Good news for marine insurers on piracy

Piracy on European vessels is not new but the way the Dutch authorities investigated and successfully prosecuted recently is. Liam Morrissey explains why this could start a string of convictions for pirates.

When the five young Somali pirates prepared to assault the Turkish-crewed Dutch Antilles-flagged cargo ship, MV Samanyolu, last year they would not have looked like the Hollywood image of a Blackbeard, Captain Jack Sparrow or Captain Kidd. They would have been in their small skiff, with extra fuel drums, a rocket propelled grenade launcher and AK-47 assault rifles.

These young men, products of refugee camps and subsistence living in Somalia have little glamour in their lives and are capable of extreme violence after several generations of regional war, civil war and internecine fighting. One thing they did not expect, however, was for their attack to fail. And even when it did and they were arrested by Danish Special Forces they would have not been too worried. In other cases, the western military authorities have simply interviewed and then released their friends under the same circumstances. However, this time was different. The Danes not only apprehended them but would later extradite them to the Dutch authorities for investigation and successful prosecution.

Inconsistency in response
Sadly many pirate attacks have proved to be successful for the pirates and there are ever- increasing ransom payments. Hitherto, the pirates enjoyed a period where international efforts were not fully uniform in the application of force and deterrence. It is said that there is one particular pirate known in his community as a ‘veteran' because he has been detained and released by warships of four different navies over the last year.

But this is starting to change and in the Gulf of Aden in the Arabian Sea in particular, attacks are being regularly blunted by military forces working in concert with the shipping industry. This has meant a faster response to distress signals, a coordinated deployment of available forces and, therefore, lowers numbers of successful hijackings. Unfortunately the sheer size of the Somalian basin, the Arabian Sea, and Indian Ocean presents challenges to replicating this model successfully elsewhere.

It is a clear fact that pirates have modified their tactics and are ranging further a field by utilising mother-ships to transport attack parties. These mother-ships can be other hijacked vessels, fishing vessels or other suitable craft with increased range and provisions.

The Dutch Experience
It is not surprising that the Dutch courts imposed a custodial sentence on the Somalians recently found guilty of maritime piracy in the attack of the Samanyolu last year. The Dutch have exhibited a strong international role in the pursuit and prosecution of pirates. They regularly have naval assets playing a leading role in the Gulf of Aden as part of the European Union Naval Force Somalia ‘Operation Atalanta', and Combined Task Force One Five One, the is an international naval task force. With a strong maritime trade history, and as a responsible nation with a strong judiciary which treats this crime seriously, it is not reluctant to deploy law enforcement personnel to rigorously investigate these crimes when they occur on Dutch and Dutch Antilles flagged vessels.

Attempts to dismiss charges on technical grounds - such as a delay in bringing suspects before a judge as in this case - should be reasonably resisted when weighing the real threat. In this matter the district Court of Rotterdam made the observation in its ruling that the delay of some 40 days should not have occurred and was a technical breach under article 5 of the European Convention on Human Rights. However, no consequences followed from this in these criminal proceedings. The judgement demonstrated the insight and understanding that the Dutch judiciary has of international marine piracy. Other countries should take note of this and hopefully this case will serve as a legal precedent in future.

Prevention is possible
Attacks can be prevented. The pirates are not terrorists and are not ideological. They are criminals and as such, villains are generally lazy. If they see an easy target, they will attack it in preference to one that looks more difficult. The private security sector has little tangible regulation and virtually anyone can be a self-declared expert and go into business. Ship owners, ship management organisations, insurance companies and others need to select their providers with care. The piracy threat has evolved since the spike of 2008.

Notwithstanding this, there are reputable groups that understand the dynamics of preventing and responding to these incidents. A proportionate approach is what is needed in every case. This needs to be risk-driven and carefully considered. The time to plan for a crisis is not in the middle of one, so owners should ensure that they register their transits with the authorities. A tremendous amount of best practice advice is available from the naval forces in theatre. Owners should know what advice is being given to masters and crews and what the corporate response will be to an incident.

Drilled in defence
Crews should be drilled and defensive measures are easy to implement. This can include preparing a safe room for the crew to muster while under attack. The master should plot his route and speed to be most appropriate for the area of risk. Extra watches and evasive manoeuvre tactics should be rehearsed. As basic as it sounds, the use of razor wire and fire hoses can go a long way to deterring an attack. Masters should understand that if the pirates see a prepared and alert vessel from the outset, this will often lead them to find an easier target somewhere else. Because of the use of mother-ships, crews need to ensure they remain vigilant even when far off from the Somali coast. Previous hijackings this year have seen ships taken 1000 nautical miles south and up to 1200 nautical miles east of Somali waters.

Insurance should be purchased for vulnerable transits. Many owners rely on their pre-existing hull and machinery war risk cover but this is not designed for a hijack incident. Moreover, a US Presidential Executive Order issued in April 2010 has placed more demands on ship owners when trying to resolve these types of incidents.

Some insurers are trying to develop a private security concept that would see the underwriting of the risk twinned with private security escort vessels in the region to take ships through dangerous waters in convoy. This approach would see military ships freed up to pursue suspected pirates. This concept would work transparently to the military and insurance communities and is being carefully examined by numerous parties.

Sinister face
The piratical threat emanating from Somalia is still evolving. Once somewhat amateurish criminals who were lucky and under the international radar, they have been a magnet for organised crime, shore-based militia, corrupt influencers and copycat activity. This is changing the way in which they act and the criminal decision makers today and tomorrow are not the same as at the beginning. This presents a sinister face to the issue and means longer periods of captivity, higher ransom payments and greater use of violence in future. All stakeholders public and private must work together to stop this.

As long as Somalia is a failed state with no functioning central government able to project control, the threat of marine piracy will persist. It is a symptom of the larger humanitarian crisis.

And as long as the pirates have ‘targets' and ‘sanctuary', incidents will continue. It is up to the shipping industry to use best practice techniques and reduce easy targets. It is the international community that must stop the use of Somali anchorages as sanctuary. With everyone working together, they will ensure that the numbers of assaults will reduce, and that, if they do occur, the Dutch case and one or two others will not be isolated incidents but the start of a string of successful convictions against pirates.

Liam Morrissey is a partner at BTG Global Risk Partners