A Study On The Nature And Insurance Coverage For Somalia Pirates Ransom Payment

The current wave of piracy is putting more and more pressure on the world shipping industry by way of hijacking and huge sum of ransoms. This new way of pirating, presents some new problems both practically and theoretically, and thus leads to a review of the relavent acdemic and practical issues on piracy and marine insurance. This paper, however, mainly focus on analysing if and how the losses caused by ransom payment could be covered by marine insurance. To achieve that goal, this paper made a research both by way of historical studies and theoretical analysis. And with the hope that this research could contribute to the practice and study on this issue, this paper examined the academic issues regarding the defination of piracy, the nature of ransom in marine insurance, and the insurance coverage for ransoms, based on the latest developments in this area.Besides the Forward and the Conclusion, this paper is constituted by three chapters. The first chapter introduces the grave situation at the Gulf of Aden and the new characters which makes the pirates in Somalia distinguished from their peers in other part of the world. The second chapter started by a study on the defination of piracy and then moves forward to analyse the nature of the losses caused by ransom payment under marine insurance law. The third chapter mainly deals with the practical issues, it examines two sorts of widely used marine and cargo insurance clauses to find out how could the losses of ransom payment be covered by them, and to make the study more comprehensive, a furter analysis on the possible coverage from P& I insurance and Kidnap& Ransom insurance is made in the later part of chapter three. Finally, this paper comes to the conclusion that the losses stems from the payment of ransom could be considered as general average or sue and labour, and thus could be covered by marine insurance.