Geopolitical Conflict, Force Majeure Clauses, and Cashflow Crises: The Qatar Central Bank’s Regulatory intervention

5 min 36 sec May 18, 2026 (Edited)

Written by

Matthew Heaton

Partner, Head of Office, Head of Banking & Finance - Qatar

m.heaton@tamimi.com View LinkedIn Profile

Muhammad Mitha

Of Counsel

m.mitha@tamimi.com View LinkedIn Profile

Carma Estetieh

Associate

c.estetieh@tamimi.com

The ongoing geopolitical conflict in the Middle East region, including the closure of the Strait of Hormuz, is greatly affecting many countries, including Qatar. The Ras Laffan LNG facility, the world’s largest LNG export facility, has sustained severe damage following recent airstrikes, causing approximately 17% of Qatar’s LNG capacity to be lost for up to five years. Additionally, regional airspace closures have disrupted aviation operations, and businesses across a range of sectors are facing real pressure over their contracts and cashflows.

The Qatar Central Bank (QCB) has responded with a pre-emptive package of regulatory measures aimed at maintaining financial stability and supporting individuals and businesses through the current period.

This article sets out the importance of regulatory intervention in times of crisis beyond control, and considers the practical implications for borrowers and lenders.

Force majeure under Qatari law

Force majeure in Qatar is governed by the Qatar Civil Code (Law No. 22 of 2004). The primary relevant provision is Article 188, which applies to contracts binding on both parties and imposing reciprocal obligations. Loan agreements, facility documents, and most financial contracts fall within this category.

Under Article 188, where performance of an obligation becomes impossible by reason of force majeure beyond the obligor’s control, that obligation and its corresponding obligations are extinguished and the contract is automatically treated as terminated, without the need for a court order or formal notice. Where impossibility is only partial, the obligee may choose either to enforce the contract to the extent that performance remains possible, or to demand termination entirely.

In applying Article 188, courts typically consider whether the event is:

1. external to the obligor;
2. unforeseeable at the time the contract was concluded;
3. unavoidable in its consequences; and
4. the direct cause of the inability to perform.

Critically, Article 188 requires actual impossibility of performance. Where performance has simply become more difficult or more expensive, the provision does not apply. That distinction is important in the financial services context, as payment obligations will rarely become impossible in the strict legal sense. A debtor facing financial pressure is not, in principle, incapable of payment.

Article 171 addresses the related but distinct doctrine of hardship. If an exceptional and unforeseen event makes performance so costly that it would cause the obligor serious loss, the court has the power to reduce the obligation to a reasonable level. Any attempt to contract out of this protection is void. For payment obligations, Article 171 is a better fit than Article 188, but it has real practical drawbacks. It is a discretionary remedy that requires court proceedings to invoke.

Where contracts include their own force majeure clauses, as many financial contracts do, those clauses will generally take precedence over the statutory rules. Before sending any formal notice to a counterparty, the precise wording of the clause should be reviewed carefully.

Contracts, cashflows, and circumstances

The current regional conflict and associated supply chain disruption are events external to contracting parties and may be considered beyond their control. Whether those events are sufficient to engage force majeure under any given contract will depend on the specific facts and the terms of the contract.

Unforeseeability is likely to be the most contested element. Contracts concluded before the outbreak of hostilities are in a stronger position than those signed after regional tensions had already arisen. Whether the failure to perform could have been avoided will depend on what options were reasonably available at the time.

For financial contracts, caution is warranted before invoking force majeure. A notice sent without solid legal grounds could trigger default provisions in related loan agreements, damage the notifying party’s credit, and expose it to claims for wrongful termination of the contract. In most cases, affected borrowers will be better off engaging directly with their lenders and applying for any available relief.

Where a party genuinely cannot perform a non-monetary obligation due to the conflict, a properly structured force majeure notification may be both appropriate and necessary. Notice requirements and time limits under the applicable clause must be observed carefully, as failure to notify in time can result in the loss of the right to rely on the clause altogether.

The QCB’s regulatory intervention

Following its comprehensive review of the financial sector, the QCB confirmed that Qatar’s financial system continues to operate from a position of strength. The QCB pointed to:

• banks’ strong liquidity positions, which are sufficient to meet market needs and customer demands;
• capital levels significantly exceeding the regulatory requirements set by the QCB; and
• provisioning levels remaining adequate to cover credit risks, including under stressed conditions.

Nevertheless, the QCB determined that the current geopolitical environment warranted a pre-emptive response. Acting under its supervisory mandate pursuant to Law No. 13 of 2012, the QCB is implementing the following precautionary measures.

Monetary policy measures

The QCB will provide an unlimited amount of Qatari Riyal repurchase facilities against eligible securities held by banks, ensuring deep Qatari Riyal liquidity in the local market.

In addition to the existing overnight repo facility, the QCB is introducing a term repo facility with maturities of up to three months, giving banks greater certainty in managing short-term funding requirements.

The reserve requirement on deposits has also been reduced from 4.5% to 3.5%, releasing additional liquidity into the banking system.

Borrower support measures

Banks are permitted to offer eligible customers the deferral of both principal and interest payments for up to three months, where those customers are affected by current circumstances. Each bank may apply deferrals in line with its own internal policies, an overall market assessment, and QCB supervisory guidance.

It is proposed that banks may restructure deferred amounts across the remaining term of the relevant facility rather than waive them, which preserves lenders’ financial positions whilst providing meaningful cashflow relief to borrowers during the period of disruption.

The QCB is the first central bank in the region to implement three-month deferrals in the context of the present conflict. The regulatory character of these directives is significant. The directive is applicable to licensed institutions under the QCB Law. The deferral framework therefore offers eligible borrowers a level of certainty and ease of access that force majeure claims under contract or statute simply cannot match.

Practical implications

For borrowers, the QCB deferral programme is the most immediate source of cashflow relief available. Eligible customers should understand from the relevant banks in Qatar the applicable eligibility criteria and whether they qualify for the deferral on their facilities. The deferral restructures the payment timeline rather than extinguishing the underlying debt, and borrowers should factor this into their financial planning beyond the deferral window.

For lenders and financial institutions, the QCB’s measures create mandatory obligations. Banks should review credit classification and provisioning frameworks to ensure alignment with QCB guidance, and assess the implications of portfolio-wide deferrals for related hedging arrangements, securitisation structures, and capital adequacy calculations.