'The World’s Chokepoint': War, Contracts, and ADR’s Rise in a Reshaping Global Order
By Maideh Orangi
What happens when war is waged on one of the most critical arteries of global commerce is not simply disruption or inflation, but something deeper and more structural: contracts begin to fail.
Across industries, agreements built on assumptions of stability are no longer holding. Energy contracts priced for predictability are being stretched beyond viability, shipping agreements are breaking down mid-performance, and insurance frameworks are being rewritten in real time.
What the war involving Iran has exposed is not only market fragility, but the fragility of the legal and commercial structures built on top of it. As those structures begin to crack, disputes are not flowing into courts in any meaningful sense. Instead, they are being redirected, almost quietly, into arbitration and mediation at a scale that reflects the magnitude of the disruption itself.
Alternative dispute resolution is not merely responding to the Iran war. It is functioning as the system through which global commerce continues despite it.
The Indispensable Strait
The Strait of Hormuz is not simply important; it is indispensable. Roughly one-fifth of the world’s oil supply passes through this narrow corridor, meaning that any disruption there immediately transmits across global markets Ron Bousso, “Iran’s Hormuz ‘toll booth’ set to hardwire higher energy prices,” Reuters (April 9) (available at https://reut.rs/4cl5aAL).
But geography alone does not destabilize systems. It is the imposition of war onto that geography that transforms it into leverage.
Following military escalation against Iran, the Strait has become a site not just of transit, but of control. Shipping traffic has slowed or rerouted, insurance markets have withdrawn or repriced risk to extreme levels, and governments have been forced to intervene simply to maintain the flow of goods. War-risk premiums have surged, and in some cases coverage has disappeared altogether, reflecting a level of uncertainty that markets cannot independently absorb . “India plans sovereign guarantees for insurers as Iran war heightens shipping risks, sources say,” Reuters (April 7) (available at https://bit.ly/4tO5teF); “Maersk cautious on Strait of Hormuz shipping despite US-Iran ceasefire,” Reuters (April 8) (available at https://bit.ly/4dLU2PZ).
What is emerging is not volatility within a functioning system, but pressure on the system itself.
When Markets Shift, Contracts Break
That pressure does not remain at the level of markets. It translates directly into contractual strain.
Oil price shocks are destabilizing long-term supply agreements negotiated under entirely different economic conditions from when the contracts were established. Shipping delays and rerouting are triggering disputes over delivery obligations and liability. Insurance claims are being contested as war-risk exclusions move from background clauses to central points of contention. Supply chains have fractured across sectors, increasing costs and undermining performance in ways that no party fully anticipated. See, e.g., David J. Lynch, “The war’s economic impact could get worse for Americans,” Washington Post (April 4) (available at https://bit.ly/3QEjP2J); “Iran war hits supply chains for K-beauty, ramen and clothes,” Washington Post (Apr. 7, 2026) (available at https://bit.ly/4sBjkUF).
What practitioners now describe as “war-related disruption” is not a single category of loss, but a cascade of contractual stress across industries. These disputes are not defined by wrongdoing in the traditional sense, but by the collapse of the assumptions that made performance possible.
Arbitration Keeps Commerce Moving
In earlier periods, disruption of this magnitude might have stalled commerce entirely. What is notable about the current moment is that it has not.
Instead, disputes are being absorbed into arbitration and mediation frameworks that allow commercial relationships to continue functioning, even as their underlying assumptions shift.
This pattern is not new. Following the 1979 Iranian Revolution, thousands of claims arising from disrupted contracts and frozen assets were processed through the Iran–United States Claims Tribunal, which effectively became a mechanism for managing the legal consequences of geopolitical rupture.
More recently, in Naftogaz v. Gazprom, ICC Case No. 27245/GL (June 16, 2025) (available at https://bit.ly/4dDpLmq), arbitral tribunals were required to interpret long-term gas supply agreements that had become economically untenable due to geopolitical conflict, forcing a reconsideration of pricing mechanisms and contractual obligations under radically altered conditions.
What those cases demonstrate is that arbitration does not simply resolve disputes after instability occurs. It enables systems to function within instability.
That dynamic is now playing out again, but on a broader scale. Disputes arising from shipping disruptions, insurance breakdowns, and sanctions-related complications are being routed into arbitration not because it is ideal, but because it is the only forum capable of operating across jurisdictions and outside the constraints that limit national courts.
Commerce is continuing not because stability has been restored, but because dispute resolution has adapted.
From Breach to Changed Circumstances
The most important shift is not the volume of disputes, but their character.
These are not traditional breach cases. Instead, they arise in situations where performance remains technically possible but economically irrational, and where contracts continue to exist even as the conditions that made them viable have fundamentally changed.
Oil priced under one geopolitical reality becomes untenable under another. Shipping routes that once took days now take weeks. Insurance coverage that once existed disappears entirely.
In this environment, arbitration and mediation are not primarily determining fault. They are reallocating risk in response to systemic change.
Force Majeure & the Limits of Contractual Protection
This tension is most visible in the resurgence of force majeure claims across energy and commodities contracts.
War, sanctions, and disruption to the Strait of Hormuz fall squarely within the types of events contemplated by force majeure provisions, and parties are increasingly invoking these clauses to justify nonperformance. But invocation does not resolve the issue. It re-frames it.
The central question is no longer whether disruption has occurred, but whether it rises to the level required to excuse performance. Is passage through the Strait legally impossible, or simply more dangerous and more expensive? Do sanctions render payment unlawful, or merely more complex? At what point does hardship become impossibility?
Recent legal analysis reflects how frequently these questions arise in practice, particularly in contracts affected by supply chain disruption, political risk, and sanctions exposure. Joseph D. Jean & Meaghan C. Murphy, “Conflict Premium: Insurance and Supply Chains During the Iran War (Part 3),” Pillsbury Winthrop Shaw Pittman (March 13) (available at https://bit.ly/3Oi6FIa).
Force majeure, in this context, is no longer a straightforward shield against liability. It has become a contested mechanism through which parties attempt to redistribute risk in contracts destabilized by forces beyond their control.
Sanctions, Political Volatility,
And Legal Fragmentation
The complexity of these disputes is compounded by sanctions regimes that are not only restrictive, but increasingly unstable.
Payments are blocked, transactions are delayed, and compliance obligations shift in real time. What distinguishes the current moment is not simply the existence of sanctions, but the unpredictability surrounding their application. Public and at times contradictory policy signaling has introduced an additional layer of volatility into already fragile markets, influencing pricing, shipping decisions, and investment behavior almost instantaneously. See, e.g., “Trump news at a glance: a tale of two ceasefires as US and Iran claim different terms,” Guardian (April 8) (available at https://bit.ly/4t52b6K).
This unpredictability has direct implications for dispute resolution. Mediation depends on a baseline level of trust and stability, requiring parties to believe that negotiated outcomes will retain value over time. When the surrounding regulatory and political environment can shift overnight, that assumption weakens. Agreements reached in one moment risk becoming obsolete in the next, making mediation more difficult to sustain, particularly in disputes involving U.S.-linked parties operating under rapidly shifting signals.
As a result, parties may increasingly turn to arbitration not because it is more efficient, but because it offers a degree of finality that mediation cannot guarantee in such conditions. Courts, for their part, remain constrained by jurisdiction and the need to interpret settled law, making them ill-suited to a landscape defined by constant change.
Mediating to Preserve Commercial Relationships
And yet, mediation remains essential.
Many of the contracts now under strain are not isolated transactions, but long-term relationships in energy, infrastructure, and trade. Terminating them outright often produces consequences more severe than the disputes themselves.
Mediation allows parties to adapt rather than exit. Pricing structures can be renegotiated, delivery obligations adjusted, and relationships preserved even as external conditions shift. In a war-driven economy, this capacity for adaptation becomes critical, because the objective is no longer simply to resolve disputes, but to sustain commerce in an environment where stability cannot be assumed.
What This Reveals About Power
Taken together, these dynamics reveal something broader than a shift in dispute resolution.
They reveal a shift in how power operates.
The disruption of the Strait of Hormuz has demonstrated with unusual clarity that control over a narrow geographic corridor can reverberate across the entire global economy. Oil prices react immediately, supply chains reconfigure, and national economies adjust in real time. See, Ron Bousso, “Iran’s Hormuz ‘toll booth’ set to hardwire higher energy prices,” above..
This is not incidental disruption. It is structural leverage.
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The Iran war is often framed as a geopolitical crisis with economic consequences. That framing does not go far enough.
What is unfolding is a systemic event in which contracts are breaking down at scale, disputes are being redefined by changed circumstances rather than breach, and arbitration and mediation have become the mechanisms through which global commerce continues to function despite instability.
At the same time, the conflict is revealing something far more significant.
Iran’s position at the world’s chokepoint, combined with its demonstrated ability to disrupt and reshape global markets under conditions of sustained pressure, has exposed a form of power that was long underestimated. And by that measure, Iran is no longer operating at the margins of global power. It is emerging as a far more influential actor than previously understood—one capable not only of disrupting the global economy, but of reshaping the terms on which it operates.
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The author, a student at the George Washington University Law School in Washington, D.C., is a Spring 2026 intern at the CPR Institute.
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