Following UK and US naval forces repelling the largest Houthi attack in the Red Sea since the beginning of the Israel/Gaza conflict, there is now a suggestion that the Western allied forces may respond by targeting Houthi rebel installations in northern Yemen, says Keystone Law’s shipping partner Richard Johnson-Brown. If this happens, it will escalate the Israel/Gaza conflict to the point where it turns the Red Sea into a theatre of war between nations and (arguably) it could potentially become a proxy war between the West and Iran.
“Between Owners and Charterers, a risk assessment will need to be carried out before the transit through the Red Sea to assess whether it is safe for the particular vessel to sail through in the particular circumstances prevailing before the transit, i.e. at this stage, it needs to be assessed on a case by case basis and whereas it may be safe for one particular vessel to transit, it may not be safe for another particular vessel.
“Further down the supply chain, whether it is additional war risk insurance premiums and delays arising from sailing through the Red Sea and the Suez Canal, or the additional fuel consumption and delays resulting from sailing around the Cape of Good Hope, there will be strain on ongoing supply contracts. These additional costs will not frustrate these supply contracts as a matter of English law. If the contracts contain force majeure clauses, it is unlikely that these could be relied upon to excuse non-performance, but in each case, it will depend on the wording of the particular force majeure clause. If the conflict escalates, this could lead to these supply contracts being re-negotiated.”