Impacts of the Middle East crisis on charterparty disputes

The 2026 US-Israel-Iran conflict  has profoundly disrupted Persian Gulf shipping. Traffic through this critical chokepoint, which normally handles around a quarter of the global seaborne oil trade, plummeted to less than 10% of normal volumes, with vessels facing attacks, AIS/GPS jamming, and selective passage demands. This has sparked a surge in disputes over performance, risk allocation, and termination rights. In seeking to determine liability for the costs of delay, or the right to terminate, the War Risks Clause, the Safe Port provisions, and the Force Majeure provisions are likely to be of key importance.

War Risks Clauses

BIMCO’s standard form CONWARTIME (time charters) or VOYWAR (voyage charters) clauses are widely incorporated in tanker and bulk charterparty forms, and form the basis of the majority of War Risk provision in English law charterparties. These define “war risks” broadly to include actual, threatened, or reported hostilities, warlike operations, blockades, or malicious damage. In the master’s or owners’ reasonable judgment, if the vessel, crew, or cargo faces danger in an area like the Strait or Persian Gulf ports, owners may refuse to proceed, divert, or require charterers to provide alternative voyage orders. Charterers must then nominate new destinations, and owners can recover whatever additional war risk insurance premiums are required to obtain cover. Iran’s response to the military actions taken by the US, which have included drone and missile strikes on port facilities and shipping within the Persian Gulf, are likely to have rendered the entire Persian Gulf region a high risk area, triggering the provisions of the war risks clause.

Safe Port Warranties

Safe port warranties are likely also to be relevant. Charterers typically warrant that nominated ports remain safe for arrival, stay, and departure. A port will not be safe unless a vessel can reach, use and leave it without being exposed to a danger that cannot be avoided by good seamanship. This requires an enquiry into the conditions at the port and the systems put in place to keep ships safe. Political risks, including the risk of war, can also result in a port being rendered unsafe. Charterers’ duty arises at the time of giving the order, so that if the port is safe (or is expected to be safe upon arrival) at the time the order is given, charterers will not be in breach if it later becomes unsafe, although they may then be under an obligation to give alternative orders that are safe. Owners who proceed with charterers’ voyage instructions despite being aware of the existing risks may be held to have waived their right later to refuse to reject them. As with War Risk provisions, the current state of risk of attack in the Gulf ports is likely to render them at least arguable unsafe at this time.

Force Majeure and Frustration

Force majeure clauses, absent a general English law doctrine, depend entirely on the express wording of the clause. The standard BIMCO Force Majeure clause includes “war”, “hostilities”, “warlike operations”, “laying of mines” and “act of government” as force majeure events, but parties seeking to rely on the clause must prove causation (i.e. that the event prevented or hindered performance), non-foreseeability at contracting, and reasonable mitigation efforts. Tribunals will also scrutinise whether performance would actually have occurred “but for” the conflict, following Classic Maritime v Limbungan (2019). Selective Hormuz passage fees or rerouting have fuelled arguments over hindrance versus impracticability. To the extent, therefore, that a party can show that its non-performance of a charter was caused by a force majeure event, it will not be liable for the losses that flow from that breach.

Frustration remains a high bar. The doctrine discharges contracts only if performance becomes impossible or radically different from what was contemplated (Davis Contractors v Fareham, 1956). War risk clauses often allocate such risks expressly, precluding frustration; temporary delays or Cape reroutes (as was seen in the closure of the Suez canal) typically fail the test. Prolonged blockage might succeed if it destroys the venture’s commercial purpose, but English courts remain reluctant to invoke frustration, favouring contractual mechanisms, which are more likely to be appropriate.

Additional flashpoints

Other issues that have arisen include off-hire claims, demurrage from delays, questions over the right to deviate, and sanctions compliance (following new UK/EU measures targeting Iranian entities). Insurance disputes over war risk exclusions and premium pass-throughs have proliferated.

Comment

In practice, owners and charterers must review specific recaps and clauses promptly, document risk assessments, and ensure that requirements for formal notices are met. The episode underscores English law’s emphasis on precise drafting and risk allocation, and is likely to prompt new provisions addressing jamming, selective blockades, and hybrid threats.