Combating Modern Piracy

1. Connecticut Maritime Association 20 May 2010 Combating Modern Piracy James Henry Bergeron Political Advisor, Striking Force NATO Steering Committee, Int'l Transportation Committee, American Bar Association (Comments are personal and do not necessarily reflect US or NATO policy)

2. The Role of the Political Advisor Advisor to the Commander on political-military issues, Int’l Affairs, and inter-agency process. Primary liaison to the inter-agency, civilian MOD, and other MFAs – the ‘civilian link to Policy’ Diplomatic representative of the Commander to governments, IO’s NGOs – the ‘inter-agency’ Resource for the Staff in operations and policy areas A ‘different set of eyes on the problem’

3. The Background to Somali Piracy State formed in 1960 from merger of British and Italian colonies Last effective government 1991; civil war between rival warlords Somaliland declares independence; UN/US debacle in Somalia 1993-95; Puntland declares autonomy 1998, TFG established 2000; Clan fighting breaks out in 2006, Union of Islamic Courts seize Mogadishu and the South; Ethiopia invades and disperses the UIC. Islamists regroup as Al Shabaab and fighting continues. 1991-2006; failed state syndrome; warlordism; no recognized EEZ; allegations of poaching of Somali EEZ fisheries stocks and toxic dumping 2004 – 'National Volunteer Coast Guard' militias appear, sailing out to demand 'taxes' from commercial fishers – evolving into kidnapping and ransom demands; warlords and financiers get into the act; piracy escalates and professionalizes into an industry.

4. Somali Piracy 2008: the year the world took notice 92 attacks in Gulf of Aden 19 attacks off Somalia 42 Vessels Hijacked 815 crew taken hostage On 31 December 2008, 13 vessels with 242 crew held hostage for ransom US$ 18–30 million paid 2008

5. Sirius Star 15 Nov 2008 - Saudi‐owned VLCC Sirius Star captured by pirates 450 miles offshore, 25 crew members on board 2M barrels crude oil, value £68 million Pirates anchored off Somali coast of Somalia $25M ransom demanded, ship released 9 Jan 09 after $3M paid

6. MV Faina 25 Sep 2008 – Belize-flagged MV Faina, Ukrainian operator, captured off Somali coast with 21 crew members on board, large number of Russian-made tanks and ammunition Surrounded by warships off Somali coast Released on 6 Feb 2009 after payment of $3.2 million ransom

7. Somali piracy 2009 217 attacks, 47 vessels hijacked, 867 crew taken prisoner April 2009 – US Flagged MV Maersk Alabama attacked by pirates; 5 day standoff with USN leading to killing of three pirates by USN. Shared Awareness and Deconfliction (SHADE) develops as coordination forum NATO, EU, TF151 in operation, notable interdictions, attack and hijack rate rising

8. Somali Piracy 2010 - 23 ships held, half used as mother ships; 400+ prisoners - Interdiction rates up; 40 pirate groups disrupted - Attacks moving far outside transit lane; Indian Ocean, Seychelles

9. Impact on Somalia Destabilization of local communities; new culture of gang wealth; boomtowns; revival of local fishing Growing linkages to international financial crime networks Small but developing linkage to al Shabaab insurgency Complex impact on TFG relations with Puntland government, warlords and the region Strategic Strait in an important part of the world: US national interests and values are at stake

10. Defining Piracy: UNCLOS 101 Piracy consists of any of the following acts: (a) 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 . . , and directed: on the high seas, against another ship . . . (b) any act of voluntary participation in the operation of a ship . . . with knowledge of facts making it a pirate ship . . (c) any act of inciting or of intentionally facilitating an act described in sub-paragraph (a) or (b).

11. Other Applicable International Regimes Convention for the Suppression of Unlawful Acts against the Safety of Maritime Navigation (SUA) 1988 – an offense to seize control of a ship by use or threat of force. Grants no right of action. Obligation to criminalize, establish jurisdiction, prosecute or extradite. SUA 2005 Protocol: added offenses related to maritime terrorism and WMD trafficking, or transporting by sea anyone in violation of SUA 1988; boardings permissible on high seas and with permission of flag state under optional expedited procedure – 8 ratifications. 1979 International Convention against the Taking of Hostages; obligations to establish jurisdiction, prosecute or extradite similar to SUA, based on presence in the territory

12. The International Mandate UNCLOS/Customary International Law: piracy as an ius cogens offense, creating universal jurisdiction and power to act against pirates on the high seas. UNSCR 1814 (May 08): welcomes WFP escorts, support contingent on TFG request UNSCR 1816 (Jun 08): Chapter VII resolution; TFG concurrence required; authorization to act 'using all necessary means' under international law within Somali TTW to repress armed robbery at sea; cured 'defect' in TFG recognition; extended law of piracy into TTW UNSCR 1838 (Oct 08): Chapter VII resolution but no additional mandated powers, 'calls on' – political necessity for EU Op Atalanta UNSCR 1846 (Dec 08): Extends 1816 mandate to Dec 09

13. The International Mandate UNSCR 1851 (Dec 08) – encourages establishment of detention and trial facilities, and local 'shipriders'; expands mandate to include land operations on request of TFG and notification to UNSG Jan 09 US-Kenya agreement on the transfer of pirates Mar 09 EU-Kenya agreement on the transfer of pirates UNSCR 1897 (Nov 2009); extends mandate Mar 10 – Kenya resists further transfers BOTTOM LINE: INTERNATIONAL MANDATE IS ROBUST

14. The International Response Jun 08 – UNSCR 1816 Oct 08 - EU announces Op Atalanta Oct-Dec 08 - NATO offers Op Allied Provider to cover gap until Atalanta begins Dec 08 - Op Atalanta Commences Mar-Aug 09 NATO Op Allied Protector Jan 09 - US establishes Task Force 151; Contact Group convenes (CGPCS), Djibouti Code of Conduct agreed NATO Op Ocean Shield September 2009 Russia, Japan, Singapore, Malaysia, India, China, Iran launch independent missions

15. Operation Atalanta First Maritime European Union ESDP mission. Focus on protection of WPF shipping and counter-piracy in Gulf of Aden Largest counter-piracy mission in region: 10 frigates, 3 patrol aircraft, 1 submarine. Robust rules of engagement: authority to arrest, detain and transfer suspected pirates, seize pirate vessels, captured vessels and cargos. 2010: HMNS Johan De Wit: CP “mother ship” strategy effective

16. NATO Operation Ocean Shield Counter-Piracy mission off Somalia; 3 frigates, 1 support ship Employs the NATO Standing NATO maritime groups Objective of deterring and responding to pirate attacks and partner -nation capacity building

17. Coalition Maritime Forces TF151 Counter-Piracy mission off Somalia, establish Jan 09 Coalition lead, US, Turkish Currently 3-4 frigates or support ships Provides a valuable compliment to EU and NATO operations; brings in partners preferring a less close tie to either organization.

18. Operational Challenges Legal and Political concerns over jurisdiction and trial often mean guns are dumped overboard and pirates released If pirates seized, they need to be taken somewhere – ship is out of the mission during that time. Information and intelligence sharing is critically important. Waterspace is about the size of the Mediterranean, with 20 odd ships to patrol it – MPA assets critical. Coordination at sea has improved dramatically over the past 12 months. SHADE forum and bridge-to-bridge; most ships in region exercising mutual support.

19. Lessons Identified Transit Corridor approach is proving effective for ships within the Corridor; most hijackings now happening outside. Best practices substantially reduce the risk of a successful attack; all shipowners and mariners need to make best efforts. Regular update, use of EUNAVFOR, TF151 and other info sharing portals for awareness. Ships structurally at risk should consider armed security. Ability of the crew to shield themselves in a secure space has proven of value where naval forces are in the vicinity

20. Major Legal Issues for international forces • The Authority to deploy naval forces to combat crime on the high seas: national internal legal question • The authority to exercise universal jurisdiction – limited by some national laws • The definition and nature of the force used: military or constabulary paradigms? • The questions of arrest and detention by naval forces • Trial and Incarceration – willingness to incarcerate is the largest problem

21. Is Piracy still a universal crime? Piracy the doyen of ius cogens crimes, attracting universal jurisdiction Custom is based on the custom and practice of states, including their opinio iuris, sense that their act is legal Custom can override codified law (UNCLOS) 2008-10, several states have refused to arrest pirates on grounds that no nexus to their state existed or no confidence that a successful prosecution at home was possible:most common response is to disarm and allow to return to shore Remarkably few pirates have been arrested and brought home for trial; and almost none where no nexus existed with the apprehending state 18 May – Somali Gov. representative denied US jurisdiction to try Abdiwali Abdiqadir Muse for the MAERSK ALABAMA hijacking.

22. The Commercial Dimension Kidnap and ransom insurance is an ancient business – rates of premium have increased substantially in 2009 4 Insurance Options: H&M, War Risks, P&I and K&R. Shipowners paying $30K for $3M K&R cover for seven days transit (1% premium). But there are 20K transits of Gulf of Aden annually with 42 hijacks in 2008 - 0.2% London insurance market – piracy is a maritime risk in std hull and machinery clauses and all risks cargo policy US AIMU forms treat piracy as a war risk – no deductible but an additional premium for each transit (premium adjusted daily with risk, freight determined weeks in advance)

23. Losses from Piracy Ransom $1-3M or more Transaction cost of paying the ransom - $500K 50-60 day negotiation period, ship not earning freight Minimal crew maintenance – major machinery needs immediate repair; cost and further delay Risk of liability for material breach of contract regarding the cargo

24. Who Pays? Stakeholders: Vessel, Crew, Cargo and freight to be earned by the voyage Consensus that ransom forms the subject of General Average: Ship Owners/Underwriters will pay ransom and recover a contribution from cargo interests – Justinian's Digest, Rhodian Law, Consolado del Mare, in common law Hicks v. Palington (1590) Moore's (Q.B) R 297, approved US S.Ct. Ralli v. Troop (1894) 157 US 386 Sometimes informal: York-Antwerp Rules 1994: GA commission of $30K for 1.5M ransom + interest of $2K/wk from payment until 90 days after issue of adjustment. Informal option sometimes prohibited by reinsurance clauses

25. Requirements of General Average York Antwerp Rules 1994 require - 1. Peril 2. Extraordinary Loss/Expenditure 3. Voluntary incurring of such Loss/Expenditure 4. Common Benefit/Common Maritime Adventure Exception – Rule D YAR: demonstrating pre-existing unseaworthiness before voyage (some claims have tried this)

26. Ransom: US Legal and Policy Factors US law does not prohibit payment of ransom in situations of maritime piracy per se. Common law policy allows but could be overridden by statute. Foreign Corrupt Practices Act, 15 USC S 78dd – illegal to make payments designed to influence decisions of foreign officials US Treasury Office of Foreign Assets Control (OFAC) Regulations impose US economic sanctions on states, groups and individuals.. Bank Secrecy Act 1970 – single transfer of +$10K; threshold of US Federal money laundering linkage

27. The Terrorism Question Terrorism is considered a war risk in insurance law, not a maritime risk Extensive national legislations and international directives prohibit providing financial support to terrorist organisations – 'ransom' cannot be paid by private parties to terrorists seizing a ship on the high seas – and contribution cannot be enforced After MAERSK ALABAMA, SecState Clinton mooted the idea at treating pirates similarly to terrorists – if developed could bar ransom payments by US ship owners and insurers. Terrorist? Pirate?

28. US Executive Order 13536 US Executive Order 13536 of 13 April 2010: Declares US national emergency with respect to the situation in Somalia and off its coast. - Piracy included as a threat to peace and security, but ransom payments not prohibited per se Order places restrictions on named persons deemed contributing to Somali instability: 11 persons and 1 entity named; two with links to both al Shahab and piracy,. OFAC/TR may designate others. - Order applies to transactions by US Persons OR within the US - Prohibited transaction must be a 'contribution for the benefit of' named persons; due diligence expectations not yet clear

29. US Executive Order 13536 - Scope Scope: Includes all US persons, corporations in US and abroad; - Does not include foreign corporations for sole reason that they have assets or offices in US (16 Apr briefing) - Likely to include US insurers/reinsurers paying cover for a ransom to named individuals - May include US banks if part of a ransom payment or insurance chain. Q – Law firms or attorneys negotiating or facilitating a ransom payment? Q – Impact on General Average payments by US cargo or charter interests. Prohibited? K of insurance void on grounds of public policy? Q – Comity and Conflict considerations: will a UK court applying UK law absolve a US contributor? Q – What role for the Flag State?

30. US Executive Order 13536 - Impact Application: Apr 16 Briefing; consultation with OFAC/TR urged before making ransom payments - Regulation not likely to be amended before the fact; may impact insurance dimension after the fact. – informal assurance (Apr 16 briefing) that ransom would not be prohibited where life was at stake. Operational Effect: Red Gaming the EO: - Pirates will want hostages - If ransom was prohibited and life was at stake; navies under pressure to go offensive against mother ships and pirated vessels; would alter current C/P operations - Potential impact on US insurance/reinsurance market - Potential impact on P&I and labor relations

31. What Lessons from Counter-Piracy? - Cost of HVLD assets must be considered; Chicago School approach; need to distinguish threat from cost - Capacity building is hard without a partner -Short missions never are - Piracy as a 21st century phenomenon needs a clearer definition – universal crime, commercial irritant, strategic threat, national emergency? – and a coherent deterrent and enforcement posture Somali maritime hijackings as piracy may be short lived; may be entering a more problematic scenario of either insurgent or government linkages, should Somali localism and warlordism 'normalize' the piracy phenomenon.

32. Discussion