Force Majeure under Saudi Law

Introduction: War‑related disruptions and why understanding force majeure matters now

In light of the current escalation of hostilities involving Iran and its regional impact, many contracts are facing serious disruptions: sanctions, border or port restrictions, transport‑route closures, and sharply rising logistics or material costs. These developments make it essential for contractual parties to understand what their rights and obligations are under the law and their contract.

Under Saudi law, as well as under model clauses like the ICC Force Majeure and Hardship Clause, parties must distinguish between events that make performance impossible (force majeure) and those that only make it excessively onerous or costly (hardship). In the current environment, decisions taken today—such as whether to issue a force majeure notice, request renegotiation, or continue performance—can determine whether a party preserves its entitlements or risks being treated as in default.

This note explains how Saudi law and the ICC Force Majeure standard clause work together in the current war‑linked situation, and what practical steps each party should consider.

1. The Saudi‑law background

Under the Saudi Civil Transactions Law (CTL), there is no single “force majeure” article, but two key rules define the situation:

• Article 110: If performance becomes impossible due to a reason beyond the debtor’s control, the affected obligation and the corresponding obligation of the other party are extinguished, and the contract may be terminated.
• Article 125: A person is not liable for harm caused by events beyond his control, such as force majeure or third‑party fault, unless the parties agreed otherwise.

Saudi courts treat force majeure as an unforeseeable, beyond the debtor's control event that makes performance impossible, not merely difficult or expensive.

If instead the performance is excessively onerous in such a way that it may cause heavy losses, then the debtor may claim the hardship situation as provided in Article 97 of the CTL which provides that the performance is still possible but excessively onerous.

Understanding Force Majeure under Saudi Law

2. How the ICC Force Majeure Clause fits in

The ICC Force Majeure and Hardship Clause (2020 / 2023) is a standard model clause that substantially covers extraordinary events beyond a party’s control (such as war, natural disasters, government prohibitions) that prevent performance. Under ICC principle, the consequences are typically suspension of the obligations affected, and, if the event continues for an agreed period, termination of the contract with no liability from the affected party.

The standard clause can be incorporated into contracts by reference. It is widely accepted in international construction and trade and is often used alongside Saudi‑law‑governed contracts.

Under Saudi law, the ICC clause is interpreted:

• As a contractual allocation of risk, not as a substitute for mandatory CTL rules.
• In a way that cannot waive fundamental protections (e.g., Article 110 on impossibility, Article 125 on non‑liability, and Article 97 on hardship).

In practice, Saudi courts and arbitral tribunals will:

• Respect the ICC wording on notice, burden of proof, and consequences,
• But may override any clause that tries to exclude core CTL protections (for example, full liability for harmful acts under Article 173 CTL).

Please note that the party invoking successfully the force majeure event is relieved from its duty to perform and from any liability from the time the impediment causes inability to perform, provided that the notice thereof is given without delay. If notice is not given without delay, the relief is effective from the time at which notice thereof reaches the other party 

3. What qualifies as a force majeure event under the ICC Clause

The ICC clause typically defines force majeure by four conditions:

1. The event is beyond the parties’ control;
2. It was not reasonably foreseeable at the time the contract was concluded;
3. It is not reasonably avoidable or overcome;
4. It is not attributable to the other party.

The clause also lists examples such as war, hostilities, acts of terrorism, natural catastrophes, government actions, and similar events. These are presumed force majeure if they genuinely prevent or hinder performance.

In the current context of US/Israel–Iran‑linked tensions, events such as:

• Sanctions blocking key materials or payments;
• Closure of ports or borders affecting transport routes;
• Government‑imposed security or movement restrictions on or near the site;

may satisfy the ICC‑style force majeure definition if they actually prevent or substantially hinder performance, not just raise costs.

How the ICC Force Majeure Clause Works in Practice

4. When can a war be a force majeure event?

A war or armed conflict can be treated as a force majeure event under the ICC Clause, but only if strict conditions are met:

• Performance must be impossible or genuinely hindered, not merely more expensive.
  • Example: Port closures or sanctions that prevent import of critical construction equipment with no realistic alternative.
• The event must be beyond the contractor’s control and not caused by its own choices (e.g., picking a high‑risk route when safer options existed).
• The risk must not have been foreseeable at contract signing.
  • If the contract was signed after the war‑linked risks were widely known, Saudi‑law‑oriented commentators are likely to say the risk was foreseeable and not force majeure.
• There must be a direct causal link between the war‑related event and the delay or inability to perform.

If the contractor can still perform by using alternative suppliers, routes, or methods (even at higher cost), Saudi‑law‑oriented analysis treats this as hardship (Article 97 CTL), not force majeure.

5. Rights and obligations when force majeure applies

When an ICC‑style force majeure event is established:

• The affected party is excused from performing that part of the obligation that is genuinely prevented by the event.
• The affected party does not pay liquidated damages or other penalties for non‑performance during the force majeure period, and termination‑for‑default should not be triggered for that reason.
• If the event persists for a long time, the clause often allows the affected party to terminate the contract, which is consistent with Article 110 CTL (termination due to prolonged impossibility).

However, the contractor must still:

• Mitigate the impact (e.g., seek alternative routes, suppliers, or methods).
• Notify the other party promptly (the ICC‑style clause usually requires written notice within a short period, e.g., 14–30 days, depending on the version).
• Provide evidence (government orders, customs or shipping notices, sanctions lists, price‑index data) showing that the war‑related event caused the disruption.

Saudi‑law‑oriented practitioners emphasise that failure to mitigate or notify may lead the court to deny force majeure protection, even if the event itself qualifies.

When a War Can Be a Force Majeure Event under Saudi Law

6. Hardship vs force majeure under Saudi law

The ICC Clause also includes a hardship situation, which instead  applies where performance is still technically possible but has become excessively onerous because of an unforeseen event (for example, a major disruption of supply or extreme cost increase). Excessively onerous does not that the performance has become simply more expensive. Under ICC approach, hardship triggers renegotiation; if renegotiation fails, a court or tribunal may adapt or terminate the contract.

Under Saudi Law, Article 97 CTL provides that:

• Hardship applies when extraordinary, unforeseeable events make performance excessively onerous and may cause heavy losses, but the contract is still possible to perform.
• The affected party may request renegotiation in writing.
• If renegotiation fails, the matter may be referred to a court or arbitrator, which may adjust the contract to restore a reasonable balance (e.g., price adjustment, payment‑term changes).

This is very close in spirit to Article 97 CTL, which is mandatory and cannot be waived by contract. Even if the ICC‑style hardship clause is not perfectly aligned with Article 97, Saudi courts will apply the CTL standard as a minimum protection.

In the current war‑related environment:

• If sanctions or logistics disruptions make performance impossible or extremely unsafe, the contractor should argue force majeure under the ICC Clause and Article 110 CTL.
• If performance is still possible but costs have spiked (fuel, steel, logistics), the contractor should argue hardship under Article 97 CTL and the ICC hardship‑style wording.

The party invoking the hardship event is not entitled to suspend the performance just because it sent the request to renegotiate the contract.

7. Practical take‑aways for contractors

• Check your contract:
  • Is the contract governed by Saudi law?
  • Is an ICC Force Majeure and Hardship Clause incorporated by reference (e.g., “incorporated in full” or “as amended”)?
• If war‑related disruption arises:
  1. Assess whether performance is impossible (force majeure) or merely excessively costly (hardship).
  2. Issue a written ICC‑style force majeure notice promptly, describing the event, its effect, and any mitigation steps.
  3. Collect evidence: government orders, sanctions lists, shipping‑route notices, price data, and internal mitigation‑effort records.
• If you are facing heavy cost increases but can still perform:
  • Send a formal hardship‑renegotiation request under Article 97 CTL and the ICC hardship clause, while continuing to perform as far as possible.
• Remember:
  • Saudi law is the minimum standard; the ICC Clause can only add to protections, not remove them.
  • Saudi courts may disapply or modify clauses that conflict with mandatory CTL rules, especially around liability and hardship.

If you tell me how your contract refers to the ICC Clause (exact wording) and whether you are the contractor or employer, I can draft a short, ready‑to‑use Model Force Majeure Notice tailored to your project.

Force Majeure vs Hardship under Saudi Law: What Every Contractor Should Know