The sudden boilover of long-simmering tensions between the Gulf States has resulted in an unexpected windfall for an international commercial firm.
Ince & Co is reporting a spike in work for shipping companies after Qatar’s neighbours decided to cut diplomatic ties and close their borders with the state. After the UAE, Saudi Arabia, Bahrain and Egypt all suspend land, air, and sea transport links with Qatar, the firm says it is helping shipping and transportation companies plan for a period of disruption and uncertainty.
Ince & Co says that there is uncertainty over the practical implementation of the cutting of maritime links between Qatar and other ports due to limited official information.
For example, the Port of Fujairah had released a notice banning all Qatari-flagged or owned vessels, or vessels sailing to or from Qatari ports, from calling at Fujairah. Similar bans have been put in place by Saudi Arabia and Bahrain and companies like DP World on its UAE ports.
However, the notice UAE’s Federal Transport Authority circulated leaves the possibility that vessels gaining clearance if the last port of call or next port of call is Qatar, as long as they are not Qatari-owned or flagged, says Rania Tadros, Ince & Co’s managing partner in Dubai.
The situation is still developing, the firm warns shipping companies.
“It is impossible to confidently predict how the situation will develop, for how long the ‘Qatar ban’ will remain in place and whether any further restrictions will be implemented,” Tadros said. “At this time, there are no signs that a wider sanctions regime against Qatar is being contemplated by the GCC states, but we recommend that affected parties monitor the situation closely and check for reports from official sources for guidance as to each State’s position.”
Tadros also noted that uncertainty hangs over implications of the row to access to the Suez Canal. While all vessels, regardless of flag, should be able to access the canal, the Convention of Constantinople also permits Egypt to take measures for the country’s defence.
Furthermore, Ince & Co is also advising clients on contractual implications of the developing situation.
“There are a number of contractual issues facing the shipping industry as a result of these developments,” Tadros said. “Charterparty provisions over ‘blockade’ and safe port/berth warranties may be relevant under these circumstances. The concept of ‘frustration’ may also arise if a vessel cannot get close to its nominated port as a result of the measures announced by the UAE, Saudi Arabia and Bahrain. Given these and other issues, those entering into charterparties that might be affected by the closure of ports to Qatari trade should consider incorporating terms that allocate the associated risks.
“It is also possible that the wording of existing clauses may be wide enough to embrace the prohibitions put in place by the UAE and others in relation to Qatari vessels. A party may also be able to rely on a force majeure event if it is expressly entitled to do so under the contract,” she added.
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