Israel - Hamas War: Frequently Asked Questions
19 October 2023
The world’s focus is rightly on the plight of those affected by the recent events in the Middle East, and the impact on shipping and trade will at most be a subsidiary consideration in the face of a worsening humanitarian crisis. However, as the conflict escalates, this will no doubt become more of a priority for owners and charterers, who will have safety considerations – for the crew, ship and cargo - and be concerned about rights and obligations under the contractual arrangements they have for their ship and cargo where they are involved in voyages to, from or through the region.
In each case the position will very much depend on which port is involved, because some in the region have been largely unaffected, and the situation varies widely even for those ports within Israel, where it is understood that ports toward the north of the country are in many ways operating as normal.
Whichever port is involved, the assessment is likely to require urgent consideration of complex legal issues, and with that in mind operators may find it helpful to refer to the following guidance, which is intended as a brief, high level checklist of enquiries that might be made wherever the voyage includes a call at a port in Israel or surrounding countries in the region, in particular Egypt, Lebanon and Jordan (Aqaba).
As always the outcome will, of course, depend on the contractual terms involved and specific advice should be taken whenever faced with any of these issues. In this respect, Members should contact their normal Club contacts at the Club for further guidance.
Can orders to call at ports in the region be refused?
There are two main grounds upon which it may be possible to lawfully refuse an order, which are where the intended port is unsafe or where it is likely that war risks will be encountered.
Does the contract contain a safe port warranty?
In the description of the ports that the vessel will call at, wording such as “safe port” or “1SP” or “charterers warrant the safety of the port” will be taken as a warranty by charterers that the port is safe at the time of nominating that port. Breach of the warranty, by ordering the vessel to a port that is not safe, can lead to a damages claim where loss or damage is suffered as a result.
Where there is no express safe port warranty this may be implied, although this is unlikely to be the case in a voyage charter where the ports are identified in advance, since owners can then (in theory) make their own decision about whether the port is safe. This is in contrast to the position under a time charter for worldwide trading where the ports are not defined.
Are ports in Israel safe?
A port will not be safe unless a vessel can reach, use and leave it without being exposed to a danger that cannot be avoided by good seamanship. This requires an enquiry into the conditions at the port and the systems put in place to keep ships safe. An abnormal occurrence would not usually make a port unsafe.
Ports in the south of Israel situated close to the Gaza border are under frequent rocket attacks which clearly raises safe port considerations whereas ports in the north, including Hadera and Haifa are reportedly operating more normally, making it less likely that they would be considered unsafe.
Are other ports in the region safe?
The club's correspondents are reporting that ports in neighbouring countries in the region, Egypt, Lebanon, and Jordan are operating more or less as normal. Unless the conflict escalates it is unlikely that the legal position in relation to the safety of those ports has changed.
What if the vessel is ordered to a port that is not safe?
Orders to call at a port that is unsafe are unlawful, and owners are entitled to reject them and request that charterers give alternative orders to a safe port.
If owners decide to call at the ordered port, owners will not necessarily be prevented from claiming for losses suffered if the vessel is damaged as a result.
Does the contract contain a war risks clause?
Charterparties often contain clauses setting out rights and obligations where the vessel is subject to war risks which will be defined and usually include situations of war, acts of war, hostilities, acts of piracy, violence, terrorism, blockades and seizure or detention.
As to what constitutes a war see section (1) of www.steamshipmutual.com/ukraine-russia-conflict-impact-shipping.
The most common war risks clauses in voyage and time charters provide that the question of whether the vessel will be exposed to war risks will be for the judgment of the Master or Owners. This judgment must be exercised reasonably based on evidence that there is a real risk that the vessel is likely to be exposed to war risks.
With a conflict as widely reported as this one it is likely that such evidence will be readily available, but enquiries with local agents, correspondents and other representatives in the region would also be recommended to support any argument that all the risks have been considered and a reasonable judgment has been made.
Does calling at Israel or other ports in the region expose the vessel to war risks?
This will depend on the specific provisions of the war risks clause and the situation on the ground, and any judgement will need to be subject to regular review as circumstances change. At the time of writing, with frequent rocket attacks on Ashdod and Ashkelon and recommendations to divert to other ports in Israel, it is likely that war risks clauses will be engaged, subject to the judgement of the Master / owners.
For ports in the north of Israel and others in the Mediterranean that are operating normally for the time being, it is less likely that war risks would be relevant.
What happens if charterers order the vessel to an area that is subject to war risks?
The relevant clause will set out what options are available to an owner where the vessel is ordered to a region that exposes the vessel to war risks. This generally includes a right to refuse the order and request alternative orders.
When proceeding to an area that is subject to war risks, additional premium for war risk insurance cover may be needed. The cost of this is often allocated to charterers.
Can a charterparty requiring a call at ports in the region be cancelled or terminated?
Can the charterparty be cancelled if the vessel is delayed?
Where the vessel is delayed en-route to a port in the region it is possible that any laycan providing for arrival or delivery of the vessel by a certain date will not be met. This is a right for charterers to exercise, but it can only be done once the deadline has passed, not before, even if it is inevitable that the vessel will be late.
In the meantime owners owe a duty to proceed to the load port or place of delivery reasonably quickly, so cannot slow the vessel deliberately in the hope that charterers cancel when the laycan is missed.
Is there a clause allowing termination where war has broken out?
The charterparty may contain a specific clause dealing with the outbreak of war e.g. allowing either party to terminate wherever there is an outbreak of war between major international powers which this would not be (as yet), although some clauses might permit termination for more localised conflicts such as this.
If there is an option to terminate for this reason then it ought to be exercised reasonably quickly once it is clear that a situation of war exists, and in the meantime nothing should be done that indicates that a party intends to continue with the contract.
Is there an applicable force majeure clause?
English law does not recognise a freestanding concept of force majeure, so whether this is applicable will depend on the terms of the contract. Many charterparties contain a force majeure provision setting out when a party might be excused from their contractual obligations for events which hinder or delay performance, such as war, strikes, riots etc. There is often a requirement that the event be outside the control of either party, which is unlikely to cause any difficulty here.
What if it becomes impossible to call at the intended port?
Even where there is no specific clause covering this situation, a contract might come to an end where performance of obligations becomes impossible. In general terms this would mean a state of affairs that renders performance radically different to that anticipated under the contract. Whether this is the case will be a highly fact specific issue and it is not possible to say without considering all of the circumstances whether the current conflict would result in a charterparty being frustrated.
Whilst not all ports in Israel have been affected to the same extent, it appears that most are operating with some capacity although under emergency regulations suggesting that calls at those ports are still possible, even if there may be safe port considerations (see above). The situation is also highly fluid, with no indications at this stage that restrictions will be in place for a long period. In those circumstances it is unlikely that frustration would be relevant but again this will turn on the terms of the contract involved and the current situation on the ground.
What happens if the vessel is affected by the conflict when calling at ports in the region?
Who is responsible for delay?
Under a time charter the risk of delay is generally on the charterer, unless the delay is caused by owners or (as is normal) there is a clause in the charter providing for particular circumstances in which the vessel is off-hire. The standard form off-hire clauses in common forms such as NYPE and Shelltime charterparties would not cover the situation where the vessel is delayed due to armed conflict, but bespoke clauses might say that the vessel is off-hire in these circumstances.
For voyage charters the position is similar where time has started to count at the load or discharge port. Time would in most cases continue to count unless there is a specific clause providing otherwise. Delays during the voyage however would usually be at owners’ risk so if, for example, the vessel is subject to blockade upon approach to a discharge port in Israel the vessel would not be on laytime / demurrage.
Who is responsible if the vessel is damaged as a result of conflict?
This would depend on the cause of the damage and whether charterers have warranted the safety of the port (see above). Where the vessel is damaged due to danger that cannot be avoided (ie. the port is unsafe), in principle owners would be entitled to look to recover the losses from charterers for breach of the safe port warranty.
The warranty applies at the time of nomination of the port, so if the port is safe at the time that the vessel is ordered there but subsequently after arrival becomes unsafe e.g. due to escalation of the conflict, this would not usually amount to a breach of the safe port warranty. However, if the port becomes unsafe whilst the vessel is en-route, charterers would then be under an obligation to give alternative orders to a safe port. Therefore, since the situation in the Middle East is so fluid and changing on a daily basis, it is crucial for owners and charterers to keep this under review and be prepared to change plans at short notice.
Who is responsible for damage or delay to delivery of cargo?
The starting point will be to consider the contract of carriage. In most cases this will be subject to the Hague or Hague Visby Rules, and may also incorporate the terms of a charterparty giving the carrier the benefit of any war risks provisions set out therein.
Where cargo is damaged or delivery is delayed as a result of the conflict, it is likely that the carrier under the contract of carriage will be entitled to rely on an exception under the Hague / Hague-Visby Rules, most relevantly the exceptions for acts of war (Article 4(2)(e)), riots and civil commotions (4(2)(k)) or for any other cause without fault or privity of the carrier (4(2)(q)).
Can the carrier deliver the cargo elsewhere?
The terms of the contract of carriage may provide for a liberty to discharge at an alternative port or, where the contract incorporates a charterparty which includes a war risks clause, owners may make alternative arrangements for discharge in accordance with that clause.
Update 4 December
Can the carrier proceed by a different route?
It is not just ports in Israel and the immediate surrounding area that may be affected by this conflict. Recent events have made clear that commercial vessels sailing even in international waters may come into contact with hostile actors connected to the fighting in Israel / Gaza. For example, forces in Yemen reported to have connections to Hamas are understood to be responsible for attacks on vessels in the Red Sea, a vital waterway for access to and from the Suez Canal, apparently in support of Hamas. The vessels had no Israeli connection, although it is not clear whether this was known to the attackers at the time.
In light of this apparent danger to vessels, even those not owned, flagged, managed or chartered by Israeli interests, carriers might come to the view that proceeding via the Suez Canal presents an unnacceptable risk of harm to the vessel, crew or cargo where it requires transiting the Red Sea. This might lead them to insist on a different and, most likely, much longer route. The questions will then be (i) whether an owner can insist on a different route, and (ii) if doing so would amount to a deviation for the purposes of the contract of carriage. This latter question is likely to be of the utmost importance given that the consequences of an unlawful deviation can be severe, including increased liability under the contract of carriage and possible prejudice to P&I club cover.
There is little clear guidance in the cases on what amounts to an unlawful deviation in these circumstances, and again, the terms of the contract will need to be considered carefully to check whether there are any particular terms dealing with this situation. Generally, however it is likely that similar considerations as apply to the question of war risks – see (1) above - would be relevant here, meaning that the Master would be required to take into account the nature and extent of the hostilities and make a judgement as to whether there is a real risk of harm to the vessel, crew or cargo. This question has been considered before in similar circumstances in the context of attacks on shipping in the Strait of Hormuz (see, for example, https://www.steamshipmutual.com/publications/articles/transiting-strait-hormuz062019)
Where such a judgement is reached on reasonable grounds, it is unlikely that choosing a longer route would then amount to a deviation for the purposes of the contract of carriage, although this will be very fact specific, and detailed consideration of the contractual terms and surrounding circumstances would be needed on a case-by-case basis.
We are grateful for the assistance of our correspondents in the region for providing reports on the status of ports and shipping in those countries. The above is based on information available to us as at 19 October 2023.