Piracy and robbery against ships in the Singapore Straits – what shipowners should know

According to an annual report by the Regional Cooperation Agreement on Combating Piracy and Armed Robbery against Ships in Asia (ReCAAP) Information Sharing Centre, the number of piracy and armed robbery cases in the Singapore Strait hit a six-year high in 2021, even though the overall number of cases in Asia fell to the lowest since 2018.

In all of Asia, 82 piracy and armed robbery incidents against ships were reported last year, a 15% decrease from the year before. However, there were 49 incidents in the Singapore Strait, one of the world’s busiest shipping routes – in 2021, compared with 34 in 2020 and 31 in 2019.

Several legal issues can arise out of a piracy or armed robbery incident but two recent developments bear highlighting.

Liability of shipowners to seafarers

In 2020, the Singapore Parliament passed a Bill to amend the Merchant Shipping (Maritime Labour Convention) Act 2014, which took effect in December 2021. The Act covers all Singapore ships and non-Singapore flagged ships in Singapore waters.

One of the amendments provides that should a seafarer be held captive on or off a ship as a result of an act of “piracy” or “armed robbery”, the seafarer’s employment terms will continue to be effective during the period of captivity, regardless of whether the employment agreement has expired or whether either party has given notice to suspend or terminate the employment.

A captive seafarer’s salary and entitlements must continue to be paid during the period of captivity, up until the seafarer is released and repatriated, or until the seafarer’s death while in captivity. Repatriation upon release from captivity is the employer’s obligation.

Additionally, the amendments provide a statutory basis for insurers to become subrogated to seafarers’ rights where the insurer has paid the seafarer for any liability arising from the shipowner’s obligation towards the seafarer.

Singaporean seafarers on non-Singapore flagged ships that are not sailing in Singapore waters would not be covered. That said, since many countries are signatories to the Maritime Labour Convention, it is likely that these seafarers will be covered under the latest amendments if they sail on signatory-state flagged ships or within signatory-state waters.

Liability of cargo owners for ransom payments

A recent case to note is that of Herculito Maritime Ltd & others v. Gunvor International BV & others (Polar) [2021] EWCA Civ 1828.

In this case, the vessel owners declared General Average in respect of a ransom payment of around US$7 million paid out to pirates to secure the release of the vessel after its seizure in the Gulf of Aden.

The owners and their subrogated insurers (the respondents) sought a contribution in General Average from the cargo owners who denied any liability to contribute on the basis that the bills of lading, properly construed, precluded a claim by owners against cargo owners for a contribution in General Average due to terms providing for an exclusive “insurance code” for such risks.

The dispute went to arbitration and the Tribunal ruled in favour of the cargo owners. That position was reversed by Sir Nigel Teare in 2020 in the Commercial Court on a section 69 Arbitration Act 1996 appeal.

The cargo owners appealed to the Court of Appeal which dismissed the appeal and held that, based on the terms of the bills of lading, the owners were not precluded from claiming a General Average contribution from the cargo owners.

Some practical tips

ReCAAP reported that most of piracy and armed robbery cases were carried out in the night by no more than five perpetrators. They mostly targeted bulk carriers and stole engine spares for resale, and ship crew were not harmed in most of the incidents.

Nonetheless and while not mandatory, shipping companies, shipowners and ship operators are encouraged to make confidential reports on all “Actual” and “Attempted” piracy and robbery incidents to ReCAAP ISC as soon as possible so that danger zones can be quickly identified and alerts sent out.

Shipowners should also set up a crisis management team and establish appropriate response protocols. If seafarers are held captive for ransom, assistance should be sought from a professional response consultant.