Contracts, Crisis, and AI: How the Strait of Hormuz Blockade Raises the Stakes for Contract Intelligence

The Strait of Hormuz blockade has once again proven that when crisis strikes, it’s time to pull out your contracts. What’s new this time is the degree to which AI can accelerate and future-proof your response.

COVID, sanctions, even another waterway obstruction (remember the Ever Given ?) have each sent companies scrambling to see what kind of relief—or exposure—may be sitting in their commercial agreements.

In the most recent crisis, a number of oil companies and oil producing nations have sought to invoke Force Majeure for missed deliveries due to the blockade. In other words, they are declaring themselves not liable for failures to fulfill their contractual obligations (oil deliveries). This will trigger a cascade of missed obligations down supply chains, with each link looking for its own contractual protections to avoid penalties and breach.

In fact, the Strait of Hormuz blockade is a prime example of the very purpose of a contract: properly written, they act as a list of if/then contingencies that protect companies from the unknown.

As Alla Valente, Principal Analyst at Forrester, recently described contracts in an Icertis-hosted webinar: “Think of contracts as your crystal globes to see into the future.”

Turning potential into practice

But while contracts are clearly powerful risk management tools, the gap between what contracts can do and what they deliver in practice is significant when contract management is left to manual and ad hoc processes. Manual contracting can take weeks, whereas a crisis can move in days. To deliver full value, contracts must be:

• Drafted to account for the proper contingencies based on contract scope, geography and other parameters;
• Managed correctly to ensure that all obligations are fulfilled, including prerequisites for invoking Force Majeure (more on that below);
• and analyzed at scale to gain a portfolio-wide view of risk and opportunity.
• The results of those analytics—gaps discovered, risks surfaced—then need to inform how contracts can be better written and managed in the future.

At Icertis, we call this the Engage-Operate-Analyze Flywheel. Each step feeds intelligence into the next, improving outcomes over time as the system learns.

How AI changes the way contracts are leveraged

Historically, such a flywheel would require large teams of legal experts poring over contracts to address a crisis like the one taking place in the Gulf.

But with AI, companies can now turn it into an always-on motion.

Let’s consider how the Icertis platform puts the Flywheel to work in the case of the Strait of Hormuz crisis.

Contract drafting, redlining, and review: The first step of any contract is to draft and negotiate it with the counterparty. Depending on their maturity, contracting teams may have defined standards for Force Majeure language that they will try to insert into the contract. But what if the counterparty objects? Or what if the contract sits on the counterparty’s paper?

To address these challenges, we turn to Vera, Icertis’ AI trained on our proprietary contract data lake to turn contract language into fast, accurate, and contextual insights.

Vera Engage, the first part of the Flywheel, accelerates and improves contract drafting, redlining, and reviews with an AI-native interface. In this case, Engage compares a given Force Majeure clause to the company’s standards and grades how risky it is. If your playbook calls for terms like “Acts of War” or “Government Action” to be included but aren’t, it’s flagged and surgically inserted into the draft.

But what if a company doesn’t have a well-defined Force Majeure standard? Engage can also draft playbooks based on past contract language and human inputs to standardize language to corporate risk standards. From there, teams can update as needed to account for emerging risks. With these capabilities, Engage greatly compresses contract review cycles from weeks to days while improving risk posture.

Contract operations: Force Majeure is not a self-executing shield. Invoking it — or responding to a Force Majeure notice from a counterparty — triggers a specific set of legal obligations: notification windows (often 5–15 days), mitigation evidence standards, partial performance thresholds, and resumption protocols. Miss a step, and you expose yourself to breach even if the underlying event is clearly unforeseeable.

Vera Obligations uses AI to extract and structure these obligations, giving companies a clear roadmap for turning contractual hypotheticals into business action. It also connects contract data to other systems like SAP, pushing obligation actions directly into the tools where work gets done.

Portfolio-wide analytics: A crisis of this scale generates a volume of contract activity no team can manually synthesize. Thousands of affected agreements, cascading obligation triggers, Force Majeure notices arriving from multiple counterparties simultaneously, and board-level questions demanding answers in real time. With AI, it is now possible to analyze contract language at scale, get answers in plain language, and take action. That’s what Icertis delivers through its analytics offerings. With  Vera Analytics Advanced, you can prompt your entire contract portfolio for answers to whatever pressing issue is facing your company and get answers in minutes.

Consider this testimonial from a customer using Icertis to respond to a similar international crisis a few years ago: “We got the task on Friday that we needed to identify all contracts with business entities in Russia. We got it done in less than a week and were able to identify not only direct exposure but indirect exposure buried in contracts through subcontractors. Without Icertis, we’d still be looking through contracts, honestly.”

Why you need a single source of contract intelligence

These three contracting motions are not standalone. Each feeds into the next, either accruing intelligence or compounding risk. Yet many contract management tools only offer spot solutions to narrow contracting use cases: Legal may use one tool for redlining; another for operations and obligation tracking; and the c-suite a third for running analytics.

Icertis brings all contracting capabilities into a single, AI-native environment so everyone who works with contracts can access all the contract intelligence they need in one place, and bring insights forward so contract outcomes continuously improve.

So next time you read the news, consider it through a contracting lens: How well prepared is your company to respond to the next crisis? Where would you go to find answers – and how quickly could you action them?

If the answer is “I don’t know,” it’s time to reconsider how you contract. Because the time to prepare for the next crisis is now.