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Navigating troubled waters: Red Sea instability sparks legal quandaries in global maritime trade

Navigating troubled waters: Red Sea instability sparks legal quandaries in global maritime trade


British Petroleum, CMA-CGM, Maersk and OOCL have paused all shipments of oil through the Red Sea

The Red Sea, a vital conduit for 10-15% of worldwide trade, faces escalating instability, posing intricate questions in international law. In response to repeated assaults by the Houthi Movement, major energy and freight companies like British Petroleum, CMA-CGM, Maersk, and OOCL are opting to reroute their vessels around the Cape of Good Hope instead of their usual Red Sea and Suez Canal passage.

Over the past weeks, Houthi rebels in Yemen's Northern Region have targeted oil tankers, container ships, and LNG vessels, even seizing a cargo ship. These actions significantly disrupt the Red Sea, a key route for global trade, accounting for 8% of global grain trade and 12% of global seaborne oil trade.

In response to the heightened threat, the United States, along with allies such as the United Kingdom, Bahrain, Canada, France, Italy, Netherlands, Norway, Seychelles, and Spain, has established an international taskforce for maritime security. John Kirby, US National Security Council Coordinator for Strategic Communications, mentioned a potential reconsideration of designating the Houthis as a Foreign Terrorist Organization.

These attacks raise intricate legal issues involving insurers, shipowners, state actors, and individuals onboard these ships and rebels. The international taskforce faces legal challenges, including the right of self-defense and self-help under public international law. Questions arise about their powers to board, detain suspects, and seize vessels.

Shipowners, likely to employ private security, face legal dilemmas regarding the use of force and weapons. Accountability for damages and harm caused during interventions or attacks prompts legal scrutiny. Possible sanctions on the Houthis by the US, UK, and EU raise caution against paying ransoms, risking violation of sanction regulations.

Rerouting commercial ships results in delays triggering contractual responsibilities and increased insurance costs. Shipowners need to scrutinize contracts, particularly force majeure clauses, to assess if Houthi attacks fall within their scope. The Red Sea's instability unveils a complex web of legal intricacies impacting global maritime trade.