How Has the Hormuz Crisis Affected Charterparties?

Since the Middle East conflict began on 28 February 2026, three questions have become urgent for ships trading to the Persian Gulf: will the crew be put at risk, will insurance respond, and does the charterparty allow the voyage to be refused?

Traffic data show the scale of the disruption. According to Windward’s AIS data, Hormuz transits fell from around 3,750 in February 2026 to 450 in March and remained roughly 83% below the pre-crisis level in June. According to market reports, additional war risk premiums rose from about 0.25% of hull value before the conflict to between 3% and 10% at various points in 2026.

Law firms and P&I clubs have reported a rapid increase in charter disputes during this period. War risks clauses, safe port warranties, force majeure and frustration are at the centre of the debate.

Why Does the War Risks Clause Come Before Force Majeure?

In shipping, the allocation of war and conflict risk between the parties is usually made not through general force majeure provisions but through war risks clauses incorporated into the charterparty and the safe port warranty. These clauses are largely shaped by BIMCO standard wording.

The practical consequence is important: where the contract regulates a particular risk and its consequences in detail, it becomes difficult for the parties to rely on general force majeure or frustration. The dispute usually focuses on whether the owners’ decision to avoid a particular route was reasonable under the terms of the clause.

How Do the BIMCO 2025 Clauses Define War Risks?

CONWARTIME 2025 and VOYWAR 2025 define “War Risks” broadly. The definition covers any actual, threatened or reported war, act of war, civil war, hostilities, acts of terrorism and blockades. It is sufficient that such events are carried out by any person or organisation.

The key element of the definition is that these events must be such that, in the reasonable judgement of the master or the owners, they may be dangerous to the vessel, cargo, crew or other persons on board. The risk need not have materialised; a reasonable assessment is enough.

The inclusion of “reported” events is important for Hormuz. Official warnings, insurers’ listings and reliable intelligence reports bring into the assessment the risk of attacks that have not yet occurred.

When Can Owners Refuse an Order to Proceed?

The clauses give owners the right to refuse an order to proceed to a port or area where the vessel may be exposed to war risks. However, English court practice limits this right by three criteria:

1. The judgement must be reasonable and made in good faith

The court does not substitute its own assessment for that of the owners. It does, however, review whether the decision was made honestly, taking into account all relevant information, and not arbitrarily. This principle was established in The Product Star (No 2). The warnings, reports and internal correspondence on which the decision is based should therefore be recorded.

2. The risk must have changed qualitatively since the charter

Owners cannot later rely on a risk they knowingly accepted when signing the charter as a ground for refusal. There must have been a qualitative change in the risk since the date of the charterparty. According to Skuld, owners are generally not permitted to refuse orders to trade in areas in respect of which they have accepted the risk under the charter, unless they can establish such a qualitative change.

This criterion creates a major difference between charters concluded before 28 February 2026 and those concluded after that date. In a charter signed while the conflict was ongoing, owners are likely to be regarded as having accepted the existing risk. Refusal would then require a further escalation of the risk, for example an effective blockade of the Strait.

3. “Strait of Hormuz always allowed” provisions

Some charters contain special wording such as “Strait of Hormuz always allowed”. Such a provision prima facie makes it even harder for owners to refuse to transit the Strait in the absence of a qualitative change in the risk.

What Are the Differences Between CONWARTIME and VOYWAR 2025 and the 2013 Versions?

BIMCO revised its war risks clauses in 2025. The NorthStandard P&I Club stresses that the 2025 wording is slightly different from the 2013 versions and that, even where BIMCO clauses are incorporated, which revision applies must be checked separately. According to Adams & Moore, the changes are incremental rather than fundamental:

The same commentary also notes the criticism that the 2025 wording does not take into account new threats such as AIS spoofing or the UK Supreme Court’s decision in The Polar.

Who Bears Additional War Risk Premiums and Other Costs?

Under both CONWARTIME 2025 and VOYWAR 2025, insurance costs such as additional war risk premiums arising from the vessel entering a risk area are for the charterers’ account. However, as NorthStandard emphasises, charterers are only required to pay costs actually incurred.

Where premiums can reach 3–10% of hull value, this rule determines the allocation of very large sums. Charterers should therefore ask for documents showing that the premium was actually paid, that it was reasonable and, under the 2025 wording, that owners used reasonable endeavours to obtain appropriate cover.

The Polar: insurance is not always the only remedy

In Herculito Maritime v Gunvor (The Polar) [2024], the UK Supreme Court considered a general average claim arising from the seizure of a vessel by pirates. The Court held that the charterers’ payment of the additional premium did not, by itself, make insurance the owners’ exclusive remedy.

For an attack or seizure in Hormuz, the decision means this: before concluding that “insurance will pay, so charterers or cargo interests owe nothing”, the wording of each contract must be read separately.

What Are the Consequences of an Illegitimate Order by Charterers?

An order by charterers to proceed to an area not permitted under the war risks clause is a breach of the charterparty. Under English law, such a breach is not automatically repudiatory. However, it may become so if charterers persist in the order.

• Damages: Owners may claim the losses caused by the illegitimate order. The duty to mitigate applies.
• Indemnity: If owners choose to comply with the order, an express or implied indemnity from charterers for the consequences of the order may be relevant.
• Off-hire: Under CONWARTIME, the vessel remains on hire as long as it acts as permitted by the clause. Correct use of the right of refusal protects owners against deductions of hire.

Which Law Applies to Turkish Owners and Charterers?

Most international charterparties are governed by English law, with disputes referred to London arbitration. Under Article 24 of Turkish Law No. 5718 on Private International and Procedural Law, the parties may choose the law applicable to the contract. Even if a dispute comes before a Turkish court, under Article 2(1) of the same Law the Turkish judge applies the competent foreign law ex officio.

For a Turkish owner or charterer, the first question in a Hormuz dispute is therefore which law governs the contract and which jurisdiction or arbitration clause it contains. In a contract governed by Turkish law, the provisions of the Turkish Code of Obligations on impossibility of performance and excessive difficulty of performance must also be considered alongside the war risks clause.

Checklist for Owners and Charterers

Frequently Asked Questions

What is CONWARTIME?

It is BIMCO’s war risks clause for time charterparties. It gives owners the right to refuse to proceed to areas where, in their reasonable judgement, the vessel may be exposed to war risks, and places additional insurance costs on charterers. The latest revision dates from 2025.

What is the difference between VOYWAR and CONWARTIME?

VOYWAR is designed for voyage charters and CONWARTIME for time charters. VOYWAR also regulates voyage-specific consequences such as cancellation before loading and discharge at an alternative port.

Can owners always refuse to go to Hormuz?

No. Refusal must be based on the reasonable judgement of the master or owners, and there must be a qualitative change in the risk accepted at the time of the charter. The notice requirements of the clause must also be complied with.

Can owners refuse under a charter signed after the conflict began?

It is more difficult. Owners may be regarded as having accepted the risk existing at that time. Refusal requires a further escalation of the risk after the charter.

Who pays the additional war risk premium?

Under CONWARTIME 2025 and VOYWAR 2025, charterers. However, only costs actually incurred may be claimed and, under the 2025 wording, owners must show that they used reasonable endeavours to obtain appropriate cover.

What is the most important difference between the 2013 and 2025 revisions?

The reasonable endeavours requirement for insurance costs, the inclusion of K&R insurance, notice before entering the area and the extension of the time for new orders from 48 to 72 hours are the main changes.

Does an illegitimate order by charterers terminate the charter?

Not automatically. However, if charterers persist in the order it may become repudiatory, and owners may claim their losses.

Will a Turkish court apply English law?

If the parties have chosen English law, under Article 2(1) of Law No. 5718 the Turkish judge applies the competent foreign law ex officio.

Why Is Specialist Legal Support Necessary?

In the Hormuz crisis, decisions by owners and charterers are often taken within hours. Yet the legal consequences of those decisions are assessed months later, in London arbitration or in court, on the basis of the full charter wording, the revision year of the clause, the timing of notices and the information on which the decision was based. Criteria such as reasonable judgement, qualitative change and notice requirements determine which party will bear premiums and delay costs running into millions of dollars.

2M Hukuk Law Firm, based in Tuzla, Istanbul, advises shipowners, operators, charterers and cargo interests in Istanbul and Kocaeli on maritime law. We work on the review of charterparties, the negotiation of war risks and sanctions clauses, the drafting of refusal and orders correspondence and the handling of charter disputes.

If your vessel has been ordered to the Gulf, or if you have received a notice of refusal as charterer or owner, you can request a consultation through our contact page together with your charter and correspondence.