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Dealing with Force Majeure Risk in Iraq and Libya
www.milestoneintl.com
The continuing unrest and conflict in Iraq and Libya is a cause of major concern for Oil & Gas Contractors
executing projects in these countries. Faced with growing uncertainty and worsening security situation,
many of them are forced to suspend their operations and abandon the project.
Whilst express contractual remedies may be available to the parties to deal with such a situation, the
robust legal basis is the provisions relating to force majeure.
Albeit the possible security situation may call for the Contractors to adopt many practical measures
depending on the prevailing security situation, the following steps are advisable to adopt in order to
safeguard their position and save them from future liability.
 Contractors must closely examine the force majeure provisions in their contract to ensure that the security
situation and ensuing threat constitute a force majeure event under their contract, compared to the security
situation that prevailed at the time of contracting.
 It is essential to understand the relevant legal provisions relating to force majeure under the governing law of
the contract - the right of a contracting party to suspend performance of its obligations, wholly or in part, as a
result of unforeseen events or circumstances beyond its control.
Iraqi Civil Code – Articles 168 and 425
Libyan Civil Code – Articles 147, 161, 147 and 218
 If required, legal advice specific to the situation shall be sought from a knowledgeable source.
1Page 1 of 2
Dealing with Force Majeure Risk in Iraq and Libya
www.milestoneintl.com
 Notice must be served within the mandatory time limit stated in the contract and evidence of submission
recorded.
 Contractor shall seek to meet with the Company and/or PMC/Engineer to apprise them of the situation and
formulate emergency plans and record evidence of such discussions and meetings. If such deliberations are
not possible, evidence of having made earnest efforts to facilitate meetings must be retained.
 Simultaneously, Contractor shall meet with the Subcontractor(s) and apprise them of the situation and
formulate contingency plans.
 If possible, Contractor shall seek to get a written approval/instruction from the Company to suspend or
terminate the works (if necessary).
 If the security situation so permits and provided it is conducive to do so Contractor may consider systematic
and rapid demobilization prior to evacuation.
 Provided it is safe to undertake basic site operations, steps must be taken to protect the constructed works.
 Take videos and/or photographs of the site prior to departure in order to demonstrate the contemporary state
of the site and extent of works completion and progress achieved.
 Stocks and inventory list must be updated and if possible authentication must be obtained from the Company
or PMC/Engineer.
 It is essential to secure all the important project documentation on the site. All the documentation concerning
progress (milestone) payments, MPRs, baseline schedules and updates, variations, claims and important
contractual correspondence must be preserved. Soft and scanned copies must be transferred to a remote
server and hard copies must be sent to a secure location.
2Page 2 of 2

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Dealing with Force Majeure Risk in Iraq and Libya

  • 1. Dealing with Force Majeure Risk in Iraq and Libya www.milestoneintl.com The continuing unrest and conflict in Iraq and Libya is a cause of major concern for Oil & Gas Contractors executing projects in these countries. Faced with growing uncertainty and worsening security situation, many of them are forced to suspend their operations and abandon the project. Whilst express contractual remedies may be available to the parties to deal with such a situation, the robust legal basis is the provisions relating to force majeure. Albeit the possible security situation may call for the Contractors to adopt many practical measures depending on the prevailing security situation, the following steps are advisable to adopt in order to safeguard their position and save them from future liability.  Contractors must closely examine the force majeure provisions in their contract to ensure that the security situation and ensuing threat constitute a force majeure event under their contract, compared to the security situation that prevailed at the time of contracting.  It is essential to understand the relevant legal provisions relating to force majeure under the governing law of the contract - the right of a contracting party to suspend performance of its obligations, wholly or in part, as a result of unforeseen events or circumstances beyond its control. Iraqi Civil Code – Articles 168 and 425 Libyan Civil Code – Articles 147, 161, 147 and 218  If required, legal advice specific to the situation shall be sought from a knowledgeable source. 1Page 1 of 2
  • 2. Dealing with Force Majeure Risk in Iraq and Libya www.milestoneintl.com  Notice must be served within the mandatory time limit stated in the contract and evidence of submission recorded.  Contractor shall seek to meet with the Company and/or PMC/Engineer to apprise them of the situation and formulate emergency plans and record evidence of such discussions and meetings. If such deliberations are not possible, evidence of having made earnest efforts to facilitate meetings must be retained.  Simultaneously, Contractor shall meet with the Subcontractor(s) and apprise them of the situation and formulate contingency plans.  If possible, Contractor shall seek to get a written approval/instruction from the Company to suspend or terminate the works (if necessary).  If the security situation so permits and provided it is conducive to do so Contractor may consider systematic and rapid demobilization prior to evacuation.  Provided it is safe to undertake basic site operations, steps must be taken to protect the constructed works.  Take videos and/or photographs of the site prior to departure in order to demonstrate the contemporary state of the site and extent of works completion and progress achieved.  Stocks and inventory list must be updated and if possible authentication must be obtained from the Company or PMC/Engineer.  It is essential to secure all the important project documentation on the site. All the documentation concerning progress (milestone) payments, MPRs, baseline schedules and updates, variations, claims and important contractual correspondence must be preserved. Soft and scanned copies must be transferred to a remote server and hard copies must be sent to a secure location. 2Page 2 of 2