, for example: it should be straightforward to record the number of personnel moved off-site to shelter, their rates of pay, and idle time before resumption. Ringfence that cost calculation so it’s visible and discrete. Failing to present sufficient evidence for even one component can jeopardise the entire claim.
The disruptive effect of returning to previous output levels is harder to quantify but typically represents a relatively modest proportion of the overall claim. Claimants should resist the temptation to rely too heavily on loss-of-efficiency arguments.
Framing the costs of conflict in a claim
When a contractor is instructed to demobilise for safety reasons, costs need to be identified and framed with precision – separately:
- The first obligation is to make the site safe and protect completed works.
- After that, other costs should be reduced wherever possible, though some will unavoidably be retained – plant that cannot easily be off-hired, supervisory staff who cannot readily be redeployed, site labour that cannot be stood down. Careful thought should be given to what can realistically be mitigated.
- Remobilisation costs will follow, given the instruction to resume. Some of the project team may no longer be available – as during the pandemic, when specialist welders could no longer be sourced on certain projects.
- Re-assembled on site, teams then face a re-learning curve before a project can return to its previous production levels.
Delay and disruption are not the same thing, though often conflated. Claims for disruption must address incremental costs rather than a more straightforward total of resources on site during a prolongation period. Persuading tribunals of the distinction between outputs and how they’re measured is challenging – and experts often hold diametrically opposing views.
As-built records and non-critical delays still matter in conflicts
Good records are the foundation of any successful claim. This may be easier said than done in a conflict situation, but this core principle still stands. Contractors should maintain a clear, as-built picture of events that extends beyond the critical path to capture the whole project. Local delays that don’t impact critical-path activities nonetheless have their own story – and costs to be recorded.
Disruption to parallel activities that don’t affect overall completion is frequently overlooked, leaving money on the table. Productivity across an entire section of works may be lost due to restricted access, late design approvals or other hindrances. Even where overall progress is unaffected, the cost to the contractor should be recoverable – provided the three-step process of entitlement, causation and quantification is followed rigorously.
The challenge is identifying disruption early enough. Main contractors often don’t directly employ those doing the work, and a project’s commercial manager may not hear of a problem from subcontractors for a month or more – when it’s too late to capture the necessary evidence. Contractors need a mechanism to track earned value and productivity at the subworks level. Digital tools can help but must be in place before they’re needed.
Using conflict sensibily in mitigation and pre-existing delays
The contractor’s obligation to mitigate depends on the contract terms, which may specify particular steps to limit delay. Beyond express terms, there is a general legal duty on all parties to avoid unnecessary costs arising from a breach. Employers and their experts are entitled to examine subcontract terms and reject costs that a main contractor could recover – fully or partially – from its subcontractors.
For projects already in execution with pre-existing delays, any attempt to use the current conflict as cover for those earlier problems is likely to fail. A tribunal should be able to distinguish between historical, intervening and overall delays. Where pre-existing delays have already pushed a project beyond the completion date, it may be argued that reduces entitlement to relief due to the current conflict. But, as this wasn’t foreseeable, a tribunal is more likely to attribute the additional delay to that cause.
Giving notice and taking note amid conflict
Notice requirements are another important consideration. Whether a notice provision is a condition precedent – and must be strictly followed to preserve entitlement – turns on jurisdiction. Under English law, it would be binding; in other civil law jurisdictions, it may not be enforced if regarded as inequitable. Legal counsel should be consulted on both the contract terms and the prevailing law, particularly in light of recent civil code changes within the Gulf.
Probably the most critical response for contractors in the current conflict is to identify loss of productivity early and trace its causation. Some structure is essential to capture the less obvious effects of disruption. Traditionally, this was done by interviewing staff at the workface. If not already implemented, it’s too late to rely on technology. An alternative is some form of value analysis at different levels to monitor productivity of discrete types of work. That will allow rigorous investigation and recordkeeping that are crucial to claims strategy.
To rewatch our live podcast:
About our experts
Haroon Niazi is a Partner and Head of Construction Claims & Expert EMEA and moderator of the panel. He is a Chartered Quantity Surveyor with more than 15 years of experience in the construction industry.
Dr Franco Mastrandrea is an HKA partner with over 40 years’ experience in construction. A Lexology Index global elite thought leader, he is an expert in international project management, delay, and quantum disputes.
Derek Nelson is an HKA partner and fellow of the Academy of Experts. A leading author, he is an expert in disruption, delay and quantum matters with four decades’ experience in the industry.
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