Before the recent strikes on Iran by the US and Israel, most understood that any such response would be limited in scope and dealt with swiftly by the US and Israel. Many didn’t expect the Iranians to attack their neighbours in the Middle East and focus their survival strategy on attacking the global economy seemingly indiscriminately. Whilst direct interference has been over the free flow of the Straits of Hormuz and the bombing of GCC countries’ airports and oil facilities, the secondary effects have spread across the globe.
Many companies now face significant disruptions to their business and are reviewing their contracts for the non-performance clauses regarding breaches and specifically force majeure. In disputes like this, somewhat broad definitions are micro-analysed, and terminology is dissected and interpreted in the most favourable terms on both sides.
Defining War
A key issue for these disputes can be defining common exclusions, such as ‘War’. When does war begin? What kind of kinetic action happens? Does it bring disruption everywhere, all at once into war, or some regions unaffected? Does war against Iran mean war against all of Iran when we consider whether the performance of a contract is impossible or illegal? It is in these circumstances that the details of the event need a forensic review.
Available resources not always available
Our methodology in this type of dispute can vary, but it is often based on the evidence-gathering techniques we utilise in war crimes investigations. There is a significant amount of material created by interested parties, whether they be news agencies, military units, politicians or witnesses from targeted populations. Commercial satellite passes are increased in an effort to continuously update bomb damage assessments for military and civilian use. Statements are made as to what was known when and by whom. All of these data points are valuable for causation studies that support or contest parties’ positions on the applications of force majeure conditions. It is important to note that, as in war crimes investigations, this information will not necessarily be available in two or three years when called for in an arbitration setting.
The small things matter
In disputes of this nature, the small details matter. For example, when previously instructed on a contract breach with war-connected non-performance terms, we were able to determine that the applicant had not, in fact, left their compound on the date the conflict had started. We could demonstrate through satellite imagery that the compound remained unaffected for months after the breakout of the conflict. In this scenario, the contractor was able to remove expensive machinery easily, but chose not to and instead abandoned it, contrary to their responsibilities under the contract.
In practice, many companies begin their evidence gathering, sometimes after an event, triggered by pending arbitration proceedings. It is prudent, however, to begin gathering any relevant information regarding business interruptions now, to be prepared to preserve evidence of impact that may have a material effect on proceedings years down the line.
