Force Majeure and Frustration of Contract in Wartime Construction Projects – The Legal and Economic Significance for Developers and Contractors
Mar 18, 2026
By: Itzick Simon
The construction industry in Israel has always been influenced by the country’s security situation, with security-related events directly affecting the scope of activity in the sector. Frequent sirens, the need to move to protected spaces, safety restrictions on site, and various operational disruptions all lead to delays in many projects—and have become a common occurrence under these conditions.
In such a situation, a legal question almost naturally arises: do these circumstances constitute force majeure, or even frustration of contract, justifying delays in project timelines and contractual obligations?
However, in Israel’s legal reality—especially given that the construction industry has been designated as an essential sector and permitted to continue operating even during wartime—the answer to this question is far from obvious.
Courts do not examine only the mere existence of a war, but rather much more practical questions: what actually occurred on the construction site, how long work was suspended, what restrictions were imposed on site operations, and what their real impact was on the project’s timeline.
Accordingly, in construction projects in Israel, the central question is not whether there is a war, but whether it can be concretely demonstrated that the events actually prevented the continuation of work on the project.
This article will examine how Israeli courts approach claims of force majeure and the doctrine of frustration during wartime, the significance of the construction industry being classified as essential, why the availability of protective solutions on-site changes the legal analysis, and what contractual and insurance-related issues may arise when a construction project is affected or delayed during a period of war.
Force majeure and failure of contract – not just a contractual matter
When a claim of force majeure is examined, the starting point is usually the contract between the parties.
In most construction contracts, there is a clause addressing force majeure events, which defines how extraordinary events affect the parties’ obligations and the project timelines.
Courts examine, among other things:
Whether war is explicitly included in the force majeure clause
What conditions must be met to invoke the clause
Whether proper notice was given
Whether the contractual conditions were fulfilled
However, force majeure is not only a matter of contractual wording. Under Israeli law, there is also the doctrine of frustration, which deals with situations where an external and unforeseeable event makes performance of the contract impossible or fundamentally alters it.
Israeli case law interprets the doctrine of frustration very narrowly, and therefore the mere existence of war does not automatically lead to the conclusion that the contract has been frustrated.
In other words, even when a severe security event occurs, it is not enough to point to it in general terms. One must demonstrate how it actually affected the ability to perform the obligations in the specific project.
In residential construction projects, the contract is not the only relevant framework. It is important to remember that such projects are also governed by the provisions of the Sale (Apartments) Law, which is intended to protect homebuyers and imposes certain limitations on the contractor’s freedom of contract.
The law establishes a compensation mechanism for delays in the delivery of an apartment, and such compensation applies even without the purchaser having to prove actual damage. A contractor can be exempt from the obligation to pay compensation only if the delay was caused by circumstances beyond their control and that could not have been prevented.
Accordingly, even when a claim of force majeure or frustration of contract is raised, the court examines whether the delay in delivering the apartment actually resulted from the extraordinary event, or whether it stemmed from delays that had already arisen during the course of the project and are unrelated to it.
The practical implication is clear: not every contractual clause will prevail, and not every general claim of war will suffice to exempt a contractor from the relatively strict provisions of the Sale (Apartments) Law.
When it comes to selling apartments – there is also protection by law.
At the outbreak of war, the government declared the construction industry to be essential to the economy. Unlike other industries where activity was halted, construction sites were allowed to continue operating.
However, the permit for activity is granted subject to key conditions:
The existence of a standard protected space accessible to workers in accordance with the defensive time determined by the Home Front Command .
When the state allows the industry to continue operating, the starting point is that work on the construction site is possible even during wartime.
However, this does not mean that a claim of force majeure or contract failure is completely ruled out. There may be situations where a high frequency of alarms, safety restrictions, or operational difficulties have created a real impairment of the ability to perform.
Therefore, each case will be examined according to its circumstances.
The construction industry has been declared essential to the economy.
One of the key conditions for the continuation of construction site activity during the war is the existence of a standard, accessible protected space for workers.
In recent years, mobile protection solutions such as mobile fire stations have become relatively available and can be deployed on site in a short time.
When a temporary protective solution can be reasonably placed on the site and in accordance with Home Front Command guidelines, the courts may examine whether reasonable steps have been taken to continue the site's operations.
From a legal perspective, the availability of such solutions may make it difficult to make a blanket claim that it was not possible to continue working on the site. To the extent that there is an accessible, available and reasonable protective solution under the circumstances, the expectation also increases that a developer or contractor will act to enable the continuation of work and will not be satisfied with a general claim of the inability to work.
However, there is no automatic rule here either. In each case, the time spent defending the area, the number of workers, the characteristics of the site, the distances to reach the protection, and the nature of the work actually performed will be examined, among other things.
Availability of website protection solutions and its legal implications
In recent years, there have been significant changes in the structure of the industry's workforce.
Since the events of October 2023, Palestinian workers have not been employed on construction sites in Israel, except in the areas of settlements in Judea and Samaria. In their place, foreign workers from a variety of countries have entered the industry as part of a government policy designed to stabilize the industry's activities.
Therefore, the general claim of a shortage of manpower as a result of the war is not necessarily self-evident and will be examined in each project according to its data.
This does not mean that there may not be specific difficulties. There may be delays in recruiting employees, changes in the available manpower at a particular site, or other operational difficulties. However, from an industry perspective, the situation today is fundamentally different from the initial phase after October 2023, and therefore claims in this area will also be carefully examined according to the case law tests.
Manpower in the construction industry
Israeli case law recognizes that war may be considered a force majeure event and may even give rise to a claim of frustration of contract; however, such recognition is not automatic.
In various judgments dealing with delays in construction projects due to security situations, the courts have reiterated the principle that the mere existence of a wartime event is insufficient. For example, in Civ. Case (Magistrate Court, Kfar Saba) 38721-10-15 Davidovitz Moran v. Rami Tzarfati Construction Ltd., the contractor’s claim that Operations “Brother’s Keeper” and “Protective Edge” constituted force majeure justifying a delay in the delivery of an apartment was rejected, after it was not proven that these events actually affected the pace of construction or the delivery date. The court emphasized that even when dealing with significant security events, the contractor must demonstrate how they actually impacted the project and its timeline.
A similar approach was reflected in the Supreme Court’s decision in proceedings concerning Civ. App. (Leave) 44422-09-17 Aura Israel Initiatives and Investments Ltd., where a claim that Operation Protective Edge caused delays in the delivery of apartments was rejected, after no data was presented indicating an actual work stoppage or a significant operational disruption at the construction site.
This principle was reiterated in a 2025 decision in RTA (Request for Leave to Appeal) 74469-01-25 Gurevich v. Alberto Gabso & Sons Ltd., delivered by the District Court in Be’er Sheva. The court held that the “Iron Swords” war and Home Front Command directives may constitute force majeure under appropriate circumstances, but stressed that the concrete impact of the events on the specific project must be examined.
This is the most important practical takeaway: even during wartime, courts do not rule based solely on the existence of hostilities, but on the factual foundation. The key questions are how long work actually stopped, which activities were affected, whether partial work could continue, and whether reasonable steps were taken to mitigate the impact on the project’s progress.
How courts treat force majeure and breach of contract claims during wartime
Israeli courts often point out that the local security reality is different from that of many other countries.
Security incidents are not a rare phenomenon in Israel, and therefore in long-term projects, the courts may expect that developers and contractors will take such a possibility into account as part of the project's risk management.
This does not mean that force majeure or breach of contract can never be claimed. It does mean that the claim will be examined carefully, and the court will ask whether it is an event that, in the circumstances of the project, could not have been reasonably foreseen, prevented, or prepared for.
In practice, this is one of the reasons why the legal debate in Israel in this area is more complex than in countries where war is perceived as an exceptionally rare and extreme event.
The Israeli reality
The importance of real-time documentation
In disputes regarding project delays, actual documentation is a decisive factor.
It is important to maintain orderly work diaries and document events such as:
Work stoppages due to alarms
Work stops to reach a protected space
Site safety restrictions
Delays in the supply of equipment or materials
In complex projects, the key question is whether the event affected activities on the project's critical path.
Without proper documentation, the claim for delay will remain at a general level. With proper documentation, it becomes a factual claim that can be substantiated.
In most cases, the dispute will not be whether there was a war, but rather how long the war actually delayed the project, and to what extent. This is precisely what requires ongoing, accurate, and data-backed documentation.
Although the discussion of force majeure claims is primarily contractual, delays in construction projects during wartime may also have insurance implications.
A construction insurance policy is issued for a pre-defined period of time. When project schedules are delayed, it may be necessary to extend the insurance period.
Such an extension usually involves an additional premium and sometimes a re-examination of the risk by the insurance company. In practice, the costs of the extension may be relatively high and sometimes are not directly proportional to the length of the extension period itself.
Therefore, even in projects that are not particularly large, a delay in schedules may result in additional insurance costs that must be taken into account as part of project management.
Insurance implications to consider
When a construction project in progress is damaged by a missile strike or other wartime event, the damage itself is not covered by a contractor's work insurance policy due to a war exception.
In such cases, the main compensation mechanism is the state's compensation mechanism through property tax and the compensation fund .
However, before the restoration work begins, another insurance question arises: how will insurance coverage relate to the repair work that will be carried out on the site.
The restoration work may be different from the original work that was insured, and therefore it is sometimes necessary to update the terms of the policy or arrange appropriate insurance coverage for the restoration work.
From an underwriting perspective, it is incorrect to assume that the original policy automatically applies to the repair work. This involves a fundamental change in the circumstances of the project, and sometimes also a change in the scope of the work, the execution method, or the insurance risk.
Therefore, in any case of a missile strike or damage resulting from a hostile act or war, there is an obligation to notify the insurance company of the material change in the circumstances of the project and to ensure that express approval has been given for the continuation of insurance coverage with respect to the planned rehabilitation work.
Ignoring this issue may lead to a situation where the restoration work itself is carried out without appropriate insurance coverage.
Rehabilitation work after a missile strike – an insurance issue that must be examined in advance
1. The assumption that the mere existence of war constitutes force majeure
A common mistake is to assume that the mere existence of war automatically releases parties from contractual obligations or timelines.
In practice, courts examine how the war actually affected the specific project. Where the construction industry has been defined as essential and work is permitted subject to protective measures, a general claim that “there is a war, therefore no work can be performed” is insufficient.
To avoid this issue, one must demonstrate concretely which works were halted, for how long, which activities were affected, and what the actual impact was on the project’s progress and schedule.
2. Failure to review the force majeure clause in the contract
In many projects, parties assume that the force majeure clause is clear and self-explanatory. In practice, each contract is drafted differently, and there are often preconditions for invoking the clause.
The correct approach is to review the contract immediately upon the occurrence of the event, examine the notice mechanism, the conditions for invoking the clause, and its relationship to time extension or compensation mechanisms.
In residential projects, it is also important to remember that the Sale (Apartments) Law applies—therefore, reviewing the contract alone is not sufficient.
3. Failure to provide timely notice to the project parties
Many contracts require notice to be given within a short period from the moment the event begins to affect the work. Waiting until the end of the event may undermine the claim itself.
To avoid this issue, a formal written notice should be provided at the outset of the event, even if the full extent of the delay is not yet clear. It is better to submit a conservative notice and update it later than to refrain from giving notice and attempt to raise the claim retroactively.
4. Lack of documentation of the impact of events on the site
Many contractors assume that the existence of war is self-evident and therefore does not require documentation. However, in legal disputes, documentation is often the decisive factor.
It is essential to maintain proper work logs and document events affecting the project’s progress, such as sirens, work stoppages, safety restrictions, supply delays, changes in workforce, and their impact on the project schedule.
Without such documentation, it is difficult to substantiate a genuine claim for justified delay. With proper documentation, the claim gains both factual and legal support.
5. Ignoring insurance implications and policy extensions
Delays in the project timeline may require extending the project’s insurance policy at additional cost. Moreover, in the event of missile damage to the project, significant insurance issues may arise regarding restoration works.
It is therefore important to assess in advance the impact of delays on the insurance period, the cost of extensions, and—where war-related damage occurs—the scope of coverage for repair works.
In any case involving restoration works following missile damage, the insurer should be notified of the material change in the project, and explicit confirmation of coverage should be obtained before commencing the works.
Five common mistakes contractors make during wartime – and how to avoid them
In conclusion
Ultimately, in most cases, the legal question is not whether there was a war, but how the war actually affected the execution of the project.
The determination usually depends on the concrete facts on site: the duration of work stoppages, the restrictions imposed on operations, the measures taken to continue the work, the impact of events on the project timeline, and the ability to demonstrate a real causal link between the war and the alleged delay.
It is also important to remember that Israeli case law tends to interpret claims of frustration narrowly, particularly in the construction sector. This is due, among other things, to the fact that the industry operates in an environment where security-related events are not entirely unforeseeable—especially when the state itself allows continued activity in the sector and defines it as an essential industry.
Accordingly, in construction projects during wartime, claims of force majeure or frustration of contract are not examined at the level of slogans, but at the level of facts, documentation, and the actual management of the site.
In other words: it is not enough to argue that there was a war—it must be shown how it actually affected the construction, the on-site work, and the timeline of the specific project.
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