How many attacks does it take to make Strait of Hormuz unsafe?

Introduction
Evia
Ocean Victory
Saga Cob
Chemical Venture
Comment

Introduction

Since May 2019, six oil tankers have been attacked in the Strait of Hormuz – four on 12 May 2019 and two on 13 June 2019, all allegedly with limpet mines, drones or missiles. However, despite these attacks, vessels are still taking orders to sail through the strait, albeit with higher war risk insurance rates and, most likely, heightened crew concerns. The occurrence of such attacks might lead to war risk clauses in the governing charterparties being invoked and the war risk insurers applying their own approach to the situation. However, at what point under UK law can owners refuse such voyage orders on the basis that the strait is contractually unsafe?

A recent London arbitration award obtained for a charterer confirms that refusing orders due solely to crew concerns about a conflict in the country of discharge is not justifiable without evidence of unsafety in the port of destination as opposed to merely in its vicinity. While the award did not deal with the related issues as to how close or how often guerilla attacks must be in order to make a port unsafe, prior UK case law gives guidance on this issue.

Evia

The House of Lords in Evia ((No 2) [1982] 2 LLR 307) commented on this issue when finding that:

• Basrah, Iraq – immediately prior to the outbreak of the Iran-Iraq war in September 1980 – was a safe port even though border hostilities further north had started in June 1980; and
• the war was an abnormality that did not make Basrah 'unsafe' within the meaning of the time charter safe port warranty.

Ocean Victory

The Supreme Court later provided clarification on what constituted an abnormality in Ocean Victory ([2017] 1 LLR 521), which dealt with the safety of the port of Kashima, Japan, in adverse weather conditions. The court stated that it was something well removed from normal, which a notional charterer would not have in mind when making the order to go to the port. In this case, it was accepted that the possibility of long waves at the berth in Kashima and northerly winds preventing navigation on the fairway had both been known. However, the combination of the two occurring simultaneously – which was causative of the loss – had not, as this had apparently not happened for 35 years and was therefore an abnormality.

Saga Cob

The above begs the question of how many times a combination of events needs to have happened in the past for it to become less-well removed from the norm and not an abnormality. The Court of Appeal considered this issue in Saga Cob ([1992] 2 LLR 545). It found that there had been hostilities in Eritrea for many years, with a frontline approximately 40 to 50 kilometers away from Massawa port, and that sporadic artillery attacks had occurred on the port every few weeks in the five months prior to the Saga Cob being ordered to Massawa. This was not considered enough to make the port unsafe.

However, there was also a risk of sea borne attack by guerillas which was known when the charterers gave the order to Massawa (being the relevant time to assess the safety of the port under UK law) because they had made such an attack 65 miles from the port almost three months previously, and it was another such attack that had caused the loss once the vessel had arrived at Massawa. The owners claimed that this risk made the port unsafe, but the Court of Appeal found that:

• the prior attack was abnormal;
• apparently adequate precautions from further attack (involving naval escorts and convoys) were in place; and
• no further attack had occurred when the orders were given to the Saga Cob.

Therefore, there was nothing to suggest that the risk of further attack had not been contained, so when it did occur, it was regarded as another abnormality and not a ground for treating the port as unsafe.

Therefore, Saga Cob indicates that one prior occurrence when viewed in conjunction with apparent precautions against further attack does not make a repetition some months afterwards a matter of unsafety. However, what of a situation where there is one occurrence, such as a limpet mine attack, and no subsequent reassurance that a repetition has been contained?

Chemical Venture

The risk of possible successive attacks was considered in Chemical Venture ([1993] 1 LLR 508) – another Iran-Iraq war case, which took place four years after Evia – when Iran started airborne missile attacks on vessels sailing to Kuwait. The Chemical Venture was ordered to Kuwait three days before the first missile attack, with a further two attacks occurring in the following three days. The crew demanded a war bonus in order to proceed, which was agreed by the charterers six days after the attacks. The vessel proceeded to Kuwait and was hit by a missile two days later. The judge held that when the order to Kuwait had been reconfirmed by the charterers as part of the agreement on crew bonuses, the risk of attack was not abnormal and would therefore have made proceeding to Kuwait unsafe. However, the judge also found that in negotiating the crew bonuses, the owners had waived their right to contend that the charterers were in breach of the safe port warranty for Kuwait.

Comment

It seems that individual attacks on three different days over a period of four days (as in Chemical Venture) is enough, whereas one attack (as in Saga Cob) is not, at least when the risk of further attack is thought to have been adequately contained. What then of the present situation in the Strait of Hormuz, where six known attacks have taken place on two separate days one month apart? If the attacks on each day are seen as a single event – or possibly even if they are seen as separate events – much will depend on the adequacy of the current precautions, which after the attacks were led by the US Fifth Fleet's sentinel programme, (although this may change after the most recent events in the region), and the time delay since the last attacks in June 2019. The authorities would appear to indicate that the better the precautions in place, and the longer the interval between attacks, the more likely any further attack could still be considered abnormal, particularly if there are no further attacks thereafter – a post-attack fact taken into consideration in both Saga Cob and Chemical Venture.

However, given that the sentinel programme that has been in place since the attacks is understood to rely mainly on the surveillance capabilities of the US destroyers patrolling chokepoints in the strait, and is apparently not yet insisting on vessels being escorted in convoy through the strait (the use of escorts and convoys appearing to have been a significant feature of the Saga Cob decision), it is unclear whether the UK courts would regard such measures as adequate precautions should another attack take place in the near future, opening up the prospect of the strait being considered contractually unsafe during the period of inadequate precautions. That said, given that several months have now passed since the last attacks, and the lack of any further attacks following recent events in the region, there is also reason to consider that the current precautions are working and that the strait is contractually safe.

For further information on this topic please contact Robert Joiner at Wikborg Rein by telephone (+65 6438 4498) or email (raj@wr.com.sg). The Wikborg Rein website can be accessed at www.wr.no.