Who Should Bear War Risk in Malta's Government Contracts?

Malta's government should not shift war-related costs solely onto private contractors, according to Clement Mifsud-Bonnici, a prominent figure in Malta's legal and procurement circles.

The statement reflects a broader debate within Malta's business and legal sectors about how government contracts should allocate risk when international conflicts disrupt supply chains and drive up costs for materials and services.

The Core Issue

When armed conflict abroad affects shipping routes, imposes sanctions, or disrupts commodity markets, suppliers to government projects face difficult choices: absorb the increased costs, renegotiate terms with authorities, or invoke contract termination clauses. Currently, the burden typically falls on contractors, who often price projects conservatively to account for geopolitical uncertainty.

Mifsud-Bonnici's position suggests this arrangement warrants reconsideration. The argument centers on whether private firms—particularly Malta's smaller enterprises that compete for public tenders—should bear costs driven by events entirely beyond their control.

How Other Countries Approach This

Several European jurisdictions have revisited their procurement frameworks in response to supply chain disruptions. The United Kingdom and France, among others, have updated their standard contract templates to provide clearer mechanisms for handling extraordinary cost increases tied to external events. However, specific details of these approaches and their applicability to Malta would require further research and official sources to verify.

What Remains Unclear

Malta's current procurement regulations offer limited guidance on how extraordinary geopolitical risks should be shared between government and contractors. Whether this gap will prompt policy changes depends on how seriously policymakers prioritize the issue.

The practical implications—whether for project costs, completion timelines, or public sector budgets—would ultimately depend on how any reforms are structured and implemented. Such decisions would require detailed analysis and stakeholder consultation beyond what is currently documented.

The Conversation Ahead

For Malta's construction, legal, and business sectors, the question of fair risk allocation in government contracts remains open. How the government responds could shape the future of public procurement, though any changes would likely take time to develop and implement given the complexity involved.