In this article we address the latest example of why political risk is now a potential issue to be considered when negotiating UK-focused contracts concerning critical or strategic areas and involving Chinese entities. Careful consideration needs to be given to potential risk mitigation measures when developers, financiers or other project stakeholders are considering using Chinese manufacturing. A number of the mitigation measures have been used previously in more developing markets – the novelty here is the application in the UK context.

In April 2026, the UK government banned Ming Yang Smart Energy, a Chinese wind turbine manufacturer, from supplying turbines for offshore wind projects in UK waters. The decision is reportedly based on national security concerns, particularly regarding potential risks associated with critical infrastructure.

Shortly thereafter, TwinHub, which was awarded the first ever UK floating offshore wind Contracts for Difference (“CfD”) in 2022 announced that the Low Carbon Contracts Company (LCCC), which enters CfDs with developers on behalf of the UK government, confirmed that its CfD had come prematurely to an end. TwinHub’s preferred turbine supplier was Ming Yang Smart Energy.

Ming Yang turbines may have been an attractive option for cost and technology reasons. The decision, however, reflects increasing scrutiny of Chinese companies in the UK and Europe, especially in sectors deemed sensitive, critical or strategic. 

The ban also halts Ming Yang’s planned £1.5 billion wind turbine plant in Scotland, which Ming Yang states would have created 1,500 jobs. Scottish officials argue that the UK could secure Chinese-made turbines, just as it does with other Chinese products like phones and cars, and that relying on only two Western suppliers may harm resilience and value for consumers. 

The decision comes amid rising UK-China tensions and follows cyberattacks on European wind farms and recent espionage allegations. Chinese officials have called the ban a missed opportunity and urged for continued cooperation between the two countries.

Trade Minister Sir Chris Bryant emphasized the need for a cautious approach to relations with China, including human rights issues. The Scottish government criticized the lengthy decision process, warning of far-reaching consequences for Scotland’s industrial future.

China and the UK: Going Forward

The UK government reiterated its openness to Chinese investment where it aligns with national interests but stressed the importance of security and resilience in the offshore wind supply chain. Scotland’s Deputy First Minister Kate Forbes called the decision regrettable and accused the UK government of undermining Scotland’s industrial prospects. 

Mitigating Risks in Agreements

When negotiating construction, procurement, technology, and purchase agreements, you should consider the following mitigation strategies:

• Political Risk Insurance: Consider insurance products that cover losses from government actions or political events, noting that losses will only be covered if they arise from specifically insured perils stipulated under the policy.
• Assess Supplier Risk: Conduct thorough background checks on all suppliers, especially those from countries subject to political scrutiny.
• Monitor Regulatory Changes: Stay updated on government policies and potential bans or restrictions.
• Force Majeure Clauses: Include provisions that cover government actions, such as bans or sanctions, as force majeure events. Ensure that those provisions also accommodate a prolonged force majeure scenario and potential termination consequences.
• Termination Rights: Ensure the contract allows for termination or substitution of suppliers if a ban or restriction is imposed.
• Alternative Suppliers: Identify and pre-qualify alternative suppliers to reduce dependency on any single country or company. As noted above, this may be a particularly relevant issue in the UK and Europe whereby the exclusion of Chinese suppliers has resulted in a smaller pool of potential suppliers.
• Technology Flexibility: Specify technology-neutral requirements where possible, allowing for substitution if needed, although this will require careful analysis in the context of any government support that may be offered. Government support may be provided on the basis of a particular technology being used or performance requirements being met.
• Material Adverse Change (MAC) Clauses: Discuss the inclusion of MAC clauses that allow parties to renegotiate or terminate if significant political or regulatory changes occur (such as bans or new sanctions).
• Change in Law Clauses: Highlight the importance of robust “change in law” provisions that allocate risk and set out procedures for notification, cost adjustment, and potential termination if regulatory changes impact the contract.
• Assignment and Substitution Rights: Recommend including clear assignment or substitution rights to allow for the replacement of suppliers if a ban is imposed.
• Dispute Resolution and Governing Law: Emphasise the need for a neutral and enforceable dispute resolution mechanism (e.g. international arbitration) and governing law, especially where cross-border suppliers are involved.
• Ongoing Compliance and Audit Rights: Suggest warranties that suppliers will comply with all applicable laws and regulations throughout the contract term, and that buyers have audit rights to verify ongoing compliance.
• Intellectual Property (IP) and Technology Escrow: Consider the risk of IP loss or technology lock-in if a supplier is banned. Recommend technology escrow arrangements or IP assignment clauses to ensure business continuity.
• Investment Treaty Protections: For major projects, consider whether investment treaty protections (e.g., under BITs or the Energy Charter Treaty) might be available if government action results in loss or expropriation.
• Data Security and Localisation: Address the risk that bans or restrictions may impact data flows, confidentiality, or cybersecurity, especially where Chinese technology is involved.

Conclusion

From a legal perspective, the risk landscape for UK infrastructure and energy projects onshore and offshore — especially those involving critical national assets — has never been more complex or acute. The recent ban on Ming Yang Smart Energy turbines is a clear demonstration that political risk is real, material, and now a central consideration even in mature markets like the UK. For developers, financiers, and project stakeholders, these risks are real, material, and can crystallise overnight, even in mature markets like the UK. For any party negotiating procurement, technology, or construction contracts, it is essential to anticipate and address the potential for sudden regulatory change, government intervention, or supplier bans. This means deploying a full suite of legal risk mitigation tools: robust due diligence, political risk insurance, clear force majeure and change in law clauses, flexible termination and substitution rights, and ongoing compliance monitoring. The legal and commercial landscape is shifting rapidly, and contracts must be drafted with the expectation that political risk is not just a theoretical possibility, but a practical reality. In today’s climate, ignoring political risk is not just unwise — it is a direct threat to project viability and value. 

Stephenson Harwood’s Global Energy Transition and Infrastructure Group

Our Global Energy Transition and Infrastructure Group has deep experience on complex international projects, bringing together the work we do across all our ten offices in Europe, the Middle East and Asia.  We act across all renewable sectors, including offshore and onshore wind, solar, energy from waste, biomass, and hydrogen. 

Our multidisciplinary team advise on planning, financing, corporate, construction, operation, and dispute issues.  We act for sponsors, developers, funders, international contractors, insurers, and operators and so have a deep understanding of these projects from each of their different perspectives. 

As governments, businesses, and communities accelerate efforts to decarbonise, the need for legal and strategic guidance has never been greater. Our team can be called upon to assist with advising on international arbitration and high-stakes commercial and investment treaty disputes.

If you would like to discuss any of the issues covered, please contact any of the contributing authors, or any other member of the Energy Transition and Infrastructure Group.