{"id":17840,"date":"2026-04-09T10:14:19","date_gmt":"2026-04-09T10:14:19","guid":{"rendered":"https:\/\/riaabarkergillette.com\/pk\/?p=17840"},"modified":"2026-04-09T13:25:20","modified_gmt":"2026-04-09T13:25:20","slug":"force-majeure-and-the-gulf-conflict-risks-for-pakistani-business","status":"publish","type":"post","link":"https:\/\/riaabarkergillette.com\/pk\/insight-article\/force-majeure-and-the-gulf-conflict-risks-for-pakistani-business\/","title":{"rendered":"Force Majeure and the Gulf Conflict: What Pakistani Businesses Need to Know"},"content":{"rendered":"\n

On 28 February 2026, the United States and Israel launched strikes on Iran. Iran retaliated across the Gulf, targeting energy infrastructure and effectively closing the\u00a0Strait of Hormuz<\/a>.\u00a0QatarEnergy<\/a>, Kuwait Petroleum Corporation and Bahrain\u2019s Bapco Energies each declared force majeure on their export obligations.<\/p>\n\n\n\n

On 8 April 2026, a Pakistan-mediated two-week ceasefire took effect. Yet even if this truce culminates in a permanent end to hostilities, damaged production facilities and disrupted supply chains will produce cascading effects for months.<\/p>\n\n\n\n

Pakistan\u2019s Exposure<\/h2>\n\n\n\n

Pakistan imports over 80% of its oil and nearly all its LNG through the Strait. The disruption extends beyond energy. Some major domestic fertiliser plants depend on imported LNG as feedstock, and at least one major plant halting operations after losing access to Qatari gas. The country also faces a structural deficit in DAP (di-ammonium phosphate) imports, while helium constraints affect healthcare.<\/p>\n\n\n\n

Section 56 of the Contract Act: Threshold, Causation and the Case Law<\/h2>\n\n\n\n

As a common law jurisdiction, Pakistan has no codified force majeure<\/em> doctrine. This distinguishes it from civil law systems where force majeure<\/em> is codified in statute and courts have express power to rebalance obligations in exceptional circumstances. In Pakistan, where a contract contains an express force majeure<\/em> clause, courts will give effect to it. In\u00a0Lebeaupin v R Crispin & Co<\/em>\u00a0[1920] 2 KB 714, force majeure<\/em> was defined as encompassing all circumstances independent of the will of man, including war.<\/p>\n\n\n\n

Where a contract is governed by Pakistani law and contains no express force majeure<\/em> clause, the sole recourse is\u00a0Section 56 of the Contract Act, 1872<\/a>, under which a contract becomes void where performance is rendered impossible by an unpreventable event. (This analysis applies to contracts governed by Pakistani law. Contracts with Pakistani counterparties governed by English, UAE, or other foreign law will be subject to the force majeure framework of that governing law.) The Sindh High Court confirmed in\u00a0PICIC v Habib Enterprises<\/em>\u00a0(1989 CLC 2070) that the doctrine applies to events subsequent to the contract that were not in the contemplation of the parties. The Supreme Court, in\u00a0Mansukhdas Bodram v Hussain Brothers<\/em>\u00a0(PLD 1980 SC 122), held that frustration \u201cguillotines the contract without the action of either party.\u201d This has a critical practical consequence: Section 56 does not merely excuse the affected obligation. It voids the entire contract automatically. Every future obligation falls away, and Section 65 requires restitution of benefits received. A business that needs its supply relationship to survive the disruption should therefore think carefully before invoking a doctrine that will destroy it \u2014 negotiated variations that preserve the contract may be preferable.<\/p>\n\n\n\n

The threshold is demanding: a party must prove performance is wholly impossible, not merely more expensive. Equally important is causation. Consider a power producer whose generation depends on LNG supplied under a long-term contract with QatarEnergy. When QatarEnergy declares force majeure<\/em> and suspends deliveries, that producer cannot generate electricity and therefore cannot meet its own offtake obligations \u2014 a clear case of impossibility with a direct causal chain. Contrast this with a manufacturer who faces higher input costs but could source alternative fuel or adjust production. That is commercial hardship, and Section 56 will not assist. Where pre-existing difficulties had already compromised performance, courts are unlikely to accept the conflict as the sole frustrating cause.<\/p>\n\n\n\n

\n

\u201cFor businesses whose contracts are silent on force majeure<\/em>, Section 56 sets a high bar. The priority now is building a clear evidentiary record that connects the disruption directly to the conflict and demonstrates that all reasonable steps to mitigate were taken,\u201d said\u00a0Mayhar Kazi<\/a>, Partner at RIAA Barker Gillette.<\/p>\n<\/blockquote>\n\n\n\n

Express Force Majeure Clauses and Adjacent Provisions<\/h2>\n\n\n\n

This conflict exposes a critical gap for businesses whose contracts lack force majeure<\/em> or adjacent clauses. Without one, Section 56\u2019s narrow impossibility standard is the only defence.<\/p>\n\n\n\n

Even where a clause exists, invoking it requires satisfying multiple conditions simultaneously, including scope, foreseeability, a threshold of prevention rather than mere inconvenience, and strict notice and mitigation obligations. Failure on any single condition can defeat the claim.<\/p>\n\n\n\n

Beyond force majeure<\/em>, businesses should review adjacent mechanisms. Material adverse change (MAC) clauses may provide grounds for adjustment or termination. Hardship and price escalation provisions may offer relief where the contract\u2019s economic balance has shifted. In all cases, a party claiming relief must demonstrate that it took reasonable steps to mitigate: courts will scrutinise whether viable alternatives existed and were pursued.<\/p>\n\n\n\n

\n

\u201cThe foreseeability question will define the next wave of disputes. Contracts signed before February 2026 carry a fundamentally different risk profile from those executed after hostilities began \u2014 and the force majeure<\/em> analysis shifts accordingly,\u201d said\u00a0Hasnain Naqvee<\/a>, Senior Partner at RIAA Barker Gillette.<\/p>\n<\/blockquote>\n\n\n\n

What Businesses Should Do Now<\/h2>\n\n\n\n

Companies should audit existing force majeure clauses carefully. Check whether \u201cwar,\u201d \u201carmed conflict,\u201d or \u201cgovernment action\u201d is a listed trigger event, and whether catch-all language exists. Crucially, check the clause\u2019s threshold: does it require performance to be \u201cprevented,\u201d \u201chindered,\u201d or \u201cdelayed\u201d? Each word produces a different legal result.<\/p>\n\n\n\n

Notice deadlines must be identified and observed. Many clauses require notice within 14 or 30 days of the triggering event. Missing the window can forfeit the right to claim, regardless of the merits.<\/p>\n\n\n\n

Document the causal chain, not just the disruption. Retain supplier force majeure notices, shipping records, and correspondence showing specifically how the conflict prevented performance. Engage counterparties early \u2014 agreed variations and interim arrangements are almost always preferable to litigation. Finally, businesses receiving force majeure<\/em> notices from suppliers should assess them critically before accepting the suspension of their own entitlements.<\/p>\n\n\n\n

For advice on force majeure<\/em> or contractual risk management, contact\u00a0Hasnain Naqvee<\/a>\u00a0or\u00a0Mayhar Kazi<\/a>\u00a0today.<\/strong><\/p>\n\n\n\n

This article is not legal advice; it provides information of general interest about current legal issues.<\/em><\/p>\n\n\n\n

\u2026<\/p>\n\n\n\n

RIAA Barker Gillette is Pakistan\u2019s premier law firm, with an on-the-ground presence in three major cities in Pakistan: Karachi, Islamabad and Lahore, and affiliated offices in Dubai (DIFC) and London. <\/p>\n\n\n\n

The firm practices in all areas of corporate, commercial and dispute resolution law. Leading international legal directories consistently recognise the firm as a top-tier law firm in Pakistan.<\/p>\n\n\n\n

\"RIAA<\/figure>\n\n\n\n

RIAA Barker Gillette is the exclusive member firm in Pakistan for Lex Mundi<\/a>, the world\u2019s leading network of independent law firms with in-depth experience in over 125 countries worldwide.<\/p>\n","protected":false},"excerpt":{"rendered":"

The Gulf conflict has triggered force majeure declarations and disrupted supply chains critical to Pakistan. With no codified force majeure doctrine, Pakistani businesses face a strict impossibility threshold under the Contract Act, 1872 \u2014 and must also navigate demanding requirements of causation, notice, and mitigation.<\/p>\n","protected":false},"author":9,"featured_media":17843,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_coblocks_attr":"","_coblocks_dimensions":"","_coblocks_responsive_height":"","_coblocks_accordion_ie_support":"","footnotes":""},"categories":[16],"tags":[32,13,67,70],"class_list":["post-17840","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-insight-article","tag-corporate","tag-dispute-resolution","tag-manufacturing-and-retail","tag-oil-and-gas"],"acf":[],"yoast_head":"\nForce Majeure and the Gulf Conflict: What Pakistani Businesses Need to Know - RIAA Barker Gillette Force Majeure and the Gulf Conflict: Risks for Pakistani Business<\/title>\n<meta name=\"description\" content=\"Gulf energy firms invoke force majeure as conflict disrupts trade. 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