P&K Insights: Chokepoints in Crisis

Force Majeure, Price Reviews and International Law Risks Across Energy and Commodities Markets

The Strait of Hormuz – a vital artery for global energy and commodities – has in recent weeks become a chokepoint.

International law provides for the right of transit passage through straits used for international navigation. The reality, however, is that the evolving armed conflict places businesses in the position of grappling with the contractual and financial fallout in real-time.

This article by Charis Tan, Haakon Bingen, SeungMin Lee, Mino Han and Flavio Peter considers the potential impact – while force majeure is often the first contractual response, the consequences extend well beyond it, triggering price review mechanisms in gas and LNG contracts, maritime and insurance obligations, trade disruption and, in some cases, international law and investment treaty protections.