In a July 22, 2026, article in Risk Management magazine, McGuireWoods London partner Simon Hems examined the legal implications of the ongoing conflict in Iran for commercial contracts, particularly in the shipping, trade and energy sectors.
The war and its effects on the Strait of Hormuz have disrupted global supply chains and shifted the dynamics of trade deals for essential goods. While many contracting parties may view the conflict as an obvious basis for exiting their contractual obligations, they “cannot blindly assume wars and other conflicts remove the duty of performance,” Hems cautioned.
“Rather, most parties might find they can achieve the solution needed by looking at and applying contractual terms properly,” Hems wrote.
Hems, an international dispute resolution and insurance recovery lawyer, analyzed four key areas:
- Sanctions — Where a trade would violate applicable sanctions, parties have no option but to refuse performance, though they must assess whether the activity is actually prohibited or permitted under a license.
- War risks clauses — Certain trade-related contracts, particularly charter parties, contain provisions that modify the parties’ rights and obligations when defined war risk circumstances arise.
- Force majeure — These provisions can effectively suspend a contract without terminating it, preserving the option to resume performance if conditions improve. Hems emphasized the critical distinction between clauses requiring full prevention of performance and those triggered by mere hindrance.
- Termination — The most drastic remedy, typically carrying financial consequences in the form of compensatory payments.
Hems underscored the importance of carefully reviewing contractual language, obtaining clear legal advice on sanctions compliance, and understanding the risks and costs associated with each available remedy before taking action.
“As is so often the case in extreme circumstances, look to your contracts first for the solutions you may need and be mindful of the potential consequences of carrying on where there are increased risks,” he wrote.