Strait of Hormuz and The Persian Gulf: Legal implications

The insurance market has responded swiftly. Several major P&I clubs have issued notices of cancellation of certain fixed premium war risk coverages and on 3 March 2026 the Joint War Committee (JWC) expanded the listed areas around the Arabian Sea. Owners must now notify their war risk insurers in advance of any voyage into the newly listed areas and pay the required Additional War Risk Premiums (AWRP). For the approximately 3,200 vessels already in the Persian Gulf, the issued cancellation notices from the P&I insurers will take effect after the minimum notice period. War risk hull insurers may also seek to issue cancellation notices for vessels already in JWC Listed Areas (such as the Persian Gulf), meaning owners may need to secure renewed cover at significantly increased premiums or potentially remain without adequate insurance. President Trump's announcement on 3 March 2026 of certain insurance coverage and guarantees for vessels passing through the Strait remains unclear in its practical application.

In this newsletter we examine key charterparty aspects and insurance implications arising from the current situation.

Key charterparty aspects

The below examines the typical position under standard form charterparties. Standard form charterparties will, however, often be amended and include both riders and recaps which can alter the position. Each charterparty must therefore be assessed on its specific terms.

Safe port warranties

Charterparties typically include a warranty that charterers shall only order the vessel to proceed to safe ports or berths, which extends to both physical dangers and political risks. In the present circumstances, owners under time charterparties may be entitled to reject port nominations requiring vessels to transit the Strait by relying on a safe port warranty, requiring charterers to nominate an alternative safe port. However, if owners proceed to a nominated port with knowledge that it may be unsafe, they may be considered as having waived their right to claim damages for breach of the safe port warranty. Under voyage charters, the position is less clear and will depend on the specific wording of the charterparty and owners may be obliged to proceed only as near as the vessel may safely get.

War risks clauses

Most charterparties incorporate express war risks clauses, typically BIMCO's CONWARTIME (for time charterparties) or VOYWAR (for voyage charterparties). The definition of "war risks" under CONWARTIME is broad and expressly encompasses blockades, entitling owners to refuse orders to proceed to or through any area where the vessel, crew or cargo may be exposed to war risks. If the vessel refuses to proceed, owners may request an alternative nomination; if none is received within the stipulated period, owners may discharge at any safe port of their choosing at charterers' expense. The CONWARTIME clause does not, however, permit either party to terminate the charterparty.

Critically, charterers are obliged to reimburse owners for AWRP and crew bonuses paid due to war risk exposure. This is a point which can quickly become contagious between owners and charterers as AWRP is expected to reach very high levels for vessels entering the Strait.

Where no war risk clause has been agreed, time charterparties frequently allocate insurance costs to owners with a right of recovery for additional expenses in excluded zones, whilst under voyage charterparties owners typically bear the AWRP if they agree to proceed to the nominated port.

Laytime, demurrage and off-hire

With several key ports suspending operations, vessels in the middle of cargo operations face significant challenges. The general rule is "once on demurrage, always on demurrage": once laytime is exceeded, demurrage runs continuously until cargo operations are complete. Whether laytime exceptions apply to excuse delays will depend on the specific wording of each charterparty. Under time charterparties, delay due to war or port closures will generally not put the vessel off-hire unless specifically provided for, entailing significant ongoing hire exposure for charterers.

Force majeure and frustration/termination

The starting point under Norwegian law is that contracts shall be performed in accordance with their terms. However, unlike English law, Norwegian law recognises a general doctrine of force majeure by operation of law even if there is no force majeure clause in the charterparty. Under this doctrine, a party may be excused from performing if performance is prevented by an unforeseeable event outside the parties' control (a sudden outbreak of a war being a typical example), provided the party has taken all reasonable steps to overcome the hindrance. It is not sufficient that performance has become more difficult or more expensive; the event must undermine the fundamental premises of the contract.

Norwegian law also recognises the doctrine of frustration and there is a general legal provision (section 36 of the Contracts Act) providing for the revision of contracts if requiring performance of the contract would be considered unreasonable in the circumstances. The Norwegian Maritime Code also contains specific provisions excusing performance of charterparties due to war risks. However, the threshold for invoking these doctrines in commercial contracts remains very high.

Fluctuation in charterparty freight and rates

The current crisis has caused significant volatility in freight and charter rates. Parties locked into commercially unfavourable contracts may seek grounds for termination and any non-compliance may be seized upon by a counterparty looking for an exit. Strict compliance with all terms and thorough contemporaneous documentation are therefore essential.

Insurance implications

Ordinary marine insurances provide the usual cover within the Persian Gulf for marine perils and risks, but war perils are excluded under both H&M (Nordic Plan Clause 2-8(1)(a)) and P&I (e.g. Gard Rule 58). Casualties not related to the war will thus be covered as normal; however, if a war peril strikes the vessel, owners must resort to their war risk insurance.

War risk cover

A marine war risk insurance under Nordic Plan Chapter 15 normally covers H&M, loss of hire and P&I liabilities. There is currently no war between major powers within Clause 15-5 that would automatically terminate cover. However, a war risk insurer may terminate cover by giving 7 days' notice under Clause 15-8, though it will in such case endeavour to propose continuation on the best available terms. With that said war policies may incorporate different notice periods for cancellation of cover in case of war.

Blocking and trapping

Vessels inside the Persian Gulf but not directly struck by use of arms or other war implements may still be subject to blocking and trapping where they are "prevented from leaving a port or a similar limited area" which is covered under Clause 15-12. The Commentary to this Clause states that in relation to the Strait, the provision must be given a wide interpretation. Accordingly, if an oil tanker is unable to exit the Strait during a conflict, the provision will apply. However, a total loss can only be claimed after 12 months of such blocking. Importantly, prevention from entering the Persian Gulf through the Strait will not constitute blocking and trapping, this only applies to vessels prevented from leaving a similar area. It should be noted, however, that there are currently vessels sailing through the Strait so each case must be assessed individually.

War cover for loss of hire

The same concept of blocking and trapping applies to war risk cover for loss of hire under Clause 15-16(2) which may be very relevant for the vessels currently in the Persian Gulf as the situation stands today. However, loss of hire cover requires that the assured sustains a loss of income due to the vessel being wholly or partly deprived of income-earning activity because of the blocking (Clauses 15-16(1) and 16-1(1)). Accordingly, if charterers remain obliged to pay hire or demurrage under the charterparty, there is no loss of income to be claimed from the war risk insurer. It should also be noted that war policies may contain different deductible periods for loss of hire cover. Again, each case must be assessed individually to determine cover.

Practical recommendations

The closure of the Strait of Hormuz presents significant legal and commercial challenges for shipowners, charterers and insurers. The situation remains fluid, and parties should be prepared for both short-term disruption and the possibility of a protracted closure. In light of the situation we recommend that parties:

• Review existing charterparties to identify war risk clauses, safe port warranties, force majeure provisions and cancellation rights
• Check whether terms are back-to-back in the charterparty chain to ensure costs are not unintentionally accumulated with an unintended party
• Perform careful risk assessments before responding to orders
• Ensure all charterparty requirements are complied with and secure documentation of compliance or non-compliance
• Notify war risk insurers promptly and comply with all advice and instructions
• Maintain close contact with charterers to ensure continued payment of hire, demurrage and additional war risk premiums as applicable
• Report any material developments to war risk insurers without delay

Our shipping and marine insurance teams have extensive experience advising on charterparty disputes, war risks and insurance claims. Please do not hesitate to contact any of the persons listed below if you require assistance.