Ship owners and operators remain in a dilemma over what actions to take in the face of increased pressure from Charterers and Shippers increasingly desperate to resume oil and LNG flows out of the Persian Gulf.
There are increasing calls for a regularized toll option on the basis that even with a US-Iran deal the latter seems unlikely to want to give up control of the Straits as they now see its strategic significance. This option is supported by many ship owners including Evangelos Marinakis who recently raised it at Posidonia. The rationale is that tolls would be better than the current expensive insurance options with premiums of up to 5% of value to transit the Straits, some 4000 times higher than the norm. The toll option would also substantially reduce the risk to the lives of seafarers which is something that can’t be covered by insurance and which is of grave concern to ship owners.
The sticking point of course is that the US has publicly announced that any ship owner who pays a toll will face sanctions. Even where the toll is paid by charterers or cargo owners the party exposed to sanctions is the ship owner. We don’t know if this will change as part of a US-Iran deal but the toll option of course means substantial cash going to Iran which they can use to rebuild and/or rearm!
The last few weeks have seen an increasing trickle of ships exiting the Straits. In many cases, this is down to diplomatic channels (PRC and Indian vessels have a better relationship with Iran), although one can never rule out that payments may have been made behind the scenes. Other vessels have chosen to go dark and run the gauntlet – in effect taking the risk of being struck by Iranian drones or missiles – presumably on the basis that the insurance will pick up the costs if that happens and the crew will have been suitably rewarded for putting their lives on the line. Our clients tell us that many of their crew are desperate to get out of the Gulf. However, running the risk puts ship owners at risk if anything goes wrong.
On the legal side, we continue to advise clients on their options but things are relatively quiet due to the current paralysis. However, claims are mounting and the threat of frustration of charters and contracts grows day by day. We anticipate that the aftermath could give rise to substantial claims which will take some time to resolve.
Nick Burgess
Partner
