With an estimated 1,000 internationally trading vessels stranded inside the Arabian Gulf, and many more unable to enter through the Strait of Hormuz, one of the key commercial questions now facing the shipping industry is simple: who pays for the delay?
According to Menelaus Kouzoupis, partner at maritime law firm Stephenson Harwood, the answer depends first and foremost on the type of charter involved and the contractual framework governing the voyage.
Speaking on the latest edition of the Seatrade Maritime News Podcast, Kouzoupis explained that in a time charter scenario, a vessel generally remains on hire while waiting for fresh instructions, which means the charterer would usually continue paying during the delay. Under a voyage charter, however, the position may be very different, and the financial burden could fall on the shipowner depending on the facts and the wording of the contract.
He noted that when delays stem from war risk or safety concerns, the allocation of responsibility depends heavily on the factual situation and on who carries the contractual risk under those circumstances.
Timing also matters.
Kouzoupis said that the point at which voyage orders were accepted may become a significant factor in assessing liability. Even so, he stressed that in crises such as the current conflict around Iran, most charterers and owners tend to cooperate in the immediate aftermath, prioritising the safety of the vessel and its crew over commercial disputes.
In practice, the first step is usually to do whatever is necessary to secure the ship. Discussions about liability often come later, with parties sometimes reserving their rights until the facts and legal position can be fully reviewed.
Asked what would happen if a particularly unreasonable charterer insisted that a vessel continue through the Strait of Hormuz despite the risk, Kouzoupis was clear that safety comes first.
He said the master and the owner ultimately retain the right to decide whether a voyage places the ship and crew in danger. In most cases, war risk clauses give shipowners the right to reject unsafe voyage orders and request alternative instructions leading to a safer destination.
If the charterer fails to provide those alternative orders, owners may be entitled to proceed to a safe port on their own initiative. Kouzoupis added that owners could even discharge the cargo there, with the diversion and discharge costs falling on the charterer if the latter failed to meet its obligations under the war clauses.
As the security situation in the Gulf remains unstable, these contractual distinctions are likely to become increasingly important for owners, charterers and insurers alike.
