The Burning Question Every Contractor, Engineer & Consultant Is Asking Right Now
"I signed the contract before the current events. Now, with the escalating Iran-US tensions, the potential closure of the Strait of Hormuz, and the disruption of regional supply chains — the prices I contracted for are loss-making, and the agreed timeline is no longer executable. What do I do to protect my rights?"
This is not a theoretical question. It is the reality thousands of contractors across the Middle East are living today.
The military and political escalation has led to:
- 📈 Unprecedented spikes in prices of key materials (steel, cement, fuel, equipment)
- ✈️ Closure of airspaces
- 🚢 Delayed shipments
- 🔒 Forced shutdowns or security restrictions at project sites
In this comprehensive guide from PM Guide, we will explain in detail — under FIDIC 2017 (Red Book) — how to transform these events from a "potential loss" into an "opportunity to rebalance the Contract."
We will rely on the official Sub-Clauses (particularly Clause 18), provide proven practical steps, and address the most frequently asked questions.
🔍 If you are searching for "Force Majeure," "Disruption Claim," or "Price Adjustment" — you are in the right place.
⚖️ Is It Really an Exceptional Event? Ask Yourself These Three Critical Questions Before Issuing Any Notice
Many Contractors rush to draft a "Force Majeure Notice" and assume the matter is resolved. However, under FIDIC 2017, the term has been formally replaced with "Exceptional Event" (instead of Force Majeure) — a deliberate shift to align with civil law legislation across the region.
⚠️ Before issuing any Notice, ask yourself these three decisive questions:
❓ Question 1: Have Site Operations and Your Contractual Obligations Completely Ceased — or Have They Only Been Adversely Affected?
If the Site is still operating at even 30–40% capacity, this does not constitute a "complete prevention" justifying Contract termination. Instead, it qualifies as a Disruption — entitling you to both time relief and cost recovery.
❓ Question 2: Has the Situation Continued for More Than 84 Consecutive Days or 140 Cumulative Days?
This threshold is defined under Sub-Clause 18.5 of FIDIC 2017 (Optional Termination due to an Exceptional Event). If you have not yet reached this duration — do not consider termination at this stage.
❓ Question 3: Is There a Direct Physical Impact on Your Site (bombardment, sabotage, legal closure, military requisition) — or Is It Purely a Supply Chain Disruption?
- Global price increases or delayed shipments through the Strait of Hormuz are classified as a "Supply Chain Disruption"
- They do not constitute an Exceptional Event that wholly prevents performance
📌 Key Takeaway:
What you are most likely facing is not an Exceptional Event leading to termination — but rather an extraordinary circumstance that has disturbed the contractual equilibrium.
Your primary objective, therefore, is: Rebalancing the Contract and equitably sharing the losses.
🛠️ The Four Practical Steps to Protect Your Rights: Notify — Document — Claim — Negotiate
✅ Step 1: Issue the Notice Within the Required Timeframe (within 14 Days)
Issue the following formal notices:
| Notice Type | Applicable Sub-Clause |
|---|---|
| Notice of Exceptional Event | Sub-Clause 18.2 |
| Notice of Supply Chain Disruption | Sub-Clause 18.2 / Clause 8 |
📋 The Notice Must Include:
- 📌 Description of the event
- 📅 Date of occurrence
- 📊 Anticipated impact on the Programme and Contract Price
- 🛡️ Mitigation measures being undertaken
📮 Delivery: Send via registered email AND registered post — retain proof of delivery for both.
✅ Step 2: Document Everything Daily (Documentation Is Your Strongest Weapon)
Maintain the following records:
| Record Type | Purpose |
|---|---|
| 📋 Daily Site Reports (weather, security, logistics) | Contemporaneous evidence |
| 📸 Site photographs and videos | Visual proof of impact |
| 🧾 Updated invoices showing price escalation (vs. Contract rates) | Cost substantiation |
| 📩 Supplier correspondence confirming delays | Third-party corroboration |
| 🦺 Safety reports and forced shutdown orders | Regulatory evidence |
💡 PM Guide Tip: Use our ready-made Daily Report Template from our professional course for structured, dispute-ready documentation.
✅ Step 3: Submit a Fully Detailed Disruption Claim
Your claim package must include the following components:
| Claim Component | Applicable Sub-Clause |
|---|---|
| Extension of Time (EOT) | Sub-Clause 8.4 |
| Cost Recovery | Clause 18 + Clause 20 |
| Price Adjustment (even if not expressly stated in the Contract) | Sub-Clause 13.6 / General Law |
📊 The Claim Must Be Supported By:
- 🗓️ Delay Analysis (Critical Path Method — CPM)
- 💰 Cost Calculation (Direct Costs + Indirect Costs / Prolongation Costs)
- 📑 Contractual Nexus (Clauses 18 + 8.4 + 20/21)
✅ Step 4: Enter Smart Negotiations
Any Employer wants their project completed.
- 🤝 Be flexible: propose a 50/50 loss-sharing arrangement or a revised Programme in exchange for a reasonable price adjustment
- 📈 Most projects conclude with a successful settlement rather than proceeding to arbitration
🔑 What If the Contract Places All Risk on You and Does Not Allow Price Adjustment?
Even in this scenario, you hold strong legal cards:
| Legal Mechanism | Basis |
|---|---|
| ⚖️ Doctrine of Rebus Sic Stantibus (Rebalancing of Contracts) | Civil Law Principle |
| 📜 Changes in Laws Sub-Clause | Sub-Clause 13.6 (applicable versions) |
| 🏛️ DAAB (Dispute Avoidance/Adjudication Board) | Sub-Clause 21.1 |
| ⚖️ International Arbitration | Sub-Clause 21.6 |
🌍 Regional Note: Courts and arbitral tribunals in GCC countries (particularly the UAE) have increasingly demonstrated flexibility in addressing extraordinary circumstances such as the current regional tensions.
(A dedicated article on this topic will be published soon — stay tuned.)
❓ Frequently Asked Questions (FAQ)
Q: Does a price increase alone qualify as an Exceptional Event?
A: If the price increase is "exceptional and unforeseeable" resulting from an external event (such as military escalation or strait closure), yes — it supports a Disruption Claim and Cost Recovery under FIDIC 2017.
Q: Do I need a lawyer to draft the Notice?
A: Not necessarily — but consultation with a FIDIC Contracts specialist is strongly advisable. Our course provides ready-made Notice templates.
Q: What is the deadline for submitting the Claim?
A: 28 days from the initial Notice (Sub-Clause 20.2 — Notice of Claim).
Q: How do I enroll in PM Guide courses?
A: Contact us via:
- 📱 WhatsApp: 00971547003321
- 📧 Email: contact@pm-guide.net
- 🌐 Direct Enrollment: pm-guide.net/courses
Q: Is there a refund policy if I am not satisfied?
A: Yes — subject to the Platform's refund policy. (Please refer to our Terms & Conditions.)
Q: Are the courses delivered in Arabic or English?
A: Both languages — with clear bilingual instruction throughout.
🏆 Why Choose PM Guide for Your Professional Development?
PM Guide is a specialized platform in Construction Contract Management and Project Management — combining academic knowledge with practical application through courses designed by Engineer Jean Zacharia.
| Course | Content | Duration |
|---|---|---|
| 🔴 FIDIC Course (Red Book) | Protecting your contractual rights under FIDIC 2017 | 143 Lectures — 28 Hours |
| 📋 CLAIM Course | How to write a winning Claim — step by step with real-world examples | 64 Lectures — 15 Hours |
🔗 Explore All Courses:
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|---|---|
| ▶️ YouTube | PM Guide Channel |
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| @jan.pm.guide | |
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| Chat Directly |
🎯 Closing: Don't Wait — Start Protecting Your Project Now
The current events are not the end of your Contract — they are an opportunity to demonstrate your professionalism.
The Contractor who knows his Sub-Clauses, documents contemporaneously, claims systematically, and negotiates intelligently — is the one who emerges with minimum losses or even additional entitlement.
PM Guide is here to help you become that professional Contractor. Whether you are seeking career advancement or excellence in your field — we provide the right solutions.
🚀 Start your journey today and join thousands of engineers who have transformed their careers with us.
📚 For official FIDIC Sub-Clause references and updates, visit the official FIDIC website: 👉 www.fidic.org
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