Strait of Hormuz: Navigating risks amidst a fragile ceasefire

Posted: 30/06/2025

At the time of writing, a fragile ceasefire appears to be holding between Israel and Iran. However, the geopolitical situation remains volatile, and the potential for renewed hostilities continues to pose significant legal, commercial and operational risks for vessels transiting the Strait of Hormuz.

This article outlines key risk considerations for shipowners and charterers, drawing on recent case law and standard charterparty provisions under English law. It also offers practical steps for managing legal exposure in what remains one of the world’s most strategically sensitive waterways.

Strategic importance and emerging threats

The Strait of Hormuz remains one of the world’s most critical maritime chokepoints, facilitating some 20% of global oil shipments. While the ceasefire has temporarily reduced the threat of immediate escalation, the underlying risks remain acute. Recent tensions have prompted maritime authorities to issue guidance urging caution, and some states have advised operators to avoid the region altogether. Importantly, these risks are not confined to Iran or Israel-bound vessels. Ships trading to the UAE, Qatar, Bahrain, Iraq, and Saudi Arabia may also be affected.

Although the ceasefire has temporarily eased some of these concerns, the threat of closure or military escalation remains a pressing issue for shipowners and charterers.

Deviation and charterparty rights

Under the Hague-Visby Rules, carriers are permitted to deviate from their agreed voyage path to safeguard life or property at sea. Most charterparties also include liberty clauses allowing deviation under specific circumstances. However, such deviation must be reasonable and proportionate to the threat. In the absence of explicit clauses, deviation may still be justified under common law principles, but the burden of proof lies with the carrier.

It is important to note that deviation rights in charterparties may not automatically extend to bills of lading, potentially exposing carriers to claims from cargo interests. The case of The Hill Harmony [2001] 1 Lloyd’s Rep 147 illustrates the importance of adhering to charterparty instructions unless deviation is clearly justified.

Force majeure and frustration

Force majeure clauses may allow parties to suspend or terminate obligations due to extraordinary events. However, under English law, force majeure is not implied and must be expressly included in the contract. In the absence of such a clause, parties may only rely on the doctrine of frustration, which applies when an unforeseen event renders contractual performance impossible or radically different to that originally contemplated.

In the absence of a force majeure clause, parties may argue frustration if performance becomes impossible or radically different. However, the threshold for frustration is high. In Davis Contractors Ltd v Fareham UDC [1956] AC 696, the court held that mere inconvenience or increased expense does not constitute frustration. Therefore, a closure of the Strait or active conflict would need to fundamentally alter the nature of the contract to qualify.

Safe port obligations

Charterers are generally required to nominate prospectively safe ports. A port is considered unsafe if, at the time of nomination, it exposes the vessel to danger that cannot be avoided by good navigation and seamanship. The Eastern City [1958] 2 Lloyd’s Rep 127 remains the leading authority on this principle.

If a port becomes unsafe, owners under time charters may request a new nomination. Under voyage charters, the vessel is often required to proceed as close as safely possible to the nominated port. The foreseeability of conflict plays a key role in determining whether the port remains safe.

In the current climate, ports such as Jebel Ali, Dammam, or Ras Laffan may not be directly unsafe, but the approaches to them notably the Strait of Hormuz may be subject to elevated risks. However, a port is only considered unsafe if those risks are sufficiently imminent and substantial.

War risk clauses and insurance

Standard war risk clauses, such as CONWARTIME (for time charters) and VOYWAR (for voyage charters), allow owners to refuse orders to enter high-risk areas if, in the Master’s reasonable judgment, the vessel, crew, or cargo may be exposed to war risks. The Triton Lark [2012] EWHC 70 (Comm) clarified that this judgment must be based on objective evidence and a real likelihood of danger. Moreover, the Supreme Court in The Polar [2024] UKSC 2 emphasized that if the risk was already known and accepted at the time of the charterparty, refusal to comply with orders requires a material increase in risk not just a continuation of existing conditions.

These clauses may also affect freight entitlements and insurance responsibilities. Additional premiums are typically required for transits through conflict zones. Charterparties should clearly allocate responsibility for these costs to avoid disputes.

Practical risk management

To protect legal and commercial interests, and mitigate exposure, shipowners and charterers should consider the following:

• review charterparty terms, especially clauses on deviation, safe ports, and war risks;
• update force majeure clauses to ensure they reflect the current risks and provide workable remedies;
• confirm insurance coverage for transits through high-risk areas (keep an open dialogue with P&I club/ brokers);
• access and monitor whether geopolitical developments increase risk levels and whether they have materially changed since the time of fixture;
• undertake risk assessments and document decisions made by the master; and
• communicate early if concerns arise about routing or port safety, parties should discuss alternatives before refusing orders.

Conclusion: preparing for uncertainty

While the current ceasefire offers a temporary reprieve, risk in the region remains live and fluid. The legal and commercial uncertainties posed by renewed conflict or even the threat of it demand careful management.

The legal and operational risks associated with the Strait of Hormuz are far from resolved. Stakeholders must remain vigilant, ensure contractual clarity, and adopt proactive risk management strategies. Legal preparedness is essential to navigate the uncertainties that may arise should the ceasefire collapse.

This article was co-written by Laura Stigaite, trainee solicitor in the marine, trade and aviation team.

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