By: Di Freeze Issue: Global Trade Section: Collaborator Profile
Law Firm Launches Initiatives To Combat Piracy
Eighty percent of the world’s commerce travels by ship. That journey is often full of perils, now more so than in the past. In just the first quarter of 2009, 109 incidences of piracy occurred nearly doubling over first quarter 2008, rising from more than 200 pirate attacks in all of 2008, which had doubled over 2007. An accurate account of ransoms paid in 2008 to recover seized ships and crews is difficult to determine, but the United Nations (UN) reports approximately $120 million. Even for vessels avoiding attack, there are added costs of increased insurance premiums, loss of time, loss of cargo, additional crew pay and operating costs of as much as twice the normal amount, and now, lawsuits for negligent failure to adequately protect the vessel. When shipping costs sharply increase, so do the costs of goods we buy.
Those facts alone show that this issue affects a multitude of entities. One person striving to come up with a collaborative resolution to this problem, and getting close, is Emanuel Anton, founder of Anton Law Group, based in Denver. He is not working alone.
One of Anton Law Group’s clients, a large U.S. corporation comprised primarily of retired Special Forces individuals, has traditionally focused on government and defense contracting. When it wanted to expand into aviation, they sought the help of Anton, whose law firm has provided strategic business, regulatory and legal services to leading international trade, aviation, and government contracting companies throughout the United States and abroad. In August 2007, he began serving as general counsel for the Colorado Springs-based company.
The fast-growing company also wanted to expand its maritime operations, desiring to provide port security and maritime security on merchant vessels. When they began discussing the maritime issues involving commercial operations, piracy actually seemed to be at a lull. “The last time you really heard of the issue was in 2003 and early 2004, with what was happening in the Strait of Malacca,” Anton said. “Things died down in the press after several navies stepped up their patrols of the area in July 2004.”
But despite a current increase of various countries’ naval gunboats in the Gulf of Aden, piracy in east Africa is only rising – choking one of the world’s busiest shipping lanes. A confluence of various events in late 2008 and early 2009 created an undercurrent leading towards some resolution in the maritime arena. Last September, Somali pirates seized a Ukrainian vessel in neutral waters near Kenya and Somalia carrying tanks, ammunition and crew. The pirates demanded a ransom of $3.2 million, which they were reportedly paid.
A specialist in the International Traffic in Arms Regulations (ITAR), Anton understood the global national security implications from that piracy event. “Such profound arms in the hands of Islamist militias shocked the globe,” Anton said.
Anton began delving into the practical and legal issues causing the upsurge in piracy, reading any articles, publications and treaties he could get his hands on. He also began working with a maritime law expert in New York, Mark Jaffe, which provided valuable insight to him. That research helped Anton begin to understand the complexities that were preventing the suppression of piracy and armed robbery against ships.
piracy in east Africa is only rising – choking one of the world’s busiest shipping lanes.
When Anton began working with the Colorado Springs group, he was no stranger to the problems in that area. As part of his aviation practice, he has counseled aircraft owners on ways to fully utilize their aircraft including employing planes on long-term leases to support, for example, relief efforts in Africa, Afghanistan, Iraq and Southeast Asia. He has helped pair clients with organizations like the U.S. Departments of State and Defense, UNICEF, the United Nations and Samaritan’s Purse, to fly aid into areas including Sudan and Somalia. His dealings with and increasing knowledge about the various areas, including Kenya and Nigeria, familiarized him further with the huge relief problems, producing his desire to help in any way possible.
Anton’s interest in that area as well as his client’s desire to get into merchant marine security led to the forming of NEK Maritime Security Solutions, Inc. (NEK MSS) earlier this year, which Anton co-founded.
Anton said that Somalia’s collapse, leaving it lawless for more than 10 years, has been difficult to bring about any sustainable resolution.
“Once the pirates go out and commit their pirate barbary, armed robbery, hijackings or killings, there is always this safe harbor for them to retreat to,” he said. Past failed attempts by the U.S. and other governments to squash Islamist movements and reinstate the Somali government and a land-based solution is keeping the issue alive at sea. U.S. Navy Vice Adm. William Gortney, commander of the Combined Maritime Forces of various militaries’ ships, has indicated that without a procedure to prosecute pirates, anti-piracy measures are severely limited.
The existing international legal framework for dealing with piracy exists primarily in two international conventions and in several International Maritime Organization (IMO) and U.N. resolutions. While these laws cover a broad range of unlawful acts against ships - calling primarily upon international cooperation to assist, extradite and prosecute under universal jurisdiction – states are not offering up their courts as envisioned. The result promotes the laws’ other purpose – establishment of a framework under which ships take their own precautions to protect against piracy.
One of the biggest problems has been the insufficient protection of ships. “There are so many different parties involved,” Anton said. “You might have a German owned ship, flagged in Panama, with a Greek crew, a Liberian operator and cargo from South Korea. With varying opinions of what precautions are necessary, all agree that while helpful to some, the multi-national naval effort cannot patrol and protect all of the highest risk shipping lanes. There is such a large expanse of water that they can not possibly be everywhere all the time.”
Self Help Measures by Vessel Operators
“More and more shipmasters and owners are seeking armed protection of their vessels.” The millions received in ransoms have purchased faster boats, more powerful weapons and the latest technology to assist pirates’ efforts. “Under the laws that we have here in most U.S. states, if somebody enters upon my property, state law authorizes lethal force in defense of my life. By contrast, while international laws do not prevent the use of guns, they do not authorize it either. That is left up to the individual flag states to authorize,” Anton said. “The U.N. Security Council and the IMO are very clear in their resolutions and do not recommend the arming of seafarers - the crew aboard these vessels - because they are not trained professionals. Putting a gun in their hands is as dangerous as in the hands of pirates. Crews are not equipped to deal with that contingency. They do not have the experience, the training or the skill to effect mission success.”
Said Anton, “When you think of the fact that non-lethal anti-piracy measures were used by ships that have been hijacked, but none seized were protected by armed professionals, it’s easy to understand why more are choosing an armed security team.”
Collaboration With Flag States
The way that maritime laws work is that whosever flag is flying on that ship, that is whose laws govern what happens on that boat in international waters,” Anton said. “Any solution would require cooperation from flag states’ registries to authorize the hiring of armed professionals and use of lethal means in defense of that flag’s vessels.” With great interest in seeking an armed response to maritime threats, NEK MSS’s first priority was to meet with stakeholders to talk about concerns. NEK MSS has approached all of the major flags of convenience, including Panama, Liberia, Marshall Islands and Greece to understand their regulatory frameworks. Anton started with the largest meeting with the Panama Maritime Authority (AMP) in January 2009 as well as other individuals within the Panamanian government to understand their concerns and discuss an appropriate resolution. “We found Panama extremely receptive because they sought to understand the concerns of their 8,400+ customers, many of which are traveling through hostile shipping lanes.” The AMP proactively sought NEK MSS’s assistance to understand and address questions their customers had.
Anton Law Group is helping draft Panama’s new regulatory guidance authorizing ship owners in the hiring of armed professionals, and NEK MSS is currently consulting the AMP to better understand the practical, legal and insurance-related issues that face thousands of vessel owners and operators flagged with that state.
Working to Resolve Insurance Issues
Anton said that they sought to incorporate all the players’ concerns, including the insurance providers. Insurance coverage against the risk of pirate attacks traditionally involved protection and indemnity (P&I), marine hull, marine cargo insurance, but increasing pirate attacks began becoming risks covered under war risk insurance.
Anton Law Group initiated a dialog with the largest insurance organizations including Lloyd’s of London and non-London based insurers. They have brought into the discussions underwriters for the various insurance syndicates from Lloyd’s, as well as other syndicates that are willing to write marine policies that would cover these risks. Even AIG, a U.S. company that normally does not underwrite a lot of that risk, is willing to sit at the table and start talking. “A vessel may be $100 million and the cargo might be another $100 to $200 million,” Anton said. “When you factor in the significant risk, it’s no wonder why caution preceded action.” “A vessel may be $100 million and the cargo might be another $100 to $200 million,” Anton said. “When you factor in the significant risk, it’s no wonder why caution preceded action.”
Anton found, however, rumors that armed security guards would invalidate coverage were not the case. Rather, P&I clubs were willing to evaluate the risks on a case-by-case basis. “Confusion and a lack of understanding by ship owners and operators of where or if coverage would exist, especially where different insurers were involved and armed professionals were on board, simply required NEK MSS bring ships and their insurers together,” he said. “I believe having recourses readily available provides NEK MSS the resources they need to help bridge an understanding between insurers and vessel owners of how risks are reduced when traveling hostile shipping lanes with armed professionals aboard.”
Anton said there are three options with risk. “You can assume it, push it off to somebody else or insure around it,” he said. “Shipping companies do not want to assume any risk they can insure, but the insurance companies do not want to insure unknown risks. Both tried to push the risks to the other, so a solution was not there,” Anton said. Thomas Gilhooly, Vice President of NEK Maritime Security Solutions, explained, “Once the stakeholders understand how our Standard Operating Procedures and Rules of Force operate, and how NEK MSS has worked with the Panama Maritime Authority to mitigate risk unlike any other security firm, it’s easy for everyone to come to agreement,” he said.
NEK MSS’s Standard Operating Procedures are based on those that have been implemented in high-risk areas all over the world. “Whether it’s Iraq, Afghanistan or in the Gulf of Aden, they are what reasonable people would anticipate. They define hostile intent and appropriate response measures as that threat escalates which must be followed to ensure lethal means is the last means of defense against hostile acts,” Gilhooly said.
Cargo Boat Close up Although he says there is no present-day global solution to piracy in east Africa, he feels NEK MSS’s security offerings are an effective solution, at least in the short term, to help minimize some of the resultant pain.
NEK MSS approach in meeting with all stakeholders is manifesting acceptable solutions where uncertainty prevented them before. “We needed to make sure we first understood everybody’s concerns, and that they had the information upon which to make informed decisions. Once everyone understood the caliber, training and experience of professionals involved with NEK MSS, the procedures by which the company operates, any remaining issues were easily managed when we circled back around. By asking, ‘This is what we’re thinking; do you feel we adequately addressed your concerns in the overall solution?’ The collaborative effort was huge in flushing out remaining concerns, improving NEK MSS’s procedures, and overcoming misunderstandings of the risks involved. When you keep going around and around and around, so long as everyone is participating, eventually it brings that circle so close together that everybody is finally on the same page.”
Di Freeze served as editor-in-chief for a national aviation publication for a decade. Presently, she is an independent writer. Contact Anton Law Group at 720.536.4600 or visit their website at www.antonlaw.com.