Analysis Of The Nature And Insurance Coverage For Somalia Pirate Ransom Payment

In recent years, the international ocean shipping is rapidly developed whilefacing the risk of rampant pirates at the same time. Somalia pirate, occupied the Gulfof Aden and Red Sea, is one of whom attack passing ships, hijack the cargoes andshipman. Compared with other pirates, Somalia pirate has its own characteristics.They kidnap the shipman as hostage or hijack cargo and ship to threat the ship-ownerto pay the ransom. As long as they get satisfied ransom, generally speaking, they willnot harm crew, nor damage the ship or cargo. Under this premise, the ransom on onehand saves ship, cargo and even loss of life, on the other hand, it causes theship-owner’s additional expenses. The nature of the pirate ransom has beencontroversial in academic-field, this uncertainty will affect the indemnification ofmarine insurance also. This paper attempts to start from the characteristics of theSomalia pirate ransom to clarify the nature of ransom and responsibility of ransompayment in maritime perspective, and then discuss possible solutions in maritimeinsurance coverage. Removed the preface and conclusion, this paper divides into threechapters.The first chapter is an overview of the pirate and pirate ransom. Lead from thehistorical origins of pirates, this part analyses the characteristics of Somalia pirate andpirate ransom.Chapter Two is the main part, which makes a research on the nature of ransom in qualitative and quantitative point of view. Compared the definitions and constitutiverequirements within three possible theories including particular average, marinesalvage and general average, taken reasonable and realistic measures in consideration,we come to a conclusion that Somalia pirate ransom should be in the scope of generalaverage. Then in the quantitative analysis, this part sums up three undertakers ofransom payment in particular situation and their corresponding responsibilities.Chapter Three is about the issue whether the loss caused by piracy risk andransom payment could be settled in marine insurance. By analyzing interrelatedinsurance clauses both domestic and overseas and enumerating practices of someinsurers operating abroad, we could utilize as a source of reference to some extent.