Introduction: the Hormuz Strait and its significance
The world is still reacting to the dramatic outbreak of hostilities between Israel and Iran on 13 June 2025, which has included reciprocal missile and bomb strikes by both states. In the maritime community, shipowners are exercising great caution in sending their vessels into the region and, particularly, through the Hormuz Strait, while several countries, including the UK and Greece, have advised their merchant shipping fleets to avoid transiting the Gulf of Aden and to log all voyages in the area.
The Strait of Hormuz is one of the most strategically important shipping channels in the world and is the only sea passage from the Persian Gulf to the open ocean. Some 35% of the world’s seaborne oil is estimated to pass through the Strait. The Strait is just 22 nm (32 km) wide at its narrowest point.
The international legal framework governing the Strait is both complex and contested. Under the UN Law of the Sea Convention 1982 (UNCLOS), flagged vessels enjoy the right of innocent passage through the territorial waters of a coastal state. However, the Strait links the Exclusive Economic Zones of numerous coastal states in the region and qualifies as a strait used for international navigation within UNCLOS, through which flagged vessels enjoy the broader right of transit passage[1]. Iran, however, (like the US) has not ratified UNCLOS and does not accept that the right of transit passage exists as a matter of broader customary international law. Disputes about the extent of any navigational freedoms in the Strait are therefore to be expected.
Current situation and future risks
At the time of writing, the Hormuz Strait remains open, although concerns about the stability of the area continue to mount. While the US-led Combined Maritime Force has confirmed that commercial traffic is currently flowing through the Strait, it has also advised that the likelihood of regional conflict has been elevated to a significant level. Furthermore, Iranian sources indicate that the country is seriously considering closing the Strait, a move that would have severe global economic repercussions, in particular for the global oil and container trades.
The potential blockade or attempted closure of the Strait is just one possibility. What is also possible is the targeting or seizure of vessels with overt connections to Israel or its allies, particularly those providing military assistance to Israel. This was evident in recent Houthi attacks on commercial shipping in the Red Sea. There is also the risk of vessels being unintentionally struck either by sea mines, drones or stray missiles while transiting the waterway, especially if the conflict spreads into the marine space. Confiscation may also be a serious possibility.
English law charterparty implications
This article considers some of the important English law charterparty implications stemming from the current hostilities in the area and the potential closure of the Strait.
War Risks Clauses
Many charterparties contain an express war risks clause; the most common example is one iteration or another of the BIMCO CONWARTIME and VOYWAR clauses. The clauses were updated in 2025, but the 2004 and 2013 versions are currently in the widest circulation.
Would hostilities or closure of the Strait engage the war risks clause?
Suppose Iran were to act on its threats and to blockade the Strait. A blockade is an express inclusion in the definition of “war risks” in the CONWARTIME clause. Therefore, such a step by the Iranians would be capable of triggering the consequences set out in the clause.
What, it is suggested, is more realistic, however, would be for Iran to vow to attack Israeli-connected vessels transiting the Strait and those connected with states supporting Israel, especially militarily. This was again the case with recent Houthi attacks on commercial shipping in the Red Sea. It is suggested that such actions would similarly constitute a “war risk” for purposes of CONWARTIME.
What does the war risks clause permit?
CONWARTIME 2013 and 2025 gives owners the right to refuse to proceed or continue to or through any port, place, area or zone or any waterway or canal where it appears that the vessel, her crew or cargo in the reasonable judgement of the master or owners may be exposed to war risks. If the vessel refuses to proceed to a loading or discharge port, having first given notice to charterers, owners may request an alternative port nomination within the permitted range and if no such nomination is received within 48 hours[2] owners may discharge the cargo at any safe port of their choosing, and the costs and expenses of doing so will be for the charterers' account.
Under VOYWAR 2013 and 2025, owners may discontinue loading operations or otherwise cease to proceed to or remain at any place at which the vessel is exposed to a war risk. Owners may also require an alternative port nomination and discharge at a safe place of their choosing if no alternative nomination is forthcoming within 48 hours[3] (and recover extra discharge expenses as well as additional freight if the extra distance exceeds 100 miles). VOYWAR 2013 also deals with the situation where the usual route becomes dangerous. In such cases, owners may give notice that a different route will be taken[4] and can also recover additional freight to the extent the extra distance exceeds 100 miles. Note that under VOYWAR 2025, owners are instead entitled to an adjusted freight “based on the estimated time and/or expenses incurred or saved as a result of that alternative route, as documented by the Owners”.
Owners' assessment of exposure to war risks
The entitlement of owners to refuse orders under any war risks provision is based on some form of assessment of the likelihood of the vessel's exposure to such risks. The previous CONWARTIME 2004 clause, for instance, permits refusal to proceed if the vessel, cargo or crew "in the reasonable judgement of the Master and/or the Owners, may be, or are likely to be, exposed to War Risks". Owners' judgement under the clause must be exercised in good faith and be objectively reasonable, while the exposure must be "a real likelihood" or a "serious possibility"[5]. It will assist owners in this regard if all necessary enquiries are made to assess the degree of exposure. Such enquiries could include, for instance, an appropriate (independent) voyage risk assessment; liaising with flag state representatives and/or consideration as to any additional safety measures which may be employed on the vessel[6].
Owners are generally not permitted, however, to refuse orders to trade in areas in respect of which they have, by the terms of the charterparty construed in its factual context, accepted the risk, unless they can establish that there has been a "qualitative change"[7] in the risk since the date of the relevant charterparty[8]. Acceptance of the risks associated with a certain trade may be inferred in cases where, for instance, owners must have known upon entering the charterparty that the vessel would be employed in that particular trade[9] or if a clause stipulates, for example, that a particular route is "always allowed"[10]. Also important will be the knowledge that may reasonably be attributed to the parties when the contract was agreed.
For instance, if the governing Charterparty provided that “Strait of Hormuz always allowed”, this would prima facie make it more difficult for owners to refuse to proceed through the Strait in the absence of a qualitative change in the nature of the risk of doing so, since the charter was agreed. In making this assessment, the timing of the formation of the charterparty will be critical. For instance, there is a reasonable argument that there has been a qualitative change in the nature of the risk of proceeding through the Strait after the recent outbreak of hostilities on 13 June, and therefore it is easier for owners to justify a refusal to proceed through the Strait under a charterparty formed before 13 June than one formed afterwards. The nature of the risk would probably change further to the extent Iran takes positive steps to blockade the Strait or if the conflict between the countries spreads to the marine domain.
Note, however, that the 2013 and 2025 CONWARTIME clauses may be engaged in "whether such risk existed at the time of entering into [the charterparty] or occurred thereafter".
Note also that CONWARTIME 2025 and VOYWAR 2025 do not substantively change the nature of the reasonable judgement to be exercised by owners and masters in assessing the exposure of the vessel and crew to war risks. Therefore, it is suggested that prior case law on the clauses remains authoritative.
Safe port warranties
Most charterparties contain an express or implied provision that the vessel shall only proceed to safe ports or berths. It is well-established under English law that a port will be considered safe if “in the relevant period of time, the particular ship can reach it, use it and return from it without, in the absence of some abnormal occurrence, being exposed to danger which cannot be avoided by good navigation and seamanship”[11].
There are almost innumerable aspects to the question of port safety. The assessment extends well beyond physical threats to the vessel and her crew and includes all matters of legal and political safety, such as the risk of arbitrary or unjustified detention by port state authorities.
Owners can refuse to comply with charterers' orders to proceed to an unsafe port and may ask for alternative voyage instructions. Should charterers persist in their order for a vessel to proceed to an unsafe port, they risk repudiatory breach of contract.
The safety of a port must be assessed at the time the order is given, but the assessment is one of prospective safety[12]. That is to say, the assessment considers the safety of the port when the vessel is due to arrive at and use the port.
If time charterers give orders to proceed to a port which is safe when the order is given but becomes unsafe, for instance, before the vessel arrives, Charterers are under a secondary obligation to give alternative voyage instructions to proceed to another port which is prospectively safe[13] (at least to the extent the vessel is not trapped and is able to proceed to another port).
It is doubtful whether this secondary obligation applies in the context of voyage charters[14]. However, many voyage charterers will provide that the vessel is to proceed to the nominated port, or as near to the nominated port as she “may safely get”, thereby allowing the vessel to proceed to an alternative safe port.
Potential arguments about the safety of ports requiring transit through Hormuz can certainly be envisaged. At the time of writing, the Strait remains open, and the missile exchanges between Iran and Israel have not spread to the marine domain. Therefore, a missile strike on a vessel without any Israeli connection while transiting the Strait might still be considered an “abnormal occurrence”[15] on this basis and not render the relevant port unsafe[16].
However, Iran has publicly threatened to close the Strait, and should a vessel become trapped by a blockade imposed by Iran having proceeded through it, it might be argued that such an eventuality was expected[17].
Should hostilities spill over to the marine space or should Iran make credible threats to attack commercial vessels transiting Hormuz, there would be an increasingly cogent argument that ports in the vicinity are unsafe.
Proceeding through the Hormuz Strait
To the extent a vessel does indeed proceed through the Hormuz Strait, several consequences may follow.
Additional War Risks Premiums
Under CONWARTIME 2013, if the vessel indeed proceeds through an area exposed to war risks, charterers are obliged to "reimburse to the Owners any additional premiums required by the Owners' insurers and the costs of any additional insurances that the Owners reasonably require in connection with War Risks”[18]. Under CONWARTIME 2025, charterers are entitled to ask for proof of the owners’ reasonable endeavours to obtain appropriate cover and terms, and to challenge any excessive premium claimed[19].
Blocking and trapping
The availability of Blocking and Trapping Insurance should also be borne in mind when considering fixing a charter for trade to/from the Persian Gulf. Blocking and Trapping Insurance is a form of war risk insurance which extends over a considerable period (often in excess of 12 months) and is aimed at compensating owners in those instances in which a vessel is prevented from leaving a port or other such confined area due to obstruction or physical hindrance, including blockade or military detention/confiscation[20].
Potential remedies for owners if the vessel incurs loss/damage
Damages
To the extent a charterer's order to proceed through the Hormuz Strait is not legitimate, this is a breach of the charterparty. Such a breach will not automatically be repudiatory, but may become repudiatory to the extent charterers persist in their illegitimate orders.
If the vessel is damaged as a result of the charterers' breach of contract, owners should generally be able to recover damages to the extent their loss is caused by the breach and the loss claimed is not too remote. Owners would also be under a duty to take reasonable steps to mitigate their losses.
The implied indemnity
If the vessel is damaged as a result of complying with, for instance, a time charterer's order to proceed through the Hormuz Strait, Owners may be able to recover under the implied indemnity, e.g. in clause 8 of the NYPE 1946 form. For such an indemnity claim to succeed, however, the charterers' orders must be an "effective cause" of the owner's loss[21], and no indemnity will be recoverable in respect of risks that owners are deemed to have agreed to bear under the relevant charterparty[22].
Can the charterparty be terminated?
Frustration
If vessels are not able to transit the Strait of Hormuz safely for a prolonged period of time, the governing charterparty may be frustrated.
A charterparty, like any other contract, may become frustrated if, without fault of either party, a change of circumstances makes the performance of contractual obligations so “radically different”[23] from that which was reasonably contemplated at the execution of the contract, that it would be unjust to hold the parties to those obligations[24].
Simply because performance has become more costly or time-consuming will not in itself frustrate the contract; the changed circumstances must make performance “radically different”. Any assessment of whether the new circumstances are so radically different as to frustrate the contract will inevitably involve reference to the contract terms and to the circumstances prevailing when the contract was agreed.
Whether hostilities in the Strait of Hormuz could frustrate a charterparty will therefore depend on the specific circumstances and charterparty terms. A charterparty will not be frustrated if its terms adequately set out the consequences of the putative frustrating event. The more sophisticated war risks clauses, such as VOYWAR, make detailed stipulations for the consequences of, for instance, being unable to enter the nominated port on account of a war risk. Even if proceeding to a nominated port is impossible, the terms of the charter may permit owners to proceed to an alternative port nearby to which the vessel can safely proceed. Where these stipulations are engaged and alternative performance can be tendered without inordinate delay or expense, the charterparty is unlikely to be frustrated.
Certain types of supervening events that adversely affect performance may similarly be regarded as risks that the parties are deemed to have accepted under the contract. This may be the case when particular risks are common and well-known in a specific industry[25]. It is unlikely, however, that war risks of the kind in question will be seen as “part and parcel” of any particular trade. However, should prolonged delays become commonplace for vessels transiting Hormuz before a charterparty is concluded, this will make it harder for shipowners to argue that the contract has been frustrated by such delays, the risk of which it has arguably assumed upon agreeing the contract in those circumstances.
The extent to which, for instance, a delay in proceeding through Hormuz, or the additional time required to proceed to an alternative port would frustrate the contract would depend on a number of factors, including the length of the delay when compared with the duration of the subject charterparty (although this will not always be determinative)[26].
The financial consequences of frustration vary (potentially dramatically) between time and voyage charterparties. If a voyage charterparty is frustrated, the losses simply lie where they fall, and neither party will be entitled to claim damages from the other. The frustration of time charters, however, is governed by the Law Reform (Frustrated Contract) Act 1945, pursuant to which hire will generally cease to be payable from the date of discharge and hire paid beforehand may be repaid. However, the court or tribunal has a discretion to allow owners to retain hire paid or to receive hire which would have been payable after the discharge of the contract “if it considers it just to do so, having regard to all the circumstances of the case”[27].
Force majeure and cancellation clauses
There is no free-standing doctrine of force majeure as a matter of English law, and the extent to which parties may be excused from performance based on force majeure events will depend on the wording of any applicable force majeure provision in the governing charterparty. Such provisions are more commonplace in voyage charterparties. Whether an owner or charterer may rely on such provisions will depend on their scope, but the onus is generally on the party seeking to rely on the clause to excuse non-performance to bring themselves within the wording of the relevant provision.
The charterparty may also contain an express clause permitting cancellation of the contract e.g. if the vessel cannot be delivered under the charterparty within a certain period or in other stipulated circumstances.
Under VOYWAR 2013 and 2025, for instance, if at any time prior to the commencement of loading it appears in the reasonable judgement of the master/owner that the performance of the contract of carriage may expose the vessel to war risks, owners may give notice to charterers to cancel the charterparty[28]. However, if the charterparty provides for a range of ports, owners must first give notice to charterers requiring the nomination of another safe port within the permitted range and will be entitled to cancel if there is no nomination within 48 or 72 hours, under VOYWAR 2013 and 2025 respectively.
Five practical steps moving forward ...
- Safety First!
The safety of the vessel and its crew is paramount.
Quite apart from any applicable war risks provision, the vessel is not obliged to proceed to any place where it will face imminent peril or a risk that has not been assumed under the charterparty. - Take the time necessary to assess the risk
It should be emphasised that owners are not obliged to comply with any order from a time charterer immediately and without pause for thought: owners are entitled to a reasonable period of time to consider the relevant order given and its legitimacy[29].
The reasonable period of time afforded to owners should be used, wherever possible, to gather evidence and to conduct an appropriate voyage-specific risk assessment for the relevant vessel, so as to make as informed a decision as possible about whether it is safe to comply with instructions. - Co-operation and agreement wherever possible
Owners and charterers are under an implied duty to cooperate with each other as far as the safe and effective prosecution of the voyage is concerned[30]. In this regard, communication lines should always be kept open, and the parties should cooperate to the fullest possible extent to see if solutions can be reached to mitigate any risks to the vessel or her crew. - Notice requirements
Should owners elect to refuse orders on the strength of one of the BIMCO standard war clauses, for instance, note that many of the owners' entitlements under such provisions are contingent on the provision of minimum amounts of notice to charterers. Where these apply, it is important that such notice requirements are complied with strictly. - Additional clauses
In respect of new charterparties pursuant to which it is foreseeable that the vessel will proceed via the Strait of Hormuz, owners and charterers should consider whether an additional charterparty provision is needed to safeguard or strengthen their respective positions and avoid some of the uncertainties with the current suite of standard war risks provisions.
Skuld is very grateful to Robert Veal and Glenn Winter of Winter & Co for this article.
Skuld has formed a global working group to assist Members. If you have any questions, please contact your claims handler in your Business Unit. This article will be updated as matters progress.
[1] Article 37, UNCLOS.
[2] The period is extended to 72 hours under CONWARTIME 2025.
[3] The period is extended to 72 hours under CONWARTIME 2025.
[4] The clause also gives owners the option of cancelling the contract of carriage before loading has commenced in certain circumstances. This is considered in a separate section below.
[5] The Triton Lark [2012] 1 Lloyd's Rep. 151.
[6] The CONWARTIME 2013 and 2025 clauses omit the words "or are likely to" in an attempt to simply its application (see the corresponding BIMCO Explanatory Note), although it may be doubted whether the revised wording makes a significant practical difference.
[7] The Polar [2024] UKSC 2.
[8] The Product Star (No. 2) [1993] 1 Lloyd's Rep. 397, approved by the Supreme Court in The Polar [2024] UKSC 2.
[9] As was the case in The Product Star (No.2) [1993] 1 Lloyd's Rep. 397.
[10] See The Paiwan Wisdom [2012] 2 Lloyd's Rep 416, the clause in that case referring to Aden.
[11] The Eastern City [1958] 2 Lloyd’s Rep. 127.
[12] The Evia No. 2 [1983] 1 A.C. 736.
[13] The Evia No. 2 [1983] 1 A.C. 736.
[14] It is also unclear whether this secondary obligation is strict in nature or is one of due diligence only.
[15] ‘Abnormal’ means “well removed from the normal; out of the ordinary course and unexpected” see The Ocean Victory [2017] UKSC 35.
[16] As was the case with Massawa in The Saga Cob [1992] 2 Lloyd’s Rep 545.
[17] On the matter of port safety, in The Ocean Victory, Lord Clarke stated that ” (T)he first question is whether a reasonable shipowner in the position of the particular shipowner trading the ship for his own account and knowing the relevant facts would proceed to the nominated port. If the answer is “yes unless there is an abnormal occurrence”, the port is prospectively safe for the particular ship and the promise is fulfilled.” at para 27.
[18] Note that clause 34 of Shelltime 4 provides that owners' reimbursement of AWRP is conditional on owners obtaining from their insurers a waiver of any subrogated rights against charterers in respect of any claims by owners under their war risk insurance arising out of compliance with orders to trade to areas where there is war or a threat of war.
[19] CONWARTIME 2025, Sub-clause (d).
[20] There could be complicated questions as to what would happen in case of confiscation or loss of the vessel, particularly where it is Charterers who have paid the War Risk premium (in which regard the Strait of Hormuz has been identified as a Listed Area by the Joint Action Committee since 2018). In this regard, it has been held by the Supreme Court in The Ocean Victory [2017] 1 Lloyd’s Rep. 521 and more recently in The Polar [2024] 1 Lloyd’s Rep. 85 that it was open to parties to a contract to agree that specified loss or damage was to be covered by insurance, and that in the event of such loss or damage occurring, the parties would seek recourse against the insurers rather than their contractual counterparty. Whether or not the parties have in fact agreed such a scheme is a matter of construction of the particular contract. Usually, the mere fact that the charterers have agreed to pay for extra insurance premium would not be enough to create an insurance code or fund. By contrast, the fact that joint names insurance was taken will often suggest that such a scheme was agreed (although this is not determinative).
[21] The Kos [2012] 2 Lloyd's Rep. 292.
[22] The Island Archon [1994] 2 Lloyd's Rep. 227.
[23] Davis Contractors Ltd v Fareham Urban District Council [1956] AC 696.
[24] National Carriers Ltd v Panalpina (Northern) Ltd [1981] AC 675.
[25] See for instance The Sea Angel [2007] 2 Lloyd's Rep. 517.
[26] See, for instance, Port Line v. Ben Line [1958] 2 QB 461 and contrast The Wenjiang (No. 2) [1983] 1 Lloyd's Rep. 400.
[27] Section 1(2).
[28] Sub-clause (b) VOYWAR 2025.
[29] The Houda [1994] 2 Lloyd's Rep. 541.
[30] See Time Charters, 7th edn, 2014, [para I28].