Iran’s Strait Of Hormuz Fee Plan: UNCLOS

Source: Indian Express
GS II: Effect of Policies and Politics of Developed and Developing Countries on India’s interests

Overview

1. News in Brief
2.  UNCLOS and Strait of Hormuz
3. Implications for India

Why in the News?

Iran has proposed levying transit fees on ships passing through the Strait of Hormuz.

News in Brief

• The proposal follows rising regional tensions involving Iran, Israel, and the United States.
• The move has triggered debate over whether such charges are consistent with international maritime law under the United Nations Convention on the Law of the Sea (UNCLOS).
• Since nearly one-fifth of global oil trade passes through the Strait, any restriction could significantly affect global energy security.

UNCLOS and the Strait of Hormuz

Freedom of Navigation

• The United Nations Convention on the Law of the Sea (UNCLOS), 1982 guarantees:
  • Freedom of navigation.
  • Freedom of overflight.
  • Uninterrupted transit through international straits.
• Under Article 37 to 44 of the UNCLOS, ships of all nations enjoy the Right of Transit Passage, which generally cannot be suspended by coastal states.

Transit Passage

• Transit passage refers to:
  • Continuous and expeditious navigation through an international strait.
  • Passage by both merchant and military vessels.
  • Navigation carried out in accordance with international law and for peaceful purposes.
• Coastal states cannot arbitrarily impede or suspend this right.

Status of the Strait of Hormuz

• The Strait of Hormuz qualifies as an international strait because:
  • It connects the Persian Gulf with the Gulf of Oman and the Arabian Sea.
  • It links two parts of the high seas/Exclusive Economic Zones (EEZs).
  • It is extensively used for international maritime navigation.
• Therefore, the UNCLOS regime governing transit passage applies.

Transit Fees Under UNCLOS

• UNCLOS generally does not permit coastal states to levy fees solely for the passage of ships through an international strait.
• However, charges may be imposed only for specific services actually provided, such as:
  • Pilotage services.
  • Port facilities.
  • Other navigation-related services.
• A blanket transit fee merely for exercising the right of transit passage would likely be inconsistent with the provisions and spirit of UNCLOS.

Regulatory Powers of Coastal States

• Coastal states may enact laws relating to:
  • Safety of navigation.
  • Marine environmental protection and pollution control.
  • Customs regulations.
  • Immigration procedures.
  • Security measures.
• Such laws, however, must not hamper, suspend, or deny the right of transit passage guaranteed under UNCLOS.

Iran’s Position

• Iran has signed the United Nations Convention on the Law of the Sea (UNCLOS) but has not ratified it.
• While it follows several principles of customary international maritime law, it has reservations regarding the transit passage regime.
• Iran’s domestic maritime laws require prior authorization for certain foreign warships and vessels carrying hazardous materials.

Persistent Objector Doctrine

• Iran invokes the Persistent Objector Doctrine, which states that:
  • A state that consistently and openly objects to an emerging rule of customary international law during its formation may not be bound by that rule.
  • Iran argues that it has consistently opposed the unrestricted transit passage regime.
• However, the applicability of this doctrine in the case of the Strait of Hormuz remains legally contested and is not universally accepted.

Corfu Channel Case (1949)

• The Corfu Channel Case (1949) was the first contentious case decided by the International Court of Justice (ICJ).
• The Court recognized the right of innocent passage for ships through international straits used for international navigation during peacetime.
• The judgment laid the foundation for the modern principle of freedom of navigation, which was later reflected in the UNCLOS framework.

Implications for India

Threat to Energy Security

• India imports more than 80% of its crude oil requirements, with a significant portion sourced from Gulf countries through the Strait of Hormuz.
• Any disruption could affect the timely supply of crude oil and LNG, posing challenges to India’s energy security.

Inflationary Pressures

• Higher international crude oil prices would increase the cost of petroleum products in India.
• This would raise transportation and production costs across sectors, leading to inflation and reducing consumers’ purchasing power.

Higher Import Bill and Current Account Deficit

• A sustained rise in oil prices would increase India’s import expenditure, widening the Current Account Deficit (CAD) and putting pressure on the Indian rupee.
• It could also affect fiscal stability through higher subsidy burdens.

Impact on Economic Growth

• Expensive energy imports increase production costs for industries, reduce business profitability, and may slow economic growth.
• Sectors such as aviation, logistics, fertilizers, and manufacturing would be particularly affected.

Importance of Energy Diversification

• The situation reinforces the need for India to:
  • Diversify crude oil import sources beyond West Asia.
  • Expand the Strategic Petroleum Reserve (SPR).
  • Increase the share of renewable energy and alternative fuels.
  • Strengthen energy partnerships with countries in Africa, the Americas, and Russia.
  • Promote domestic exploration and production under initiatives such as the Hydrocarbon Exploration and Licensing Policy (HELP).

Strategic and Diplomatic Significance

• India has a strong interest in ensuring freedom of navigation and maintaining peace in the Indian Ocean and West Asia.
• It is likely to continue supporting a rules-based maritime order under UNCLOS, while balancing its diplomatic relations with Iran, Gulf countries, and major global powers.

UPSC Prelims and Mains Practice Question

Q. Consider the following statements:

1. Iran has signed but not ratified the United Nations Convention on the Law of the Sea (UNCLOS).
2. UNCLOS guarantees the Right of Transit Passage through international straits used for navigation.
3. The Corfu Channel Case (1949) is associated with maritime navigation through international straits.

Which of the statements given above are correct?

A. 1 and 2 only
B. 2 and 3 only
C. 1 and 3 only
D. 1, 2 and 3

Answer: D

Mains Practice Question

Q. “The Strait of Hormuz is not merely a maritime chokepoint but also a test of international maritime law. Discuss the legal issues surrounding transit passage under UNCLOS and examine its implications for India’s energy security.” (250 words)

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