What is piracy?

• The International Maritime Bureau (IMB) provides the following straightforward definition:
  "an act of boarding or attempting to board any ship with the apparent intent to commit theft or any other crime and with the apparent intent or capability to use force in furtherance of that act".
  There are more detailed definitions which may apply in different contexts.  For some purposes (particularly public international law), piracy may be restricted to acts in international waters.

What is the difference between piracy and terrorism?

• The motivation for piracy is personal or commercial gain rather than political. This will not always be clear but the pirates in Somalia have pointed out that their motives are non-political. Attacks in West Africa are also often purely criminal but sometimes the goals may be at least in part political. The difference between piracy and terrorism may be relevant in order to determine which insurance policy applies and in evaluating the legality of a ransom payment.

Should I enter into an agreement with a security company?

• It may be sensible to seek advice from reputable and well qualified consultants to provide crew support and guidance. However, owners should be aware that they will not be covered for liabilities arising under contractual indemnities unless approved in advance and see below in relation to weapons. The hiring of guards should supplement not replace proper crew training and contingency planning. If guards are put onboard, there must be careful planning to make sure that the guards and crew are briefed thoroughly so that all understand their respective duties otherwise misunderstandings can easily arise with unfortunate results. Ultimate responsibility for the navigation and safety of the ship rests with the Master and any dilution of the Master’s authority may amount to a breach of SOLAS and other legal obligations.

Should I enter into an agreement with a security company which will provide armed guards?

• This is an operational decision for owners. For more information see the Section on Armed guards.

How big is the risk?

• There are usually between ten and twenty vessels held in the vicinity of Somalia at any one time. About 22,000 vessels transit the Gulf of Aden annually. Risk will depend on vessel design, crew training, weather, location and many other factors.

Are vessels normally returned?

• Yes. The common practice is that a ransom is paid after a negotiation period. While this used to be between one and three months, the period has increased and may approach a year.

Is it legal to pay a ransom?

• This depends on the applicable national law. The payment is more likely to be illegal if terrorists are likely to benefit financially. On 13 April 2010 an Executive Order was issued by the President of the United States blocking payments to certain persons in Somalia, including two alleged pirate leaders. The Order was initially in effect for one year but has been extended for a further year from 12 April 2011. A US Treasury has issued a brochure containing guidance on sanctions applicable to Somalia. In a case involving the vessel “Bunga Melati Dua”, the Court confirmed the widely held view that payment of ransom was lawful and was not contrary to public policy under English law (see below).

Can I claim the ransom from insurers?

• As noted in the Insurance Section below, additional insurance from specialist providers is available for kidnap, ransom, extortion and related costs. Since February 2010 the Association has been in a position to arrange this cover. Ransom is also generally recoverable from property insurers as a sue and labour expense.  This was confirmed most recently by the English Court of Appeal on 26 January 2011 when it upheld a decision by the Commercial Court in the Bunga Melati Dua case (Masefield AG v Amlin).

Can I claim the ransom in general average?

• The prevailing view is that a ransom is recoverable in general average.