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Pirates – the reality behind the legend

Fifteen men on the dead man’s chest – Yo-ho-ho, and a bottle of rum !”

As Captain Billy Bones sang in The Admiral Benbow at the start of Treasure Island and, for most of us, the image of pirates has remained firmly lodged in the seventeenth and eighteenth centuries, along with vague recollections of names such as Edward Teach (Blackbeard), Henry Morgan and Bartholomew Roberts. Screen portrayals by such actors as Douglas Fairbanks Sr., Errol Flynn, Robert Newton and, for those of a younger disposition, Johnny Depp fixed that image in our heads but it is by no means the whole story.

Piracy is as old as mercantile trade by sea itself. One of the earliest records of a pirate raid in the Aegean by the so-called Sea Peoples dates from the fourteenth century BC and Julius Caesar himself was captured by pirates in 75BC. His captors wanted to ask twenty talents of gold to secure his release but he insisted he was worth at least fifty and was ransomed at that price. After his release, he raised a fleet and captured and crucified his erstwhile captors.

From earliest times, most nations had realized that any threat to trade jeopardized their viability and should be dealt with severely. Pirates were declared enemies of humanity and pursued by navies of all nations, often across international boundaries. Although generally held to be universal law (finally confirmed in Articles 101 to 103 of the United Nations Convention on the Law of the Sea, 1982) many countries realized that piracy in some form could be a useful weapon against an adversary – particularly if there had been no declaration of open warfare – and issued letters of mart effectively licensing certain ships to attack merchantmen belonging to the opposing nation.

Certainly, the drafters of early marine insurance policies were well aware that the dangers facing ships and their cargoes were as much man-made as those of the oceans. The SG* policy wording was appended to the 1906 Marine Insurance Act but it, or a similar form of words, had been in use for about two hundred years before then, as you will gather from the phraseology: “Touching the adventures and perils which we the assurers are contented to bear and do take upon us in this voyage: they are of the seas, men-of-war, fire, enemies, pirates, rovers, thieves, jettisons, letters of mart and countermart, surprisals, takings at sea, arrests, restraints, and detainments of all kings, princes and people . . .”

Perhaps the situation is not too different today. A map of world pirate attacks reveals that the west and east coasts of Africa are affected, as are parts of India, the Straits of Malacca and the South China Seas but by far the highest concentration appears in Gulf of Aden, which is the only area widely reported. Since the majority of trade between the Middle and Far East and Europe passes through this area, it is a matter of major concern and 28% of published shipping companies’ reports identify piracy as a key risk.

From reports received, it seems clear that Somali pirates are more interested in collecting ransoms for the release of the ship, cargo and crew than stealing the property involved. In most cases – except, perhaps, where a full cargo of oil is involved – the ship itself will be worth more than any individual parcel of cargo and so, because of this, the shipowner (who also has the interests of the crew at heart) or his representatives will undertake negotiating the release of the vessel. But what of the hapless cargo owner?

Provided he has instructed his broker to arrange insurance, the risk of piracy is covered by the Institute Cargo Clauses (A) which, as we have seen before, “covers all risks of loss of or damage to the subject matter insured . . .” subject to certain exceptions. However, it must be remembered that it is only the risks of physical loss or damage that are covered and, in order for a claim of theft to be admitted, the cargo owner must be permanently deprived of his goods and, given the Somali pirates’ aim of extracting ransom, this seems unlikely. Finally, it must also be remembered that losses caused by delay are excluded. This comes as no comfort to the merchant importing fresh mangoes from India.

As always, it is advisable to speak to a cargo insurance specialist broker, before transporting goods.

 

* Before the standard MAR 91 form was introduced in 1982, the SG form was standard in the marine market but no one remembered what SG stood for. It is probably ‘ship/goods’ since the original form covered both interests, but nobody’s sure.

 

Rodd Bankier is a director of specialist broker Peter Lole & Co Ltd www.peter-lole.co.uk