| At the time of writing the shipping and marine | | | | pirates on board, but they are just foot soldiers |
| insurance industries are still trying to digest and | | | | employed to guard the ship. The "investors" ashore |
| understand the full ramifications of the US Presidential | | | | who form the committees that control negotiations |
| Order signed on April 13th 2010. | | | | are shadows, whose identities can only be guessed |
| Confusion reigns, which is unsurprising in the face of a | | | | at. |
| lack of written clarification from the US State or | | | | For non-US entities problems may arise where cargo |
| Treasury Departments. The fact that a | | | | or other interests are being asked for a contribution |
| non-attributable, off the record briefing took place on | | | | in GA or other indemnity to cover the ransom and |
| Friday 16th April has been widely reported, but given | | | | ancillary costs from companies with a US nexis. US |
| that the criminal sanctions include a twenty year | | | | insurers and companies will not make payment |
| prison sentence and the civil sanctions a fine twice | | | | without clearance from the relevant US Treasury |
| that of the value of the transaction, the industry | | | | Department (OAFC). It is unlikely that the intention of |
| (especially those with any type of US nexus) can be | | | | the US government was to give US interests a public |
| forgiven for approaching the payment of ransoms or | | | | policy type defence to all payments that may be |
| the indemnification of owners who have paid | | | | deemed to be funding a ransom. That would be |
| ransoms with anything other than absolute caution. | | | | protectionism at its worse and would severely affect |
| In what must have been a co-ordinated initiative the | | | | the US insurance market's ability to write marine or |
| US and the UN Sanctions Committee (whose role | | | | specialist policies that may cover ransom payments. |
| includes naming designated groups and individuals | | | | That would impact not only on K&R insurance, |
| under UN Resolution 1844) both issued lists on 13 | | | | but also hull and war cover where ransoms may form |
| April naming Al Shebab as a group and nine others | | | | legitimate sue and labour and General Average costs. |
| described as members of Al Shebab or similar groups, | | | | We would hope that the Order will be explained and |
| whose activities (in the language of both the | | | | clarification given and are optimistic that the |
| Presidential Order and Resolution 1844) undermine the | | | | ramifications of this may not be as wide reaching as |
| security and stability of Somalia. The US went further | | | | they first appear. |
| and named two men said to be connected with | | | | Other Developments |
| piracy, an activity that the US Order expressly | | | | Recent IMB headlines suggest that piracy incidents |
| stated as undermining Somalia's security. Why these | | | | are decreasing. Applied to Somalia that is surely |
| two men were singled out is unclear. There are | | | | misleading, given that half the reported cases took |
| others whose prominence in the piracy world is also | | | | place off east Africa. January and February gave |
| widely reported who, for the moment, have slipped | | | | some cause for comfort but the levels of activity for |
| through the net. | | | | March and April are now in excess of the |
| Those designated by the UN are to have their assets | | | | corresponding period of last year. Attacks are taking |
| frozen, and are forbidden to travel. Whilst the US | | | | place further south and further east than have |
| Order makes similar sanctions against those named | | | | previously been seen. Indeed, this is fast becoming |
| on its list, the effect on those wishing to pay a | | | | piracy off India with the last attack on a tanker being |
| ransom or give support to those needing to pay a | | | | at 68 degrees East. In the last few days at 69 |
| ransom is less clear. The Order makes no specific | | | | degrees East two fishing vessels were taken, some |
| reference to ransoms and the US authorities say | | | | 350 miles off India. It will be interesting to see if this |
| they remain sympathetic to owners caught up in a | | | | leads to a reaction from the War Risk Committee |
| hijacking and who are forced to pay a ransom to | | | | and whether the Additional Premium (AP) area is also |
| release, in particular, their crew. The aim, it is therefor | | | | pushed further East. The AP area is moved to take |
| said, is not to prevent the payment of ransoms, but | | | | into account new pirate activity but the pirates react |
| to lay the groundwork to bring action against those | | | | to that by moving their operations to the east of |
| who may be supporting piracy. We can expect, | | | | that line. Vessels are running out of sea and it would |
| surely in the future, further names to be added to | | | | be interesting to know how many ships other than |
| the list. Although it is understood that those named | | | | those calling at Somali ports have been attacked and |
| will only be pirates or terrorists, the Order does not | | | | hijacked whilst in the AP area as it existed at the |
| make this clear. | | | | time of the attack. |
| This is very much a US issue and anyone involved in | | | | The military has begun to take the fight to the |
| a hijacking must take US legal advice, but picking up | | | | pirates but a greater appetite to arrest pirates |
| on the issues and common themes reported in the | | | | coincided with Kenya making it clear that it had taken |
| press and by US legal commentators, it seems that a | | | | its share and would accept no more. At one stage |
| ship owner with no US nexus can pay a ransom, as | | | | the French had forty pirates on board one of their |
| long as it is not paid to one of the designated people | | | | naval vessels, who were distributed between |
| or groups. In respect of Al Shebab, given its naming | | | | Puntland, Seychelles and Kenya (the last to be |
| as a terrorist organisation by the US, this is nothing | | | | allowed in). The Dutch Marines received well-deserved |
| new. In the UK anti-terrorist legislation means that no | | | | plaudits for their recapture of the German flagged |
| payment can be knowingly made to a terrorist | | | | Taipan, with special forces fast roping onto the |
| organisation which has committed a violent act, | | | | vessel when the pirates were on board. The crew |
| particularly one involving fire arms, where the act | | | | had retired to a citadel and the Dutch placed |
| was motivated by politics, ideology or religion. No | | | | themselves back under national control in order to |
| direct link (in terms of funding) has been established | | | | carry out the attack, thereby circumventing the |
| between the pirates and Al Shebab, but it remains to | | | | more bureaucratic central command of EUNAVFOR. It |
| be seen whether the industry remains prepared to | | | | is thought the pirates captured in this incident are |
| make payments or indemnify those that make | | | | being sent to Germany for prosecution. |
| payments directly to the pirates. The move by the | | | | The last quarter also saw the capture of another |
| US to name piracy as an activity undermining Somali | | | | VLCC, the Samho Dream with a second tanker |
| security seems to have altered the landscape | | | | evading capture with the use of an armed security |
| completely. | | | | team. There is no doubt attitudes on the use of |
| Implications | | | | arms on board are hardening as the industry faces up |
| Insurers (and especially those with US connections) | | | | the fact that no ship has been taken where armed |
| still reeling from the severity of the Iranian sanctions | | | | guards have been deployed. But there has also been |
| should approach this latest Order with caution. | | | | the first reported shooting of a pirate by a private |
| Fundamental to falling foul of the Order is if payment | | | | security company raising again the spectre of |
| goes to one of the designated people. But for | | | | escalation. So far the pirates have shown no willing to |
| owners and insurers the question is how do you | | | | use anything other than the AK 47 and an RPG and |
| know if the ransom is going to one of the designated | | | | it is to be hoped that this will not change. The rescue |
| people? What level of due diligence will the US | | | | of the crews of the Taipan and the Moscow |
| authorities require? In practical terms it is nigh on | | | | University show that the use of citadels can have a |
| impossible to know with any certainty to whom a | | | | successful outcome, but these are dependant on |
| ransom is being paid. Pirates rarely use their real | | | | there being a military force nearby. Again, this brings |
| names and often hide behind nicknames. That can be | | | | a risk of escalation. The stakes remain high for all, |
| seen in the US list where Mohammed Abdi Garaad is | | | | not least the crew who bear much of the risk to |
| named. Garaad means "white beard", which for | | | | ensure trade gets through. With over two hundred |
| obvious reasons is unlikely to have been bestowed | | | | being held the final thoughts should be with them and |
| on him by his mother. Even the translators employed | | | | their families and for Rachel and Paul Chandler who |
| by the pirates use generic names like Ali or | | | | were taken on their yacht in October 2009 and still |
| Chermake and will change them from ship to ship. | | | | await release. |
| Beyond this the crew may learn the names of the | | | | |