The Strait of Hormuz remains the pre-eminent legally contested and strategically volatile chokepoint in contemporary maritime law, as evidenced by the high-stakes geopolitical crisis in late March 2026. Under the 1982 United Nations Convention on the Law of the Sea (UNCLOS), the ownership of the waterway is a shared reality between the coastal states of Iran and Oman. At its narrowest point, the strait is approximately 21 nautical miles wide; since both states claim a 12-nautical-mile territorial sea as permitted under Article 3, no high seas corridor exists. All vessels must navigate through these territorial waters, bringing into sharp relief the conflict between Part III of UNCLOS and the more restrictive regime of innocent passage. This geographical reality means that any disruption within these 21 miles immediately impacts nearly 20 per cent of the world’s seaborne petroleum and 25 per cent of global liquefied natural gas (LNG) consumption, creating an immediate inflationary shock to the global energy supply.
The primary legal framework governing such waterways is the regime of Transit Passage. Article 38(2) defines this as the “exercise… of the freedom of navigation and overflight solely for the purpose of continuous and expeditious transit.” Crucially, Article 44 stipulates that “States bordering straits shall not hamper transit passage… There shall be no suspension.” However, legal friction persists because while Oman has ratified UNCLOS, Iran has signed but not ratified the treaty. Tehran maintains that Innocent Passage applies to its waters, relying on Article 25(3), which allows a coastal state to “suspend temporarily… the innocent passage of foreign ships if such suspension is essential for the protection of its security.” Unlike transit passage, innocent passage under Article 19 must not be “prejudicial to the peace, good order or security of the coastal State.” This allows Iran to claim broad enforcement powers, including the boarding of vessels and the demand for cargo manifests, which would be prohibited under a strict transit passage regime.
The economic paralysis of the strait is currently dictated by a “legal-financial” blockade rather than a traditional naval one. As highlighted in the University of Wisconsin Law School Strategic Maritime Analysis (26 March 2026), titled “The De Facto Blockade: Insurance and Force Majeure in the Strait of Hormuz”, the crisis is driven by the collapse of the marine insurance market. The Lloyd’s Market Association (LMA) Joint War Committee has expanded its “Listed Areas,” leading to the widespread withdrawal of war risk insurance. For vessels still willing to transit, “Additional Premiums” (AP) have surged to between 3 and 5 per cent of the hull value, meaning a VLCC valued at US$130 million faces a cost exceeding US$4 million for a single transit. Furthermore, the International Group of P&I Clubs has flagged that “Sanction Limitation and Exclusion” clauses are being triggered, leaving shipowners without third-party liability coverage for pollution or wreck removal. This has prompted major carriers to invoke Force Majeure clauses in their Bills of Lading, legally absolving them of the obligation to deliver cargo to Persian Gulf ports.
The situation was further institutionalised by the Iranian Parliament’s approval of the Hormuz Transit Fee Law on 30 March 2026. This domestic legislation purports to formalise a toll system of up to US$2 million per voyage for “security and environmental maintenance.” Under international law, specifically Article 26 of UNCLOS, “no charge may be levied upon foreign ships by reason only of their passage through the territorial sea,” except for “services rendered to the ship.” By framing these tolls as security fees, Iran attempts a domestic legal workaround, though maritime experts argue this directly contravenes the non-discriminatory requirements of Article 42. Furthermore, Tehran has increasingly mandated that such transactions be settled in Chinese Yuan (RMB) to circumvent US dollar-clearing systems. This leverages the mBridge cross-border payment platform, effectively integrating maritime transit into a non-Western financial architecture and complicating the legal recourse for shipowners whose primary insurance and banking remains dollar-denominated.
On 11 March 2026, the United Nations Security Council adopted Resolution 2817 (S/RES/2817), which, invoking Article 39 of the UN Charter, determined that interference with shipping constitutes a “breach of international law and a serious threat to international peace and security.” Nevertheless, a Chatham House Legal Briefing (13 March 2026) notes a “methodologically incoherent” landscape where kinetic strikes occur alongside maritime enforcement. Pervasive GPS jamming and “dark vessel” signatures, where Automatic Identification Systems (AIS) are deactivated in violation of IMO SOLAS Regulation V/19, have made the attribution of incidents nearly impossible under current evidentiary standards. This lack of “legal provability” prevents insurers from processing claims and stops flag states from invoking the right of self-defence under Article 51 of the UN Charter, as the identity of the aggressor remains obscured by electronic warfare.
The way forward requires the definitive codification of transit passage as a rule of customary international law to prevent coastal states from exploiting the “signing but not ratifying” loophole. There is an urgent need for an Advisory Opinion from the International Tribunal for the Law of the Sea (ITLOS), utilizing the principle of “systemic integration” under Article 31(3)(c) of the Vienna Convention on the Law of Treaties, to affirm that transit passage binds all states regardless of ratification status. Such a ruling would clarify that freedom of navigation in international straits is an erga omnes obligation. Legally, the transition to a permanent, neutral maritime monitoring mechanism anchored in Article 42 of UNCLOS is essential. This would allow bordering states to adopt non-discriminatory safety laws coordinated through the International Maritime Organization, ensuring the “continuous and expeditious” flow of commerce is protected by a unified interpretation of customary law rather than unilateral sovereign privilege.
