Red Sea: To go or not to go?

Red Sea To go or not to go | BDM Blog | BDM Law

The world is adjusting to the new reality of ships refusing to run the risk of being targeted by missiles launched by Houthi rebels.

Over 50 ships have now been targeted with some seriously damaged. So far, no crew have been killed or injured. However, the risks remain. It’s possibly only a matter of time before seafarers are killed or injured and/or a major loss/ pollution occurs.

The ITF recently issued a statement that seafarers have a right to refuse to sail on ships ordered to sail through the Red Sea. They must be given at least seven days prior notice of any intention to sail through the Red Sea so that they can decide whether or not to leave the ship at the ship owners’ cost. That of itself is causing problems as ships have to deviate to land reluctant crew members and take on new crew. Crew bonuses for Red Sea/ Suez transits are now running at well over double normal wages.

P&I Clubs have also faced problems due to some reinsurers refusing to write war risk cover for Red Sea transits. That has put insurance cover for crew liabilities on hold. Some Clubs have responded by agreeing to cover this themselves. In most cases, additional insurance cover can be arranged by the Club, usually at charterers’ cost, for 7 day transits but often with warranties that there will be no Israeli interest nor any carriage of goods or materials to Israel. The sense is that anything owned by Israel and/or going to Israel is almost uninsurable.

The latest strike on Lebanese operated Belize flagged Rubymar demonstrates that ships can be targeted for the most tenuous reasons. The motive for the strike was a perceived British connection due to the registered owner operating from an address in Southampton! It seems any link to a country engaged in the consortium opposed to the Houthi’s and/or perceived to be supportive of Israel’s campaign in Gaza can put a target on the ship and crew. Even those ships flagged elsewhere are at risk. Many ships flagged under Marshall Islands flag are potentially at risk merely because the Marshall Island ship registry is in Washington!

The legal question on whether to go through the Red Sea has already been covered in our previous blogs. We are now dealing with many cases where the Master has refused to transit on the back of CONWARTIME. His decision is being questioned by angry Charterers who are pointing to the fact that other ships are going through with insurance cover in place (however expensive that might be) and so the decision not to go is unreasonable. We expect that some of these cases will end up before arbitrators who will have to consider the circumstances in each situation.

The legal problems faced by clients in late December and January have died down as voyages have been completed. Many ship owners and operators are now reconsidering to what extent they want to run the risk of going through the Red Sea before charters are concluded. However, some ships are still operating under long term charters. The legal ramifications of repeated refusals to go through the Red Sea are potentially significant if a Tribunal decides that the Master acted unreasonably. For that reason, ship owners and operators under long term charters need to approach each voyage order carefully and examine the facts. The difference between going through and not going through can be up to US$1M. That is something that charterers are unlikely to give up easily.

Finally, there is a lot of discussion now about what can be done to reduce the risks. One recalls that the Somali hijacking issue was eventually dealt with via the use of armed guards and anti-piracy measures. The risks of missile attack are more difficult to address. Some owners and operators are seeking to remove any links to states that might be perceived as pro-Israel and/or anti-Houthi. However, it is difficult to do that in the world of social media when Houthi commanders can look the ship up on a variety of online apps and/or Google it. Chances are there will be something somewhere online to link the ship to a particular country or type of investor and that may be all that is needed to persuade the Houthi command to launch a missile.

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Nick Burgess
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