Combating the Piracy Problem - A Call for Action & The Need for Standardization

The problem of pirate attacks in the Gulf of Aden and many other hot spots is a very real and growing problem that plagues the shipping industry.

As an Associate Member of the INTERTANKO, where we sit on the Advisory Panel on Piracy and Maritime Security, Unifire AB is working hard with other industry professionals to understand and address the many facets of the piracy problem.

The maritime industry must begin confronting the piracy problem in a very real way, including by investing in training, procedures and the acquisition of non-lethal equipment designed to protect ships and their crew.

Among other things, ship owners and operators are generally held legally liable to take reasonable steps to protect their crew from foreseeable dangers, including pirate attacks. Lawsuits by pirate attack victims (crew members) are picking up against their employers (ship owners/operators). We expect this trend to increase. As such lawsuits settle and/or result in large verdicts, insurance rates will also continue to rise. Even absent such suits, insurance rates are rising as a result of larger and larger ransoms being paid to pirates. Furthermore, crew members are more and more reluctant to serve in risky waters and it's Unifire's understanding that this is beginning to cause difficulties for some operators.

Unifire is actively working with other industry professionals to raise the level of information and transparency regarding the variety of anti-piracy equipment and the effectiveness thereof. We are, among other things, calling for standardization and independent evaluation of equipment so that ship owners and operators may have some sense of confidence about the ability of equipment to protect their ships.

Yet, despite the growing problem and increasing costs and liability associated with pirate attacks, ship owners and operators remain reluctant to invest properly in self-defense procedures, training and equipment. There are a number of reasons for this. Unifire forecasts that this will change in the fairly near future.

Based on Unifire's independent research and information that we have gathered to date from the industry, conferences, ship owners and operators, and other security advisers and industry
professionals, we have drawn the following conclusions (among others):

• The problem of pirate attacks is very real, costly, and persistent. By some estimates, the risk of attack by pirates in high-risk areas greatly exceeds the risk of fire. All ships are mandatorily equipped with firefighting equipment, yet we are aware of no regulations requiring any means of protection whatsoever against pirate attacks.

• The industry lacks clear guidance and standards in terms of best practices for anti-piracy protection (and perhaps most acutely when it comes to equipment). The OCIMF (Oil Companies International Marine Forum), in cooperation with IOO, Intergargo, Intertanko and SIGTTO, has produced a guide entitled, "Piracy - The East Africa/Somalia Situation. Practical Measures to Avoid, Deter or Delay Piracy Attacks" (Published by Witherby Seamanship International Ltd., www.witherbyseamanship.com). This publication is, in Unifire's opinion, a good start, but does not go far enough. Further clarification and standardization is clearly necessary.
  

• Ship owners and operators are reluctant to invest in technologies which in practice may have unknown, unproven or unreliable and/or negligible effect.
  

• Even assuming that proper equipment can be identified, ship owners and operators are reluctant to be the first to invest significantly in equipment and training because they view the expense to outweigh the perceived benefits. This is compounded by the lack of regulation and the lack of custom in the industry to take certain measures for self-defense, as well as the global economical downturn and other factors. Ship owners and operators tend to think to themselves, "Why should we be first to go to this expense and hassle? As long as others are doing nothing, we won't either!"
  

• Ship owners and operators so far have viewed the costs associated with pirate attacks to be less than would be the cost to implement a proper, company-wide strategy, training and procurement of equipment to provide proper self defense against pirates. This is particularly the case as long as insurers are not prepared to reduce insurance rates. At the same time, however, the current costs of insurance and damages associated with pirate attacks is increasing and is truly problematic.

• Insurance companies are paying out ever-increasing amounts and must raise their rates accordingly. Payouts hurt the underwriters, their insureds (as a result of exorbitant and ever-rising rates), and serve to encourage yet more pirate attacks given successful collection of ransoms in the millions of dollars.
  

• As a whole, the insurance industry is also uncertain about what equipment and standards are effective and thus warrant reducing their rates. Again, there are no standards by which to judge whether particular equipment is effective, cost efficient, and the extent to which it may reduce risk. So long as there lacks a set of standards by which to judge the efficacy of equipment, policies and procedures can be judged, insurers will remain unlikely to reduce rates even for clients who are equipped with effective equipment.
  

• State actors are more and more reluctant to protect civilians and the commercial industry against pirate attacks and certainly do not want to be counted on as the primary solution to the problem. Moreover, their presence is inadequate even in the areas in which they patrol, both due to the vastness of the seas and the intelligence capabilities of the pirates.

• Having armed security guards on board to protect a ship is of very questionable legality and viewed by most professionals to be highly inadvisable. Similarly, carrying weapons on ships for self defense is impracticable, very risky and ill-advised. All self defense methods employed should therefore be non-lethal.

A net savings industry-wide can be achieved only if the respective ship owners and operators take decisive measures to protect themselves and thereby dissuade attacks. This can be achieved by developing standards that are:

1. effective in combating piracy;
2. economical;
   
3. widely adopted by ship owners & operators; and
   
4. accepted by insurance carriers who provide rate reductions for their insureds who are in compliance with the standards.

Moreover, if effective policies and procedures are adopted on a large scale, piracy attacks will likely diminish as pirates find it more and more difficult to gain access to ships.

Based on these conclusions, Unifire recommends and calls for the development and adopting of an industry-wide set of objective standards against which equipment, policies and practices can be evaluated, judged and rated. To this aim, Unifire asks all interested parties--whether political bodies, equipment manufacturers, ship owners and operators, lawyers, lawmakers--to join Unifire in the creation of a credible, sensible and effective set of standards.

Once such standards are adopted they then must be implemented by ship owners and operators. The insurance industry can also base their rates upon the level of adherence to the standards; and ship owners and operators will have collective bargaining power to demand rate reductions by being able, for the first time, to point to standards that have been tested for effectiveness and demonstrating their compliance therewith.

Unifire proposes that standards should be set for the following aspects of combating piracy:

1. Intelligence Gathering & Sharing (for avoidance of attacks in the first place);
2. Early Warning & Detection Equipment and Practices (for early detection and evasion);
3. Procedures Upon Detection; and
4. Equipment (Broken down and evaluated by categories, e.g.: bridge hardening devices, razor wire and similar, acoustic devices, water cannons, lasers, etc.)

Service providers and manufacturers in each of the above categories could be invited to demonstrate their technologies and submit papers describing their view of best practices. Each technology would be evaluated against pre-determined criteria and compared and ranked against others in their class, perhaps on a point scale. Such criteria might include, for example: effectiveness; cost; reliability; ease of use; time and ease to install or implement; and availability.

Unifire believes that the only way to make a significant difference in the fight against pirates is through industry-wide collaboration. Obtaining such collaboration can only be effectively done through either political action or voluntarily through collective action by the shipping industry itself.

Unifire is working with INTERTANKO to commence dialog among its members on this topic and seek the will and commitment to take action to establish and oversee the implementation of standards such as those mentioned herein. Unifire also is working with other partners on the development of standards for the industry.

We believe that clarity of effective policy and guidance in the industry will benefit the industry as a whole, as well as the individual, respective parties and entities comprising it (ranging from ship owners and operators to insurance underwriters to service and equipment providers).

All interested individuals and companies who seek to help Unifire in the fight against pirates are asked to contact Roger Barrett James of Unifire AB by email to roger@unifire.com. Together we can make a significant impact on the piracy problem and help save lives and property.

Written by Roger Barrett James, Attorney at Law, Unifire AB. © Copyright 2010, Unifire AB. All Rights Reserved.