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As far as I can make out, the Iranian tanker Grace 1 was seized by Gibraltar whilst it was travelling through Gibraltar's territorial waters. See e.g. this article. The stated basis for the seizure was that it was suspected of violating EU sanctions by carrying crude oil to a sanctioned refinery in Syria.

What was the legal basis in international law for this? Even though the ship was in territorial waters, the United Nations Convention on the Law of the Sea specifies that vessels should have either "innocent" or "transit" passage through international straits. There are some restrictions that coastal states can impose on ships, but none of them seem to relate to carrying cargoes in violation of sanctions. As far as I know the sanctions are EU sanctions and so only relevant to domestic law and not international law.

According to Wikipedia, the UK has ratified the UNCLOS whereas Iran has signed but not ratified it. I don't know if this makes any difference.

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The passage is alleged to be not “innocent”

From Article 19:

  1. Passage is innocent so long as it is not prejudicial to the peace, good order or security of the coastal State.

The article enumerates a non-exhaustive list of things that are not innocent but the UK is free to make laws adding things to the list providing these are “published” (Article 21). The sanctions on Syria were published.

Dale M
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This is a copy of my answer to a similar question on politics.se, which I only became aware of after posting this question. My answer there is itself derived from material dug up in another answer, but it expands on the legal justification I think that material implies.

The key legal point of their justification seems to be this, from the press release.

The Grace 1 was detained last week in Gibraltar when it freely navigated into British Gibraltar Territorial Waters to a point two miles off the Eastside of Gibraltar, having previously exited the international waters of the Straits of Gibraltar, on a pre-arranged call for provisions and spare parts.

Article 18 of UNCLOS says this:

  1. Passage means navigation through the territorial sea for the purpose of:

    (a) traversing that sea without entering internal waters or calling at a roadstead or port facility outside internal waters; or

    (b) proceeding to or from internal waters or a call at such roadstead or port facility.

  2. Passage shall be continuous and expeditious. However, passage includes stopping and anchoring, but only in so far as the same are incidental to ordinary navigation or are rendered necessary by force majeure or distress or for the purpose of rendering assistance to persons, ships or aircraft in danger or distress.

Once you stop to take on supplies, it's no longer passage, regardless of whether you are in territorial waters where innocent passage would normally be allowed.

I also don't think stopping to take on supplies in itself counts as calling at a roadstead or port facility. But even if it did, "passage" only seems to apply to going to or from the place, not actually being at it. If you did choose to stop in a country's facility, you'd be placing yourself fully within its jurisdiction. There's no suggestion the Grace 1 visited Gibraltar's internal waters.