Stephen Askins

Weighing the risk

I used to have a set of imaginary scales and I would say to myself, are pirates motivated by the lack of risk or by the reward? / By Stephen Askins

Q. How has the legal approach towards piracy evolved during your time as a lawyer?

A. The legal approach towards piracy has definitely evolved but it has probably reached a plateau… However, there are still some legacy cases out there where we will have a look at some of the issues around payments of ransoms and how the insurance market worked.

In the early days, there was this continuous debate around whether pirates were criminals or terrorists. We very quickly concluded that this was criminal activity, because pirates weren’t really being motivated by ideology, religion or politics, it was purely a business transaction… However, with the changes in legislation of the Terrorism Act – which made it much clearer that insurers could be liable to prosecution if they knowingly helped fund terrorism through a ransom – we found ourselves being scrutinised that much more, particularly in West Africa where the politics involved was a little bit more uncertain.

The debate has moved on. In the Sulu Sea we have seen, for the first time, a political and proscribed organisation in Abu Sayyaf taking ships, and I think it still comes as a bit of a shock to owners that even if you have a worldwide kidnap and ransom policy, you are not allowed to pay ransoms to groups, like Abu Sayyaf. It hasn’t been explained that the motivations of the pirates will be the determining factor as to whether they can recover from their underwriters and whether they are able to pay a ransom.”

Q. What enables pirates to act with impunity?

A. I used to have a set of imaginary scales and I would say to myself, are pirates motivated by the lack of risk or by the reward? Because we are continuously faced with this argument that if you continue to pay a ransom then you are encouraging ships to be taken, and there is some truth in that, but what happened with Somalia piracy is that the reward went up, and yet, suddenly, piracy stopped. So, you then have to ask yourself, why did that happen? It seemed to me the answer was that we increased the risk of being a pirate.

It got more difficult for a pirate (sometimes operating 1200 to 1500 miles offshore) in that they would run out of food and water before being able to secure a passage home on a captured ship. It meant potential pirates were starving and dying out at sea. Holes were appearing in the ranks of the youths in the villages up and down the coasts.

What you have to do very quickly when piracy starts is make it clear that it comes with considerable risk.

Q. How does the legal approach towards piracy change between regions?

A. I don’t think it does change. Some regions are clearly criminal, such as the Nigerian or Somali gangs. In those cases, the legal approach is that this is a business transaction and you go through a process, and you will find yourself the right side of the regulatory and compliance issues that may arise.

The problem comes in situations such as in the Sulu Sea with Abu Sayyaf where the piracy is politically motivated. Your approach to that is completely different because in that situation, if you are based in the UK or most European countries, you cannot lawfully pay a ransom to terrorists.

“My view is that needs rethinking. The approach is understandable but with the rise of terrorists out of the Middle East families are faced with a stark choice: be criminalised for paying a ransom or seeing loved ones executed. The UK finds itself in an isolated position on this. In the US, President Obama changed the approach, so families were not to face criminal charges in those situations and were forced to do so by the number of US journalists and aid workers that were captured. That seems the more humane approach. In certain circumstances, it may be impossible to increase the risks involved in being a kidnapper, and so it remains a viable model to raise funds.”

Q. How protected are ship owners/ charterers today?

A. “Shipowners have an increased awareness of the threat and are more likely to apply the Best Management Guidelines wherever they are. That means there is a greater reliance on risk assessment but as the threat recedes and the High Risk Area decreases then there is a risk that complacency sets in. That has to be guarded against. On the insurance side shipowners have a basket of insurance including war and K & R (kidnap and ransom) which gives them access to immediate support. In the early days, piracy sat with the hull market but was switched to the war policies as the piracy phenomenon grew post 2008. That allowed the war market to charge variable rates and there was a rush to provide K & R cover which saw many non-marine insurers offering insurance to shipowners often without a real appreciation as to how the maritime industry operated. Several got their fingers badly burned while others made significant amounts of premium.”

Q. Do the media act responsibly when reporting piracy incidents?

A. “Piracy incidents have become almost routine, with a flurry of media activity at the beginning and at the end. As a shipowner you could deal with the flurry at the beginning, and the flurry at the end was often good news because those concerned were being released. So generally the view taken in respect of dealing with the media was to make some initial comments at the outset and then lie low. There is little to be gained in giving a running commentary.

However, there were high-profile incidents where owners got badly caught out by some serious adverse reaction locally. The problems mainly occurred because the incident was going on and on, and yet the information stopped flowing to the families of the crew impacted …The families are often the stakeholders that can do you most damage.

People forget that crisis communication is as much internal as it is external. But the media get the story and they understand that it is a process”.

Q. How do you see the legal challenges evolving in the future?

A. “If the piracy issue off Somalia returns, I’m concerned that we haven’t discussed or documented the best method for negotiating in piracy situations going forward, or what the strategic aims of the industry should be.

Something that we will have a real issue in dealing with is where do you locate the money? America has taken action against certain banks which has made that industry nervous. Furthermore, the US is extremely averse to dollars being used to pay ransoms. As a result, it is becoming extremely hard to find someone who will offer up the physical cash for a ransom drop.

What we didn’t really have in the last wave of piracy was social media. I fear that one of the things we will have to deal with – where things gets sticky in a negotiation and you’re attempting to control the narrative and the internal communication – is pirates tweeting the pictures, generating anxiety amongst families, government and lawyers at the centre of the process more so than now.”

Stephen Askins joined Tatham Macinnes LLP in April 2015 after 25 years at Ince & Co. A renowned maritime lawyer, Stephen was listed in the Lloyd’s List Top 10 Law Personalities in the past three years in addition to being named The Times ‘Lawyer of the week’ in late 2017 for his pro bono work on behalf of the “Chennai Six”.

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