In 2009, the MV Maersk Alabama and its crew were captured by Somali pirates, who eventually took Captain Richard Phillips hostage while attempting to flee in a lifeboat from the U.S. Navy. His ordeal, the subject of a movie released this month, exemplifies how piracy bedeviled shippers near the coast of Somalia, according to Bruce Paulsen, a partner at New York’s Seward & Kissel. Paulsen, who represents shipping companies and their insurers, has been involved in more than 40 piracies. He talked to The National Law Journal about the legal issues involved.
The remarks below been edited for length and clarity.
The National Law Journal: How did you get into this business of piracy?
Bruce Paulsen: A ship that was owned by one of our clients…was taken the day after Thanksgiving, 2008, as the Somali piracy situation was ramping up. There were a host of legal issues, but the big one is: “Can we pay a ransom and free the crew and save their lives essentially without violating U.S. law?” All of a sudden I was up to my eyeballs in piracy.
NLJ: How has your practice changed since then?
Paulsen: The first one we were involved in was a mad scramble at the beginning. That pattern changed during the two or three years when this was most prevalent. They would take a couple of months for the negotiation to unfold, starting like any other negotiation with a demand for ransom by the pirates followed by a counter offer by the ship owners. And, of course, this is a crime, and the crime is kidnap for ransom, and there would occasionally be threats of violence against crewmembers. Some of the pirate gangs were more violent than others.
It’s an awfully scary situation for the crewmembers. These aren’t naval officers. Their place of work has been attacked, not unlike if somebody goes into a school or place of business with a gun. In 2008, the ransoms were averaging $750,000 to $2 million, depending on the ship, and by the time you got to 2012 they were closer to $4 million or $5 million, and the crews were being held for close to a year sometimes.
NLJ: What was your role?
Bruce Paulsen: In the first piracy we were involved in every aspect. We did not negotiate the ransom; the ransom is negotiated by the CEO of the company under the guidance of a professional hostage negotiator, who is paid for with kidnap-and-ransom insurance, or K&R insurance, and we were aware of every aspect of this.
As time went by…the State Department drafted and President Obama issued on April 13, 2010, an executive order which was aimed at piracy. It essentially prevented any U.S. person from making payment of any kind to certain people and entities in Somalia. So we as lawyers…would reach out to the Department of the Treasury and its Office of Foreign Assets Control, the same body that administers the sanctions programs against Iran and so forth. We’d say, “This ship was taken on X date, this is it’s name and official number and the flag it flies, and the name of the response consultants handling the piracy.” Before the U.S. order, there was concern of risk by a company paying ransom, although every company determined that they had to take the risk.
NLJ: What type of legal work was involved in that?
Paulsen: I used my legal skills to draft contracts with the companies that would actually hire the airplanes and fly out over the Indian Ocean to the ship and drop the ransom in the water. They would have a parachute and a rubber tube with a counting machine that the ransom would go in. The crew would be walked on deck, so a headcount was taken, so there was proof of life, and then the ransom dropped in the water. The pirates would pick up the ransom, bring it on deck—and this is the most dangerous time for the crew members—and there would be a pay master who would count the money and distribute it.
NLJ: It seems that fewer ships have been pirated in recent years. Why?
Paulsen: It’s almost stopped at this point because the ship owners have been hiring armed guards and shooting back at the pirates, and that has effectively ended piracy on the East Coast of Africa. The ship owners were very hesitant…to permit armed guards aboard the ships. Sometimes seafarers have disputes between themselves. They live in tight quarters. It’s a hard life. The idea of having them all armed was frightening from an argument and liability point of view.
NLJ: Have you met Captain Phillips?
Paulsen: I have met him. In fact, I sit on the board of something called the Seamen’s Church Institute, the seafarer’s charity. We honored him at our annual dinner. He’s just a rock solid ship captain. Modest. I’m going to see the movie…and I’ll see how he’s portrayed, but he struck me as a competent, solid mariner.
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