Defining force majeure in Saudi Arabia following Abqaiq attacks
DWF partners Kayaan Unwalla and Slava Kiryushin say the recent shut down of production at Abqaiq and Khurais facilities due to weaponised Unmanned Aerial Vehicle ("UAV") drone attacks, again raises issues of applicability of force majeure to all stakeholders affected by the diminished production.
Force majeure is widely understood to allow a party to avoid performance of its contractual obligations, if such performance is prevented by circumstances beyond that party's control. However, contractually, force majeure will only become relevant if the UAV drone attack is a 'relevant event' defined in an affected contract and if all conditions to obtaining relief are fulfilled.
Separately, the position on force majeure is not straightforward in Saudi law. In general, laws of Kingdom of Saudi Arabia ("KSA") are not codified and rely heavily on Shari'a law principles. For example, the commercial law is devoid of specific regulations outside of Shari'a law principles and other sources of jurisprudence applicable to the theory of contract.
Having said this, force majeure, as a concept, is recognised by in Shari'a law. The principle allows a contract to be voided if a specific event was: i) unforeseeable; ii) unavoidable; and iii) made the contract impossible to perform.
Unfortunately, this principle is not universally accepted by Saudi courts. By way of example, we are aware that the principle could be applied very narrowly to acts that may make a party's performance absolutely impossible. In this instance, a difficulty of (or non-commerciality in) performance will not discharge the contractual obligation.
We are also aware of a number of technologies that may have been implemented to avoid similar type of attacks. As the threat landscape has evolved within the region, asymmetrical warfare targeting critical infrastructure will continue to be a strategy as an attempt to disrupt economic activity.
Acutely aware of this strategy, KSA and the UAE have been focusing their national security efforts towards counter-Unmanned Aerial System ("UAS") platforms capable of detecting, tracking, disrupting and destroying invasive UAS platforms with destructive intentions. Various contractors have also begun to partner with national states in efforts to implement such technologies within mid to large scale infrastructure, energy and nuclear projects.
The usual challenges apply: (i) keeping abreast of enemy technology; (ii) the ability to integrate new systems into existing national security frameworks; and (iii) maintaining such systems in geologically harsh environments. If such defense systems were to mature within a contracting environment, it raises the question as to whether such an attack may qualify as a ‘relevant event’ given the preparation adopted towards its foreseeability.
Therefore, whether the attack could have been foreseen or avoided may also lead to interesting arguments in front of the courts.
Each argument of force majeure must be considered on a case-by-case basis and relevant facts, as there is no universal approach. As of this date, we are not aware of any cases pending in relation to force majeure associated with the incident at Abqaiq and Khurais.