Assessing The Legality Under International Law Of Iran’s ‘Toll’ Collection On Passage Through The Strait Of Hormuz

New Delhi: In a move to further capitalise on its leverage over the vital Strait of Hormuz in the conflict against Israel and the United States of America, Iran’s National Security Commission cleared a series of new regulations, which include financial provisions requiring vessels to pay a ‘transit fee’ for transit through the Strait of Hormuz. Upon clearance by the Guardian Council and President, the regulations would impose a minimum toll of $1 per barrel of oil — channelled through an IRGC-linked intermediary via a Chinese State-owned financial institution — and vest in Iran an essentially unfettered discretion over vessel access, exercised according to its assessment of each flag state's political disposition toward Tehran. As reported by the Financial Times, Iran, through a letter to the member countries of the International Maritime Organisation, has stated that they had “taken necessary and proportionate measures to prevent the aggressors and their supporters from exploiting the Strait of Hormuz to advance hostile operations against Iran”  as vessels linked to the US and Israel “do not qualify for innocent or non-hostile passage”. While Iran’s letter states that non-hostile vessels will be permitted passage ‘in coordination with Iranian authorities’, these regulations seem to suggest that Iran is unwilling to return to a pre-conflict situation even after a cessation of hostilities. On April 02, 2026, Deputy Foreign Minister of Iran Kazem Gharibabadi stated that it is coordinating with Oman a peacetime maritime navigation plan that will require all vessels to coordinate in advance with Omani and Iranian authorities and obtain necessary permits and licenses. 

This has brought to the fore the question of the legal basis within international law upon which such a measure can rest, which this article seeks to analyse. At the outset, it must be clarified that the article limits itself to the analysis of the right of a coastal state to exercise discretion over the passage of commercial vessels through international straits and impose a ‘transit fee’ over such passage. It does not seek to analyse the restriction of vessels of belligerent States or warships through such waters during a state of armed conflict. Neither will it focus upon the targeting — under laws of armed conflict — of ‘neutral’ commercial vessels seeking to transit through international straits. Hormuz. The current situation in the Strait of Hormuz is but an example to highlight a larger issue of freedom of navigation on the high seas and transit passage through internationally recognised straits.  

The Transit Passage Regime under UNCLOS 1982

This discussion is neither new in principle nor context. Straits used for international navigation have often been the subject of discussion, negotiation, and conflict rising from the fundamental tension between two competing imperatives: the freedom of navigation as a cornerstone of international trade, and the interests of the coastal State in regulating activities in such proximate and narrow passageways. It was this balance which was struck with the conclusion of the United Nations Convention on the Law of the Sea 1982 (UNCLOS 1982) in the creation of a new ‘right of transit passage’ (Article 38) in Section 2 Part III. This right, as per UNCLOS 1982, is restricted to ‘straits used for international navigation between one part of the high seas or an exclusive economic zone and another part of the high seas or an exclusive economic zone (Article 37 UNCLOS). It is important to highlight that as per Article 36 UNCLOS, if there exists through the strait a route through the high seas or through the exclusive economic zone of similar convenience with respect to navigational and hydrographical characteristics, the regime of transit passage will not apply. This is because within the high seas or exclusive economic zone, freedom of navigation already exists and therefore, a new regime is unnecessary. While not a legal threshold, as a rule of thumb, for there to be a ‘strait used for international navigation’ under UNCLOS, the maximum width at the narrowest point of the strait must not exceed 24 nautical miles. When the width at the narrowest point is within 24 nm, passage is through the territorial sea of one of the bordering States to the strait over which the coastal State exerts sovereignty, subject to the right of innocent passage. The mere fact that the territorial sea of the State is in a geographical strait does not “alter the legal status” of the territorial sea or the sovereignty or jurisdiction over such waters”. However, Article 34 UNCLOS makes this status subject to the right of transit passage, which equates to an exercise of freedom of navigation and overflight in the strait which “shall not be impeded”. Therefore, the right of transit passage is a broader right (akin to freedom of navigation and overflight) in favour of the interests of international shipping and trade as opposed to the right of innocent passage. This right is subject to the power of the bordering States to designate traffic separation schemes (Article 41 UNCLOS), and adopt laws for the safety of navigation, prevention of pollution, and in respect of fishing vessels (Article 42 UNCLOS). Even though bordering States have certain powers to regulate transit passage, Article 42 and Article 44 of UNCLOS are unequivocal in their construction that “such laws shall not discriminate in form or in fact among foreign ships or in their application have the practical effect of denying, hampering or impairing the right of transit passage’ and that there “shall be no suspension of transit passage”. 

The Strait of Hormuz connecting the Persian Gulf and the Gulf of Oman is 20.75 nautical miles wide at its narrowest point and 52.5 nautical miles at its widest. In 1973, the International Maritime Organisation established a Traffic Separation Scheme (TSS) in the Strait of Hormuz with two shipping lanes for eastbound and westbound traffic in addition to a separation zone. Eastbound and westbound traffic moves through the Iranian and Omani territorial seas. It has been reported that Iran is currently rerouting approved vessels from the TSS further north around Larak Island to create a new maritime corridor. Since the Strait of Hormuz falls at its narrowest point falls within the 24nm limit, and connects two exclusive economic zones on either side, it at the outset falls within the definition of a strait used for international navigation, making it subject to the right of transit passage. 

Iran's Non-Ratification of UNCLOS 1982 and the Customary Law Question

A reading of UNCLOS 1982 makes such measures proposed to be undertaken by Iran a violation of international law, as it would be contrary to the right of transit passage. However, Iran may argue that the transit passage regime is not applicable to it as it has not ratified UNCLOS 1982 and is merely a signatory.  Additionally, at the time of signing, Iran made a declaration, and Iran explicitly recorded that the “certain of its [1982 Convention] provisions are merely a product of quid pro quo, which do not necessarily purport to codify the existing customs or established usage (practice) regarded as having an obligatory character. Therefore, it seems natural and in harmony with Article 34 of the 1969 Vienna Convention on the Law of Treaties that only states parties to the Law of the Sea Convention shall be entitled to benefit from the contractual rights created therein. The above considerations pertain specifically (but not exclusively) to the following:  The right of Transit passage through straits used for international navigation (Part III, Section 2, article 38). Therefore, it may be argued that the provisions of the transit passage regime do not reflect a codification of customary international law with respect to passage rights in straits and therefore, the ‘benefits’ are not binding upon non-Parties. While non-ratification points towards Iran not assuming the obligations of this provision either, the declaration in its construction may support a reading that Iran does not wish to allow the ‘benefits’ of transit passage to States such as Israel and the United States that have not ratified UNCLOS 1982 either. 

During the Third United Nations Conference on the Law of the Sea, the delegate of Iran argued that: 

“Rules could be devised which would guarantee freedom of passage for foreign vessels while taking account of such questions as the security of coastal states, the protection of the marine environment and the regulation of the passage of vessels through sea corridors.  While certain exceptions to the sovereignty of the Coastal State might be envisaged in the interests of international trade and communication, the draft Articles should in no way alter the status of the territorial sea encompassing the Straits.”

These comments need to be read with the 1974 joint declaration by Iran and Oman to ensure ―the freedom of navigation through the Strait of Hormuz and the adjacent seas.”

While some commentators have argued that the development of the transit passage regime and near universal ratification of UNCLOS make it a rule of customary international law, the introduction of such a compromise in 1982 does raise questions as to its customary status. Additionally, Iran has consistently stated that there is no need for a new regime as the territorial sea principles apply, and may argue for the status of a persistent objector. At this juncture, it could be assumed that, irrespective of the veracity of Iran’s insistence to be a persistent objector, the imposition of such measures may still be contrary to international law. 

The Innocent Passage Regime: A Floor That Cannot Be Withdrawn

Nonetheless, the right of innocent passage would apply in the Strait of Hormuz — a position supported by Iran itself. For this claim, Iran has argued that while such a right exists, it may be suspended by the coastal State.  Iran has signed the Geneva Convention on the Territorial Sea and Contiguous Zone 1958 Article 16(4) of which stipulates that there should be no suspension of the innocent passage regime through straits used for international navigation between one party of the high seas and another part of the high seas or the territorial sea of a foreign State. This has been upheld — even in the case of warships — in the ICJ’s Corfu Channel Case and has been declared as a rule of customary international law. Iran and Oman argue that the Strait of Hormuz is not subject to Article 16(4) because the strait does not connect one part of the high seas and another part of the high seas. This argument is untenable as Iran and Oman have extended their territorial sea limits to 12nm from the previous 3nm limit, which existed at the time of the conclusion of the 1958 Convention. The creation of the transit passage regime was done in response to this increase in territorialisation of the international straits, which would impede global commerce. Additionally, the exclusive economic zone explicitly preserves the high seas freedom of navigation. It is to adapt to this reality that the transit passage regime in UNCLOS 1982 was modified to include the exclusive economic zone in addition to the high seas, and consequently, Article 16(4) too needs to be read considering these new realities. Therefore, even if the transit passage regime is not applicable, the innocent passage regime is applicable to the Strait of Hormuz that may not be suspended in the future. Since the right of innocent passage is ‘universal’, as long as the passage is expeditious, continuous and is not prejudicial to the peace, good order, or security of the coastal State — a definition adopted by Iran herself in the Act on the Marine Areas of Islamic Republic of Iran in the Persian Gulf and the Oman Sea, 1993— any Iranian measure to discriminate against vessels or impede their passage will be in violation of this principle. Furthermore, the introduction of a toll is also a violation of the right of innocent passage as codified in Article 26 UNCLOS, which does not allow for a charge to be levied upon foreign ships by reason only of their passage through the territorial sea. Such a levy would go against the very notion of a ‘right’. 

Historical Precedent and the Permissible Scope of Charges

The collection of ‘tolls’ during passage through natural straits has, however, had some precedent. The two cases that need to be addressed are the cases of the ‘Danish Straits' (The Belts and Sound) and the ‘Turkish Straits’, namely the Bosporus and Dardanelles. Connecting the maritime corridors between the North Sea and the Baltic Sea, the control over the Danish straits evolved as a consequence of state practice and the principle of control over both shores of a waterway under Roman law. This was supported by similar State practice with the Byzantine Empire over the Bosporus and Dardanelles. While the Danes collected dues for passage through the Sound, the basis of the claim was expenses it incurred in protecting the shipping against piracy, and upkeep of markers, lighthouses, etc., that were essential for safe passage. However, over time, with growing maritime power and interests of other seafaring nations, the international consensus grew against this practice, which was abolished — albeit after a lump sum one-time payment — in the Treaty of Copenhagen in 1857.  While the payment of a one-time compensation acknowledged the special status of these straits, the abolition of fees represented a new international consensus with Danish state practise extending the benefits to commercial vessels of non-party States. Requirements of pilotage, too, were abolished. Similarly, for the Turkish straits, the Montreux Convention 1936 in Article 1 recognises the principle of freedom of transit and navigation by sea in the Turkish Straits. Despite already being a multilateral treaty, Turkey has agreed to apply these provisions to vessels of third States too, reaffirming the right to transit passage. UNCLOS 1982 incorporates these conventions within its scope by carving out an exception for them in Article 35(c), which does not make Part III applicable to straits which have long-standing conventions specially in force for them. A key aspect in the acceptance of these conventions is that they were concluded between not merely the bordering States to straits but have attained wider consensus between multiple major maritime and affected nations. 

In times of peace, all merchant vessels without discrimination on the basis of flag, cargo, etc., can transit through the Straits. Turkish authorities are only allowed to collect charges for services rendered to the vessel, such as the establishment of sanitary control stations, lighthouses, light and channel buoys, and life-saving services as laid down in Annex 1 to the Montreux Convention. This collection is without discrimination based on the flag of the vessel. Therefore, there does not exist an exercise of sovereignty vis-à-vis the transit of merchant vessels in the manner proposed by the Iranian State (both regimes retain restrictions on warship transit, especially during belligerency, which is not a subject of discussion here). In fact, the UNCLOS regime itself in Article 26(2) permits indiscriminate charges for specific services rendered to the ship. Therefore, charges cannot be collected for the mere purpose of passage without a corresponding demonstration of value addition for safety.

It is possible that any such measure being planned by Iran be couched in terms of the safety of navigation. As per the transit passage regime and State practice on straits used for international navigation, national laws may be adopted for giving effect to safety and pollution control measures, etc. However, any substitutions in the traffic separation scheme must be adopted by the International Maritime Organisation, must be in agreement with generally accepted international regulations, and must be in cooperation with States bordering the strait (Article 41 UNCLOS). Even State practice outside the UNCLOS 1982 regime — as seen in the Danish Straits — is supported by an IMO resolution and a European Parliament Directive.

The role of Oman, too, becomes crucial in this analysis. While Oman has historically had a more rigid position in comparison to Iran on the rights of coastal states over such straits, Oman has signed and ratified UNCLOS 1982, making it a Party to the Convention and the transit passage regime. Oman’s declaration upon signature, which stated that the innocent and transit passage regime provisions do not preclude a coastal State from taking such appropriate measures as are necessary to protect its interest of peace and security, is appreciated. However, the discriminatory restriction of merchant vessels and the imposition of a toll can by no means be a measure to protect its peace or security. Therefore, Oman’s adherence to international law is an important factor in the success or lack thereof of such Iranian measures.

Conclusion 

Unilateral changes to the traffic separation scheme, introduction of a permitting requirement, and the imposition of ‘tolls’ or ‘transit charges’ by Iran are violations of international law. It violates not only the transit passage regime laid out in UNCLOS 1982, but would at the minimum also be a violation of the innocent passage regime, which Iran itself acknowledges is applicable. The argument of Iran that such a right can be suspended does not find any support in international treaty nor customary international law. While some State practice does exist to support the charging of fees from vessels transiting such straits, these fees may be charged for the provision of certain services rendered by the coastal State for the navigation of vessels, but may not be charged for the fact of transit. Consequently, they may not be arbitrary or discriminatory in nature. In any case, such a fee structure needs to be established by a multilateral agreement involving the IMO. An argument may be made that such a ‘toll’ may be established if multilateral groupings involving the specially affected States, such as India, that utilise this strait concur with the establishment of such a mechanism. However, any unilateral or even bilateral action without international agreement is going to be contrary to international law. While we may be empathetic to Iran’s jus ad bellum arguments for the use of force, the establishment of such a post-conflict system cannot be reconciled with existing principles of international law. This does not portend well for freedom of navigation on the high seas and could potentially open the proverbial ‘Pandora’s box’ if other coastal states straddling other international straits across the world decide to follow suit.

(Written By Admiral Karambir Singh (Retd), Ex-CNS and Chairman NMF)

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