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UK Counter Terrorism and Security Bill – does it affect ransom payments to pirates?

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Much will no doubt be written about the main provisions of the new Counter Terrorism and Security Bill that were outlined in the recent speech by the Home Secretary, Theresa May, as she set out her latest proposed initiative against those the UK government see as a threat to national security. The new Bill was revealed in the week that also saw the publication of the report into apparent security service failings behind the dreadful killing of the soldier, Lee Rigby, on the streets of London. Security is an issue very much in the public eye. Nonetheless, this article makes no comment on the politics of the initiative. Rather, it focuses on its potential relevance to the shipping  and insurance industries, specifically in relation to ransom payments to pirates.

Of concern to the shipping, and indeed, insurance markets, was the suggestion that there would be a change of law to make it clear that that there could be no pay out under an insurance (or indeed reinsurance) policy  to cover  a ransom paid to a terrorist. In her  speech, Theresa May pointed to a UN report suggesting that as much as £28 million had been paid to terrorist organizations. There is, however, absolutely no suggestion that these payments have been made by UK insurers or indeed UK entities. In that sense, fingers have long been pointed at foreign governments who have seemingly been much more ready to pay a ransom to secure the release of their nationals. The argument that a stated policy of not paying a ransom somehow gives a state’s nationals a better chance of avoiding kidnapping is controversial and open to debate. A totally utilitarian outlook and a universal ban on  ransoms may have a better chance of achieving that, but would be impossible to achieve and assumes a level of rationality on the part of the perpetrators that they hardly deserve.

It is understood that the insurance market made lengthy representation to the Home Office to the effect that new law was not required and that existing laws were adequate and, importantly, were being complied with. It was argued that highlighting this apparent “change” would play into the hands of the rivals of London’s K & R market and the perception would work against what is the world’s leading K & R market.

The question of legality of ransoms is one that the government has looked at on a number of occasions and, in 2012, an International Task Force was set up to investigate whether ransoms to pirates should be banned. Industry won the argument in that instance, pointing out that depriving crew of the ability to be released, particularly in the absence of clear policy to rescue abandoned crews, would hardly help in making a sea-going career an attractive proposition. Questions of legality over the payments made and a recognition that ransoms for pirates were not being passed straight onto Al Shabaab came under scrutiny. With the announcement of the new Bill, there was a similar concern around non-governmental organisations (“NGOs”) and aid workers who, assuming they have such insurance, began to question whether they should avoid  working in high risk environments.

However, the Bill  provides that the new law will be S. 17A to the existing Terrorism Act 2000. By way of a reminder, S 17 of that Act states as follows:

Section 17 of the Terrorism Act 2000

“FUNDING ARRANGEMENTS.
A PERSON COMMITS AN OFFENCE IF— (A) HE ENTERS INTO OR BECOMES CONCERNED IN AN ARRANGEMENT AS A RESULT OF WHICH MONEY OR OTHER PROPERTY IS MADE AVAILABLE OR IS TO BE MADE AVAILABLE TO ANOTHER, AND
(B) HE KNOWS OR HAS REASONABLE CAUSE TO SUSPECT THAT IT WILL OR MAY BE USED FOR THE PURPOSES OF TERRORISM.”

THE PROPOSED OFFENCE AIMED AT INSURERS PROVIDES:

“17A INSURANCE AGAINST PAYMENTS MADE IN RESPONSE TO TERRORIST DEMANDS

 

(1) THE INSURER UNDER AN INSURANCE CONTRACT COMMITS AN OFFENCE IF—

 

(A) THE INSURER MAKES A PAYMENT UNDER THE CONTRACT, OR PURPORTEDLY
UNDER IT,

 

(B) THE PAYMENT IS MADE IN RESPECT OF ANY MONEY OR OTHER PROPERTY
THAT HAS BEEN, OR IS TO BE, HANDED OVER IN RESPONSE TO A DEMAND
MADE WHOLLY OR PARTLY FOR THE PURPOSES OF TERRORISM, AND

 

(C) THE INSURER OR THE PERSON AUTHORISING THE PAYMENT ON THE
INSURER’S BEHALF KNOWS OR HAS REASONABLE CAUSE TO SUSPECT THAT
THE MONEY OR OTHER PROPERTY HAS BEEN, OR IS TO BE, HANDED OVER
IN RESPONSE TO SUCH A DEMAND.”

Indeed, an insurance company or its staff will have committed an offence even they consent to such a payment being made or allow the payment by neglect. The legislation applies equally to a transaction that may have no other connection to the UK and is payable overseas. As matter of English Law, insurers were not permitted to make such payments in any event, so on the face of it the amendment does no more than clarify that but no doubt underwriters and their compliance teams will need to be very sure of where funds are going and who is being paid what.

There is no attempt in the new legislation to prevent a K & R policy being written. Underwriters will clearly not be able to reimburse the ransom itself where that is being paid to a terrorist regardless of the nationality of the insured party. A critical part of any K & R policy is the cover for the additional costs including the negotiators appointed to handle the case. On the face of it these are not affected by the new provision but the complex principles of common law on illegality and public policy  may apply. It is clearly the government’s intention to stop payments to terrorists. It was always open to insurers to waive certain illegal acts by their assured and whether that is possible even in respect of the ancillary costs which do not get paid to the terrorists requires careful thought.

Importantly for shipping, the new law makes no attempt to curb an owner’s ability to pay a ransom to pirates who are acting for “private ends”. Whilst that will not affect the ability to pay a Somali pirate, the situation will remain more complicated in a West African attack where the demand is made for example, by MEND. Whether it somehow gives other markets a toe hold to argue that the situation has changed in the UK in order to gain a commercial advantage will no doubt be monitored carefully in coming months.

Maritime Cyprus

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WAIVER CESSATION: Igbokwe urges NIMASA to evolve stronger collaboration with Ships owners

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…Stresses the need for timely disbursement of N44.6billion CVFF***

Highly revered Nigerian Maritime Lawyer, and Senior Advocate of Nigeria (SAN), Mike Igbokwe has urged the Nigeria Maritime Administration and safety Agency (NIMASA) to partner with ship owners and relevant association in the industry to evolving a more vibrant merchant shipping and cabotage trade regime.

Igbokwe gave the counsel during his paper presentation at the just concluded two-day stakeholders’ meeting on Cabotage waiver restrictions, organized by NIMASA.

“NIMASA and shipowners should develop merchant shipping including cabotage trade. A good start is to partner with the relevant associations in this field, such as the Nigeria Indigenous Shipowners Association (NISA), Shipowners Association of Nigeria (SOAN), Oil Trade Group & Maritime Trade Group of the Nigerian Association of Chambers of Commerce, Industry, Mines and Agriculture (NACCIMA).

“A cursory look at their vision, mission and objectives, show that they are willing to improve the maritime sector, not just for their members but for stakeholders in the maritime economy and the country”.

Adding that it is of utmost importance for NIMASA to have a through briefing and regular consultation with ships owners, in other to have insight on the challenges facing the ship owners.

“It is of utmost importance for NIMASA to have a thorough briefing and regular consultations with shipowners, to receive insight on the challenges they face, and how the Agency can assist in solving them and encouraging them to invest and participate in the maritime sector, for its development. 

“NIMASA should see them as partners in progress because, if they do not invest in buying ships and registering them in Nigeria, there would be no Nigerian-owned ships in its Register and NIMASA would be unable to discharge its main objective.

The Maritime lawyer also urged NIMASA  to disburse the Cabotage Vessel Financing Fund (CVFF)that currently stands at about N44.6 billion.

“Lest it be forgotten, what is on the lips of almost every shipowner, is the need to disburse the Cabotage Vessel Financing Fund (the CVFF’), which was established by the Coastal and Inland Shipping Act, 2003. It was established to promote the development of indigenous ship acquisition capacity, by providing financial assistance to Nigerian citizens and shipping companies wholly owned by Nigerian operating in the domestic coastal shipping, to purchase and maintain vessels and build shipping capacity. 

“Research shows that this fund has grown to about N44.6billion; and that due to its non-disbursement, financial institutions have repossessed some vessels, resulting in a 43% reduction of the number of operational indigenous shipping companies in Nigeria, in the past few years. 

“Without beating around the bush, to promote indigenous maritime development, prompt action must be taken by NIMASA to commence the disbursement of this Fund to qualified shipowners pursuant to the extant Cabotage Vessel Financing Fund (“CVFF”) Regulations.

Mike Igbokwe (SAN)

“Indeed, as part of its statutory functions, NIMASA is to enforce and administer the provisions of the Cabotage Act 2003 and develop and implement policies and programmes which will facilitate the growth of local capacity in ownership, manning and construction of ships and other maritime infrastructure. Disbursing the CVFF is one of the ways NIMASA can fulfill this mandate.

“To assist in this task, there must be collaboration between NIMASA, financial institutions, the Minister of Transportation, as contained in the CVFF Regulations that are yet to be implemented”, the legal guru highlighted further. 

He urged the agency to create the right environment for its stakeholders to build on and engender the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders.

“Lastly, which is the main reason why we are all here, cessation of ministerial waivers on some cabotage requirements, which I believe is worth applause in favour of NIMASA. 

“This is because it appears that the readiness to obtain/grant waivers had made some of the vessels and their owners engaged in cabotage trade, to become complacent and indifferent in quickly ensuring that they updated their capacities, so as not to require the waivers. 

“The cessation of waivers is a way of forcing the relevant stakeholders of the maritime sector, to find workable solutions within, for maritime development and fill the gaps in the local capacities in 100% Nigerian crewing, ship ownership, and ship building, that had necessitated the existence of the waivers since about 15 years ago, when the Cabotage Act came into being. 

“However, NIMASA must ensure that the right environment is provided for its stakeholders to build and possess the needed capacities to fill the gaps; and ensure that steps are being taken to solve the challenges being faced by stakeholders. Or better still, that they are solved within the next 5 years of its intention to stop granting waivers”, he further explained. 

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Breaking News: The Funeral Rites of Matriarch C. Ogbeifun is Live

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The Burial Ceremony of Engr. Greg Ogbeifun’s mother is live. Watch on the website: www.maritimefirstnewspaper.com and on Youtube: Maritimefirst Newspaper.

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Wind Farm Vessel Collision Leaves 15 Injured

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…As Valles Steamship Orders 112,000 dwt Tanker from South Korea***

A wind farm supply vessel and a cargo ship collided in the Baltic Sea on Tuesday leaving 15 injured.

The Cyprus-flagged 80-meter general cargo ship Raba collided with Denmark-flagged 31-meter wind farm supply vessel World Bora near Rügen Island, about three nautical miles off the coast of Hamburg. 

Many of those injured were service engineers on the wind farm vessel, and 10 were seriously hurt. 

They were headed to Iberdrola’s 350MW Wikinger wind farm. Nine of the people on board the World Bora were employees of Siemens Gamesa, two were employees of Iberdrola and four were crew.

The cause of the incident is not yet known, and no pollution has been reported.

After the collision, the two ships were able to proceed to Rügen under their own power, and the injured were then taken to hospital. 

Lifeboat crews from the German Maritime Search and Rescue Service tended to them prior to their transport to hospital via ambulance and helicopter.

“Iberdrola wishes to thank the rescue services for their diligence and professionalism,” the company said in a statement.

In the meantime, the Hong Kong-based shipowner Valles Steamship has ordered a new 112,000 dwt crude oil tanker from South Korea’s Sumitomo Heavy Industries Marine & Engineering.

Sumitomo is to deliver the Aframax to Valles Steamship by the end of 2020, according to data provided by Asiasis.

The newbuild Aframax will join seven other Aframaxes in Valles Steamship’s fleet. Other ships operated by the company include Panamax bulkers and medium and long range product tankers.

The company’s most-recently delivered unit is the 114,426 dwt Aframax tanker Seagalaxy. The naming and delivery of the tanker took place in February 2019, at Namura Shipbuilding’s yard in Japan.

Maritime Executive with additional report from World Maritime News

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