Monday, August 9, 2010

Brokers for pirate ransom

Suppose your ship were hijacked by Somali pirates, and you wanted to ransom it and the crew. How would you go about it?  You would need a middleman, someone who could get the money to the right pirates, and maybe who played a repeated game with them, to help ensure that the release would go as planned. As it happens, you might become the client of a certain kind of British law firm, whose market is now threatened by the imposition of sanctions against those who deal with certain named Somali pirates. The problem is, it may be impossible to pay a ransom without doing business with the embargoed individuals. The Financial Times reports: Somali crackdown threatens City role on ransoms

"International plans for a legal crackdown on the funding of piracy could scupper a burgeoning City industry.
"The United Nations plans for sanctions on two suspected pirates would hit the often lucrative work of the law firms, insurers and private security companies in London that quietly arrange ransoms to free kidnapped ships and crews."
"The government has decided to block the UN plans amid worries they could force shipowners and their advisers to stop paying ransoms or else risk prosecution.

"London’s piracy negotiation business brings together an unusual cast of characters, from hard-bitten security operatives to dapper lawyers making telephone calls to hijacked ships from offices close to the banks of the Thames.

"NYA International, a kidnap response specialist based off Bishopsgate and now part of Aon, the US insurance broker, has advised on more than 20 piracy incidents during the past 18 months or so.

"The leading ship hijack case law firm in terms of numbers of clients is said to be Holman Fenwick Willan, which has offices north-west of the Tower of London.

"James Gosling, partner at HFW, said: “Nobody wants to pay ransoms. But when it’s the only option, what the hell else do you do?” "
"The concern about sanctions is that, while they do not explicitly outlaw the payment of ransoms, they make it impossible in practice because of the uncertainty about where money given to pirates will end up.
“The problem is the due diligence,” Mr Roberts said. “How can you possibly know if the money is going to that [sanctioned] person or not?”
"Maritime lawyers in London say they were encouraged by a High Court ruling this year that paying ransoms wasn’t contrary to British public policy, although they admit the argument over the subject is increasingly becoming political rather than legal.
"That is why the capital’s community of piracy-related businesses is appealing to the government to hold firm in stopping the UN proposal and the sanctions it would introduce.
"As one London-based insurer, who asked not to be named, put it: “We would be very concerned if shipowners were denied a means to free pirated ships.
“There are no navies prepared to go all guns blazing to rescue people – and it wouldn’t work, either.” "


MJM said...

“There are no navies prepared to go all guns blazing to rescue people – and it wouldn’t work, either.”
Are we sure about this?:,2933,514719,00.html

dWj said...

Before your ship is seized or your people kidnapped, you would naturally want potential seizers or kidnappers to believe that you would be unable to pay a ransom. After the fact, you might wish to be able to, after all. I can imagine the UN viewing it as a positive effect to be able to provide the commitment ability.