Significant marine market response to attacks off Fujairah, says Clyde & Co

Trade in the areas newly declared as high-risk by the Joint War Committee under insurance policies to which Listed Areas (JWLA024) is applicable and additional premium may be payable, to be negotiated on a case by case basis, Mike Roderick and Nick Austin of legal firm Clyde & Co have reminded clients in a new web alert.

The JWC (comprising representatives involved in writing marine hull war business in both the Lloyd’s and IUA company markets) updated JWLA024 to reflect the perceived heightened risk across the region.

The additions to the existing Listed Areas are:

  • Oman
  • Persian or Arabian Gulf and adjacent waters including the Gulf of Oman west of Longitude 58°E
  • United Arab Emirates

Saudi Arabia (excluding transits) was already included in the previous List, but this has been amended so that all trade on the Gulf coast of the country, including transits, is now included.

Clyde & Co observed that there had been significant uncertainty about the nature of the attacks that occurred on May 12th, and in reaching its decision the JWC recognized that the circumstances and methods employed in the attack remained unclear. However, it was acknowledged that considerable damage had been done and that significant claims would arise.

The authors said that, although charterparty clauses dealing with war risks would vary, in practice charterers were likely to be prohibited from ordering a ship to a place where, in the reasonable judgment of the master or the owners, the situation might be dangerous or likely to be or to become dangerous to the vessel, her cargo or crew. “However, if owners agree to comply with a voyage order, any additional insurance costs incurred (usually together with other extra costs such as additional crew wages) are likely to be payable by charterers under express or implied terms”, they said.

INTERTANKO and OCIMF recently provided additional details of the incident. They confirmed that four tankers were struck in Fujairah on May 12th and went on to state that this appeared to have been a well-planned and coordinated attack involving the use of sub-surface explosive devices placed by either a remotely-operated vessel or diver.

The report acknowledged that, while Waterborne Improvised Explosive Devices (WBIED) had been used against vessels in the Southern Red Sea, the use of a sub-surface drone would require a higher level of sophistication than had previously been seen.

The authors concluded by saying that, although the Port of Fujairah appeared to be operating as normal, “shipowners should take care to notify insurers in accordance with JWLA024 where appropriate and to take note of the additional recommendations issued by INTERTANKO and OCIMF”.