Navigating geopolitical disruption

What this may mean in practice

• Suppliers may look to invoke fuel surcharges or other cost pass‑throughs to offset increased costs
• Customers may also face suppliers attempting to trigger price renegotiations or asserting implied renegotiation rights
• Where contracts do not facilitate price adjustments, there may still be informal pressure to agree 'temporary' price increases 
• Customers may be required to bear the increased cost of fuel in the supply chain under the Fair Work Commission's Fuel Cost Recovery Road Transport Contractual Chain Order  

Emerging issues / developments  

• Margin erosion mid‑term
• Risk of setting precedents across supplier base
• Relationship strain with critical suppliers
• Key supplier distress can have significant flow-through impact on production
• Supplier insolvency risk
• Commercial leverage taking precedence over contractual arrangements
• Regulatory intervention

Key considerations

• Are we contractually required to accept this price increase?
• Have the contractual triggers for a price reset actually been met?
• Can a supplier force renegotiation due to increased fuel costs?
• What happens if we refuse and the supplier underperforms or faces credit risk?

What to think about now  

• Audit pricing and variation clauses across critical contracts
• Require strict compliance with triggers, notice and process requirements
• Separate legal entitlement from commercial leverage
• Ensure any agreed variation is formally documented
• Coordinate legal, procurement and commercial response
• Identify alternative suppliers for key supply contracts, monitor warning signs of financial stress and implement a plan to manage accordingly  
• Identify all contracts within your business that may involve road transport or delivery and determine whether the Fuel Cost Recovery Road Transport Contractual Chain Order applies to those arrangements  

Contact for further information

• Jessica Mottau, Partner, Allens
• Matthew Whittle, Partner, Allens
• Matthew McCarthy, Partner, Allens
• Emily Turnbull, Partner, Allens
• Andrew Wilcock, Managing Associate, Allens
• Joe Payten, Managing Associate, Allens
• Carly Donovan, Managing Associate, Allens  

What this may mean in practice

• Suppliers may signal an inability or unwillingness to perform under current terms, ie 'pay more or we stop' scenarios
• Customers may also face partial performance or quality degradation from suppliers as they take steps to cut costs
• Similarly, customers may be de-prioritised by suppliers where supplier resources are constrained  

Emerging issues / developments  

• Whether supplier threats of non-performance amount to repudiation
• Key supplier distress can have significant flow-through impact on production
• Supplier or key customer insolvency risk
• Risk of wrongful termination by customers looking to switch suppliers
• Operational exposure (including exposure to downstream customers) arising from supply chain disruption  

Key considerations

• Does this constitute anticipatory breach or repudiation?
• Can we force continued performance?
• What remedies are available short of termination?
• What contractual mechanisms may assist (eg step-in, suspension, governance)?
• How do we protect supply chain continuity while reserving rights?

What to think about now  

• Identify alternative suppliers for key supply contracts, monitor warning signs of financial stress and implement a plan to manage accordingly
• Respond promptly and formally to any threat of non-performance
• Reserve rights and reject non‑performance expressly
• Avoid premature termination
• Assess step‑in and alternative supply options
• Prepare contingency and transition plans  

Contact for further information

• Jessica Mottau, Partner, Allens
• Matthew Whittle, Partner, Allens
• Matthew McCarthy, Partner, Allens
• Joe Payten, Managing Associate, Allens
• Carly Donovan, Managing Associate, Allens  

What this may mean in practice

• Suppliers may issue TfC notices on unprofitable contracts or use threats of TfC to drive price renegotiations
• Where TfC is exercised, a lack of adequate notice may create transition risk  

Emerging issues / developments  

• Validity of TfC rights and notices
• Compensation and stranded cost exposure
• Readiness of alternative suppliers

Key considerations

• Does the supplier actually have a TfC right?
• Is the TfC notice compliant with contractual requirements?
• What compensation or transition support applies?
• Can TfC be challenged or delayed?

What to think about now  

• Review TfC clauses and notice mechanics in critical contracts now
• Stress‑test transition‑out arrangements
• Identify backup suppliers early
• Consider negotiated standstill or extensions as an alternative to TfC
• Document all objections and reservations

Contact for further information

• Jessica Mottau, Partner, Allens
• Matthew Whittle, Partner, Allens
• Matthew McCarthy, Partner, Allens
• Joe Payten, Managing Associate, Allens
• Carly Donovan, Managing Associate, Allens  

What this may mean in practice

• Suppliers may attempt to excuse non‑performance due to cost increases by claiming FM (citing war, sanctions or fuel shortages)
• Confusion between hardship (not sufficient to justify FM) and legal impossibility should be considered  

Emerging issues / developments  

• Misuse of FM for commercial hardship
• Poorly evidenced causal links between economic circumstances and exercise of FM rights
• Long suspension periods affecting operations  

Key considerations

• Does the current crisis fall within our FM clause?
• Is increased cost enough to trigger FM?
• Has the supplier taken reasonable mitigation steps?
• Can FM be challenged or limited?  

What to think about now  

• Scrutinise FM notices against exact clause wording
• Require evidence of impossibility, not hardship
• Enforce notice and mitigation requirements strictly
• Track suspension and termination time limits
• Prepare for post‑FM transition scenarios  

Contact for further information

• Jessica Mottau, Partner, Allens
• Matthew Whittle, Partner, Allens
• Matthew McCarthy, Partner, Allens
• Joe Payten, Managing Associate, Allens
• Carly Donovan, Managing Associate, Allens  

What this may mean in practice

• Listed entities with significant exposures to the fuel crisis may have obligations to disclose price-sensitive information. Where they have provided guidance to the market, this will need to be monitored to ensure it remains appropriate
• Acute questions may be posed to boards and management about how to secure supply chains, maintain market access and preserve predictable capital flows. Decision-makers may also face increased scrutiny in their management of the crisis and longer-term strategic management of the business—eg there may be added pressure to transition away from fossil fuel dependency
• Where distress is present, directors may face personal exposure for insolvent trading  

Emerging issues / developments  

• Is there a disclosure obligation for information that is either or both (i) in the public domain or (ii) inherently uncertain or constantly moving? Where is the line for what affects a particular business, as opposed to the entire market or economy?
• What is the threshold for withdrawing or qualifying existing guidance that may be in the market? Should listed entities be giving new guidance at this time?
• Are there any other issues that may need to be managed should there be an acute change in circumstances—eg to withdraw or delay payment of a dividend if the company is no longer in a financial position to pay it?
• What is the right cadence for information flows and decision-making by directors and executives when the circumstances are volatile?
• There are broader questions being raised about governance in a less predictable world—what core assumptions that underpin the business or economy might need to be reconsidered or put to proof? What new opportunities might this unlock?  

Key considerations

• Does the crisis trigger disclosure obligations?
• Can the crisis impact current and future transactions?
• Can the crisis impact financial reporting obligations?
• Does the company need to consider its insurance coverage?
• Are there best practices for business continuity plans?
• Can a company cancel or defer a payment of a dividend?
• Could the impact on debt facility trigger a continuous disclosure obligation?
• What should I do if a key supplier or customer is in distress?
• What options do I have if my key suppliers increase their pricing?
• What options are there to protect the business if we are impacted by the crisis?

What to think about now  

• Have a clear shareholder communication plan and understanding of when any thresholds are reached to inform shareholders of the impacts on the business
• If there is a potential for a drop in share price, have clear documentation of the course of events, decision making and internal and external communications
• Closely monitor information that is or needs to be given to the market, particularly as it relates to guidance
• Take extra care in providing forward-looking information in this climate
• Consider a shareholder activism strategy for responding to activism such as at AGMs through to potential class actions
• Ensure directors are briefed on the scope of directors' duties in this situation (including insolvent trading risks)
• Understand company's cashflows and ensure they are kept up-to-date and stress-tested against developments in the marketplace
• Where financial distress is present, engage advisers to understand options (including availability of safe harbour relief)  

Contact for further information

• Vijay Cugati, Partner, Allens
• Matthew Whittle, Partner, Allens
• Matthew McCarthy, Partner, Allens
• Emily Turnbull, Partner, Allens
• Andrew Wilcock, Managing Associate, Allens
• Tom Hall, Managing Associate, Allens  
• Carly Donovan, Managing Associate, Allens  

What this may mean in practice

• Requirements to bear the increased cost of fuel in the supply chain
• Changes in workforce needs to address business impacts
• Potential impacts on workers (e.g. work health and safety risks)

Emerging issues / developments  

• Businesses are considering the impact of the Fuel Cost Recovery Road Transport Contractual Chain Order, which took effect on 21 April 2026. Any business that pays (directly or indirectly) for the delivery or transport by road of goods, waste or passengers may be caught by the order, which means it will be relevant to most businesses. The order requires businesses to adjust the rate or amount they pay for delivery and transport work to cover the increased cost of fuel arising out of the ongoing conflict.
• More employees are seeking 'work from home' arrangements, or not attending work at all, due to the cost of attending
• Employers are considering whether they may need to change working arrangements (eg changes to working hours or duties) if there is a material change in their workforce needs  

Key considerations

• Will our supplier arrangements be caught by the Fuel Cost Recovery Road Transport Contractual Chain Order?
• What steps should we be taking to address the potential impact on our people of the ongoing crisis and its flow-on effects?
• Can we change working arrangements to address impacts on our business caused by the ongoing crisis?  

What to think about now  

• Identify all contracts and arrangements within your business that may involve road transport or delivery (eg the supply of goods that are transported by road) and determine whether the rate adjustment obligations in the Fuel Cost Recovery Road Transport Contractual Chain Order apply to those arrangements
• Conduct risk assessments to identify any work health and safety risks in your business that have emerged or changed as a result of the crisis (eg psychosocial risks associated with workplace changes or uncertainty) and take steps to eliminate or mitigate those risks
• Consider the requirements in all applicable employment contracts and industrial instruments and consult with employees and unions in accordance with your usual processes, before making any workforce changes  

Contact for further information

• Simon Dewberry, Partner, Allens
• Chloe Wilton, Partner, Allens

What this may mean in practice

• Heightened competition and consumer law risk as businesses respond to shortages and cost spikes (including price rises, allocation/rationing decisions, changes to promotions and supply commitments); increased ACCC scrutiny of conduct during crises and potential collaboration/coordination with competitors  

Emerging issues / developments  

• Pricing decisions (risk of price gouging allegations; compliance with pricing and promotion rules)
• Supply allocation/rationing and customer prioritisation (refusals to supply; changes to terms; cancellation practices
• Competitor interactions and industry coordination (information sharing, joint procurement/logistics, standard setting) and whether authorisations are needed
• Complying with competition laws for industry solutions or initiatives (including at the request of government) such as financial or other support for customers impact by fuel crisis  

Key considerations

• Do I have to offer a refund if I cancel orders?
• Can I continue to promote goods and services if there is a shortage of their supply?
• Can I increase prices?
• Is the ACCC more likely to approve mergers involving parties who might be in financial difficulty?  

What to think about now  

• Implement a rapid legal review process for price changes, promotions and shortage communications
• Document objective drivers (input costs, supply constraints) and keep records to rebut 'price gouging' claims
• Ensure advertising is accurate about availability and delivery times
• Train frontline teams on refusing supply and complaint handling
• Put clean protocols in place for any competitor engagement (no sensitive info exchange; seek advice on ACCC authorisation if needed)  

Contact for further information

Rosannah Healy, Partner, Allens