A. Introduction
The on-going conflict in the Middle East has created uncertainty across multiple industries and the construction industry is no exception. Whilst the conflict may be geographically distant from Malaysia, its effect can still be felt through rising fuel prices, increased material and transportation costs, supply chain disruption, posing significant legal and contractual risks.
For those involved in construction projects, these raise immediate and practical questions. Who bears the risk of inability to perform contract due to this conflict? Who bears the risk of rising costs? Can a contractor claim additional time or money? When does disruption amount to force majeure, and when is it merely a case of performance becoming more expensive?
This article aims to discuss amongst others:
(a) how the ongoing Middle East conflict may affect construction projects;
(b) the common consequences of such conflict, including rising costs, supply chain disruption, and difficulty in performance; and
(c) the main contractual and legal avenues available to contractors and employers facing those difficulties, including force majeure, extension of time, variation, change in law, and frustration.
Ultimately, the answer will depend primarily on the wording of the construction contract. In most cases, the contract remains the key document for allocating risk between the part. Read more. Download the PDF.