Decoded: How 12 Bilateral Deals Replaced Freedom of Navigation at Hormuz

The New Transit Architecture

Freedom of navigation at the Strait of Hormuz is dead. In its place, Iran has constructed something unprecedented in modern maritime history: a bilateral access regime where your right to transit depends not on international law, but on your flag state's relationship with Tehran.

Six weeks into the crisis, at least 12 countries have secured some form of passage agreement — China, Russia, India, Iraq, Pakistan, Turkey, Malaysia, Thailand, the Philippines, France, Japan, and Oman. Each deal is different. Each was negotiated separately. And together, they represent a fundamental shift in how the world's most important maritime chokepoint operates.

This is not a blockade being slowly lifted. It is a new system being built.

The Three Tiers of Access

The bilateral deals are not equal. They fall into a clear hierarchy that reveals Iran's strategic calculus.

Tier 1: Permanent allies (unrestricted access). China and Russia were first, announced March 26 alongside India, Iraq, and Pakistan. Their ships transit with minimal friction — IRGC coordination required, but no toll and no political conditions beyond maintaining friendly relations. These are the nations that vetoed the UN Security Council resolution to reopen Hormuz on April 7 (11-2 vote). Their reward is commercial advantage.

Tier 2: Strategic partners (conditional access). India, Pakistan, Iraq, Turkey, Malaysia, Thailand, and the Philippines fall here. Each deal has specific terms. Pakistan secured passage for 20 ships, two per day. The Philippines obtained safe passage for Filipino seafarers and PH-flagged vessels, but — critically — most Filipino sailors serve on ships flagged to Panama, Liberia, or the Marshall Islands, creating a protection gap. Iraq was declared exempt from all restrictions in an Arabic-language IRGC video on April 4. Each deal serves Iran's diplomatic strategy: rewarding non-alignment and building a coalition of nations with economic stakes in Tehran's goodwill.

Tier 3: Transactional access (pay-per-transit). France's CMA CGM Kribi completed the first Western container ship transit on April 2 — not through a bilateral deal, but through direct diplomatic coordination. Japan's Mitsui OSK secured passage for one LNG tanker. These are one-off arrangements, negotiated vessel by vessel. For everyone else, there is the toll: reportedly $2 million per ship, paid in yuan or cryptocurrency, processed through the IRGC checkpoint at Larak Island.

The Numbers That Matter

Before the crisis, 130 ships transited Hormuz daily. As of April 6, the seven-day rolling average hit its highest since the war began — but Bloomberg data shows just 11 transits that day. That is 8% of normal traffic.

The bilateral system is not restoring traffic. It is rationing it.

Of the roughly 3,200 vessels now trapped in or around the Persian Gulf, the vast majority fly flags that have no bilateral deal with Iran. Panama-flagged ships — the world's largest fleet by tonnage — have no arrangement. Neither do Liberia or the Marshall Islands, the second and third largest registries. Together, these three open registries account for roughly 42% of global merchant tonnage.

This is the structural gap the bilateral model creates: the flags that dominate global shipping are precisely the ones with no political relationship to leverage.

What This Means for Operators

For shipowners: Flag state has become an operational variable, not just a regulatory one. A vessel flagged to a country with an Iran deal has a path through Hormuz. The same vessel re-flagged to Panama does not. Some owners are already exploring flag-state arbitrage — temporarily re-flagging to access-approved registries. This is legally complex, expensive, and slow, but it tells you how desperate the situation has become.

For manning agencies: The Philippine deal protects Filipino seafarers regardless of the vessel's flag — in theory. In practice, enforcement depends on the IRGC recognizing crew nationality during the Larak Island checkpoint process. No mechanism exists for verifying this at sea. Manning agencies deploying Filipino crews on non-PH-flagged vessels into the Gulf are operating in a legal grey zone where diplomatic assurance has not been tested operationally.

For insurers: The bilateral deals do not resolve the insurance crisis. War-risk premiums remain at 0.35-0.45% of hull value — 15 to 20 times pre-war levels. A bilateral deal gets your ship through the strait physically, but your insurer still prices the transit as a war-risk voyage. Until Lloyd's and the P&I clubs formally recognize the bilateral arrangements as risk-reducing, the insurance blockade remains even where the physical blockade has loosened.

For charterers: The Islamabad talks on April 10 will determine whether the bilateral patchwork becomes a universal framework or hardens into a permanent two-tier system. If talks produce a universal transit protocol, the bilateral advantages dissolve. If talks stall, the countries with existing deals gain a durable commercial edge — their ships move while competitors wait.

The UNCLOS Question Nobody Is Answering

Articles 37-44 of the UN Convention on the Law of the Sea guarantee transit passage through international straits. Article 26 explicitly prohibits charges for mere passage. Iran's bilateral toll system violates both provisions.

But enforcement requires someone to bring a case to the International Tribunal for the Law of the Sea — and no state has done so. The Russia-China veto of the April 7 Security Council resolution killed the multilateral enforcement path. No ICJ or ITLOS challenge has been filed. The IMO has called the situation "unacceptable" but has no enforcement mechanism.

The bilateral model succeeds not because it is legal, but because the alternatives — military confrontation, multilateral enforcement, or indefinite waiting — are worse for every individual actor. Each country that cuts a separate deal with Iran makes the universal framework less likely to be restored. It is a collective action problem masquerading as a series of diplomatic victories.

Bottom Line

The Strait of Hormuz is no longer governed by international law. It is governed by a patchwork of 12 bilateral arrangements, each serving Iran's strategic interests. For shipping operators, the practical question has shifted from "when will Hormuz reopen?" to "does my flag state have a deal?" The Islamabad talks on Friday represent the last realistic chance to replace this fragmented system with a universal transit framework. If they fail, the bilateral model becomes the new normal — and freedom of navigation at the world's most important chokepoint becomes a historical footnote.