Strait of Hormuz closure

In our earlier article of June 2025 (Straits of Hormuz Closure: Shipping Legal Guide | Hill Dickinson), we examined in detail the legal and commercial risks associated with what was then only a threatened disruption to the Strait of Hormuz.

That previously theoretical risk has now begun to materialise – and fast – as the global shipping industry braces again for crisis, amid reports that Iran has acted on a long-threatened lever of escalation: the closure of the Strait of Hormuz.

The Strait of Hormuz remains one of the world’s most critical arteries for global energy trade, and any interruption of oil and gas shipments through this chokepoint unavoidably sends shockwaves through global supply chains and causes disruption in the shipping industry.

Current position as of 2 March 2026 (morning London time)

On Saturday 28 February 2026, vessels operating in the region reportedly received VHF radio warnings from Iran’s Islamic Revolutionary Guard Corps (IRGC) that navigation through the Strait of Hormuz is forbidden and that no vessel is allowed to pass “till further notice”.

US naval authorities issued an alert (2026-001A-Strait of Hormuz, Persian Gulf, Gulf of Oman, and Arabian Sea-Military Operations and Potential Retaliatory Strikes by Iranian Forces | MARAD) advising commercial vessels to keep clear of the Strait, Persian Gulf, Gulf of Oman and Arabian Sea, wherever possible, citing significant military activity in these waters.

The UK Maritime Trade Operations also issued an advisory (UKMTO Advisory) clarifying that VHF broadcasts indicating closure of the Strait are not legally binding and do not constitute a lawful restriction on navigation under international law and UNCLOS, recommending that vessels should “transit with caution”.

Since then and as at the time of writing, however, multiple attacks on vessels have been reported across the wider Gulf region, intensifying concerns over security in the area. For example, the MT Skylight was struck by a projectile off Muscat, Oman on 28 February and the managers of the MKD Vyom, V Ships Asia, confirmed that one crew member onboard the vessel had been killed during an attack on 1 March. These are but two examples.

While under international law and UNCLOS, Iran cannot legally hamper transit passage through an international strait and notwithstanding the practical challenges of Iran enforcing a complete, physical closure of the Strait given the US naval presence in the area, the practical effects of a de facto closure are already being felt throughout the industry. With 170 container vessels reportedly trapped inside the Persian Gulf and 150 oil tankers waiting outside, many vessels are diverting and operators are urgently reassessing exposure.

Against this backdrop, we revisit the issues explored in our earlier article and examine how they now apply to the current, rapidly unfolding situation.

Deviation

If the charterparty contains a liberty clause that entitles the carrier to alter the contractual route, say due to war or other safety risks, then no question of deviation arises as the liberties conferred by the clause would redefine the contractual route.

In the absence of an express liberty clause, there is an implied right – and indeed an obligation – to deviate for the safety of the Vessel, crew and cargo. Article IV, Rule 4 of the Hague/Hague-Visby Rules, further entitles a carrier to make any reasonable deviation to save life or property at sea.

Whether a deviation is “reasonable” will ultimately be a question of fact. However, the courts will take into account various factors in addition to the charterparty terms, such as the scope and proportionality of the deviation.

While no formal shutdown order has been issued at the time of writing, in practice, transit through Hormuz appears currently to be effectively blocked given the increased military activity. In addition, unequivocal threats issued by the Iranian military forces together with the escalating attacks in the wider Gulf - already resulting in casualties - further support the view that attempting to transit the Strait at this time would expose a vessel to significant risk, rendering a deviation reasonable on safety grounds.

Caution, however, must always be exercised when considering a deviation, as an unreasonable deviation may deprive the carrier of contractual defences and limitation rights and may also jeopardise insurance cover. It is also critical to remember that, while an owner may have a contractual right to deviate under the charterparty, that right may not extend to the bill of lading contract. Therefore, we strongly recommend there is continuous cooperation between all parties associated with the voyage, including charterers and cargo interests. A suitable solution should be found to reduce losses to all parties.

The current situation evolves by the hour and demands a rigorous and continuous factual assessment. While transit through the Strait may not be feasible at present, the situation could shift very quickly. Owners must document their reasoning carefully to mitigate any exposure arising from any allegations of unreasonable deviation.

Force Majeure/Frustration

Unlike the doctrine of frustration, force majeure does not apply by operation of law and should be expressly incorporated into the contract, in order to be invoked. As mentioned in our earlier article, force majeure clauses are interpreted strictly and will be construed on their own terms.

By contrast, frustration arises where a supervening event, beyond the control of the contracting parties, fundamentally alters the nature of the performance, rendering it impossible, illegal or radically different from what was originally contemplated.

Although the doctrine does not strictly require the supervening event to have been unforeseen, the fact that it was unforeseen may make it easier to demonstrate that its occurrence has so radically changed the nature of the performance that the contract can no longer be fulfilled as intended. It would be a question of fact what risks were known and foreseeable at the time that the charterparty was entered into.

Delay of sufficient duration may frustrate the contract, but the likely length of the delay may not be apparent at the time when the event occurs. It is indeed too early to assess at present whether the hostilities in the Gulf area will last days, weeks or months.

Where it is impossible to determine at the outset whether the delay will be long enough to frustrate the contract, the parties must 'wait and see' before treating the contract as discharged.

However, where the contract makes full provision for such a supervening event - whether through a war risks clause or another relevant provision - the parties will generally be held to the contractual allocation of risk, and the doctrine of frustration will not apply.

We currently anticipate that in the immediate future it will be difficult, if not impossible, to establish effective channels of communication with various entities operating in Iran and other affected countries. Local ports (designated for either loading or discharge) may also be physically unreachable and/or uncontactable.

Safe port

Charterparties typically include warranties ensuring that a port is prospectively safe at the time of nomination. A port would be deemed unsafe if the vessel would be exposed to dangers which cannot be avoided by good navigation and seamanship.

Under the leading authority The Eastern City, if the only approach to a port is blocked by military force or credible threats of seizure or missile attacks, then the port may be considered unsafe.

In light of the above, we would consider that owners under time charterparties may be entitled to reject port nominations that would require the vessels to imminently transit the Strait, while, under voyage charters, owners may instead be obliged to proceed only “as near as the vessel may safely get”.

War Risks clauses

We consider that, subject to specific terms of the relevant charterparties, the current situation in the Gulf would likely entitle owners, where unamended BIMCO War Risk Clauses (CONWARTIME and VOYWAR 2025) are incorporated, to invoke those clauses and refuse orders requiring the vessel to proceed to or remain in an area where, in the Master’s reasonable judgement, the vessel may be exposed to war risks. Under the revised CONWARTIME wording, this right applies regardless of whether the relevant risk existed when the charterparty was concluded or arose only thereafter.

Unlike the 2013 wordings, the 2025 CONWARTIME and VOYWAR clauses expressly require owners to demonstrate that they have used “reasonable endeavours” to obtain competitive insurance terms, thereby giving charterers scope to challenge any excessive additional premiums claimed.

This requirement is particularly significant in the present climate, as several insurers have already indicated their intention to cancel existing policies - or have already issued cancellation notices - with a view to reissuing cover at substantially higher war risk rates, while others may become increasingly reluctant to write such risks at all. “Blocking and Trapping” cover, which protects vessels that have become physically unable to leave the Persian Gulf, is also likely to become particularly relevant.

Given the anticipated increase in premiums and tightening of available cover, owners should ensure they collate robust evidence demonstrating that they exercised reasonable efforts to obtain cover on reasonable terms. Contracting parties should likewise review their charterparty provisions carefully to determine the extent to which such increased premiums are recoverable from charterers.

Other considerations

Major shipping lines have already announced that they are rerouting vessels from Asia to Europe and the US around the Cape of Good Hope – a diversion that would add up to two weeks to transit times and exert upward pressure on freight rates.

These significantly longer distances, coupled with higher speeds often required to meet contractual delivery commitments, are likely to also increase carbon intensity. For example, under the BIMCO CII Operations Clause 2022, the Master is entitled to deviate from the most fuel-efficient route if he has reasonable grounds to believe that such a route could compromise the safe navigation of the vessel or the safety of the crew. Given the increased likelihood of such safety driven deviations, parties should review their contracts to determine whether indemnities or other protections are needed for any negative impact on a vessel’s CII rating.

Comment

The situation continues to evolve at speed. With the severity of the implications depending largely on the duration of any closure, prevailing uncertainty is significantly increasing the parties’ overall risk exposure.

Hill Dickinson is already advising a growing number of clients on the legal, contractual and insurance implications arising from this rapidly evolving situation. As the picture continues to change by the hour, our specialist teams are closely monitoring developments and will issue further updates as the situation unfolds.