US Revival of Prize Law Could Transform Maritime Risks

The United States is preparing to revive a largely dormant maritime legal framework that could significantly expand its power to seize vessels and cargo during armed conflicts. The proposed rules, published by the US District Court for the Southern District of Texas, could revive prize law, which has not been invoked since the aftermath of World War II.

Unlike conventional civil forfeiture, which generally allows vessel owners, cargo interests and other claimants to contest seizures, prize law determines whether ships or cargo can be lawfully captured as enemy property, contraband or property involved in violating a blockade. Under this framework, ownership could transfer immediately to the capturing nation, which may appropriate the property for government use or sell it, with proceeds deposited into the US Treasury.

The proposed procedures would establish modern mechanisms for presenting evidence, verifying ownership, limiting discovery and hearing appeals. The court has invited public comments until October 23, 2026, before deciding whether to adopt the rules.

The timing is significant. As military operations in the Middle East intensify, Washington appears increasingly interested in restricting Iran's ability to export oil and sustain maritime trade. Prize law could provide an additional instrument to enforce blockades, extending the risk beyond sanctioned tankers to third-party vessels and cargoes caught violating lawful wartime restrictions.

This development could fundamentally alter the risk calculations of shipping companies, charterers, cargo owners and insurers. Vessels that are not themselves sanctioned may nevertheless face capture if their activities fall within the scope of applicable wartime rules. Consequently, route planning, insurance coverage, ownership transparency and security assessments would assume greater importance.

The implications extend to Southeast Asia, particularly Malaysia's Eastern Outer Ports Limit anchorage, where opaque ship-to-ship transfers of Iranian crude destined for China have attracted attention. Complex ownership structures, indirect cargo movements and deceptive shipping practices could complicate enforcement while increasing the risk of regional maritime disputes.

However, the revival of prize law raises concerns about potential overreach. Although the proposed procedures may strengthen enforcement against blockade evasion, their application must remain consistent with international law, due process and legitimate commercial interests. Broad or arbitrary seizures could undermine confidence in maritime trade and intensify geopolitical tensions.

The strategic takeaway is clear: an old wartime instrument could become a powerful tool of modern economic pressure. Shipping companies must reassess their exposure, while governments and maritime authorities should prepare for a more contested trading environment. The revival of prize law may strengthen Washington's enforcement capabilities, but its legitimacy will ultimately depend on transparent procedures, legal safeguards and disciplined implementation.