The blockage of the Strait of Hormuz draws an unmistakable parallel to the early days of COVID-19: both events represent sudden, severe shocks to global transport and logistics, and both have reignited complex contractual disputes over force majeure, delivery delays, and the allocation of risk across international supply chains.
Yet the UAE’s response to COVID-19 demonstrated that such crises need not end in litigation or economic paralysis. The UAE’s commercial recovery, widely recognised as one of the most robust in the world, was not the product of fortune or prolonged legal battles. It was the result of deliberate, proactive preparation: a systematic approach to reviewing contractual obligations before disruption struck, enabling businesses to navigate uncertainty within a framework that was both commercially resilient and legally defensible.
That model offers a clear lesson for what lies ahead.
As such, for many of the relevant stakeholders like shipowners, charterers, freight forwarders, insurers, and port operators, this means businesses must (i) review their contracts, (ii) understand where risks lie, and (iii) consider practical steps to protect their operations and commercial relationships.
Five Legal Issues Businesses Should Revisit
The Hormuz situation is poised to make many industry leaders and business owners revisit the legal and commercial issues that were in the spotlight during the COVID-19 pandemic.
During that period, M&CO Legal advised on a range of recurring issues, including the following:
- Chief amongst the issues our clients faced was force majeure. As maritime routes remain unpredictable, parties may seek to suspend or excuse contractual performance. As COVID-19 demonstrated, these issues almost always require legal analysis, as the availability of relief depends heavily on the wording of such clauses and whether performance is truly prevented rather than simply having been rendered more difficult or costly.
- Another frequent source of disputes that emerge during times of geopolitical disruption is the delays across the shipping and logistics chain. As vessels are forced to reroute, wait offshore, or miss loading and delivery windows, this will trigger claims for demurrage, detention, or late performance. These situations also require careful examination of contractual timelines and responsibilities.
- Freight rates, insurance premiums, and other transport costs also featured prominently as matters of concern to M&CO’s commercial clients during COVID-19. In these cases, businesses must determine how these additional costs are allocated under their contracts and whether mechanisms such as Incoterms or pricing provisions shift responsibility along the supply chain.
- Heightened geopolitical tensions may affect the availability and scope of insurance coverage. Risk premiums may increase, or certain coverage may be withdrawn altogether. The stakeholders will need to review their cargo and marine insurance arrangements to understand whether losses arising from delays or rerouting are covered.
- Finally, the current climate makes it worth revisiting dispute resolution frameworks. Many commercial agreements incorporate tiered alternative dispute resolution clauses that require parties to attempt negotiation and mediation before escalating to arbitration. In fast-moving disruptions of the kind affecting maritime routes and logistics chains today, these mechanisms are not merely procedural formalities; they can be genuinely decisive. Where escalation timelines are structured efficiently, they allow disputes to be addressed and resolved at speed, without the cost and acrimony of full arbitration proceedings, preserving not just time and money, but the commercial relationships that underpin long-term business.
Proven Approaches to Geopolitical Disruption
The COVID-19 pandemic caught the world by surprise, forcing companies and legal professionals to revisit long-standing legal issues and sharpen their approach to both commercial and contractual risk. In doing so, they developed more robust strategies to help clients navigate uncertainty and make informed decisions in rapidly changing circumstances.
At M&CO Legal, we successfully guided and supported the businesses and partners who placed their trust in us by:
- helping them review contracts early to identify force majeure triggers, delivery obligations, and liability for delays;
- coordinating across the supply chain to understand how disruptions, rerouting, and increased costs affect responsibilities between parties; and
- acting quickly to document impacts, manage risks, avoid disputes, and preserve commercial relationships.
That experience has left us with something more valuable than theoretical knowledge – a practical, tested framework for responding to large-scale disruptions to global trade. The lesson it reinforced is a simple one: early legal assessment consistently makes the difference between managing a disruption effectively and allowing it to escalate into costly, time-consuming disputes.
M&CO Legal continues to assist companies, shipping stakeholders, and commercial partners in navigating the complexities of international trade disruption. If your business is affected by the evolving situation in the Strait of Hormuz, we would be pleased to discuss how we can help assess your contractual position and identify practical solutions before issues arise.
Disclaimer
This publication does not provide any legal advice, and it is for information purposes only. You should not rely upon the material or information in this publication as a basis for making any business, legal, or other decisions. Any reliance you place on such material is therefore strictly at your own risk.
