West African Piracy Alexandra N. Couvadelli and Rod Lingard Thomas Miller
Overview Piracy in the Gulf of Guinea is different War Additional Premium ( AP ) Area and incidents Insurance coverage issues Claims issues Armed guards / contracts C/P clauses Solutions / Discussion
Piracy in the Gulf of Guinea is different Increasing! Ships attacked when approaching, drifting or anchored off ports (i.e. in territorial waters) More violent Established legal systems Cargo theft (predominantly in STS transfer areas) Cargo theft intelligence led
Piracy in the Gulf of Guinea is different Kidnapping No onboard security guards (Nigeria / Ghana) Ship movement reporting procedures less effective No established policing mechanism by international navies Complex regional politics Some ship protection measures are unsuitable
Additional Premium ( AP ) Area
Incidents in West Africa April 2014 April 2015 These are just the attacks officially reported to the IMB and MTISC-GoG and under-reporting is very significant.
Insurance coverage issues Who covers what? War risks excluded from, H&M, Loss of Hire and P&I this includes terrorism But piracy exception to P&I exclusion Arms typically used by pirates do not trigger the war exclusion. Heavier weapons might Double insurance P&I Excess War Risk cover
Claims and issues Response Consultants Fees and expenses Ransoms Discretionary Crew kidnap rather than ship hijack Shorter duration Lower value Cashing the ransom Legalities / compliance issues Transfer / delivery
Claims and issues Crew Claims Injury and death Repatriation / substitution Kidnapped victims often kept in poor conditions (malaria/typhoid) Medical treatment to stabilise crew post-release Medevac may be required Security / guards to protect hostages after release Post repatriation assistance Dealing with the crew and their families Contacted and offered support Reassurance
Claims and issues Ship Damage Damage from small arms fire and RPGs Ship/ship damage Theft of stores and equipment Stolen crew personal effects Cash stolen from the Master s safe Delay Detention or War Loss of Hire Other P&I Liabilities Total cost
P&I Risks Cargo Theft The Facts Ship acted as a bunker supply for 10 years off Luanda and off Tema Ship loaded in Cotonou and carried out 2 STS Bunkering operations Armed pirates boarded and took control of the ship Armed pirates released her 6 days after the attack Pirates stole 3,500 MT of MGO, but Supercargo identified part of the receiving ship s name Owners brought an action against the other ship before the Courts of Cotonou
The Facts Valle di Cordoba [2014] EWHC 129 (comm) Trafigura Beheer BV v. Navigazione Montanari Spa. Voyage from Abidjan, Côte d'ivoire to Lagos, Nigeria Cargo of premium motor oil Vessel attacked by pirates whilst drifting offshore Lagos awaiting orders Pirates arranged for STS transfer of 5,300 MTS of oil to unknown lightening vessel Vessel released by pirates Vessel discharged remaining cargo at Lagos
In-transit loss (ITL) Clause "In addition to any other rights which Charterers may have, Owners will be responsible for the full amount of any in-transit loss if in-transit loss exceeds 0.3% 0.5% and Charterers shall have the right to deduct from freight claim an amount equal to the FOB port of loading values of such lost cargo plus freight and insurance due with respect thereto. In-transit loss is defined as the difference between net vessel volumes after loading at the loading port and before unloading at the discharge port".
Exceptions The provisions of Article III (other than) Rule 8), IV, IV Bis and VIII of the Schedule to the Carriage of Goods By Sea Act, 1971 of the United Kingdom shall apply to this Charter and shall be deemed to be inserted in extenso herein. This charter shall be deemed to be a contract for the carriage of goods by sea to which the said Articles apply, and Owners shall be entitled to the protection of the said Articles in respect of any claim made hereunder. (Emphasis added).
Court of Appeal s decision - Charterers appealed to the Court of Appeal and lost: Issues considered: Was the stolen cargo an in-transit loss? The majority of CoA said NO. The Clause was clear in covering only loss incidental to carriage of cargo and so excluded loss caused by Piracy Could Owners rely on the HVR exceptions to avoid liability for cargo loss (i.e. even if loss was an in-transit loss?) Unanimously the Court said YES Lord Justice Briggs: Clause imposed liability for loss of cargo in transit regardless of cause of loss. But HVR exceptions applied anyway Such loss is likely to be confined to loss that occurs as a direct result of the transit during the course of a routine or ordinary voyage.
Contracts between PMSC Owners National laws indicate that foreign security guards are not permitted to carry firearms on board merchant ships within the territorial waters. In Nigeria, only the use of Nigerian patrol boats is legal Local military personnel will operate under their own national rules of engagement, be subject to local law and jurisdiction BIMCO GUARDCON Off West Africa (as amended by the IG): Clear distinction between any security personnel provided and employed by the PMSC and local security personnel Owners should be the contracting party Master should remain responsible for the overall safety of the ship Local Military forces should be included in the contractor s group PMSC s insurance should include public and employer s liability cover for itself and its personnel and sub-contracted personnel
Can I refuse Charterers orders and not transit a High Risk Area? UK Defence Club s case The Facts Vessel loaded cargo off-shore Cotonou to discharge by way of STS, 12 miles from Cotonou Vessel attacked by pirates for 7 hours Owners refused charterers orders to continue with STS operations After a month, Owners agreed to the STS discharge but refused subsequent orders for loading by means of an STS transfer off Cotonou and discharging at Apapa Sub-charterers terminated the charterparty but head-charterer remained in place
Charterparty Clauses The SALDAHNA The English High Court decided that the ship remained on hire for the period of the detention by pirates in 2009 Intertanko and BIMCO Piracy Clause, 2013: Specific provision to rerouting following TRITON LARK decision The measure of risk of the attack by pirates is whether an area is actually dangerous rather than maybe or are likely to be
Solutions / Discussion Compliance with BMP4 and Gulf of Guinea Interim Guidelines Stay offshore? Use safe anchorages Escort patrol boats Improved reporting? Robust C/P piracy clauses Broad area surveillance to track ships Better Regional maritime security co-operation Building up coast guards and Navies On-shore solution economic and security governance in the regional states
Thank you. Any Questions?