As the war in the gulf enters its fifth week, the Strait of Hormuz remains effectively blocked. This data shows that daily traffc through one of the world’s most important shipping lanes is down 95% since the beginning of the war.1 In parallel, Iran’s missile and drone strikes on the Ras Laffan facility, reportedly impacting two liquified natural gas (LNG) trains, have prompted a chain reaction of force majeure declarations from the gulf into wider energy markets.
Tremors of the macroeconomic impact of this disruption are already being felt around the world, with some fearing an oil price-induced global inflation shock. Meanwhile, market participants are facing immediate legal, commercial and operational risks, which in some cases may evolve into disputes. In the context of the LNG industry, those disputes may concern disagreements on contract interpretation and claims advanced under contractual provisions for force majeure, annual programming, restoration, make-up entitlement, failures to deliver, hardship and price reviews.
This article, which supplements several other recent insights from our global team on issues arising from the gulf conflict, explores the use of expedited arbitration as a means of resolving such disputes in an effcient and expeditious manner.
