Navigation has started to catch its breath in one of the world's most critical waterways, as international maritime data showed the departure of the first liquefied natural gas (LNG) carrier from the Strait of Hormuz after about 20 days of tensions and closures. This event, which included the resumption of voyages by carriers such as "Al Areesh" owned by QatarEnergy, opens the door wide to fundamental questions about commercial security and the legal obligations of companies operating in the import and export sector.
However, beyond the language of numbers and maritime data, what are the legal repercussions of these recurring crises in the Red Sea and the Strait of Hormuz on your business? And how can companies protect their interests amidst these disruptions?
Activating the "Force Majeure" Clause in Commercial Contracts
With the disruption of ship traffic and delays in shipments worth millions of dollars, many companies find themselves unable to meet their contractual obligations on time.
The Legal Challenge: Does the closure of the Strait of Hormuz or security threats in the Bab-el-Mandeb constitute a "Force Majeure" that exempts parties from delay penalties?
The Solution: This depends entirely on how the "Force Majeure" clause is drafted in your contracts. At our firm, we always recommend regular reviews of commercial contracts to ensure they explicitly cover supply chain disruptions, armed conflicts, and sovereign decisions that hinder international shipping.
2. Marine Insurance Disputes and War Risks
Reports have indicated a rise in "dark sailing" (turning off tracking devices) by ships to avoid being targeted following the Houthis' announcement of a naval blockade, as well as previous attacks on carriers like "Al Rekayyat."
The Legal Impact: Turning off Automatic Identification Systems (AIS) may be considered a breach of certain traditional marine insurance policies.
Insurance Coverage: Navigating through conflict zones requires a meticulous legal review of "War Risk Insurance" policies. If your shipment is damaged, having a legal consultant who is an expert in maritime law ensures effective negotiation with insurance companies and the disbursement of rightful compensation.
3. Rerouting and Transportation Costs (Change of Circumstances)
Rerouting ships or having them stalled for long days adds exorbitant costs to transport operations (freight rates).
The Legal Aspect: Who bears these additional costs? The buyer or the seller? This dispute is governed by the type of International Commercial Terms (Incoterms) agreed upon in the contract (such as FOB, CIF, EXW). We provide specialized consultations to accurately determine legal responsibilities and avoid open-ended disputes between suppliers and importers.
💡 Legal Advice: Do not wait for a crisis to happen. Geopolitical crises in corridors like the Strait of Hormuz and the Bab-el-Mandeb have become frequent. Update your company's supply and shipping contracts today to include clear mechanisms for dispute resolution and risk allocation.
How Can Our Law Firm Help You?
As a leading law firm, we fully understand the magnitude of the pressures faced by commercial businesses and the shipping industry amidst the fluctuations in the Middle East. We offer the following services:
Drafting and reviewing international commercial contracts to ensure maximum protection against supply chain fluctuations.
Legal representation in maritime disputes and insurance cases.
Immediate legal consultations regarding the application of Force Majeure and Incoterms.
Do not let international navigation volatility blow away your profits. Contact our team of legal experts today to evaluate your commercial contracts and ensure your business runs securely.
