Navigating Operational and Contractual Conflict Related Risks on Construction and Engineering Projects

March 2026

Andrew Croft and Kayleigh Rhodes

Recent military action and global geopolitical instability have created significant uncertainty for organisations engaged in construction and engineering projects in the affected regions. This update highlights some of the key commercial, legal and operational considerations and actions for clients with active or planned projects that may be affected by conflict or related disruption, including in the Middle East.

Protecting people, sites and operations

Safety of personnel and site security is a core priority, especially in areas directly impacted by conflict and local authority guidance. Company directors and relevant corporate departments should consider and manage the safety and wellbeing of staff, as well as their applicable legal or employment duties.

Where applicable, impacted businesses should also take steps to consider:

Reviewing site safety and security protocols, emergency procedures, and evacuation plans.
Suspension or demobilisation of works where site access becomes unsafe or impossible¹.
Assessing whether applicable local laws or guidance, health and safety standards, or contractual obligations require updated risk assessments or protective measures, early or advance warning notices, or other forms of communications.

Consider what is being instructed by local governments, as well as the applicable UK or international guidance relevant to your offices and operations. Where organisations such as the UK Foreign, Commonwealth & Development Office (FCDO) advise against travel to a specific region, organisations should evaluate the implications and manage the risks for deployment of UK staff².

Checking and protecting contractual entitlements and relief

It is crucial to understand and monitor the applicable contractual provisions for the parties’ entitlement to payment and to relief, such as an entitlement to additional time and/or money or an ability to suspend or terminate works. Most standard-form construction contracts include provisions relevant to force majeure events which impact the project or progress of the works, and which were outside of the parties’ control (and acts of war are often included in these). Different contract types adopt varying approaches to extensions of time and recovery of loss arising from geopolitical disruption, war or hostile events, and each may impose distinct notice and procedural requirements.

In many civil code jurisdictions, force majeure will be governed by specific statutory provisions, and it is important to understand how those rules or requirements apply and what effect they may have. This differs from the position under common law, where there is no implied concept of force majeure and any potential relief must be established by the terms of the agreed contract itself.

Do not assume that a contract may be terminated simply because local circumstances have become complicated, difficult or unstable. Taking unilateral action to terminate without basis or on an applicable termination ground may itself amount to a breach of contract, with the associated consequences. It is important to ensure you have a right to terminate under the applicable law and based on the contract terms before doing so.

Relevant contract wording should be reviewed carefully, including any amendments to the industry standard position, and to ensure timely notices are issued to preserve entitlement to payment or relief. There may be additional measures to manage, such as risk reduction meetings or communications with other project stakeholders, the provision of documents, as well as certain mitigation measures. There will also be increased commercial risk where substantial work in progress is allowed to accumulate on projects without corresponding interim payments being secured. In addition, parties should ensure they fully understand the governing law, any applicable local laws, and the jurisdiction provisions of their contracts, as these will determine how rights and obligations are to be interpreted and enforced.

Future contract opportunities and negotiations will also need to take recent events into account, particularly as the actual or potential foreseeability of certain risks may affect how force majeure provisions or compensation events are interpreted and applied in practice. It will be important to review carefully the specific definitions and wording relating to protections such as compensation, force majeure and dispute‑escalation mechanisms, together with any bespoke drafting required to specifically address associated risks such as supply chain impacts, sanctions, embargoes or price adjustments linked to materials or products, energy or resource markets.

Check other contract and project documents

For certain projects, there may also be increased requirements relating to performance or financial security, such as the provision of on‑demand bonds. It is important to be aware that the risk of such security being called is heightened where a project is suspended or experiences prolonged disruption.

Supply chain, materials, and pricing considerations or risks

Conflict may directly impact or disrupt supply chains and logistics, particularly for materials sourced from or transported through local or affected regions; specialist products, equipment or machinery required; and the use of internationally mobile labour. It may be worth considering taking prompt steps to review the availability of alternative suppliers; any applicable price adjustment mechanisms; and any obligations for mitigation or programme resequencing. Retaining copies of communications and supporting documents will be important in support of this, and when relying upon contractual relief.

If it becomes necessary to suspend works on a project, it is important to take all appropriate steps to comply with the relevant contractual and notice requirements. In addition, care should be taken to secure plant, equipment and materials properly to minimise loss, damage or misuse during and as a result of the suspension period.

Insurance requirements

Construction insurance programmes often include specific hostile or warlike action exclusions. This is largely due to insurers’ inability to accurately assess the risk of such events and the potentially catastrophic losses that might be triggered across differing policies at the same time.

To the extent that this applies to your business or contracts, it is worth taking suitable steps to:

Review applicable policy wording urgently to understand potential coverage gaps. There is also a risk that travel insurance may be invalidated if travelling against FCDO advice.
Confirm which party is responsible for arranging and maintaining relevant insurances.
Notify brokers and insurers promptly of any circumstances that may give rise to a claim.

Labour, immigration and other employment or mobilisation issues

Workforces may be directly affected by travel restrictions, border closures, lockdowns or the need for emergency repatriation. Parties may seek to take steps to review the current immigration status of workers and to act accordingly. In addition, it may be appropriate to consider and manage necessary adjustments to accommodation, welfare, or schedules. It will be prudent to engage early and appropriately with employees, clients, subcontractors, and labour agencies, as needed, to manage applicable employment obligations or wellbeing duties and understand any resourcing impacts.

Suggested considerations and next steps

In summary, in considering your position and live contracts you may wish to take the following steps:

Assess overall project and site safety and confirm the status of ongoing operations.
Engage with contractors and supply chain leads to understand potential impacts.
Evaluate supply chain vulnerabilities and sourcing alternatives.
Review your contracts and issue contractual notices promptly as and where required.
Review insurance cover obligations and notify brokers or insurers where required.
Closely monitor local developments, UK and local authority guidance (as well as that of other relevant countries) and associated legal or regulatory developments and obtain appropriate legal or specialist advice where required.
Update policies, risk registers, or governance oversight to reflect evolving conditions.

Our thoughts are with our clients, colleagues, and other contacts impacted by recent events.

¹Check contract and applicable guidance. For example, the UAE Ministry of Human Resources and Emiratisation issued an extraordinary circular on 1 March 2026, instructing private sector employers to switch to remote working operations until the end of business on 3 March 2026, therefore impacting and shutting construction sites. Other countries in the Middle East may have issued similar guidance or updated local regulations. Further, as at noon on 2 March 2026, FCDO foreign travel advice recommended remaining indoors, avoiding travel and following instructions from the local authorities: United Arab Emirates travel advice – GOV.UK. There is still a requirement to register presence in region.

²As of noon on 16 March 2026, FCDO advises against all but essential travel to the United Arab Emirates.

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