Q&A: Liability of Carrier for Piracy

Q: Ocean piracy has been in the news a lot lately because of the activities of Somali-based pirate gangs off the northeast coast of Africa.

It brings several questions to my mind. Suppose a U.S. shipper had cargo aboard a vessel that was taken by pirates. Usually, the pirates ultimately release the ships they take, with the cargo, on payment of a ransom.

Who is responsible for paying the ransom? Can shippers be held partially liable for the money?

And suppose for one reason or another a U.S. shipper’s cargo wasn’t released, or was damaged or destroyed as a result of the seizure. Would the carrier be liable for the loss or damage?

Considering that the dangers of these waters are by now pretty widely known, would it affect your answers if the shipping line had chosen to use this route despite the risks?

A: Good questions all, to which I can only offer partial answers. There is, however, a new court case that could shed additional light once it’s decided.
As to your first question, I see no legal basis on which shippers could be compelled to pay any portion of a ransom.

To be sure, there’s a fairly obscure provision of law obliging shippers to bear certain costs related to the loss of other shippers’ goods. It comes into play if the goods of one or more shippers must be jettisoned at sea to save lives and/or preserve a vessel and its remaining contents.

Under the concept of “general average,” the unfortunate shippers whose goods were dumped don’t suffer the whole loss. All shippers having cargo on the same ship have to pony up a proportionate sum, so that the economic injury is shared equally.

But I see no basis on which that would apply to ransom paid for a ship taken by pirates.

Liability for goods lost or damaged because of piracy on the high seas appears to be a little unsettled in modern U.S. law. Piracy — and its close cousin, terrorism — aren’t covered one way or another by the U.S. Carriage of Goods by Sea Act.

COGSA was patterned after the original Hague Rules, a1924 international treaty setting standards for international maritime commerce. As the U.S. Constitution requires, the Senate ratified the Hague Rules in the mid-1930s, and COGSA was enacted to implement it in U.S. law.

The Hague Rules, however, don’t mention piracy. The 1968 Visby Amendments modifying and updating Hague do specifically exclude piracy and terrorism from creating carrier cargo liability. However, the Senate has not ratified the Visby Amendments, and so they have no application in U.S. law.

And I can find no post-COGSA court cases dealing with the point.

Now, the original Hague Rules and COGSA do contain exclusionary language that could very well be extended to apply to piracy. In particular, they exclude “perils, dangers and accidents of the sea,” “riots or civil commotions,” as well as “any other cause arising without actual fault and privity of the carrier and without the fault or neglect of the agents or servants of the carrier.”

Here, of course, is where we get into your routing issue. Can the carrier be held at fault — negligent — for intentionally sailing along the Somali coast, given the well-known busy activity of the local pirate gangs?

Especially considering that avoiding this route entails a pretty big deviation — the only other way to get from the Atlantic or Mediterranean to the Indian Ocean is to detour around Africa via the Cape of Good Hope — I have to question this. Not every ship that sails that channel is attacked by pirates, after all, not even most of them. And a lot of shipping lines sail that route.

But here we may get more than just speculation. Remember the recent news about the Maersk Alabama being briefly taken by pirates, with the heroic captain playing a key role in ultimately freeing the vessel?

Well, transient though the experience may have been, the ship’s cook found it traumatizing. He has sued Maersk for damages for its alleged laxity in choosing to send the ship into harm’s way.

Of course, the case is a long way from “on all fours” with the question you pose. But the ruling may well have a collateral impact on your question, since it will deal directly with that issue of negligence. For now, though, we can only await the outcome.

Consultant, author and educator Colin Barrett is president of Barrett Transportation Consultants. Send your questions to him at 5201 Whippoorwill Lane, Johns Island, S.C. 29455; phone, 843-559-1277; e-mail, BarrettTrn@aol.com. Contact him to order the 536-page compiled edition of past Q&A columns, published in 2001, at $80 plus shipping.

* Special Piracy Report Home Page
* Lesson No. 1: Be Prepared
* Paying for Piracy
* Piracy: By the Numbers
* 10 Steps to Respond to Piracy
* Washington Responds to Piracy
* Online Counter-Piracy Resources
* Interview with Avalon Security (Advertorial)

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