Piracy off Aden and Somalia: an Overview of Legal Issues



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Humanitarian concerns aside,the economic need for a response is indisputable: 22,000 ships transit through the Gulf of Aden each year. Keeping that waterway free of obstructions is vital.

At the time of writing, some 300 crew members on 16-odd ships remain hijacked off the coast of Somalia. Most appear to be near to the now booming town of Eyl with others, including The Faina, further south off Haradhere. The Faina, loaded as it seems to be with tanks and munitions (bound for Kenya or Sudan depending on who you believe), has brought things to a head.


The EU has set up a naval cell and committed warships to provide protection to commercial shipping off Somalia. The Russians and even the Indian Navy are scrabbling to get involved and there are mutterings about military options that can hardly be of any comfort to the crews and their families.


Significantly perhaps, the UN have issued Resolution 1838 giving authority for military assets to be operated in Somalian territorial seas and to use “the means necessary” to repress any act of piracy. The shipowning community can be forgiven a certain sense of frustration on the basis that a similar response six months ago might have nipped this in the bud before it reached the serious proportions of today. 22,000 ships travel through the Gulf of Aden each year and keeping that water way free of pirates is vital. The cost of the additional 15 days for an Asia–Europe voyage, even at today’s lower freight rates, will add to the cost of all products at a time when the world can least afford it.


The purpose of this article is to look at and identify some of the legal issues raised by the hijackings and the questions we are being asked to look at. Most are very much live, which means that it would not be appropriate to give definitive answers in some of the more contentious areas.


Are armed guards legal?


Admiral Gortney, the US commander of the Combined Maritime Forces, recently suggested that “shipping companies must take measures to defend their vessels and their crews”. He did not go on to say how. There is undoubtedly a debate to be had on the pros and cons of armed guards, with the more rational in the security world concluding firmly that the answer to that should be “no”. Much better to have unarmed teams giving training and support to the crew so they have the ability and confidence to avoid or thwart an attack by non lethal means. There have been many examples of crew doing just that. Further, the pirates have gone some way to show that they do not want to harm the crew. That resolve would be sorely tested if members of their gang were killed during a hijack.


Ultimately it is the law of the flag state that governs the use of force, which for most boils down to the use of reasonable force, but in circumstances where the rules of engagement would be extremely difficult to formulate and of course, police. The EU’s laws are dominated by Human Rights considerations, but in general terms for a self defence type argument to succeed, the Courts are looking for evidence of an imminent attack and a proportional response.


Is the payment of a ransom legal?


As a matter of English Law there are two potential pitfalls. One is the anti-terrorist legislation and the other is the Proceeds of Crime Act (POCA). You are not allowed to pay money to an organisation if i) you have a reasonable belief that that organisation is a terrorist one (ie it is carrying out its objectives for political, religious or ideological reasons) or ii) you think there is a reasonable chance that money may end up in the hands of a terrorist organisation.


In recent announcements by someone purporting to be the pirates’ spokesman, they have conveniently tried to make it clear that they have no affiliation with religious or political groups and that this is all about money. Given the proximity of US naval warships that view may not be entirely objective.


However, it is at least arguable that this is about extortion and not terrorism. In terms of POCA the ransom in the hands of the pirates can be regarded as a “proceed of a crime”. However the money laundering legislation is not there to punish the payers of a ransom demand in these circumstances and paying does not constitute a breach of the law.


Who is liable to pay the ransom?


A discussion seems to have started in the insurance industry as the total cost of the ransoms and the ancillary costs rise dramatically. Clearly, there is ransom inflation and the amounts being paid are unfortunately reported and speculated on widely. The cost of negotiating and actually paying the ransom in some cases exceeds the ransom itself.


The Gulf of Aden attracts an Additional Premium under war risk insurance, and yet the burden of payments for the most part is apparently being absorbed by the hull market. Much will depend on the terms of the policies, but payment of a ransom may have to be borne by the owner in the first instance. Whether this is recoverable will depend on the cover provided.


There is concern that one of these incidents will expose underwriters to much bigger losses through the loss of a cargo or indeed the vessel itself and it may be the market will react accordingly. More specialised policies covering kidnap and ransom are available, with the advantage that they come with named responders, a willingness to meet costs up front and, perhaps importantly, provide loss in transit cover for the ransom itself.


Are these costs recoverable in GA?


As an extraordinary cost incurred to ensure that the common venture can continue then a ransom payment and other costs should be recoverable in GA, assuming that there is a successful release of the ship and cargo. GA security would have to be collected in the usual way prior to the discharge of the cargo at its destination. There is a sense that cargo interests should play a much more active role on helping resolve the various hijackings, although for obvious reasons the emphasis remains on freeing the crew and the feeling that this is an Owners’ problem.


What about hire?


The average hijacking is taking about 45 days to resolve. The negotiations appear to be fairly formulaic in the sense that it is a case of persuading the hijackers to accept the bare minimum. Although the period of the hijacking is causing other practical problems, with food, water and diesel supplies being exhausted before the release of the vessel. There are examples of food and other supplies being brought from the shore, but a lack of diesel is more problematic and the mechanics of organising a tow in these circumstances is sure to be exercising some Owners who are still trying to get their ships and crews out. However, even with a loss of hire policy a large part of the delay will be uninsured.


Whether hire remains payable during the hijacking will depend on the construction of the underlying charterparty. It does not follow that just because an Owner is following Charterer’s orders as to route or service that hire will be payable. Issues will arise over the wording of any deviation clause and whether the drafting has been wide enough to exclude payments of hire in all cases where the vessel departs from the normal route for whatever reason. Close attention should be paid to these during fixing so that both parties can be sure where the risk and responsibility lies in a hijacking situation. It is fair to say that not many charterparties anticipate the possibility of a hijacking and therefore arguments will arise on both sides.


Can an owner refuse to transit the Gulf of Aden?


The odds of being hijacked have shortened and Owners are dusting off their war risk clauses and focusing on whether they have a right to refuse what would otherwise would be legitimate orders. The CONWARTIME and its fellow VOYWAR clause are good examples although clearly there are many standard clauses in the various charterparties in common use.


The two clauses referred to above were brought into being after the 1990/91 Gulf War and reflect contemporary times, referring as they do to acts of terrorism and acts of piracy. They provide that without the written permission of the Owners, a vessel should not be ordered to or through an area where it appears, in the reasonable judgment of the master or the Owners, that the vessel will be exposed to war risks including the risk of capture.


It is hoped that with the intervention of the various naval forces the risk of capture will fall, particularly if a convoy system is introduced in the Gulf of Aden itself. There is no doubt that slower ships and those with smaller freeboards are more vulnerable and the judgment of the masters of those vessels may be different to the masters of, for example, the bigger and faster container ships. Although The Faina and indeed the attack on The Seabourn Spirit in 2005 show that the pirates are prepared to attack anything.


An issue may arise over the safe port warranty, which previous decisions have made clear covers the approach to the port as well as the port itself. The law is well established in that an unsafe port claim will fail if it can be shown that the feature rendering the port unsafe could have been avoided by good seamanship. The prospective unsafety of a port or its approaches has always been more problematic and in a commercial setting much more difficult to define, particularly where you are looking at political risks or as in this case a general threat of piracy which may have existed at the time the fixture was completed. In those cases it is argued that the test is not so much one of good seamanship but something more akin to common sense. In other words, an Owner must, at the very least, be able to prove that the vessel was following the recommendations of the relevant authorities, carrying out sensible risk assessments and ensuring that the crew is trained and vigilant.


Conclusion


The point was recently made that if aircraft were being hijacked with this kind of regularity the situation would not be tolerated. This is right, but at last we have seen signs of government action. Sadly there is a feeling that this is only because of the realisation of the damage that could be done to the smooth passage of the world’s trade. Whilst governments struggle to open long-since-closed stable doors, we in the industry should not forget the human side to this issue and spare a thought for the crews and their families whose safe release is very much the priority.

ABOUT THE AUTHOR: Stephen Askins
Stephen’s primary area of expertise and experience is shipping wet (Admiralty) and dry. He advises on all areas of Admiralty law as well as on contractual issues arising out of charterparties and bills of lading etc. Stephen was part of the team that handled The Prestige, and more recently was involved in The MSC Napoli and The New Flame.

Stephen handles marine insurance cases, acting for both owners and underwriters, particularly on coverage issues arising out of major maritime accidents. His involvement in a number of piracy and hijack cases has seen him act for War Risk underwriters, advising generally on the issues that arise, none more so than on The Golden Lucy which exploded during discharge in the Niger Delta and was then looted by local gunmen.

He has developed a niche expertise in advising owners and port operators and dealing with the media in high profile cases.

Copyright Ince & Co LLP
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Disclaimer: While every effort has been made to ensure the accuracy of this publication, it is not intended to provide legal advice as individual situations will differ and should be discussed with an expert and/or lawyer. For specific technical or legal advice on the information provided and related topics, please contact the author.



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