Introduction

Since March 2026, Iran has asserted authority to charge commercial vessels for passage through the Strait of Hormuz. The assertion raises a question that the law of the sea answers in two separate regimes and that state practice has confronted only rarely, namely whether a state bordering a natural strait may require payment as a condition of transit. This Insight describes the governing treaty provisions, the positions of the states concerned, the historical practice on which each side draws, and the obstacles to adjudication.

The 2026 Measures

On March 30, 2026, the Iranian Parliament approved the Hormuz Transit Fee Law, which purports to authorize charges of up to two million dollars per voyage and which Iranian authorities describe as compensation for security and environmental maintenance.[1] In May 2026, Iran established the Persian Gulf Strait Authority, which claims that no vessel may pass without a permit it has issued and whose fees reportedly fund the Islamic Revolutionary Guard Corps.[2] Presidents Masoud Pezeshkian and Donald Trump signed a memorandum of understanding on June 17, 2026, that suspended the charges for sixty days. That period lapsed on August 17 without a wider settlement, and on August 25 Iran and Oman announced a temporary transit route and an Iranian military spokesperson reported agreement on sharing revenues.[3]

Iranian officials characterize the charges as fees for security, safety, environmental, and insurance services rather than as tolls on transit.[4] The United states insists that no agreement will allow Iran to charge a toll, although President Trump threatened in July to impose an American twenty percent fee on transiting goods. The Secretary-General of the International Maritime Organization (IMO) has declared that there is “no legal basis for the introduction of any tax, any customs, or any fees” for passage through straits used for international navigation.[5]

The UNCLOS Treaty Framework

Part III of the United Nations Convention on the Law of the Sea (UNCLOS) governs straits used for international navigation. Article 38(1) confers a right of transit passage that “shall not be impeded,” and Article 44 provides that states bordering straits “shall not hamper transit passage” and that “[t]here shall be no suspension of transit passage.”[6] Article 42(1) lists the subjects on which a strait state may adopt laws and regulations, namely safety of navigation and traffic regulation, pollution, fishing, and the loading or unloading of commodities in contravention of customs, fiscal, immigration, or sanitary laws. Charges do not appear on that list, and Article 42(2) forbids any such law to discriminate “in form or in fact among foreign ships” or to have “the practical effect of denying, hampering or impairing the right of transit passage.”[7]

Article 26, which governs the territorial sea in Part II, addresses charges directly. It bars any charge on foreign ships “by reason only of their passage through the territorial sea” and allows a charge only as payment for specific services rendered to the ship, levied without discrimination. Because Article 26 sits outside Part III, commentators debate whether it reaches transit passage.[8] Article 43 opens a separate path, inviting user states and states bordering a strait to cooperate by agreement in maintaining navigational and safety aids and in preventing pollution.[9] The Cooperative Mechanism for the Straits of Malacca and Singapore, which relies on voluntary contributions and levies no transit charge, offers the leading example, and analysts read Oman’s 2026 proposal as loosely modeled on it.[10]

Iran and the United States, Two Non-Parties with Opposing Views

Iran signed UNCLOS in 1982 but has not ratified it, and the United States is not a party. On signature, Iran declared that provisions of the kind found in Part III resulted from negotiated exchange rather than codifying existing custom, and that only states parties could benefit from the contractual rights so created. The declaration named transit passage first among those rights.[11]

The United States, by contrast, treats transit passage as customary international law and lists Iran’s declaration as an excessive maritime claim in its annual freedom of navigation report.[12]

Commentators observe that the two positions yield different regimes for the same waters, transit passage on the United States view and non-suspendable innocent passage on Iran’s.[13] Even on Iran’s view, a floor of protection remains. In the 1949 Corfu Channel case, the International Court of Justice (ICJ) held that, absent a treaty providing otherwise, a coastal state has no right in time of peace to prohibit innocent passage through straits used for international navigation between two parts of the high seas.[14] Under either view, the governing regime contains no express power to charge for passage as such.

Historical Practice

Commentators often invoke three episodes. Denmark levied the Sound Dues on vessels passing the Danish Straits from the fifteenth century until 1857, when the Treaty for the Redemption of the Sound Dues extinguished the levy. Under that treaty, fifteen Powers paid a capitalized sum fixed at 30,476,325 rix dollars, with Britain paying 10,126,855 (£1,125,206), Russia 9,739,993, Prussia 4,440,027, and France 1,219,003. Defending the British share in Parliament, the Chancellor of the Exchequer argued that delays at Elsinore cost shipping more than the dues themselves and conceded that earlier treaties bound Britain to recognize their legality.[15] A leading treatise, however, later recorded that the parties framed the sum as compensation for the future maintenance of lights and buoys, so as to avoid recognizing by implication any Danish right to levy the dues.[16] The United States, which had denied the legality of the dues, settled separately at Washington in April 1857.[17]

The Constantinople Convention of 1888 governs the Suez Canal. It guarantees free passage in war and in peace and does not prohibit dues, a difference that commentators attribute to the artificial character of a canal built and maintained at cost.[18] The Montreux Convention of 1936, which governs the Turkish Straits (the Dardanelles, the Sea of Marmara, and the Bosphorus), permits Turkey to levy on merchant vessels in transit only the charges listed in Annex I, which cover sanitary control, lighthouses and buoys, and life-saving services.[19]

Read together, the three instruments draw a line between charges for services rendered, which they tolerate, and charges for access to a natural waterway, which the Sound Dues settlement and the Montreux regime avoided. Iran, however, may read the same history differently, because Denmark collected the Sound Dues for four centuries and surrendered them only in return for compensation.

Dispute Settlement

Because Iran is not a party to UNCLOS, the compulsory procedures of Part XV cannot reach it. The 1955 Treaty of Amity, Economic Relations, and Consular Rights between the United States and Iran once offered another route, and its compromissory clause grounded the ICJ’s jurisdiction in the Oil Platforms case between the two states.[20] That route has closed. The United States gave notice terminating the treaty on October 3, 2018, the same day the ICJ ordered provisional measures in a second (unrelated) case against the United States that Iran had brought under it, and the termination took effect one year later.[21] The United Nations Security Council faces a further constraint, because a veto-holding permanent member (i.e., the United States) has taken part in the underlying hostilities.

Without a forum, the conduct of states and shipowners, and the terms on which they make or refuse payment, will likely shape the legal significance of the charges. According to the International Law Commission, a failure to react over time to a practice may serve as evidence of acceptance as law, where states could react and the circumstances called for a reaction.[22] Eight shipping associations accordingly wrote to the UN and IMO Secretaries-General on August 3, 2026, opposing compulsory charges, and one commentator has warned that the survival of Iran’s regime without formal legal challenge would set the most damaging precedent.[23]

Conclusion

The legal question is narrow, and the practical stakes are broad. Whether transit passage governs the Strait of Hormuz, as the United States maintains, or non-suspendable innocent passage, as Iran maintains, neither regime confers an express power to charge for passage as such, whereas UNCLOS allows charges for specific services rendered to a ship and invites cooperative funding by agreement. Whether Iran’s charges fall on one side of that line, as fees for services, or on the other, as tolls for passage, will turn on how Iran calculates, publishes, and enforces them and, absent formal adjudication, on how states and shipowners characterize what they pay.

About the Author: Hashim Mohamed is a professor and lawyer whose research addresses international law and global energy markets.

[1] See Ahsan A. Munir, The Contesting of the Strait, Courting the Law (Apr. 7, 2026), https://courtingthelaw.com/2026/04/07/news-events/international/the-contesting-of-the-strait/.

[2] Cong. Rsch. Serv., R45281, The Strait of Hormuz, Security Developments and Impacts on Oil, Gas, and Other Commodities (updated Aug. 7, 2026), https://www.congress.gov/crs-product/R45281.

[3] US-Iran Memorandum of Understanding Expires, How and Why It Fell Apart, Al Jazeera (Aug. 17, 2026), https://www.aljazeera.com/news/2026/8/17/us-iran-memorandum-of-understanding-expires-how-and-why-it-fell-apart; Iran, Oman Agree on Temporary Hormuz Route, What We Know, Al Jazeera (Aug. 26, 2026), https://www.aljazeera.com/news/2026/8/26/iran-oman-agree-on-temporary-hormuz-route-what-we-know.

[4] Iran Says Hormuz Transit Fees Suspended Under US Memorandum, Iran Int’l (June 19, 2026), https://www.iranintl.com/en/202606199213; Iran and Oman Exchange Proposals to Manage Strait of Hormuz, Al Jazeera (July 28, 2026), https://www.aljazeera.com/news/2026/7/28/iran-and-oman-exchange-proposals-to-manage-strait-of-hormuz.

[5] Usaid Siddiqui, Is Iran Charging a Toll to Allow Oil Traffic Through Hormuz?, Al Jazeera (Oct. 5, 2026), https://www.aljazeera.com/news/2026/10/5/is-iran-charging-a-toll-to-allow-oil-traffic-through-hormuz; Jackie Northam, Trump Says U.S., Not Iran, Will Collect Tolls in the Strait of Hormuz, NPR (July 14, 2026), https://www.kunc.org/2026-07-14/trump-says-u-s-not-iran-will-collect-tolls-in-the-strait-of-hormuz; UN Maritime Agency Rejects Hormuz Tolls, Ahram Online (Apr. 27, 2026), https://english.ahram.org.eg/News/566809.aspx.

[6] United Nations Convention on the Law of the Sea arts. 38(1), 44, Dec. 10, 1982, 1833 U.N.T.S. 397 [hereinafter UNCLOS], https://www.un.org/depts/los/convention_agreements/texts/unclos/unclos_e.pdf.

[7] UNCLOS, supra note 6, art. 42.

[8] UNCLOS, supra note 6, art. 26; Safia K. Southey, Codifying Coercion, Iran’s “New Legal Regime” and the Law of International Straits, Blog of the Eur. J. Int’l L. (Apr. 20, 2026), https://www.ejiltalk.org/codifying-coercion-irans-new-legal-regime-and-the-law-of-international-straits/.

[9] UNCLOS, supra note 6, art. 43.

[10] Noam Raydan & Farzin Nadimi, Reaching Viable Management Arrangements in the Strait of Hormuz, Wash. Inst. for Near E. Pol’y (Aug. 5, 2026), https://www.washingtoninstitute.org/policy-analysis/reaching-viable-management-arrangements-strait-hormuz.

[11] Declaration of the Islamic Republic of Iran on Signature of UNCLOS (Dec. 10, 1982), in Multilateral Treaties Deposited with the Secretary-General, ch. XXI, no. 6, https://treaties.un.org/Pages/ViewDetailsIII.aspx?src=TREATY&mtdsg_no=XXI-6&chapter=21&Temp=mtdsg3&clang=_en.

[12] U.S. Dep’t of Def., Annual Freedom of Navigation Report, Fiscal Year 2024 (May 19, 2025), https://policy.defense.gov/Portals/11/Documents/FON/TAB%20A%20-%20Summary%20of%20FY24%20Operational%20Challenges.pdf.

[13] James Kraska, The Legal Vortex in the Strait of Hormuz, 54 Va. J. Int’l L. 323 (2014), https://hls.harvard.edu/bibliography/the-legal-vortex-in-the-strait-of-hormuz.

[14] Corfu Channel (U.K. v. Alb.), Judgment, 1949 I.C.J. 4, 28 (Apr. 9), https://www.icj-cij.org/case/1.

[15] Treaty for the Redemption of the Sound Dues, Mar. 14, 1857, https://api.parliament.uk/uk-treaties/treaties/11919; Sound Dues, Committee, HC Deb (June 5, 1857) (U.K.), https://api.parliament.uk/historic-hansard/commons/1857/jun/05/sound-dues-committee; Papers Moved For, HC Deb (Mar. 17, 1857) (U.K.), https://api.parliament.uk/historic-hansard/commons/1857/mar/17/papers-moved-for.

[16] T.J. Lawrence, The Principles of International Law 177 (3d rev. ed. 1900), https://archive.org/details/ed3reprinciplesof00lawr.

[17] Convention for the Discontinuance of the Sound Dues, Den.-U.S., Apr. 11, 1857, 11 Stat. 719, https://www.govinfo.gov/content/pkg/STATUTE-18/pdf/STATUTE-18-PgT173.pdf.

[18] Convention Respecting the Free Navigation of the Suez Maritime Canal art. 1, Oct. 29, 1888, https://www.suezcanal.gov.eg/french/About/CanalTreatiesAndDecrees/Pages/ConstantinopleConvention.aspx.

[19] Convention Regarding the Régime of the Straits pmbl., art. 2 & annex I, July 20, 1936, 173 L.N.T.S. 213, https://cil.nus.edu.sg/wp-content/uploads/2019/02/1936-Convention-Regarding-the-Regime-of-the-Straits.pdf.

[20] Treaty of Amity, Economic Relations, and Consular Rights, Iran-U.S., art. XXI(2), Aug. 15, 1955, 8 U.S.T. 899, 284 U.N.T.S. 93, https://api.icj-cij.org/sites/default/files/case-related/175/175-20180716-APP-01-01-EN.pdf (annex 1 to Iran’s 2018 ICJ application); Oil Platforms (Iran v. U.S.), Preliminary Objection, Judgment, 1996 I.C.J. 803 (Dec. 12), https://www.icj-cij.org/case/90.

[21] Treaty of Amity, supra note 20, art. XXIII(3); Alleged Violations of the 1955 Treaty of Amity, Economic Relations, and Consular Rights (Iran v. U.S.), Order on Provisional Measures, 2018 I.C.J. 623 (Oct. 3), https://www.icj-cij.org/case/175; US Pulls Out of 1955 Treaty with Iran, Says Measures Long Overdue, Al Jazeera (Oct. 3, 2018), https://www.aljazeera.com/news/2018/10/3/us-pulls-out-of-1955-treaty-with-iran-says-measures-long-overdue.

[22] Int’l L. Comm’n, Draft Conclusions on Identification of Customary International Law, with Commentaries, concl. 10(3), U.N. Doc. A/73/10 (2018), https://legal.un.org/ilc/texts/instruments/english/draft_articles/1_13_2018.pdf.

[23] Int’l Chamber of Shipping et al., Joint Open Letter in Relation to No Compulsory Tolls or Charges Being Introduced in the Strait of Hormuz (Aug. 3, 2026), https://www.ics-shipping.org/wp-content/uploads/2026/08/Joint-open-letter-in-relation-to-no-compulsory-tolls-or-charges-being-introduced-in-the-Strait-of-Hormuz.pdf; Southey, supra note 8.