Ukraine war raises fresh challenges for shipping in Turkish Straits

Ibrahim Onur Oguzgiray , Senior Associate at Turkish maritime insurance law firm Cavus & Coskunsu explains the latest complications when carrying out trade in the Turkish straits as a result of the ongoing war in Ukraine

The Russia-Ukraine war reminded us how important the strategic trade routes are and how delicate the global trade supply is.

The ongoing armed conflict in the Black Sea region caused massive disruptions in supply of grain that is being exported from Ukraine as well as the oil supply from Russia because of sanctions.

Turkiye is directly affected by the war as the Turkish Straits is the only waterway connecting the Black Sea to the Mediterranean.

The Turkish Straits are the main trading route for countries in the Black Sea region where the passages of ships are governed by the Montreux Convention.

This was signed on 20 July, 1936. This convention is not only about the passage of merchant vessels, but, for the purpose of this article, it is important to mention that it also provides free passage to merchant vessels.

Because of the ongoing conflict, Turkiye has introduced several new requirements from tankers and also taken a role to solve the grain supply crisis, both of which have led to increased traffic as well as delays and queues in strait passages.

NEW MEASUREMENT FOR P&I COVERS

Becoming aware of sanctions and issues arising from the insurance cover for vessels trading with Russian ports, on November 16, 2022, the Ministry of Transport and Infrastructure released a notification stating that, starting from December 1, 2022 (later extended to December 2, 2022), all vessels transporting crude oil products and passing through or entering Turkish waters are required to present letters of confirmation from their P&I Club.

This should verify that insurance coverage will be maintained under all circumstances during the transit, while the ship is in Turkish waters, or during its time at a port or terminal.

These new requirements were designed to avoid risks arising from sanctions. The notice was challenged by P&I Clubs and liability insurers, stating that the wording of the requested letters would not be acceptable because it would confirm that the P&I cover would remain in place irrespective of any violations of the owners which may grant insurers to cancel or terminate the policies.

Therefore, discussions on the wording of letters caused huge delays and led to queues in the anchorage areas nearby.

After discussions between stakeholders and Turkish state bodies, the parties achieved a consensus on the wording under which the vessels carrying crude oil cargoes were allowed to pass through Turkish waters and the straits.

The requirement to provide the confirmation letter was later extended on 10 February, 2023 to ships over 300gt carrying petroleum products (listed in MARPOL Annex I – Appendix I) through Turkish controlled waters. This requires the name of the ship, the type of the cargo as well as the voyage that is being carried out.

Fresh Hope

On 22 July, 2022, the United Nations and Türkiye facilitated an agreement for the Black Sea region, initially set for a duration of 120 days.

The purpose of this agreement was to address a worldwide food crisis that had been exacerbated by the armed conflicted between Ukraine and Russia, which led to an escalation in prices of grain products worldwide as Ukraine is a major exporter of grains globally.

Under this agreement, Ukraine is able to the transport grain from three Ukrainian ports in the Black Sea, namely Odessa, Chernomorsk and Yuzhny.

For the carriage of the cargo a route – known as the “grain corridor” - was established which allowed vessels to proceed without being targeted by either country.

Under the agreement, a committee was established called the Joint Coordination Centre that comprises representatives of Ukraine, the Russian Federation, Türkiye and the United Nations.

With more than 3 million tonnes, Türkiye has been the third biggest destination for cargo loaded from Ukraine. It is also the provider of the joint inspections of the Joint Coordination Centre, which are carried out to confirm that vessels are in compliance with the agreement, and mostly carried out in Istanbul ports.

A significant increase has been seen in maritime traffic in the Marmara Sea as well as the Turkish straits. Because of the increasing number of vessels in Marmara Sea, the vessels found it difficult to find a place in anchorage areas, especially in Istanbul where the joint inspections are carried out.

Crowded Anchorage Areas

As a natural result of the crowded anchorage areas - both due to the “grain corridor” and the P&I letter requirement - a substantive increase has been seen in collision cases at anchor. While most of the incidents are relatively small, in addition to some big claims, further claims may be brought because of delays arising from the formalities of the collision.

Under Turkish Law the authorities are empowered to commence an administrative investigation in cases of collisions where a sea protest is required.

A sea protest is issued by the courts in Turkiye where statements of the master along with the relevant crew, would be taken in a hearing then the sea protest will be issued.

Moreover, the statements of the same crew members would be also taken by the harbour master.

The vessels are only allowed to sail after the completion of the statements and submission of the requested documents and with a letter issued by the classification society certifying that the vessel can sail.

Therefore, even small collisions are causing loss of time and in some cases, delays because vessels are not allowed to travel the grain corridor if there is any detention by the harbour master due to collision.

The Turkish government is taking measures to prevent or decrease the number of the incidents.

But, because of these new measures introduced to reduce the waiting time or assignation of new anchorage areas in other ports in the south of the Marmara Sea (Çanakkale owners), means that insurers and other shipping interests need to be aware that the risk of becoming involved in an incident has significantly increased since the establishment of the grain corridor.