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Legal update from Triton 2-2019

The Strait of Hormuz and the law

This past summer has regretfully not offered much rest for marine insurers and their members, given Iran’s seizures of several vessels in the vicinity of the Strait of Hormuz through which a quarter of the world’s total oil consumption passes. The most notable incident is the seizure of the Swedish owned and UK flagged tanker Stena Impero.

At the time of writing the vessel is still under detention. Although it does not take many legal skills to conclude the seizure is unlawful it may be instructive to mention something about the legal regime for the Strait of Hormuz.

A strait shared by two states
The strait has a narrowest point of 21 miles between Iranian and Omani territory. As both Iran and Oman have declared that their territorial waters extend to 12 nautical miles, the maritime border in the strait is defined by a treaty from 1974 between the two states. This means that no part of the strait lies outside of Iranian or Omani territorial waters. To reduce the risk of collision, vessels passing through the Strait follow a Traffic Separation Scheme (TSS), with inbound vessels using the northern lane and outbound vessels using the southern lane. According to the charts I have seen, the entire TSS – including the northern lane - lies solely within Omani waters. States’ territorial waters are recognised as the sovereign territory of a state. Iran therefore has no territorial jurisdiction within the TSS.

Mare liberum
There is one further important factor to consider. The Straight of Hormuz is a strait used for international navigation as defined in Article 37 of United Nations Convention on the Law of the Sea (UNCLOS). As such, vessels passing through the strait benefit from the right of transit passage, which provides for unimpeded access through the entire strait pursuant to Article 38 of UNCLOS. As a result, transit passage cannot be suspended and vessels in transit must be permitted to pass through the territorial waters of the coastal state.

The principle of free transit stems from the ancient Mare Liberum doctrine pursuant to which the high seas (i.e. the ocean area outside states’ Exclusive Economic Zones) is international territory and all nations are free to use it. The doctrine is codified in Article 87 of UNCLOS. This means that even if the Iranians would have argued that Stena Impero was within Iranian territorial waters the seizure would still be a clear infringement of international law.

Contractual aspects
One central question for vessels involved in trade in the Persian Gulf is to what extent a Master can refuse such an order, in the light of the risk for seizure on the inbound and outbound leg. Assuming the charter party incorporates the CONWARTIME clause, the risk for seizure is considered a war risk. Pursuant to that clause, the Master must make a reasonable judgment as to whether any given order from charterers or any situation the vessel is in will result in a war risk occurring (i.e. seizure or detention by the Iranian authorities).

English case law suggests that for a decision of the Master to be reasonable, it must be made honestly and in good faith, and not arbitrarily or capriciously. In addition, there must be a real likelihood of a danger occurring, meaning that a concern based only on speculation or something being a bare possibility would be insufficient. If there is a bona fide war risk, then Masters are entitled to take various steps as outlined, regardless as to whether charterers consent or notwaters the seizure would still be a clear infringement of international law.

Always seek legal advice
Whether a Master is entitled to refuse an order depends on the circumstances prevailing at the relevant time. At the time of writing this article the general perception is that there is a high risk for vessels having a connection with the UK – in particular a UK flag - being seized and/or attacked by the Iranian government.

A fair assessment (again at the time of writing) is therefore that it is more likely that a court or tribunal would allow a Master of a UK flagged vessel to refuse an order to call at the Persian Gulf under the CONWARTIME clause than a vessel not having a connection with UK. However, legal advice should always be retained for any specific situation. The Club’s FD&D lawyers are well equipped to assist to this end.

In the meantime we should all hope that political tensions will ease so that world trade can go back to normal.

 

 Anders Leissner
Director, Corporate Legal & FD&D

 


Previous Legal Corner articles 

Sanctions, The long arm of the law - Triton no 1 2019
Improved visibility in the muddy waters of sanctions - Triton no 3 2018
Redefining the role of the lawyer - Triton no 2 2018
IMB membership for FD&D members - Triton no 1 2018
Adaptability vs continuity - Triton no 3 2017
The importance of context - Triton no 2 2017
The strive towards clarity - Triton no 1 2017
Use your head - Triton no 3 2016
Leading OW Bunker case finally decided - Triton no 2 2016
Guidelines on place of refuge - Triton no 1 2016
It’s not what you do, it’s how you do it - Triton no 3 2015
Reflections - Triton no 2 2015 
A wreck removal convention ahead - Triton no 1 2015
We need to talk - Triton no 3 2014
What it is all about - Triton no 2 2014
The Shipping Blue(s) - Triton no 1 2014

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