Nordisk Skibsrederforening

Piracy Update – Sulu Sea

The Sulu Sea is a body of water lying to the west of the Philippines and Malaysia. Since Spring 2016 there has been increased piracy activity in the region with ReCAAP (the Regional Cooperation Agreement on Combatting Piracy and Armed Robbery against Ships in Asia) reporting a total of 11 incidents from March 2016 to January 2017, involving the abduction of a total of 51 crew members.

The attack on the GIANG HAI in February 2017 resulted in the abduction of 6 crew members and the death of another. More recent reports indicate that one of the hostages has now also been killed. The latest attack against a Vietnamese bulker, the PHU AN, on 8 March 2017 was successfully prevented by the intervention of Malaysia’s Eastern Sabah Security Command (ESSCOM).

The increased activity is thought to be attributable to the Abu Sayyaf Group (“ASG”), an Islamist separatist group operating in the Southern Philippines. Crew are typically abducted and then released against payment of a ransom. Where payment has not been forthcoming there have been instances of executions.

Against a general trend of a reduction in piracy activity, both within Asia and globally, the Sulu Sea continues to be a concern. Although the area has a long standing history of piracy, this has traditionally involved smaller vessels such as fishing trawlers or tugs. In recent months there has been an increase in attacks on merchant vessels, which has led to a number of shipping companies re-routing their vessels to avoid the area. The Norwegian Shipowners’ Mutual War Risks Insurance Association has recently published its monthly threat assessment for March 2017. They consider the Sulu Sea area to be at high risk for terrorism with a high likelihood that ASG will continue to target merchant vessels. In an attempt to combat pirate activity, the Philippines, Malaysia and Indonesia have announced they will be launching joint patrols to enable commercial vessels to transit under protection via a designated channel. Patrols are expected to start in May this year.

In the meantime, the advice from ReCAAP is to re-route to avoid the area where possible. Failing which, crew should be extra vigilant and vessels should report to the Philippines authorities and ESSCOM prior to entering or passing the Sibutu Passage and Sulu-Cebu Sea. Appropriate anti-piracy measures should also be taken in compliance with the BMP4 and with reference to the Regional Guide to Counter Piracy and Armed Robbery Against Ships in Asia.

Contractually, the risk of piracy is typically dealt with either by the inclusion of a specific piracy clause or by relying on a more general war risk clause. If relying on a war risk clause, it is important to ensure that this will respond to piracy. The BIMCO Piracy clauses (for time and voyage charters) both entitle owners to refuse to proceed through an area which in the reasonable judgment of the Master/owners becomes dangerous or the level of danger increases due to actual, threatened or reported acts of piracy, violent robbery or capture/seizure. To refuse an order under a general war risk clause such as Conwartime, following the 2012 decision in The Triton Lark, there must be a real likelihood that the vessel will be exposed to acts of piracy. Both the degree of probability that an act of piracy would occur and the gravity of the consequences to the vessel, crew and cargo, are taken into account when assessing this. We might add that that the Triton Lark was a Nordisk case where we successfully argued that owners, who were proceeding from Europe, were entitled to sail around the Cape of Good Hope to avoid the piracy risk in the Gulf of Aden.

Whether to refuse orders is never an easy assessment to make. The consequences of seizure are high, for the crew and commercially, but statistically, the percentage of vessels affected is likely to be small. A bespoke piracy clause will generally provide better protection, dealing not only with an owners’ right to refuse an order, but also (as appropriate for time and voyage charters) their right to take preventative measures, who bears the cost of said measures and the allocation of risk in the event a vessel is hi-jacked.