How to act in times of war?

Following the February 28 US-Israeli strikes on Teheran, the war has shocked the whole Gulf region with continuous news of strikes and casualties. The implications are far-reaching with potential consequences both for shipowners and charterers with vessels present in the Hormuz, as well as for anyone with a trade interest in the region. The situation is raising complex legal questions for the shipping industry. We are monitoring the situation closely and listing some key considerations for all shipping actors to keep top of mind as events continue to unfold.

Are you a shipowner, charterer or operator?

• Check your insurance cover. Even if all vessels hold insurance, the extent and scope of cover may cause issues during times of war. Several marine insurers have already given suspension notices that war risk cover will soon be suspended in Iranian waters and the Persian Gulf. Whether individual cover is terminated depends on the location of the vessel as well as the applicable cancellation clauses. Anyone with a direct or indirect relationship to a vessel in the Persian Gulf or nearby should closely monitor its coverage.
• Charterparty considerations. For owners, charterers or operators, the outbreak of war may trigger complex charterparty questions regarding risk allocation and costs. Key issues include war risk clauses, safe port obligations, cancellation rights and deviation. Ports previously considered safe may no longer qualify as such, and charterers must act promptly to communicate alternative discharge preferences when original routes become blocked. With deviations potentially becoming routine due to heightened risks, communication among all stakeholders is more important than ever. Parties should carefully review their charterparty terms to ensure that delays and associated risks are properly allocated, particularly as rarely invoked clauses may suddenly be of significance.
• Expect delays. In the current situation, delays are unavoidable. Even prior to the war’s outbreak, there have been considerable surges in GPS and AIS jamming and spoofing incidents in the wider Gulf region. This variety of ongoing risks makes delays inevitable. From a contractual perspective, notification obligations and potential cancellation obligations should be considered.

Get it right. The ongoing situation is complex. While the issues discussed above remain important, we anticipate that force majeure questions and additional contractual concerns will arise both for shipping actors and, more broadly, for any party with business interests in the Gulf region. Should you require assistance, Setterwalls’ shipping and transportation team stands ready to help.