Loss from Piracy

Loss from Piracy

Do clubs cover piracy?

The usual liabilities insured by the clubs remain covered when arising out of incidents of piracy. These liabilities are potentially most likely to involve loss of life/personal injury/illness, trauma/stress treatment and counseling, crew substitution and repatriation, and crew/passenger loss of effects. Liabilities could also extend to pollution, possible wreck removal, and potentially cargo liabilities/GA (General Average) in the case of a shipowners’ contributory fault or negligence. In relation to strict liability claims under International Conventions, the “intentional act” defence may provide some protection where/if applicable.

Such liabilities are however excluded from cover if caused by the use/engagement of certain “weapons of war” specifically named in the club rules or “other similar weapons of war” to those specifically named. Also, where primary War Risk P&I Underwriters include piracy as a specific named peril, there may be overlap between P&I liabilities arising from piracy covered by the War Risk P&I underwriters and those covered by standard P&I coverage.

What does “similar weapons of war” mean?

There is no definition in club rules but the wording used in the war risks exclusion “or other similar weapons of war” indicates that such other weapons should be of a similar nature to those previously identified. The specifically identified weapons of war are mines, torpedoes, bombs, rockets, shells and explosives and show an intention that something more than guns/rifles/conventional ammunition would be needed to trigger the operation of the exclusion.

The arms typically used by pirates to date (hand guns, rifles, AK47s, and RPGs) have generally been treated by P&I Clubs as not triggering the exclusion. However, the increased use of armed guards on ships could result in pirates resorting to heavier weapons of a type that triggers the exclusion. In this event, the liabilities of the shipowner would usually be covered by the owner’s War Risks P&I policy.

How does piracy differ from terrorism?

Definitions of Piracy

UNCLOS Article 101: Definition

In the United Nations Convention on the Law of the Sea (UNCLOS) of 1982, “maritime piracy” consists of:

…any illegal acts of violence or detention, or any act of depredation, committed for private ends by the crew or the passengers of a private ship or a private aircraft, and directed:

(i) on the high seas, against another ship or aircraft, or against persons or property on board such ship or aircraft;

(ii) against a ship, aircraft, persons or property in a place outside the jurisdiction of any State;

…any act of voluntary participation in the operation of a ship or of an aircraft with knowledge of facts making it a pirate ship or aircraft;

…any act of inciting or of intentionally facilitating an act described in subparagraph.

(ii) The International Maritime Bureau (IMB) defines piracy as:

“the act of boarding any vessel with an intent to commit theft or any other crime, and with an intent or capacity to use force in furtherance of that act”.

(iii) Republic of Bolivia v Indemnity Mutual Mar Ass Co Ltd (1909)