INTERTANKO CHARTERING SEMINAR

ATHENS 2011

PIRACYJonathan Hare Skuld

BACKGROUND

BELUGA NOMINATION

ASPHALT VENTURE

Charterparty issues• What is piracy?• Hire or off-hire?• Employment & Routeing• Indemnity • Extra costs− Insurance − K&R− Others

• Seaworthiness− BMP3

• Armed guards

What is piracy?

• ”In the context of an insurance policy, if a ship is, in the ordinary meaning of the phrase, ”at sea”, or the attack upon her can be seen as a ”maritime offence” the for the purposes of a polcy of insurance she is, in my judgement, in aplace where piracy can be committed” Andreas Lemos 1982

• Not defined in c/p clauses

• Terrorism - is the motive criminal or political?

War Risk Clauses

• BIMCO Clauses − CONWARTIME 2004 ”War Risks shall include any actual,

threatened or reported….acts of piracy”

− Reasonable judgement of Master or Owners− Increase in risks since C/P entered into? Product Star

• SHELLTIME 4− Cl 35 – no direct reference to piracy

Piracy Clauses

• INTERTANKO− Time & voyage− December 2008

• BIMCO− Time, Voyage & COAs− March 2009− Revised November 2009

Hire or off-hire?

• SHELLTIME 4 (2003) − Clause 21(a):“On each and every occasion that there is a loss of time

(whether by way of interruption in the vessel’s service or from reduction in the vessel’s performance, or in any other manner):…

− (v) due to detention of the vessel by authorities at home or abroad attributable to legal action against or breach of regulations by the vessel, the vessel’s owners or Owners… the vessel shall be off-hire from the commencement of such loss or time…”

− Amendment(vi) due to an act of piracy or any other unauthorised physical capture

and/or control of the vessel of whatsoever nature..”

Hire or off-hire?• INTERTANKO− ”The vessel shall remain on hire for any time lost as a result of taking

(..preventive measures etc…) or for any time spent during or as a result of an actual or threatened attack or detention by pirates”

• BIMCO− ”…hire shall cease on the 91st day after the seizure and shall resume

once the vessel is released

• CHARTERER’S CLAUSE− ”The vessel shall be off-hire for any time lost as a result of taking

(preventive measures etc..) and for any time spent during or as a result of an actual or threatened attack or detention. Time & costs shall be shared equally ..for awaiting convoys…”

Hire or off-hire

• What does the Clause say?

• Is there an off-hire event?

• If no express reference to piracy, probably not off-hire

− Saldanha (2010) NYPE

• But is there a c/p breach?

Employment

• Shelltime 4 (2003)• Cl 13 (a) The Master…shall be under the orders and direction

of Charterers as regards employment of the vessel…

• Charterers hereby indemnify Owners against all consequences or liabilities that may arise (i) from..the Master otherwise complying with Charterers’ or their agents’ orders…− but see limits of this indemnity

• Thinking time may be allowed - The Houda

Indemnity• Implied− Island Archon (1993)

• Express

”Charterers shall indemnify Owners against all liabilities costs and expenses arising out of actual or threatened acts of piracy or any preventive or other measures taken by Owners…including but not limited to aditional insurance premiums, additional crew costs and costs of security personnel or equipment”

INTERTANKO

Routeing • Obligation on Master

− to take quickest & shortest route− Hill Harmony (2001)

• BUT - ”The master remains responsible for the safety of the vessel,

her crew and cargo. If an order is given which exposes the vessel to a risk which the owners have not agreed to bear, the master is entitled to refuse to obey it.” (Hill Harmony)

- Indemnity

Routeing

• ”Owners shall not be required to follow Charterers’ orders that theMaster or owners determine would expose the vessel, her crew or cargo to the risk of acts of piracy”.

INTERTANKO

• ”The Vessel shall not be obliged to proceed or required to continuethrough any port or place…which, in the reasonable judgement ofthe Master and/or the Owners is dangerous…”

BIMCO

• What risks have the owners accepted? Product Star (1991)

Extra Costs - Insurance

War risks excluded

Terrorism excluded

Piracy not excluded

Hull & P&I

War risks included

Terrorism included

Piracy may be included- Hull- P&I

Additional Premium

Extra costs

• Insurance − AP under existing insurances

• K&R – Kidnap & Ransom− ransom − negotiators’ fees− incidental costs

• Who pays?

• General average− unseaworthiness

Who pays ransom?

RANSOMo K&R Cover

o Cargoo Hull oCharterers

oOwners’ insurersWarHullP&I (?)

Seaworthiness

Shelltime 4 (2003)

• Clause 1 “At the date of delivery of the vessel under this charter and throughout the charter period…

(c) she shall be…in every way fitted for the service…(g) she shall have on board all certificates, documents and equipment

required from time to time by any applicable law to enable her to perform the charter service without delay…”

• Clause 2 “At the date of delivery of the vessel under this charter and throughout the charter period…she shall have a full and efficient complement of master officers & crew...who shall be trained to operate the vessel and her equipment competently and safely”.

Seaworthiness

• Seaworthiness also implied

• BMP3Best Management Practices to Deter Piracy off the Coast of Somalia and in the Arabian Sea

• Relevance of BMP3 to seaworthiness

BMP – VESSEL REGISTRATION & REPORTING

2 May 2011 MSCHOA* enlarged Vessel Movement Registration Area with immediate effect− on entering an area bounded by Suez, 10°S, 78°E and 23°N− consistent with− UKMTO Voluntary Reporting Area − High Risk Area as defined in BMP

− "Each transit through High Risk Area requires registration to MSCHOA: If Vessel registration is not made under these conditions the ship is NOT BMP compliant as recognised by the Shipping Industry including the IMO, the Military and Flag States.”

Norwegian proposal to make registration and reporting mandatory

*Maritime Security Centre (Horn of Africa)

Armed guards

• Shell Piracy Clause − ”It is a condition of this Charter that if owners deploy Guards or

Protection personnel to sail on the vessel such Guards or Protection personnel shall be at Owners’ expense and shall not be armed and any equipment they employ shall be non-lethal.”

• Flag state requirements observed?− SOLAS− ISPS

• Port state