An article by Andrew Mitchell QC, Head of 33 Chancery Lane, has been published by the Baltic Magazine on the legal avenues available for reclaiming ransom payments by the victims of maritime piracy.The continuing problem
One of the less welcome effects of the drop in maritime piracy attacks is that the average ransom has risen by 20% from the 2010 average of US$4million. This, and the recent increased migration of maritime piracy to the West coast of Africa, has resulted in a consequent increase in insurance premiums for ship owners and charterers alike. All is not as we would wish it to be.
In the event that a ship is hijacked and ransom negotiated and paid, the buck, so to speak, does not have to stop there.
The development of asset freezing and asset repatriation laws provides a framework for the recovery of payments made by those who fall prey to maritime piracy. The right combination of legal expertise and forensic investigation, combined with cooperation of local law enforcement and relevant regional organisations, means that significant inroads into the reclaiming of ransom payments are now being made.
Timing, however, is crucial.
There is a common misunderstanding that asset recovery is dependent on the prosecution of an individual. Through developments in domestic and international law, this, in fact, is not the case.
In addition to confiscation of the proceeds of crime after a conviction, there is a second avenue: civil, or ‘non-conviction based recovery’. Put simply, a recovery claim can be made against the asset itself, be that cash, a bank account, or a boat. A prosecution is not required.
This is a powerful tool that enables investigations to follow an asset into a recipient’s hands. Identified assets in the hands of individuals, which cannot be justified without recourse to illicit funds, (for example an offshore bank account, high value car, jewellery or real estate) can be disgorged. The burden of proving the legitimacy of this ‘unexplained wealth’ is upon the holder of the asset.
Take the hypothetical case of a vessel transiting the Gulf of Aden passage, when it is hijacked by pirates and taken back to the waters of Puntland. The owners are informed that their vessel and all its cargo(es) have been seized and a ransom payment is sought.
At this point, the asset recovery team should be contacted and involved in all negotiations between the owners and pirates. This will ensure that all relevant information is collected as soon as it is made available, to enable the tracing to commence immediately upon deposit of the payment.
If, for example, half the sum is paid in cash and half in an electronic transfer, forensic investigators will be able to make contact with the relevant banks, customs and Financial Intelligence Units (FIUs) to put them on notice of suspicious transactions and illicit cash movements.
Crucial information can be collated - who, how, where, when and how much has been paid. This information is dealt with sensitively, and only shared with the agreement of the owners and their insurers.
Given the asset recovery tools that are available, the physical cash, any purchases made by the individuals that cannot be legitimately explained and all electronic monies can be frozen by court order in a matter of hours.
With the use of sufficient intelligence sharing, rapid Mutual Legal Assistance, tracing skills and specialist litigation support, it is possible to follow the route of those funds no matter where they entered the banking system into the hands of the ultimate beneficiary. This is achieved by a combination of banking cooperation, the threat of prosecution and asset recovery powers.
The incentive to invest in asset recovery in vulnerable jurisdictions is obvious. Repatriation of funds that were lost can be reclaimed and invested back into maritime security and may increase insurance cover. The flow of cash from maritime piracy, crucial to its survival, can be squeezed at both ends.
The plain truth of the matter is that by limiting the availability of funds in the hands of criminal gangs, pirates don’t have the capital to invest into future piracy attacks.
In other words, the pirates will find themselves hijacked.
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