Piracy - Frequently Asked Questions

By Curious

The Japan P&I Club has published a revised edition of Piracy related issues - Frequently Asked Questions (FAQ). The document contains a total of 16 questions, covering issues such as armed guards, weapons of war, PMSCs insurance, ransom and guidance for attacks.

Find here below some of them answered by the Japan Ship Owners’ Mutual Protection & Indemnity Association (JPI) Club.

1. Do clubs cover piracy?
International Group (IG) club rules contain no definition of (or exclusion for) piracy. The third party liabilities insured by the clubs remain covered when arising out of incidents of piracy.

These liabilities are potentially most likely to involve loss of life/personal injury/illness, trauma/stress treatment and counseling, crew substitution and repatriation, and crew/passenger loss of effects. Liabilities could also extend to pollution, wreck removal, and potentially cargo liabilities/General Average (GA) in the case of a shipowner's contributory fault or negligence. In relation to strict liability claims under International Conventions, the "intentional act" defence may provide some protection where/if applicable.

Such liabilities are, however, excluded from cover if caused by the use/engagement of certain "weapons of war" specifically named in club rules or "other similar weapons of war" to those specifically named. Also, while P&I liabilities arising from acts of piracy are not an  excluded risk, those arising from terrorism are excluded (and would fall under the shipowner's war risk cover). Furthermore, where primary war risk P&I underwriters include piracy as a specific named peril, there may be overlap between P&I liabilities arising from piracy covered by the war risk P&I underwriters and those covered by the IG clubs.

These FAQs are focused on piracy in the High Risk Area in the Indian Ocean. However, the following general principles apply equally in the Gulf of Guinea:

Conducting a voyage-specific risk assessment;
•  Exercising due diligence in the selection of a private maritime security company (PMSC) (if their engagement is deemed necessary, based on the risk assessment); and
•  Entering into contractual arrangements for the performance of security functions by a PMSC/privately contracted armed security personnel (PCASP) that do not prejudice club cover.The clubs also recommend shipowners take all lawful, prudent and appropriate measures to harden ships against attack as outlined in the most recent version of the Best Management Practices (BMP)(now in version 4 published in August 2011).

2. What does "similar weapons of war" mean?
"Weapons of war" are identified as being mines, torpedoes, bombs, rockets, shells and explosives. While club rules have no definition of "similar weapons of war", the specifically identified weapons of war indicate that something more than guns/rifles/conventional ammunition would be needed to trigger the operation of the exclusion.

The arms typically used by pirates to date (hand guns, rifles, AK47s, and RPGs) are treated by IG clubs as not triggering the exclusion. However, the increased use of PMSCs on ships could result in pirates resorting to heavier weapons of a type that triggers the exclusion. In this event, the liabilities would usually be covered by the shipowner's war risk P&I policy.

3. What do hull underwriters cover and what do war risk underwriters cover?
Depending on the shipowner's particular insurance arrangements, hull and machinery (H&M) underwriters and war risk underwriters will between them provide property cover (H&M/GA/salvage etc.) and war risk P&I cover. If a piracy incident triggers the club war  exclusion (by virtue of the weapons of war provision), the consequent liabilities are likely to be covered by war risk underwriters. Also, as stated in FAQ 1 above, some primary P&I war risk underwriters also cover piracy as a specific named peril.

4. Should shipowners carry guards?
There is no cover restriction or prohibition per se on the engagement of PMSCs or the use of convoy escort protection, and appropriately trained and competent PCASP may well assist in enhancing on board security procedures and the response to a piracy incident.In each case, the decision as to whether or not to engage a PMSC is an operational one for shipowners, which should be based on a voyage-specific risk assessment.The IG clubs expect their members to exercise due diligence in the selection of a PMSC, including following the latest version of the IMO's "Interim Guidance to Shipowners, Ship Operators, and Shipmasters on the use of privately contracted armed security personnel on  board ships in the High Risk Area", which was based upon industry guidelines and was issued by the IMO as Circular 1405 on 23 May 2011. Circular 1405 was subsequently revised in  September 2011 and May 2012.

The IG clubs also recommend that shipowners obtain positive confirmation of the steps being taken by the PMSC to secure compliance with the new International Standard for PMSCs, ISO/PAS 28007 and that the PMSC complies with the IMO's "Interim Guidance to Private Maritime Security Companies providing Privately Contracted Armed Security Personnel on board ships in the High Risk Area".

It is expected that PMSCs will be able to seek to be accredited against ISO/PAS 28007 in late 2013, following a pilot scheme that is currently underway.

There are some private and tate sponsored initiatives to develop systems for accreditation of PMSCs which initiatives are being monitored and, to the extent appropriate, supported by the industry, including the IG clubs. However, as far as the IG clubs are aware, no such initiative is yet sufficiently developed so as to be of much help to shipowners in choosing a competent, safe and professional PMSC. Development of industry standards will assist but not replace a shipowner's obligation to conduct appropriate due diligence in respect of individual PMSCs.

Consideration should also be given to the appropriate number of guards deployed. BIMCO GUARDCON provides for a minimum team of four persons. This is thought to be a good starting point for most vessels but the minimum number is best determined through a voyagespecific risk assessment that takes into account the relevant characteristics of the vessel (speed, freeboard, hull length, any areas vulnerable to boarding, etc.) as well as local factors in the High Risk Area to be transited (history of recent attacks, reports of suspicious vessels, anticipated weather conditions, etc.)

Whilst a failure to use a prescribed or recommended minimum number of guards will not automatically result in any restriction on cover, this could, depending upon specific circumstances and causation, potentially impact on cover.

The deployment of armed or unarmed security should not be a substitute for, but in appropriate cases, a supplement to effective compliance with the latest version of the joint industry BMP. A key part of compliance with BMP is the liaison with naval forces, who can provide valuable intelligence and in some cases physical help to ships whose owners have followed the BMP procedures to make contact with the Maritime Security Centre Horn of Africa (MSCHOA) and with the UK Maritime Trade Office Dubai (UKMTO) before entering the High Risk Area. Contact details are set out in BMP and where PCASP are to be carried, shipowners should make this known to MSCHOA and UKMTO.

5. Should guards be armed?
The previous strong opposition of industry associations to guardsbeing armed has softened in the light of increasing levels of piracy activity in areas distant from naval protection and against a background of increasing aggression against crews. There has been a shift from general opposition to neutrality, and in high risk cases, positive support for the deployment of PCASP.

The underlying reasons against arming security personnel remain the risks inherent in the use of arms by untrained/improperly trained persons, the enhanced risk of loss of life/injury through armed engagement, and the risk of encouraging the escalation of armed engagement and the use of more potent and warlike weaponry.

Flag and Port State restrictions and licensing requirements or prohibitions on carrying PCASP (and their weapons) on board vessels must also be carefully considered in any decision relating to the deployment of PCASP. It is important to ensure that the PMSC is able to demonstrate that their weapons have been purchased, stored, exported and transferred in accordance with all applicable laws, including by providing appropriate supporting documentation, clearly identifying the relevant issuing authority. The IG is advised that the International Chamber of Shipping (ICS) is maintaining a comparison of Flag State laws  applicable to PMSCs and PCASP which may be considered helpful in this regard.

Floating armouries are frequently used by armed guards, but the legality of their use is the subject of debate. Shipowners should be aware that the use of illegally sourced weapons (whether hired-in or owned) may potentially give rise to uninsured civil and criminal liabilities. Shipowners can mitigate this risk by obtaining evidence from their PMSCs that they do not use unlicensed floating armouries.

As of August 2013, the UK Government has announced that it will make available licences for  floating armouries on a case by case basis, as appropriate.

Where armed guards are used, if there is a choice between vessel protection detachments  made up of serving members of a military force, or PCASP, the former should be preferred, other things being equal.
A thorough voyage-specific risk assessment should be carried out in deciding whether to  deploy PCASP. In the event that the decision is to deploy PCASP, shipowners should follow the IMO's "Interim Guidance to Shipowners, Ship Operators, and Shipmasters on the use of  privately contracted armed security personnel on board ships in the High Risk Area".

It remains the firm view of the IG clubs, States and industry associations that crew should not be armed.

Source: Japan P&I Club