The recent escalation of hostilities in the Gulf region, including Iranian missile and drone attacks targeting infrastructure in the United Arab Emirates and other Gulf Cooperation Council (GCC) states, has significantly heightened geopolitical risk across the Middle East. Since late February 2026, hundreds of drones and missiles have reportedly been launched towards Gulf states, causing casualties, damage to civilian infrastructure, and
widespread disruption to regional trade and energy operations.
This conflict, which arises in the broader context of military confrontations between Iran, Israel and the United States, is now producing substantial legal and commercial consequences for cross-border investments, energy contracts, shipping arrangements, and infrastructure projects in the Gulf.
For multinational businesses and investors operating in the region, the current situation raises critical questions relating to force majeure, contractual frustration, treaty protection, and potential international arbitration proceedings.
1. Escalation of the Conflict and Regional Legal Implications
Iran’s strikes against the United Arab Emirates and other Gulf states mark one of the most direct military confrontations affecting Emirati territory in modern history. Several missiles and drones were reportedly intercepted, although debris caused casualties and damage in areas including Abu Dhabi and Dubai.
The UAE government has characterised these attacks as a violation of sovereignty and international law, invoking its right to self-defence under the UN Charter.
Such developments inevitably trigger legal consequences across multiple domains:
● disruption of energy and infrastructure projects;
● suspension of shipping routes, particularly in the Strait of Hormuz;
● increased insurance and war-risk premiums;
● suspension or termination of international commercial contracts.
The legal framework governing disputes arising from such disruptions is likely to involve international arbitration and investment treaty claims.
2. Force Majeure and Contractual Disputes
Many international commercial agreements, particularly in energy, construction, and shipping sectors, contain force majeure provisions covering events such as war, hostilities, blockades, or government action.
The current conflict may allow parties to invoke such clauses where contractual performance becomes impossible or commercially impracticable.
Legal analysis typically focuses on three elements:
1. Whether the event qualifies as force majeure under the contract wording.
2. Causation – whether the conflict directly prevented performance.
3. Mitigation obligations – whether the affected party took reasonable steps to reduce the impact.
Recent reports suggest that Gulf states and energy producers are already reviewing whether force majeure provisions should be invoked in existing agreements as the war affects energy infrastructure and logistics.
For example, disruptions in LNG and oil supply chains may lead to:
● claims for non-delivery of commodities,
● termination of long-term supply agreements,
● disputes regarding delay or suspension of infrastructure projects.
These disputes frequently fall within the jurisdiction of international arbitration forums such as ICC, LCIA, DIAC, or SIAC.
3. Investment Treaty Arbitration
Beyond contractual disputes, investors affected by the conflict may rely on bilateral investment treaties (BITs) or multilateral agreements.
Potential claims may arise where government actions, emergency measures, or sanctions affect foreign investments.
Typical treaty claims may include:
● expropriation or indirect expropriation,
● breach of fair and equitable treatment (FET),
● discriminatory measures affecting foreign investors.
For instance, the UAE has reportedly considered freezing Iranian assets held within its jurisdiction following the attacks, a measure that could trigger investor-state disputes under applicable treaties.
Similarly, if states impose emergency controls on energy exports or shipping, investors may seek compensation through arbitration mechanisms such as ICSID.
4. Shipping, Energy, and Supply Chain Disputes
The Gulf conflict has also raised concerns about the safety of maritime routes, particularly through the Strait of Hormuz — one of the world’s most critical energy shipping corridors. Military threats and attacks have already resulted in reduced shipping traffic and significant disruptions to maritime trade.
Potential disputes may involve:
● charter-party war-risk clauses,
● deviation rights for vessels,
● insurance coverage disputes,
● suspension of LNG and oil deliveries.
In many cases, such disputes are resolved through maritime arbitration centres such as the London Maritime Arbitrators Association (LMAA).
5. The Role of Arbitration in Conflict-Related Commercial Disputes
Historically, arbitration has proven to be the preferred mechanism for resolving disputes arising from geopolitical crises.
Key advantages include:
● neutrality and independence from national courts,
● enforceability under the New York Convention,
● flexibility in dealing with complex multi-party disputes.
Previous conflicts in the Middle East have resulted in numerous arbitration proceedings involving energy concessions, infrastructure projects, and supply agreements.
Given the scale of commercial exposure in the Gulf, it is highly likely that the current crisis will generate a new wave of arbitration proceedings over the coming years.
Conclusion
The escalation of hostilities between Iran, the United States, Israel, and Gulf states represents not only a geopolitical crisis but also a significant legal and commercial risk for international businesses.
Key areas where disputes are likely to arise include:
● force majeure claims in commercial contracts,
● investor-state arbitration under BITs,
● shipping and energy supply disputes,
● insurance and war-risk claims.
For companies operating in the Gulf region, proactive contractual review, risk allocation analysis, and dispute preparedness are now essential. International arbitration will remain the principal mechanism through which these disputes are resolved.