PIRACY: AN INTRODUCTION TO THE EFFECT UPON MARINE SHIPPING INSURANCE

Piracy remains one of the main security threats and these articles helps understand the impact piracy has on the shipping industry from an insurance perspective, and the efforts taken to try and mitigate the risk

In recent years few topics have caused as much concern in the shipping industry as the impact of piracy. Pirate attacks on ships have most frequently focused in the Red Sea, the Gulf of Guinea and in South East Asia.

Thanks to the efforts of various nations and inter-governmental organisations, the deployment of naval vessels and surveillance aircraft has acted as a deterrent to piracy, particularly in the Red Sea. In addition, the shipping industry has taken steps to protect itself. Broadly speaking, this has taken two forms: the introduction of Best Management Practices (BMPs) and the use of guards (armed and unarmed).

For the Red Sea, Gulf of Aden, Indian Ocean and the Arabian Sea, BMP5 is the latest version. This should be read together with Global Counter Piracy Guidance for Companies, Masters and Seafarers. For West Africa and the Gulf of Guinea, BMP West Africa has been published to help companies and mariners to assess risk and mitigate external threats to their safety.

Adherence to BMPs has frequently been augmented by the employment of guards on board ships trading in areas where there is a risk of pirate attack. In modern times, commercial ships have generally not carried armed personnel or weapons (other than as cargo) and so the laws of many flag states have not permitted their employment. However, in recent years a number of governments have relaxed their laws so as to make it possible, or easier, for armed guards to be carried in certain circumstances on ships sailing under their flag.

International shipping industry organisations maintain a website (www.maritimeglobalsecurity.org) to provide security related guidance to the industry, including regional guidance.

THE CLUB’S POSITION

The decision whether to employ guards is an operational one for shipowners. Nevertheless the Clubs in the International Group appreciate the wish of many shipowners to carry guards on board their ships in the circumstances. Therefore, although the International Group, following BIMCO, does not endorse or recommend the use of guards (armed or unarmed), it does not object to them either as long as certain requirements are met. These are the detailed in the International Group’s Piracy FAQs.

The International Group and BIMCO have also recognised that guards have been employed under a considerable variety of contracts which are often poorly drafted. BIMCO has, therefore, developed GUARDCON for the employment of guards in the waters off East Africa with a view to this becoming the industry standard. As BIMCO does not feel that GUARDCON is an appropriate contract for the employment of guards on board ships in the Gulf of Guinea, the International Group has produced an amended version of GUARDCON called GUARDCON West Africa for this purpose.