Buying Out a Toll, or Paying One

The maritime powers have met a toll on a natural strait once before. They neither litigated it nor regularised it. They bought it out, and they framed the purchase so that no one could read the money as recognition of any right to charge. This post makes three claims. First, Iran’s charges for passage through the Strait of Hormuz have no footing in the law of the sea. Second, the cooperation that Iran and Oman now discuss cannot cure that defect, although it may one day house a lawful alternative. Third, the remedy that the great powers of Europe devised at Copenhagen in 1857, pairing extinguishment of the toll with a refusal to recognise it, remains open to user States, because no court or tribunal can hear this dispute.

The setting is familiar. On 30 March 2026, the Iranian Parliament approved the Hormuz Transit Fee Law, which purports to authorise charges of up to two million US dollars a voyage for “security and environmental maintenance.” On 18 May 2026, Iran’s Supreme National Security Council announced a Persian Gulf Strait Authority, and the naval arm of the Islamic Revolutionary Guard Corps broadcast the same announcement. The Authority now requires every ship to obtain permission from Iran before passage because the Authority acts as an organ of the State, and its conduct engages Iranian responsibility.

Non-Ratification Does Not Rescue the Charge

Iran signed the United Nations Convention on the Law of the Sea (“Convention”) in 1982 without ratifying it, and the United States has not joined it either. When it signed, Iran declared that transit passage was the product of a quid pro quo rather than a codification of custom, so that only States parties could claim it. The United States treats transit passage as a customary right that binds Iran, and its forces challenge the Iranian declaration by sailing through the Strait. James Kraska anatomises that disagreement.

Nevertheless, neither side of that disagreement yields power to charge ships for passage. Article 38(1) of the Convention confers a right of transit passage that no State may impede, Article 44 forbids suspension of transit passage, and Article 42(1) lists exhaustively the subjects on which Strait States may legislate, namely navigational safety, pollution, fishing, and customs, fiscal, immigration and sanitary laws. A charge for transit passage appears nowhere on that list. Where transit passage does not apply, non-suspendable innocent passage governs, as the International Court of Justice affirmed in Corfu Channel, and Article 26 permits charges only as payment for specific services that the coastal State renders to the ship, never merely by reason of passage. Neither regime permits a coastal State to sell passage, and the Secretary General of the International Maritime Organization has said that States have no legal basis to impose tolls on international straits.

Straits Are Not Canals

Article 42 of the Convention, which sets out the powers of the Strait State, says nothing about charges, and that silence denies the power rather than leaving it open. The reason lies in structure, because a strait is not a canal. Engineers build a canal and its owner maintains it at cost, so dues for its use are lawful and ancient, which is why the Convention Respecting the Free Navigation of the Suez Maritime Canal of 1888 (“Constantinople Convention”) guarantees free passage without prohibiting dues. A strait is a natural feature, and the waterway runs whether or not the riparian State spends a shilling on it.

Riparians do spend money on buoys, traffic separation schemes, and search and rescue. Oman, whose waters carry the main traffic lanes, has demanded no transit fees, and its July 2026 proposal to Iran contemplates voluntary contributions. The Convention accounts for that expenditure twice, and neither provision creates a toll. Article 26(2) permits charges for specific services that a coastal State renders to a particular ship, whereas Article 43 provides that user States and strait States “should by agreement cooperate” on navigational and safety aids and on pollution control. The Malacca and Singapore Straits Cooperative Mechanism, in which the riparian States invite voluntary contributions and levy nothing for transit, shows what that cooperation looks like in practice.

The strongest case for Iran lies in that second provision. Writing on EJIL: Talk!, Soheil Golchin and Seyed Hossein Sadat Meidani argue that Article 43 creates a “two-sided bargain” between user and strait States, so that a cooperative arrangement between Iran and Oman could place the financing of Hormuz on a lawful footing. Their argument has some force, because the Convention does expect user States to share the cost of safe navigation.

Even so, that reading cannot rescue the toll that Iran now levies, for three reasons. First, Article 43 operates “by agreement,” whereas the Hormuz Transit Fee Law operates by unilateral decree. Second, Article 43 governs contributions to aids and pollution control, whereas Iran conditions passage on payment, and the authors accept that a refusal to cooperate can never justify denying transit passage. Third, a scheme that Iran and Oman design together would bind only the States that join it, so it could fund lighthouses but could not oblige a non-contributing ship to pay before it passes. The cooperation paradigm therefore points towards a lawful future arrangement, yet it neither validates the present charge nor relieves maritime States of the need to answer it. The Copenhagen settlement of 1857 shows how they can answer it, by buying out a toll without conceding any right to levy it.

Copenhagen, 1857

For roughly four centuries Denmark levied the Sound Dues on vessels passing the Øresund and the Belts. In 1857, no regime of transit passage existed for anyone to invoke, since transit passage is a creature of the 1982 Convention, and no court affirmed the non-suspendable right of passage through straits until 1949. Denmark could cite centuries of practice and treaties acknowledging the dues, and her jurists argued prescription with a straight face. The user States held the weaker legal hand. Nevertheless, they declined to regularise the toll.

Under the Treaty for the Redemption of the Sound Dues (“Copenhagen Treaty”), which the parties signed at Copenhagen on 14 March 1857, fifteen maritime States paid a capitalised sum of 30,476,325 rixdollars for the permanent extinction of the dues. The great powers of the day led the purchase, as Great Britain, France, Russia, Prussia and Austria signed alongside the Netherlands, Belgium, Sweden, Norway, and the Hanse Towns. The coalition joined Europe’s leading navies to the trading States most dependent on the Baltic, much as the users of Hormuz now span rival blocs. Great Britain’s Chancellor of the Exchequer told the Commons that Britain’s share came to £1,125,206, and in the Sound Dues debate of 5 June 1857, he charged it to the Consolidated Fund. The United States, which denied the legality of the dues outright, stood apart and settled through its own Convention for the Discontinuance of the Sound Dues (“Washington Convention”), which the two States signed at Washington on 11 April 1857.

The parties to the Copenhagen Treaty refused to concede, by paying, that Denmark had ever held a right to charge, and so they expressed the covenanted sum as compensation for the future burden of maintaining lights and buoys rather than as the price of access. T. J. Lawrence explained that the parties framed the money this way to avoid recognising, by implication, any right in Denmark. The transaction cuts both ways. The parties regarded Denmark’s charge for passage through a natural strait as an anomaly to abolish rather than a right to price, whereas they accepted payment for lights and buoys as legitimate. Article 26(2) of the Convention draws the same line today. The Convention Regarding the Régime of the Straits of 1936 (“Montreux Convention”) draws it again, confining Turkish charges to sanitary control, lighthouses and buoys, and life-saving services.

The Cost Recovery Objection

Critics argue that a riparian State carrying the cost and hazard of dense traffic through its territorial sea may reasonably recover them, and that a rigid reading of Article 26 leaves it bearing an externality for the world. Notwithstanding its abstract force, Iran cannot invoke that argument here. A genuine cost recovery charge would pay for services that the riparian State actually renders, follow a published tariff that auditors can check, and fall on every ship, whatever its flag or destination. Nor would the State whose own conduct made the passage hazardous impose it. Since the United States and Israel struck Iran on 28 February 2026, Iran has blockaded the Strait, and in July its new Strait Authority declared that passage through the Strait was “not possible at present.” Even with a modest tariff, a State cannot manufacture a danger, offer passage around it, and call the payment remuneration for a service. Whatever Iran calls the charge, its legality turns on whether a ship that refuses to pay may still pass.

Acquiescence, Protest, and Extinguishment

The present dispute has no forum. Iran is not a party to the Convention, so Part XV does not reach Iran. The compromissory clause in Article XXI(2) of the Treaty of Amity, Economic Relations, and Consular Rights between the United States and Iran of 1955 (“Treaty of Amity”), which grounded jurisdiction in Oil Platforms, lapsed when the United States terminated the Treaty of Amity with effect from 2019. Finally, the Security Council offers no neutral forum, because the United States, a permanent member holding a veto, has been a party to the armed conflict with Iran since the strikes of February 2026. Where no tribunal can speak, what States and shipowners do, and the words in which they describe it, will settle the law of the Strait.

The danger to the transit regime lies in acquiescence rather than in defeat on the merits. If shipowners pay in silence, other States may read that conduct as recognition, and then every Strait State acquires an interest in showing that a coastal State may monetise transit through a natural waterway. Bab el Mandeb, Malacca and Gibraltar would follow, and the regime of transit passage in Part III of the Convention would become a rent rather than a servitude, one that invoices enforce in place of any claim that anyone thought fit to argue.

The 1857 remedy answers that danger in two parts. The first part is the protest that accompanies the money. Each payment should carry a written reservation, which flag States and industry bodies repeat, recording that the payer acts under duress and without prejudice, and that no one may treat the payment as recognition or as State practice. The joint open letter that leading shipping associations sent to the United Nations and the International Maritime Organization on 3 August 2026, shows the right instinct but lacks the voyage by voyage paper trail that turns a general position into evidence. The second part is extinguishment on the Copenhagen model, through a capitalised payment that user States make collectively rather than ship by ship, describes as the funding of navigational services and the clearance of hazards, and condition on the permanent abolition of the toll and the restoration of the traffic separation scheme.

Critics may ask who would pay while negotiations flounder in an escalating contest between enemies. Although the question has force today, it mistakes who the buyers would be. China, India, Japan and South Korea together received 69 per cent of the crude oil and condensate that passed through the Strait in 2024, and the Gulf exporters stand behind Oman’s plan, so buyers need not wait for Washington and Tehran to reconcile. Nor did Copenhagen wait for friendship, because the United States, the fiercest opponent of the dues, settled by its own instrument once the European powers had shown the way. A capitalised fund that user States pay into a cooperative mechanism, which Iran and Oman administer together, would also give Article 43 the standing institution that Hormuz lacks, while denying the toll any claim to legitimacy. The sum is negotiable, but the characterisation is not, because States that extinguish a toll by agreement secure a freedom, whereas States that pay it in silence concede a claim.