Hijacked Ship Cost Ruling

In a landmark decision last week, the US Supreme Court upheld an original ruling that ‘General Average’ should apply to costs incurred when ships are hijacked by pirates.

The dispute relates to the vessel ‘Longchamp’, a petroleum gas carrier, that was taken by Somali pirates in January 2009 and released two months later. The case was brought to decide whether the operating costs for the 51 day period of ransom negotiation, was subject to general average.

The original ruling, that general average was applicable, was overturned by the Court of Appeal before the US Supreme Court reinstated it.

General Average (GA) is a maritime law that has been in place since the nineteenth century. A GA act is any extraordinary sacrifice made or incurred in time of peril, that successfully saves the rest of the ships contents. The financial loss of the sacrificed cargo is apportioned between all parties with cargo on board.

GA cases in the past have related mostly to jettisoned cargo, where freight is offloaded overboard for the purpose of lightening or saving a ship, although these days it is rarely acted upon.

Somali pirates were also responsible for the hijacking of the Maersk Alabama container ship in 2009.  The US registered vessel was captured and its captain taken hostage, which inspired the 2013 movie Captain Phillips starring Tom Hanks.

Reports suggest that a significant number of international consignments still move without the correct insurance cover. Without marine or cargo insurance in place you may not be able to recover the full costs of your products in the unlikely event that you incur damages or losses during transit.

If you are unsure about your cover then please contact your local Uniserve representative or email info@ugroup.co.uk for assistance.

Uniserve Group offer a full range of cargo insurance services including individual shipment cover and annual policies, for further information please call 01708 259400 or email info@ugroup.co.uk.