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Cyprus: Piracy And Payment Of Ransom For Release Of Ships Under Cyprus Flag

Friday, 17 February 2012 | 00:00
The existence and nature of piratical attacks off Somalia, is a matter of great notoriety and has caused tremendous problems to ship-owners, cargo-owners, insurers, crew members etc.
Due to the absence of any effective government, or law enforcement in Somalia, the only realistic and effective manner of obtaining release of a vessel seized by the Somali pirates, is the negotiation and payment of a ransom.
Is the payment of ransom to Somali pirates for obtaining the release of a vessel seized, unlawful and/or contrary to public policy?
Cyprus has been an independent and sovereign republic, since 1960. Until that time, it had been a British Colony. The Cypriot legal system followed English law until 1960. Since then, it has been closely modeled on its English counterpart. Cyprus has adopted the Anglo-Saxon legal system, which allows most English cases to be cited in Cypriot Courts. Under certain conditions, the cases are treated as binding, but in most instances, they are used as guidelines.
There is no Cypriot case law, on the issue under consideration, neither there is any legislation rendering the payment of ransom unlawful.
In the event that an issue is raised before Cypriot Courts for consideration, Cypriot Courts will follow and adopt legal principles laid down in English case law.
In the English Appellate case MASEFIELD AG -V- AMLIN COPROPRATE MEMBER LTD (2011) EWCA CIV 24, it has been inter alia held that:
1. There is no universal morality against the payment of ransom, the act not of the aggressor but of the victim of piratical threats, performed in order to save property and the liberty or life of hostages. This is despite the realization that the payment of ransom, whatever it might achieve in terms of the rescue of hostages and property, itself encourages the incident of piracy for the purposes of exacting more ransoms (per RIX LJ at paragraph 69).
2. There is no universally recognized principle of morality, no clearly identified public policy, no incontestable public interest, which could lead the courts, as a matter which stands beyond the pale, without any legitimate recognition. There are only elements of conflicting public interests, which push and pull in different directions and have yet to be resolved in any legal enactments or international consensus as to a solution (per RIX LJ at paragraph 71).
3. The payment of ransom was not of itself contrary to English public policy.
Relying on inter alia the above, we conclude that it is lawful, as a matter of Cypriot law, to pay a ransom to Somali pirates, in order to secure the release of a ship, her crew and cargo.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
Source: Neptune Maritime Security
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