Charging for Hormuz

IRAN is seeking to recalibrate its control over the Strait of Hormuz by regulating maritime traffic and establishing a ‘smart management’ system that includes passage fees for vessels traversing the strait. The principal treaty governing these matters is the United Nations Convention on the Law of the Sea (UNCLOS), which establishes the legal framework applicable to passage through international straits. It recognises two principal regimes: innocent passage and transit passage.

Under UNCLOS, innocent passage is defined as passage that is “not prejudicial to the peace, good order, or security of the coastal State”. Activities that render passage non-innocent, expressly include any threat or use of force against the sovereignty, territorial integrity, or political independence of the coastal state, or in any other manner in violation of the principles of international law embodied in the Charter of the United Nations. Nevertheless, warships enjoy a customary right to innocent passage through straits used in international navigation in times of peace as recognised in the ICJ Corfu Channel case.

Innocent passage is more restrictive of the two regimes and applies within a coastal state’s territorial sea. Ships of all states enjoy the right to innocent passage through territorial seas and such passage must be continuous and expeditious. Under Article 25(3), a coastal state may temporarily suspend innocent passage in specified areas of its territorial sea, without discrimination, where necessary for its security and after due publication.

Article 45 of UNCLOS applies to straits that connect a part of the high seas or an Exclusive Economic Zone (EEZ) with the territorial sea of another state, thereby extending the innocent -passage regime to such straits used for international navigation. Iran would argue that the Strait of Hormuz falls within this special category of straits, much like the Straits of Tiran. This could, in turn, allow Iran to argue that, in specified areas of its territorial sea rather than throughout the entire strait, and upon giving due notice, it may temporarily suspend the innocent passage of foreign ships, without discrimination in form or fact, where such suspension is essential to protect its security.

Iran’s newly formalised Persian Gulf Strait Authority requires vessels to obtain transit authorisation, submit cargo details and pay fees before entering the Strait of Hormuz.

Under Article 37 of UNCLOS, the transit-passage regime applies to straits used for international navigation between one part of the high seas or an EEZ and another part of the high seas or an EEZ. It grants broader rights than innocent passage: submarines may transit while submerged, aircraft enjoy a right of overflight, and passage may not be suspended by the coastal state.

Iran signed UNCLOS in 1982 but never ratified it. Under Article 34 of the Vienna Convention on the Law of Treaties, a treaty does not, of itself, create obligations for a state that is not a party to it. As per this view, the legal basis for subjecting Iran to the transit-passage regime established under a treaty it has not ratified is questionable, unless it can be shown that the regime exists as a rule of customary international law — a proposition that, in this case, is not fully established. The US, however, maintains that the right of transit passage is part of customary international law, even though it has not ratified UNCLOS.

In 1959, Iran extended its territorial sea to 12 nautical miles, citing security concerns over Hormuz. Upon signing UNCLOS in 1982, it declared that transit passage was not part of customary international law but was, instead, a treaty compromise binding only on state parties.

Iran has maintained this position in its domestic law despite the Revolution. The 1964 Maritime Code, a 1981 decree left un-amended after the conclusion of UNCLOS, the 1993 Act on Marine Areas — which requires prior authorisation for numerous categories of vessels, including warships — and the 2012 amendments, all treat Hormuz as subject only to innocent passage.

Assuming arguendo that the right of transit passage applies, Iran would nevertheless maintain that passage through its territorial sea within the Strait of Hormuz remains governed by the innocent-passage regime, with the right to temporarily suspend for security reasons, particularly against belligerent states such as the US and its allies.

However, the innocent-passage regime prohibits imposing a fee merely for the right of passage. Consequently, any charge imposed solely for passage, or applied discriminatorily, would be legally questionable. Articles 16(4) and 18 of the 1958 Convention on the Territorial Sea and the Contiguous Zone prohibit charges for mere innocent passage through straits. Although Iran and the US are not parties to UNCLOS, it is worth noting that Article 26 of the Convention permits charges only for specific services actually rendered to a foreign vessel during innocent passage and requires that such charges be imposed without discrimination.

Iran’s newly formalised Persian Gulf Strait Authority requires vessels to obtain transit authorisation, submit cargo details and pay fees before entering the Strait of Hormuz. This policy, however, is strongly disputed internationally. Although Iran’s sovereignty supports the exercise of administrative, environmental and customs jurisdiction, international law strictly limits passage fees to reimbursement for specific services actually rendered.

To justify its tolls, Iran points to Turkiye’s fee system under the 1936 Montreux Convention and Egypt’s Suez Canal tolls. Unlike the Bosphorus, however, Hormuz is not governed by an existing multilateral treaty legitimising such fees, and, unlike the Suez Canal, Iran has not demonstrated that it provides dedicated services or maintenance for the strait.

If Iran is able — with or without Oman — to conclude an internationally recognised multilateral treaty, attracting a sufficient number of consenting states, that treaty could provide a legal basis for passage tolls, even if opposed by states such as the US. Without such a widely ratified treaty, Iran may struggle to justify a toll system legally, particularly one that is not linked to services actually provided and that accords preferential treatment to certain states.

Sikander Shah is a professor of law at Lums.
Sana Afraz is an international law expert.

Published in Dawn, July 27th, 2026