This winter, the focus of the world trade started to be shifting from the corona virus to a war threat in Black Sea region. Therefore, according to international authorities, in the light of the actual developments, a war between Russia and Ukraine is an imminent threat in Black Sea region.

That is why, with this bulletin, we would like to warn the interested maritime carriage parties on the possible precautions to be taken for preventing the negative impacts of the possible war. Accordingly, such precautions would be examined under three main paragraph starting with the situation of the Straits; followed by the important issues to be taken into consideration in the contracts of international sale and carriage and ended by the important point to pay attention in the contract of insurances (especially those of the goods)

Situation of the Straits: As the main cause of this tension lies on Russia's eternal desire to descend into warm seas; the situation of the Straits' passage's should firstly explain.

The legal status of the Straits are regulated under the Convention of Montreux signed on 1936. According to the second article of the Convention "In time of peace, merchant vessels shall enjoy complete freedom of transit and navigation in the Straits, by day and by night, under any flag any and with any kind of cargo, without any formalities" except some sanitary controls.

The Strait regime suring the time of war is regulated under Articles 4 and 5 of the Convention in accordance with Turkey being beligerent or not.

Accordingly, Article 4 stipulates "In time of war, Turkey not being belligerent, merchant vessels, under any flag or with any kind of cargo, shall enjoy freedom of transit and navigation in the Straits subject to the provisions of Articles 2 and 3..."

When it comes to Article 5 "In time of war, Turkey being belligerent, merchant vessels not belonging to a country at war with Turkey shall enjoy freedom of transit and navigation in the Straits on condition that they do not in any way assist the enemy.

Such vessels shall enter the Straits by day and their transit shall be effected by the route which shall

in each case be indicated by the Turkish authorities..."

Therefore, in case of a declaration of war between Russia and Ukraine, Turkey's position and the Straits passage regime would be determined in accordance with the position of NATO. More concretely, in case of the declaration of war by Russia against Ukraine, it NATO would declare that such declaration would be a declaration of war against a NATO member states; then Turkey would also be assumed as belligerent and Russia flagged vessel would not enjoy freedom of transit and navigation in the Straits.

Last but not least, war risk could not impact Straits passage regime as long as Turkey is not threatened with imminent danger of war. In such case of imminent danger of war, free transit and navigation regime in the Straits would continue "except that vessels must enter the Straits by day and that their transit must be effected by the route which shall, in each case, be indicated by the Turkish authorities..."

Contracts of International Sale and Carriage: During the conclusion of the contracts of international sale of goods; the Parties should firstly always bear in mind that even though there is not any declaration of war; the region may be declared as war risk zone and may be subjected to some shipping problems.

Therefore, the crucial attention should be payed on the mode of the delivery of the goods. More concretely, during the conclusion of the contract of the international sale of the goods, the Parties should bear in mind that in FOB (Free on Board) delivery term, all the risk passes to the Buyer once the goods are delivered to the board of the vessel. Therefore, in such case, if the delivery place is one of the Ukrainian ports; the war risk should be beared by the Buyer.

The problem gets more complicated when it comes to CFR or CIF delivery term as this delivery terms only regulate the freight and insurance costs. In other words, only difference between CFR, CIF and FOB terms lies on the costs of freight and insurance including the risk of loading. That is why, whether it is FOB or CFR or CIF; the war risk would always be beared by the Buyer as the risk, once the good are delivered in FOB or loaded in CFR and CIF, would pass to him. So once delivered or loaded, if the vessel would be stucked to an Ukrainian port or be damages or loss due to the war; the risk should be beared by the Buyer.

Regarding to avoid such responsibility for the Buyers, Parties may agree on DAP (Delivery at Place) delivery method so-called also "door to door".

Another issue that needs the attention of the Parties is the Force Majeure clause stipulated in the contracts of international sale and also in the contract of carriage as well. The Parties should pay important attention on such Force Majeure clause as if it includes the war and war risks as Force Majeure situation and what are the rights given by the clause to the Parties.

Last but not least, the war clause incorporated in the contract of carriage, more concretely in the charter party also should to be read carefully. The model war clauses most of the time give right of deviation to the carriers after obtaining the instructions of the charterers. In such cases, special attention should be given to the limited notification timeline. In other words, in such cases, charterers should pay special attention to not miss the notification timeline.

Contracts of Insurance: The contracts of insurance's main aim is to insure the risks. In such case of war risk, the contract of insurance insuring the goods subjected to sale and carriage should be explained along with the P&I Hull and Machinery insurance for the vessel.

Accordingly, the related Parties for the goods should pay at first attention if the contract of insurance cover the war zone. More concretely, it should be emphasize here that Lloyds Market Association (LMA), which is the association of underwriters determinning the coverage of the insurance contracts, declared with a joint circular on 15 February 2022 that the Ukraninan and Russian waters in the Black Sea and the Sea of Azov are added to the Hull War, Piracy, Terrorism and Related Peril Areas.

That is why, the related Party(ies), especially the shipowners and carriers, should read carefully the contracts of insurance with a specific attention on its coverage zone.

Furthermore, the contract of carriage may, by including the war and war risk zone, but exclude the loss and damages occurred due the war and war risk arisen after the declaration of war or war risk. This possibility also should be beared in mind by the related Prty(ies) and the contract of insurance should also be examined by taking into consideration such possibility as well.

Last but not least, the P&I clubs may exclude their Hull and Machinery coverage for war and war risk zone areas as well. Such case may be occurred as the exclusion of such zone geographically under the geographic coverage area of the insurance contract or the hull and machinery loss and damages arisen as the consquences of war or war risk actions could be excluded from the insurance coverage. Therefore, the related Part(ies) should examine carefully the contracts of insurance by taking into consideration different possible exclusion version possibility of the insurance companies.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.