Yemen conflict sparks contractual issues

The conflict in Yemen began as a domestic political dispute but has turned into a war. The fall of the country’s Saudi-backed president, Abdu Rabbu Mansour Hadi last year was the catalyst for the escalating tensions. Houthi rebels attempted to take control of much of the country, sparking air attacks from a Saudi Arabia-led coalition of Arab states that have been ongoing for the past three weeks.

The situation threatens to spill out of Yemen with Iran coming out in support of the Houthi rebels and denouncing the airstrikes. Hundreds of Yemenis have been killed in the most recent battles, and international aid groups have urged a temporary ceasefire to allow emergency distribution of food, water and medicine.

Insurer Skuld has received reports from local agents and members that an “increasingly tight blockade is being affected on Yemeni ports” as a result of the conflict. This is particularly true of ports that are under the control of the Houthi rebels.

“The intention seems to be to stop shipments that could assist the Houthi-led forces in their conflict with the government forces,” says Skuld. The insurer has received reports stating that there is a prevention of vessel traffic from Bab Al Mandab to Yemeni territorial waters with a particular focus on vessels that may have recently called at Iranian or Iraqi ports. There are also reports of air and naval strikes targets at Houthi-controlled ports, particularly in the north and west of Yemen.

Contract claims

The UK P&I Club adds that the situation could give rise to a number of contractual issues. For example, an owner may be able to refuse a charterer’s order to go to a port in Yemen, although this will depend on the terms of the relevant charter party and the terms of any war risk clause.

Owners may also find that the named port of discharge is closed, leaving them open to a potential deviation claim or a claim for transhipment expenses. “If a named discharge port is closed, then the terms of the governing Bill of Lading and any charter party should be closely examined as the ship may have liberty to discharge cargo at an alternative safe port,” advises the Club.

If the port is open but there is fighting nearby this could pose a danger to the ship and again, the terms of any Bill of Lading should be reviewed.

“If the bill contains a liberty clause or incorporates a war risks clause that allows Members to refuse to discharge cargo at a port exposed to a war risk, the owner may have the option to discharge cargo at an alternative port,” says the Club. “Where a war risk clause or a liberty clause is not incorporated into the Bill of Lading or if the clauses are limited, refusal to discharge at a named port could lead to claims for mis-delivery.”

Another contractual issue arises if the charterer orders the ship to avoid a port in Yemen.

“Depending on the terms of the relevant charter party, a charterer may be able to order a ship to an alternative discharge port, to avoid potential liabilities for which the charterer may be required to indemnify the owner.”

However, if the charterer is not the Bill of Lading holder, this may pose problems for the owner who may have an obligation to deliver the cargo to the destination named in the Bill of Lading.

“In such circumstances, the owner would be advised to require an indemnity from the charterer in respect of the consequences of such a deviation in compliance with the charterer’s orders,” says the Club.