Increasing numbers of shipowners are employing armed maritime security providers (AMSPs) to meet with piracy. This has clear legal and insurance implications, as Mike Salthouse, Director at North P&I Club, explains
Piracy remains one of the single greatest challenges facing today’s shipping industry. In 2011, the number of hijacked vessels totals[ds_preview] 42 worldwide and 421 attacks have been reported by the International Maritime Bureau Piracy Reporting Centre.* Ransoms are increasing along with the average period of detention, which increased from around 55 days three years ago, to an alarming 200 days in late 2010 – only declining slightly more recently amid a trend for increased throughput of vessels and ransoms. With attacks increasing in boldness and violence, the private security industry has embraced the business opportunities presented.
In response, the International Maritime Organisation (IMO) has issued guidance to flag states, shipowners, ship operators and shipmasters, and more recently port and coastal states, regarding the use of privately contracted armed security personnel on board ships in high risk areas. This has also prompted legislation from some national governments relating to the carriage and storage of arms, as well as rules for the use of force.
Ultimately, the fact remains that to date no vessel on which AMSPs are deployed has been seized by pirates. Increasingly, and where flag state permits, the use of AMSPs is being seen by shipowners as the most effective means of resisting a pirate attack. But the proliferation in the number of companies offering armed maritime security services has also given rise to unease about how to ensure that services are provided safely and lawfully.
There are some companies that approach the task professionally and legally. However, there are undoubtedly others that have little appreciation of the legal and legislative environment in which they and the shipowner operate. It is therefore often difficult for the shipowner to differentiate between such companies. The IMO guidelines stress the importance of carrying out a detailed risk assessment when making the initial decision to use an AMSP and the shipowner’s obligation to carry out detailed due diligence on any AMSP the shipowner intends to contract with. A shipowner cannot delegate this obligation and all shipowners and operators are expected to develop their own systems and procedures to ensure adherence. This will inevitably involve some form of vetting.
For a shipowner, employing the services of an AMSP is an exceptionally serious proposition; the logical consequence of putting men with arms on board a ship is, fundamentally, to countenance the potential use of lethal force to defend the vessel (albeit in extreme and proscribed circumstances). This has obvious implications for P&I cover in the event of a claim.
North P&I Club, for example, advises members that the use, or not, of AMSPs onboard merchant ships is a matter for individual ship operators to decide, following their own voyage risk assessment and approval of respective flag states. If AMSPs are to be used, North recommends that they must be as an additional layer of protection and not as an alternative to IMO’s BMPs.
Initially, the International Group of P&I Clubs’ FAQs (www.igpandi.org/piracy) advised against the use of AMSPs but the most recent edition published in September 2011 has adopted a neutral stance. The FAQs provide guidance upon what is and is not acceptable when contracting for the provision of security guards. In particular, the FAQs recommend that all members provide their Clubs with copies of the contract before signature for review. In common with other Group Clubs, North will undertake a simple review of such contracts to ensure that they do not contain terms that could compromise a member’s P&I cover. The purpose of the Club review is principally to ascertain whether or not the provisions of the contract prejudice a member’s P&I insurance. Typically such a review will comprise general advice concerning a shipowner’s statutory obligations when employing AMSPs, coupled with a consideration of the contractual liability provisions.
P&I Clubs have experienced claims for personal injury and loss of life, medical expenses, personal effects, trauma counselling and for damage to and loss of cargo. And while P&I cover does not prohibit the employment of armed security guards, the deployment of AMSPs on board a member’s vessel could prejudice cover if their use is in breach of flag state, port state or other legislation. To assist its members in this regard, North P&I Club has recently arranged for those AMSPs most frequently used by its members to be vetted against the IMO guidelines by maritime intelligence, investigation and crisis management company, Gray Page.
Vetting is quite different to accreditation – the setting of an industry standard against which members of that industry can be measured. The development of a clear industry standard would be of benefit to those seeking to identify suitable AMSPs, however it would not remove the need to exercise due diligence – to perform some form of vetting of an AMSP – before a particular AMSP is selected by the shipowner.
The objective of vetting is not to recommend any particular provider or indeed determine which companies are »good« or »bad«. Moreover, the vetting process does not – nor should it – provide a warranty on the likely performance of a potential contractor. Lists of companies that others have recommended may, cursorily, make the decision easier. But in reality this should be seen as no more than a useful starting point for investigation. Naturally, recommendations and »approval lists« make the decision easier, at least superficially. However, vetting is an eminently practical tool and, in these circumstances, provides a robust foundation for a safe and lawful working relationship between shipowners and providers of armed maritime security services.
Vetting is a systematic process of evaluating a person or entity against a set of criteria. In the context of AMSPs, they should be assessed against professional, legal and ethics-based criteria encompassing corporate probity, financial substance, regulatory and legislative compliance, commercial experience, contractual integrity, operational and logistical capability, weapons licensing and accountability, and the selection, recruitment and training of security personnel. The ability to perform this task proficiently relies on two main factors; independence and experience.
Vetting should be an objective process. Independence preserves objectivity because it provides a perspective unaffected by interests that may otherwise conflict with the outcome of the vetting process. The necessity for independence is one of the reasons why AMSPs should be vetted before being contracted for the provision of services. Whatever the outcome of the vetting process, it is then clear that it has not been contrived to reinforce the initial decision. Furthermore, independence is central to the credibility of the vetting process. If AMSPs are to agree to being subjected to a level of scrutiny that they have not before been required to, it is not unreasonable for AMSPs to expect that they will be evaluated under a process that is untainted by competitive bias.
Experience is, of course, vital. Not only so that the process is assuredly relevant and comprehensive, but because competent vetting is also inherently empiric. Therefore, vetting is more than a matter of asking the right questions: being able to understand the answers, and what those answers mean in the circumstances, is integral to the validity of the outcome. Moreover, AMSPs will reasonably expect that whoever is vetting them understands the operational dynamics of providing armed security services and the nature and practical realities of the piracy threat, at the very least. In conclusion, the presence of armed personnel on board is proving far more effective than any other potential deterrent in reducing the number of pirate attacks. There is no doubt that armed security will maintain a central role in providing security amid an escalating problem, which continues to extend its audacious nature and geography. Therefore, increased coordination through the IMO, flag states, ports, insurers, lawyers, shipowners and operators, masters, Navies, AMSPs and independent advisors will unite the true professionals, demonstrating that the shipping industry can effectively and lawfully play its part in overcoming the plague of piracy.
