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Law firm Reed Smith on UK Supreme Court: The “Polar” and Red Sea war risks

Reed Smith shares takeaways of the court’s judgement of case involving “MT Polar” which was chartered for a voyage from St Petersburg to Singapore laden with a cargo of fuel oil when it was seized by Somali pirates.

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Global law firm Reed Smith on Tuesday (30 January) shared key takeaways of the UK Supreme Court’s judgement of a case involving vessel “MT Polar” which was chartered for a voyage from St Petersburg to Singapore laden with a cargo of fuel oil when it was seized by Somali pirates in 2010 until ransom was paid. Cargo interests disputed liability for their share of the ransom payment:

Key takeaways

  • The UK Supreme Court recently gave judgement in The Polar, ruling that the cargo interests were liable for their share of a ransom payment claimed in general average.
  • Shipowners may need to consider the specific wording of their charters, including any war risks clauses, when assessing their rights and liabilities in war-affected areas.
  • The judgement has a limited impact on shipowners’ right to deviate in the face of potential Houthi attacks in the Red Sea, as the decision is largely based on the construction of terms.

On 17 January 2024, the UK Supreme Court handed down judgement in The Polar [2024] UKSC 2. The judgement addresses an issue of current relevance given the ongoing war risks issues in the Red Sea area. 

Key facts

The vessel MT Polar was chartered for a voyage from St Petersburg to Singapore laden with a cargo of fuel oil.

The voyage charter contained a specific agreement that the voyage would take place via the Suez Canal, with the wording “All above via Suez with the Suez costs to be for Owners account”.

This necessarily required that the vessel would transit the Gulf of Aden, a known piracy risk area at the time. The charter incorporated the amended BPVOY 4 form, including a revised clause 39, “War Risks” (Clause 39) and various additional provisions, including a “Gulf of Aden” clause. Clause 39 gave the Owners considerable liberties to cancel or vary the performance of the charter if performance would expose the vessel to war risks.

On 30 October 2010, while transiting the Gulf of Aden, the vessel was seized by Somali pirates and held captive for 10 months until a ransom of US$7.7 million was paid. General average was declared by the Owners, including the ransom payment. Eventually the adjustment found that over US$5.9 million was due from cargo interests. Cargo interests disputed liability for their share of the ransom payment. The present appeal is an appeal brought by the cargo interests against the Owners.

The Supreme Court judgement addresses several issues, the most important of which (as a threshold) is whether, on the proper interpretation of the charter, there was an insurance code or insurance fund agreed between the Owners and Charterers to compensate the Owners. If there is such an insurance code or fund, it means the parties have agreed to look to the insurers (rather than to each other) for indemnification.

The Owners’ right to refuse the Charterers’ order

When dealing with this threshold issue, the court considered whether the Owners would have been entitled to refuse to transit Suez and the Gulf of Aden on the basis that this transit represented a war risk which exposed the vessel to danger.

In this regard, the court distinguished the case Kodros Shipping Corp of Monrovia v. Empresa Cubana de Fletes (The Evia (No 2)) [1983] 1 AC 736 [HL], where a complete insurance code to similar effect was held to exist under a time charter, a decision that was not without its critics. The complete code was held to exist based on four particular features of the charter identified by Lord Roskill, the first of which was that Clause 21 (A) gave the owner an unqualified right to refuse to accept orders for the ship to go or to continue to any place which would subject her to any danger arising as a result of war.

However, in The Polar, although Clause 39 was also expressed in comprehensive and unqualified terms, it had to be construed in its contractual context and against the background of the circumstances existing at the date of the charter.

The relevant background included 1) the well-known piracy risks in transiting the Gulf of Aden, 2) the agreement between the Charterers and the Owners that the contractual voyage would be “via Suez”, and 3) the detailed arrangements as to the parties’ rights and obligations when the vessel transited the Gulf of Aden. Considering these factors, the court said it was unacceptable for the Owners to refuse to take on the known piracy risk of transiting the Gulf of Aden on the terms they had agreed.

The court went on to say that the Owners may have been able to rely on the ”War Risks” clause and refuse to proceed if there had been “a change in the nature of the piracy risk, or a change in its degree sufficient to make it qualitatively different”. In this case, the court did not consider that the piracy risk changed “at any time from that known and contemplated at the time that the charter was agreed”, and the Owners were therefore not entitled to refuse a route through Suez and the Gulf of Aden.

Having considered the above factors and various other aspects, the court concluded that there was no insurance code or fund between the parties. Since the existence of the insurance code or fund was the foundation of the cargo interests’ appeal, the court dismissed the appeal.

Implications for Red Sea issues

This decision of the Supreme Court is relevant to charterparties for passage via the Gulf of Aden and Red Sea, because it affects shipowners’ rights to deviate to avoid potential Houthi attacks. However, the application of this judgement to current Red Sea issues is arguably limited because:

  • Many charterparties will not contain an express obligation to proceed via Suez and the Red Sea, giving shipowners greater freedom to navigate by a usual or customary route.
  • Most charterparties for ships presently in the area may pre-date the outbreak of the current hostilities, meaning that a shipowner can usually rely on a change in the nature of the risk since the charter was concluded.

Of course, every charter will need to be considered on its own terms, taking into account the specific wording and context of the relevant clauses. Reed Smith is advising on a range of issues related to war risks and Red Sea transit.

 

Photo credit: CHUTTERSNAP from Unsplash
Published: 1 February, 2024

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Alternative Fuels

Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.
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Yang Ming orders six LNG dual-fuel, ammonia-ready containerships from Hanwha Ocean

Taiwanese shipping firm Yang Ming Marine Transport Corporation (Yang Ming) and South Korean shipbuilder Hanwha Ocean on Wednesday (2 September) signed a shipbuilding contract for six 13,000 TEU class LNG dual-fuel container vessels. 

The contract was signed by Dr. Chuck Tsai, Chairman of Yang Ming, and Mr. Charles Kim, CEO of Hanwha Ocean. The vessels are scheduled for delivery between 2028 and 2029. 

They will complement Yang Ming’s existing fleet of 10,000+ TEU vessels and serve as key vessels on East-West services, with deployment flexibility across trade lanes connecting Asia with the East and West Coasts of North America, South America, and the Mediterranean. 

Each of the six new vessels will have a capacity of up to 13,650 TEU and feature LNG dual-fuel propulsion and Ammonia Fuel Ready specifications.

“As Yang Ming transitions toward net-zero emissions, LNG provides a relatively mature and economically viable alternative fuel solution, capable of reducing greenhouse gas emissions by approximately 20%,” the company said. 

“At the same time, ammonia can serve as a carbon-free fuel by utilising converted LNG storage facilities, while offering relatively lower conversion costs and comparatively well-developed supply chains and infrastructure. The Ammonia Fuel Ready design will therefore provide Yang Ming with greater flexibility in responding to increasingly stringent international regulations on greenhouse gas emissions.”

In addition, the vessels will be equipped with Type B LNG fuel tanks with a design pressure of 1.0 bar to enhance the safety and efficiency of LNG operations, together with a range of energy-saving technologies, including Wind Shields, Rudder Bulbs, Pre-Swirl Stators, and Shore Power Systems. Smart ship technologies and cybersecurity protection features will also be incorporated to enhance operational efficiency, safety, and reliability while effectively reducing fuel consumption and greenhouse gas emissions.

Deliveries under Yang Ming’s next-generation fleet optimization plan commenced earlier this year. By 2030, a total of 24 new vessels are expected to enter service. 

This includes 18 LNG dual-fuel vessels—comprising five 15,500 TEU, seven 16,000 TEU, and the six 13,000 TEU vessels under this contract—alongside six 8,000 TEU methanol dual-fuel-ready ships. 

 

Photo credit: Yang Ming Marine Transport
Published: 4 September, 2026

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Alternative Fuels

LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Both secured AiP for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.
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LR, China’s MARIC unveil tanker concept ready for three future bunker fuels

Lloyd’s Register (LR) and the Marine Design and Research Institute of China (MARIC) on Thursday (3 September) have secured Approval in Principle (AiP) for a new 114,000 DWT product and crude oil tanker designed to accommodate future conversion to LNG, methanol or ammonia.

Announced at SMM 2026, the concept addresses one of the biggest investment challenges facing shipping today: the need to develop vessels and capabilities that can support a range of alternative fuel options and pathways as technologies, infrastructure and regulations evolve.

While LNG is already a mature fuel pathway, methanol and ammonia remain at an earlier stage of development, with questions around global fuel availability, infrastructure development, economics and long-term adoption.

The 114,000 DWT tanker concept has been designed as a product and crude oil carrier that can accommodate future conversion to LNG, methanol or ammonia as technologies, regulations and fuel supply chains mature. By incorporating conversion readiness at the design stage, the concept aims to reduce future retrofit complexity and provide owners with greater confidence when planning long-term fleet investments.

The design concept was reviewed against LR’s July 2026 class rules and regulations, including requirements relating to ships using gases and other low-flashpoint fuels, alongside relevant IACS Common Structural Rules for oil tankers. Final classification and statutory approval remain subject to full compliance with all applicable rules and regulations.

Theo Kourmpelis, Global Business Director for Tankers, Lloyd’s Register, said: “Shipowners are being asked to make major investment decisions today despite continued uncertainty around which fuels will dominate in the decades ahead. Alternative fuel solutions each offer potential pathways to compliance, but fuel infrastructure, regulation and economics continue to evolve at different speeds around the world.

“Designs that preserve flexibility will be critical in helping owners manage risk while preparing for multiple future scenarios.”

Si Nan, Marine & Offshore Marketing Department Vice Director, MARIC, said: “As the industry explores different decarbonisation pathways, shipowners need vessel designs that can adapt alongside technological and regulatory developments. This concept was developed specifically to provide greater fuel flexibility and long-term resilience, allowing owners to respond to changing market requirements without being locked into a single fuel strategy.

“Receiving Approval in Principle from Lloyd’s Register is an important milestone that validates the design concept and supports its future development.”

 

Photo credit: Lloyd’s Register
Published: 4 September, 2026

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Alternative Fuels

DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

LNG-fuelled vessels accounted for the vast majority of August activity while the strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year.
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September 4, 2026

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DNV: Alternative-fuelled vessel orders hit highest monthly level since October 2024

Latest data from classification society DNV’s Alternative Fuels Insight (AFI) platform alternative-fuelled vessel ordering was strong in August, with 52 new vessels added to the platform.

This is the highest monthly total since October 2024 and follows another active month in July, when 47 vessels were added to the database.

LNG-fuelled vessels accounted for the vast majority of August activity, with 46 orders recorded. The container segment led the way with 30 orders, while the car carrier segment contributed a further 12 LNG-fuelled vessels. In addition, four ethanol-fuelled bulk carriers and two hydrogen-powered bulk carriers were added during the month, as well as one LNG bunker vessel.

The strong summer performance marked a significant acceleration in ordering activity after a relatively slow start to the year. In total, 242 alternative-fuelled vessel orders have been placed in the first eight months of 2026, representing a 27% increase compared with the same period in 2025.

LNG remains the dominant fuel choice, accounting for 63% of all alternative-fuelled vessel orders registered so far this year. Container vessels represent the largest share of these LNG orders (59%), followed by car carriers (30%).

Jason Stefanatos, Global Decarbonization Director at DNV Maritime, said: “The past two months have been particularly strong for alternative-fuelled vessel ordering, with August recording the highest monthly total we’ve seen since October 2024. This has helped lift year-to-date orders to a level well above the same period last year.

“LNG remains the leading fuel choice, driven largely by activity in the container and car carrier segments. These sectors have been among the earliest adopters of alternative fuels, supported by predictable liner operations and increasing demand from cargo owners to reduce emissions across supply chains. 

“For many owners, LNG offers a combination of emissions reductions, fuel availability and future flexibility while the longer-term fuel landscape continues to evolve. 

“At the same time, the latest figures include orders for ethanol- and hydrogen-fuelled vessels, highlighting that owners continue to explore a range of decarbonization pathways. Different segments are making different fuel choices, but the overall level of activity demonstrates continued investment in lower-emission shipping.”

Screenshot 2026 09 04 at 12.29.26 PM Screenshot 2026 09 04 at 12.29.36 PM

 

Photo credit: DNV
Published: 4 September, 2026

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