I. Introduction
The Strait of Hormuz, despite its geographical narrowness, is a maritime passage with extremely high economic and strategic impact. This Strait plays a decisive role not only in terms of the intensity of energy flows but also in the continuity of global supply chains, transportation costs, insurance equilibrium, and delivery security. Therefore, developments such as military tension, attack threats, mine risks, or sudden contraction in the insurance market can seriously affect the sustainability of trade even if a complete closure does not occur.
The importance of the Strait of Hormuz does not stem solely from the volume transported. The Strait is a vital energy corridor, particularly for major Asian economies such as China, India, Japan, and South Korea. Consequently, the effects of any disruption in the Strait of Hormuz are felt primarily by economies that meet their energy needs largely through imports. This situation renders the Strait of Hormuz not merely a strategic transit point but also a central element in terms of contractual performance, delivery, shipment, and risk management.
In particular, for CIF (Cost, Insurance and Freight), FOB (Free on Board), and DAP (Delivered at Place) contracts, as well as charterparty arrangements and long-term energy supply agreements, a crisis involving the Strait of Hormuz may directly give rise to questions of force majeure, hardship, and, in some cases, frustration.
II. Legal Framework: International Straits and the Regime of Transit Passage
The fundamental reference for assessing the legal status of the Strait of Hormuz is the provisions of the United Nations Convention on the Law of the Sea (“UNCLOS”) concerning straits used for international navigation. Pursuant to UNCLOS Articles 37 and 38, all vessels and aircraft enjoy the right of transit passage through straits used for international navigation. While this regime does not entirely eliminate the sovereignty of coastal states, it does not permit the exercise of such sovereignty in a manner that would render transit passage effectively unusable. Indeed, UNCLOS Article 44 expressly provides that transit passage shall not be impeded or suspended.
Accordingly, the legal debate concerning the Strait of Hormuz centers not on innocent passage, but on the transit passage regime as a general rule. This distinction is significant, as the transit passage regime more narrowly circumscribes the scope of coastal state intervention and does not permit suspension of passage. With respect to a strait such as the Strait of Hormuz, which occupies a central role in global energy transportation, the issue is not solely the sovereign authority of coastal states, but also the continuity of world trade and energy supply.
Nevertheless, it is evident that a material distinction exists between legal protection and de facto security. Even where the transit passage regime remains legally operative, passage through the Strait of Hormuz may become economically and operationally unusable due to the threat of war, risk of attack, or contraction of insurance coverage. Consequently, in the context of the Strait of Hormuz, the intensity of de facto risk is as determinative as legal status.
However, a matter that must not be overlooked in evaluating the applicability of UNCLOS to the Strait of Hormuz is Iran’s non-party status to the Convention. Iran has signed but not ratified UNCLOS; Türkiye has neither signed nor acceded to the Convention. This circumstance means that these states are not directly bound by UNCLOS provisions in a contractual sense.
On the other hand, this finding does not lead to the conclusion that the transit passage regime cannot be invoked against Iran in any manner. The prevailing view in international law is that the right of transit passage through straits used for international navigation forms part of customary international law. Indeed, the United States, the United Kingdom, and numerous other states recognize and apply this right as a rule of customary law, irrespective of whether they are parties to UNCLOS. The jurisprudence of the International Court of Justice also confirms that in areas where customary law coincides with UNCLOS provisions, such rules may be invoked against non-party states.
Nevertheless, Iran has historically regarded the regulation of strait passage as a matter to be governed exclusively through bilateral agreements with coastal states, and has expressly articulated its opposition to a multilateral transit passage regime. This position raises the question of whether Iran may be considered a persistent objector to the formation of such rules. However, in practice, Iran has not consistently maintained this objection and has generally permitted passage through the Strait. Consequently, while the customary law argument is difficult to undermine in practice, the legal uncertainty created by non-party status should not be disregarded, particularly in judicial or diplomatic proceedings.
III. Legal Character of Transit Restrictions in the Strait of Hormuz and the Issue of De Facto Obstruction
Under international law of the sea, the authority of coastal states to unilaterally and generally close international straits used for navigation is circumscribed pursuant to Articles 42 and 44 of UNCLOS. While the transit passage regime recognizes the sovereign rights of coastal states, it does not permit the exercise of such rights in a manner that would effectively eliminate or render excessively burdensome the freedom of navigation. Yet under Articles 42 and 44 of UNCLOS, such measures may not be applied in a way that effectively eliminates or excessively hampers transit passage. A general and indefinite closure would therefore be incompatible with the freedom of international maritime navigation.
However, the principal risk in practice arises not from a formal closure decision, but rather from the transformation of the Strait of Hormuz into a de facto high-risk transit corridor. Military or quasi-military activities capable of affecting maritime security, together with acts such as detention of tankers or disruption of port operations, may render the Strait commercially unsustainable without formal closure. In such circumstances, the determinative issue is not whether the right of transit passage exists as a matter of law, but whether that right can be exercised safely, insurably, and economically.
This distinction is also directly relevant to force majeure analysis. In many contracts, the threshold is not whether passage has been legally prohibited in the strict sense, but whether performance has been de facto prevented, seriously impeded, or rendered commercially unreasonable under prevailing trade practices. In the context of the Strait of Hormuz, it is therefore necessary to distinguish not only between legal closure and de facto obstruction, but also to determine the point at which such obstruction crosses the contractual threshold for excusing or suspending performance.
IV. Force Majeure and Contractual Risk Allocation
1. The Elements of Force Majeure under English Law, the Threshold Question, and Its Relationship with Frustration
A crisis originating from the Strait of Hormuz may directly trigger the applicability of force majeure provisions, particularly in energy, commodity, and maritime transportation contracts. However, no automatic legal consequence follows. Whether a given event qualifies as force majeure depends on the wording of the relevant contract, the foreseeability of the event, whether it falls outside the affected party’s control, whether alternative means of performance are available, and whether the contractual notice requirements have been properly observed.
In contracts governed by English law, force majeure is not an independent legal doctrine but a contractual mechanism. Accordingly, unless the contract contains an express force majeure clause, a party cannot rely on force majeure as such. Where such a clause exists, it is generally interpreted narrowly, and the event in question must genuinely render performance impossible, seriously hinder it, or substantially disrupt it, depending on the wording of the clause.
At this point, it is important to distinguish between prevention of performance, serious disruption or impediment to performance, and hardship. Prevention of performance refers to situations in which performance becomes de facto impossible or the contractual obligation can no longer be carried out. Serious disruption or impediment refers to cases where performance remains theoretically possible but is gravely disturbed, obstructed, or forced materially outside the ordinary course of commercial dealing. Hardship, by contrast, refers to circumstances that do not rise to the level of impossibility but make performance excessively onerous, economically distorted, or commercially extraordinary. Not every increase in cost therefore amounts to force majeure; conversely, force majeure analysis does not in every case require proof of absolute impossibility.
The doctrine of frustration of contract under English law may also theoretically arise, but this institution comes into play under much more exceptional conditions and in the absence of a force majeure clause. The threshold required for this institution goes beyond the commercial aggravation of the contract and involves a fundamental change in the nature of performance or the collapse of the fundamental assumption of the contract. Therefore, in crises concerning the Strait of Hormuz, the first point of recourse in most cases is not frustration of contract but contractual arrangements in the nature of force majeure or excessive hardship.
A similar picture is observed with regard to standard industry clauses. The Grain and Feed Trade Association (“GAFTA”) standard contracts widely used in grain and feed trade, and the Federation of Oils, Seeds and Fats Associations (“FOSFA”) standards used in oilseeds, vegetable oils, and feed trade, provide limited contractual protection to parties in the event of delay or obstruction of shipment by enumerating certain event categories.
Against that background, the key issue in force majeure analysis is not merely whether developments in the Strait of Hormuz have increased costs, but whether they have materially affected the ability to carry out shipment safely, under insurance cover, and in a commercially reasonable manner. In oil and LNG sale contracts, events such as war, blockade, threats to navigational safety, state intervention, port closure, and de facto unavailability of insurance cover are often included within the scope of force majeure. In charterparty relationships, clauses dealing with war risks, unsafe ports, deviation, and public or administrative interference may also afford varying degrees of protection depending on the facts of the case.
At the same time, a force majeure notice issued without sufficient legal basis may expose the notifying party to the risk of anticipatory breach. Parties must therefore carefully assess the scope of the relevant clauses before serving notice, adequately document the de facto situation, consider possible alternatives for performance, and comply strictly with contractual notice requirements. In practice, the outcome of a dispute often turns less on the existence of the event itself than on whether the invoking party has complied properly with its procedural and evidential obligations.
2. Concrete Application in the Strait of Hormuz Crisis and March 2026 Notifications
In the context of the Strait of Hormuz, the central question in force majeure analysis is not so much whether passage has been legally prohibited, but whether de facto conditions have crossed the relevant contractual threshold. As noted above, Iran’s capacity for de facto obstruction is such that it may seriously disrupt performance even without a formal closure. Accordingly, a crisis in the Strait of Hormuz may give rise to serious disruption or hardship even where performance has not become entirely impossible; in some categories of contract, that alone may suffice to trigger force majeure mechanisms.
Developments as of March 2026 illustrate the practical significance of this framework. During the crisis period, certain energy companies and regional actors reported serious disruptions to production, shipment, and operational activities, demonstrating that force majeure or comparable suspension mechanisms could arise in practice. Notifications concerning LNG and refinery operations in particular show that the risks associated with the Strait of Hormuz have moved beyond the level of a merely hypothetical threat and have become a concrete issue for contractual performance.
Whether such notifications will be legally effective depends not only on the existence of a crisis, but also on the contractual definition of force majeure, the causal link between the event and the affected performance, and the parties’ compliance with the applicable contractual procedures. Examples of the kind seen in March 2026 therefore do not automatically establish force majeure, but they do illustrate the point at which de facto obstruction may begin to produce legal consequences in terms of contractual risk allocation.
3. Force Majeure and Excessive Hardship under Turkish Law
Under Turkish law, invocation of force majeure requires compliance with Article 112 of the Turkish Code of Obligations (“TCO”) and general principles of the law of obligations, mandating immediate notification to the counterparty and proof, pursuant to TCO Article 136, that non-performance is attributable to a cause beyond the obligor’s control. Turkish Supreme Court jurisprudence applies the foreseeability criterion rigorously; where regional tensions existed at the time of contract formation, subsequent escalation is less likely to constitute force majeure. Accordingly, in the context of the Strait of Hormuz, the determinative factors are the timing, severity, and degree of foreseeability of the crisis.
The presence of force majeure clauses in contracts governed by Turkish law does not displace statutory provisions but may narrow or expand their scope within the limits of party autonomy. Where the contract defines force majeure, courts will interpret the contractual provision as a threshold matter; however, such clauses will not be construed to eliminate entirely the protections afforded by TCO Article 136. Consequently, energy and transportation contracts require evaluation of both contractual stipulations and the statutory framework in conjunction.
Conversely, under TCO Article 138, where performance has not become impossible but has become excessively burdensome, adaptation or termination of the contract may be warranted. De facto obstruction of passage through the Strait of Hormuz or the emergence of serious security risks, coupled with extraordinary increases in insurance costs or the rendering of alternative routes economically prohibitive to the extent that they disturb contractual equilibrium, may, depending on the specific circumstances, exceed the threshold of excessive hardship. The analysis in this context is conducted not solely by reference to whether performance has become impossible, but by consideration of whether performance remains reasonably expectable of the obligor in accordance with the principle of good faith.
V. Insurance, Freight, and De Facto Hardship of Performance: The Economic Dimension of the Force Majeure Threshold
In the event of military escalation in the Strait of Hormuz, the market’s first reaction often appears in insurance and freight markets before any actual physical interruption of supply. Rising war risk premiums, reduced reinsurance appetite, and the practical uninsurability of certain voyages can directly affect commercial operations. In that sense, even if the Strait remains technically open, the commercial rationale for navigation through it may be severely undermined. The Strait may, in effect, become “closed without being formally closed.”
This outcome emerges more prominently with regard to oil and LNG transportation. In this area, not only transportation time but also the scope of insurance coverage, vessel safety, continuity of port operations, and manageability of financial risks play determinative roles. Contraction in the insurance market, freight increases, and additional security costs not only render shipment more costly but may also, in certain cases, bring it to a commercially unsustainable point.
Insurance and freight considerations therefore cannot be separated from force majeure analysis. In practice, the issue is not simply that performance has become more expensive, but that access to insurance is materially restricted, the vessel or voyage can no longer be regarded as safe, or it becomes objectively unreasonable to expect a carrier acting with ordinary commercial prudence to undertake the voyage. Depending on the wording of the contract, such conditions may support a claim of serious disruption or hardship even where performance has not become wholly impossible, and in some cases may directly support reliance on force majeure.
In this context, the decisive question in a Strait of Hormuz crisis is not whether the Strait is technically open, but whether passage remains commercially and legally sustainable on reasonable terms. Contraction in the insurance market and increases in freight rates are therefore not merely economic indicators; they form part of the de facto foundation of force majeure analysis.
VI. Alternative Routes and the Limits of Substitution Capacity
Pipelines and export routes proposed as alternatives to the Strait of Hormuz may provide a measure of relief, but they do not have the capacity to replace in full the volume of oil and LNG passing through the Strait. Saudi Arabia’s East-West Pipeline, the United Arab Emirates’ Fujairah route, and Iran’s Goreh-Jask pipeline are all relevant in this regard. Even so, they do not eliminate dependence on the Strait of Hormuz, particularly in relation to LNG. Qatar’s heavy reliance on the Strait makes that vulnerability especially visible.
Therefore, the existence of an alternative route or alternative export pipeline does not automatically eliminate a force majeure claim. The determinative factor here is whether the alternative is genuinely accessible from a technical, commercial, and temporal perspective. Where the alternative route offers limited capacity, creates excessive costs, or substantially disrupts the economic balance of the contract, it may not always be reasonable to compel the party to perform under the same conditions.
This situation is also important with regard to the distinction between force majeure and excessive hardship. The theoretical existence of an alternative route does not mean that performance is reasonably sustainable in every concrete case. Where the alternative is de facto inaccessible, economically excessively burdensome, or of such a nature as to disrupt the fundamental balance of the contract, parties’ recourse to contractual protection mechanisms may rest on stronger ground.
VII. Conclusion
The risk associated with the Strait of Hormuz should not be assessed solely as a geopolitical or military matter. Rather, it constitutes a multifaceted legal and commercial issue with direct implications for insurance coverage, freight costs, and contractual risk allocation. Insofar as the right of transit passage under the United Nations Convention on the Law of the Sea is not, as a rule, subject to suspension, the authority of coastal states to unilaterally and generally close international straits used for navigation is circumscribed by the norms of the international law of the sea.
From a commercial perspective, however, the determinative consideration is not legal status but practical usability. The transformation of the Strait of Hormuz into a de facto high-risk transit corridor—through factors including regional security dynamics, military tensions, naval mine risks, missile threats, unmanned aerial vehicle operations, interference with vessel operations, contraction of insurance capacity, and freight rate escalation—may materially impair the performance of energy and transportation contracts. Accordingly, the central issue is not the formal existence of the right of transit passage, but whether that right can be exercised in a safe, insurable, and economically sustainable manner.
In conclusion, assessments relating to the Strait of Hormuz should focus not on the prospect of formal legal closure, but on the scope of de facto disruption and its effects on force majeure, hardship, and contractual performance obligations. When approached in this manner, the Strait of Hormuz emerges not merely as a strategic maritime chokepoint, but as a global legal and commercial arena in which the thresholds of force majeure, performance capability, and contractual risk allocation are tested. Within this framework, the careful ex ante structuring of contractual protection mechanisms, continuous monitoring of factual conditions, and the proper documentation of force majeure notices are of critical importance in mitigating dispute risk.
B. KEY TAKEAWAYS
(1)The Strait of Hormuz is a critical transit point for global oil and liquefied natural gas transportation, and any disruption therein directly impacts energy prices, freight costs, insurance premiums, and supply chains on a global scale.
(2)Under international law of the sea, the authority of coastal states to unilaterally and generally close international straits used for navigation is limited; the right of transit passage under UNCLOS may not, as a general rule, be obstructed or suspended.
(3)The principal risk in practice arises not from a formal closure decision, but from the de facto transformation of the Strait into a high-risk corridor due to factors including regional security dynamics, naval mine risks, missile threats, unmanned aerial vehicle operations, interference with vessel operations, and disruption of port operations.
(4)The de facto obstruction situation in the Strait of Hormuz may, in many contracts, raise discussions of force majeure, excessive hardship, or serious disruption of performance independently of legal closure.
(5)The determinative factor in force majeure assessment is not merely cost increase but whether shipment can be reasonably sustained safely, under insurance coverage, and within the framework of commercial practices.
(6)With regard to contracts governed by English law, force majeure is not an independent doctrine but a mechanism based on contractual provisions; therefore, the outcome of a dispute largely depends on the wording and scope of the relevant clause.
(7)The thresholds between complete prevention of performance, serious disruption or hardship of performance, and excessive hardship are evaluated separately in each concrete case; therefore, not every cost increase results in force majeure, but not every force majeure discussion requires reaching the level of absolute impossibility.
(8)Contraction in the insurance market, reduction in reinsurance capacity, increase in war risk premiums, and freight increases may render contractual performance unsustainable even if the Strait remains technically open and constitute the de facto basis of force majeure analysis.
(9)Although alternative pipelines and export routes provide a certain degree of relief, they cannot fully substitute the total volume of oil and LNG passing through the Strait of Hormuz; therefore, the existence of alternative routes does not automatically eliminate a force majeure claim.
(10)In legal and commercial evaluations concerning the Strait of Hormuz, the scope of de facto disruption and its effects on force majeure, excessive hardship, and contractual performance obligations should be taken as the basis rather than the possibility of legal closure.
