City of pirates - how shipping lawyers are fighting Somali pirates
3 February 2009
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Lawyer2B.com investigates the role of London shipping law practices dealing with piracy in the Gulf of Aden and speaks to Emilie Bosworth Speaight, a third seat trainee at Holman Fenwick Willan, about her experiences.
Put simply, Somalia is a failed state. Without a functioning government since 1991, the country has been subject to steady descent into lawlessness. Operating within this legal vacuum, regional warlords and Islamic militants are now the de facto source of authority throughout the east African state.
Whilst Somali citizens deal with intermittent civil strife and food shortages, opportunistic criminals have been targeting rich pickings along the countrys 2,000-mile long coastline.
The region is a vital trade route between Asia and Europe and 20,000 ships pass through the waters of the Gulf of Aden - the worst affected area each year. Navigating around the region, a 15-day detour, would pass on significant extra costs to consumers. And, as the dramatic rise of hijackings has evidenced, the pirate gangs are organised, well equipped and determined - a significant threat to the commercial shipping industry.
The Pirates Attacks
According to the International Maritime Bureau, the waters off the Somali coast have been the site of 96 successful commercial hijackings, throughout 2008. On average, a ransom demand will be in the region of $2m. In such an impoverished country, money is the hijackers only concern.
The Role of London Law Firms
At the centre of the worlds maritime industry, a number of firms across London have been engaged to deal with the consequences of the hijackings. Although the extent of each firms client retainers are strictly confidential - and each set of circumstances are unique - shipping law specialists like Holman Fenwick Willan and Clyde & Co will facilitate negotiations with insurers and offer their ship owning clients practical advice to effectively resolve the situation.
Were involved in connection with any insurance law issues and well negotiate with underwriters and the other insuring interests, says Toby Stephens, a partner at Holman Fenwick. Whilst were most definitely not involved in the front line negotiations with the hijackers, we can point our clients in the direction of a suitable expert.
Andrew Preston, a partner at Clyde & Co, agrees that the place of firms isnt at the negotiating table. Well liaise with the ship owners, insurers and the contract chain, but its not our place to be fronting negotiations. We act as facilitators to help our clients minimise their loss.
Despite it being legal to pay a ransom demand under UK law, the delicate nature of the situation means that negotiations are properly the domain of private security firms, widely thought to be staffed by ex-SAS specialists.
According to a BBC investigation, it seems perfectly plausible that the facilitation of ransom money is being done by London-based insurers.
The same BBC investigation identifies that once the ransom money is gathered usually in used US dollars it will be transferred via a security expert to the hijackers, usually by way of a drop-off by air or by sea.
An Ongoing Problem
It is difficult to assess the monetary cost to insurers and the shipping industry as a result of the hijackings. An immediate solution seems unachievable.
It is probable that certain premiums are going to have to rise, confirms Preston. The shipping industry is putting pressure on governments to address the situation in Somalia, but you certainly get the impression that if we were dealing with planes rather than ships thered be an international outcry.
As poignantly illustrated by highly publicised seizure of the Sirius Star, however, there is also a human cost to be considered in relation to the crews and families of the commercial vessels attacked.
It is difficult to ignore the human element, says Stephens, Theres a real danger that the situation could come to a head and its incumbent upon everyone in the industry to try and find an effective solution to the problem.
The presence of the European Naval force is a positive step, but patrolling the whole length of coastline is difficult. Organised convoys may work, but it will inevitably cause disruption to pre-arranged schedules. In looking for a solution, weve been advising certain clients on the legalities of employing blue chip security providers.
Whilst increased security may constitute an effective deterrent, in some quarters this escalation is viewed as a worrying development. Indeed, the only long-term solution is likely to be some form of political and military intervention to impose law in Somalias coastal areas. No international organisation has shown that it has the stomach for the job.
A Trainees Perspective
Against this backdrop of unfolding commercial and geo-political events, Emilie Bosworth Speaight, a trainee at Holman Fenwick, commenced her third seat with the firm in September 2008.
It can be really exciting to see some of the things youre working on make headline news. Its a very new area of law, but the fact that its so tangible gives it a really interesting slant, she says of her experiences in the seat.
Maritime law has always been regarded as a niche area of the law. Much like pensions law, for example, even qualified lawyers will readily fess up to having only the barest knowledge of this very specific discipline. Emilie admits that it can be cryptic explaining to friends what it is that she does at work.
Of course, Im always careful when speaking about work because of the confidentiality issues - but when I say that I do shipping and mention piracy, I can get a few quizzical looks, she says.
Whilst Emilies unable to be too specific about the type of work that shes involved in, she acknowledges that she has assisted some of her senior fee earners in relation to the commercial hijackings in the Gulf of Aden.
Generally my day-to-day work will involve the standard trainee document management tasks. Dealing with evidence and collating documents can be a large part of the job, she says. But I can also be asked to draft some letters of advice to clients or undertake research. And because the issues are so topical, and its such a new area of law, the research tasks are fascinating - probably about as interesting as youre going to get as a trainee.
Whilst many magic circle trainees will be burning the midnight oil to assist their partners in relation to the recent bank bailouts - in terms of a seat in a niche practice area, youd be pushed to find anything more topical than shipping law.