Tanker reported 'missing'​ off Iran: more concerns arise out of Grace 1 seizure

The media is reporting the tanker Riah as ’missing’ off Iran accompanied by photographs of VLCCs which is slightly misleading, as it is a small product tanker of around 1,000 gt. This is against a backdrop of more threats at retaliation from Iran against the seizure of Grace 1.

• Pretexts for a tanker seizure and insuring vessels against Iranian reprisals

Are vessels now exposed to potential war risks or confiscation?

The continued threats give rise to serious questions as to whether the level of risk and danger as set out in clauses such as Conwartime can now trigger the right to refuse orders to transit the Straits of Hormuz, particularly by owners with a direct connection to the US or UK.

There may be strong commercial reasons to continue to trade but the Triton Lark judgements give clear guidance on the questions that need to be asked.

The danger to shipping is a real one as demonstrated by recent attacks and while the risk of further attack maybe relatively small, the consequences of being seized are significant.

Grace 1 ’arrested’ for security

Meanwhile, Israeli-backed interests are said to be seeking Grace 1’s arrest to enforce claims against Iran. There is also said to be a move seeking confirmation as to the vessel’s seaworthiness. It is not clear if that application has succeeded but there is no sign that the vessel is being released anytime soon, notwithstanding the British Foreign Secretary offering an ’out’ to Iran if they can assure the world that the cargo will not go to Syria. Subject of course to due process of Gibraltar which it is assumed he cannot interfere with!

Who insures Grace 1?

Does Gibraltar have a massive headache brewing? They have been quick to say that the crude was bound for Syria which suggests that the vessel may yet be stuck for the full 90 days. It must then bring into question the viability of any insurance. If Panama deregistered the vessel some months ago it would be a surprise if there is a P&I Club blue card in place. So Gibraltar are potentially sitting on an uninsured (and possibly unseaworthy) tanker with a significant quantity of crude loaded on board.

Much of the security effort is aimed at the shipping off Iran but if they cannot get their ship back there is a scenario (logistically challenging as it is) that they take direct action against the ship itself. A serious pollution incident off Gibraltar does not bear thinking about and would raise interesting issues about liability and who would bear responsibility for any clean-up costs. It would make the Prestige incident and subsequent political fall-out look minor in comparison. It must be assumed that the security around the ship is good but if the ship does look as if it is there for sometime, it may be in Spain’s interest if they were to offer somewhere to offload the cargo in the meantime.

Tatham & Co partner Stephen Askins specialises in maritime law and is involved inissues arising from trading in complex environments. He has particular expertise in dealing with kidnappings and hijackings and advising maritime security companies.