Shipping & Offshore November TERRORISM ON THE HIGH SEAS 2014 The threat Energy crisis A recent on-line Al Qaeda propaganda publication The threat evidenced in the Al-Qaeda publication has once again highlighted the potential threat is worrying for the global shipping industry and posed to global shipping by terrorism. The for the world’s energy supply. Indeed, a secure inaugural edition of “Resurgence” contains energy supply is fundamental to the world an article ominously entitled “On targeting the economy. According to the 2014 BP Statistical Achilles Heel of Western Economies”. The article Review of World Energy, global primary energy highlights the vulnerability of certain key global consumption “accelerated” in 2013 for all fuels1. maritime chokepoints through which the majority Oil remains the world’s leading fuel, accounting of world energy is shipped every day. In particular, for 34.2% of total global energy consumption the article states “Even if a single supertanker in 20132. The BP Review reports that global oil (or even an ordinary westbound cargo-vessel) consumption grew in 2013 by 1.4 million barrels were to be attacked in one of the chokepoints or per day (b/d), with the US recording the largest hijacked and scuttled in one of these narrow sea increment to consumption at +400,000 b/d, lanes, the consequences would be phenomenal: followed by China at +390,000 b/d3. Similarly, a spike in oil prices, an increase in shipping global oil trade grew by 1.7% in 2013 with rates, more expensive maritime insurance, and particularly high growth occurring in Europe and increased military spending to ensure the safety emerging economies4. of these sea passages.” 1-4 http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014- full-report.pdf The 2013 figures for natural gas tell a attack on the French crude oil carrier n Ensure that sufficient and adequate similar story with both global natural the M/T LIMBURG off the coast of security measures are in place. gas consumption and trade growing Yemen in 2002, the attack on the by 1.4% and 1.8% respectively in passenger ship the DON RAMON in The ISPS Code envisages that the 20135. The BP Review also reports Filipino waters in 2005 and the attack above objectives will be achieved that growth was experienced by both on the Japanese very large crude oil through the appointment of appropriate importer and exporter countries, with carrier the M STAR whilst transiting the security officers and/or personnel on Qatari exports growing by 2.7% and Strait of Hormuz in 2010. It is believed board vessels, in each port facility and German and Chinese imports growing that all of these attacks were carried within each shipping organisation. by 14% and 32.4% respectively6. out by terrorist organisations. These individuals will be responsible for preparing and putting into practice Both importer and exporter countries Policing the sea the security plans that will be approved rely on the safe transportation by sea for each vessel and port facility. The of oil and gas. Of particular importance The International Ship and Port ISPS Code consists of two parts, are the Strait of Hormuz and the Strait Security code (the ISPS Code) was Part A and Part B. Part A contains of Malacca. Strategically located introduced as a direct consequence mandatory provisions regarding the between Oman and Iran, the Strait of the security concerns raised by appointment of security officers for of Hormuz provides an important the tragic events of 11 September shipping companies, individual vessels connection between the Arabian Gulf, 2001. This July marked the 10 year and port facilities. Part A also includes the Gulf of Oman and the Arabian anniversary of the Code’s entry into security issues to be addressed in Sea. According to the US Energy force via a series of amendments to security plans prepared for both Information Administration (EIA), the the Safety of Life at Sea Convention vessels and port facilities. Part B Strait of Hormuz is considered the 1974 (SOLAS). The ISPS Code marked contains non-mandatory guidance and world’s most important oil chokepoint an important development in the field recommendations for preparing vessel with a daily oil flow of approximately of international maritime security since and port facility security plans. 17 million b/d in 20117. More than it introduced for the first time wide- 85% of oil travelling through the Strait ranging maritime security obligations Having initially met with some is destined for the Asian markets with for SOLAS contracting countries. scepticism upon its introduction, over China accounting for a significant the last 10 years the ISPS Code has Broadly speaking, the ISPS Code proportion8. The Strait of Malacca is become an accepted part of modern applies to all passenger ships engaged also geographically important linking shipping. Today the majority of the on international voyages, cargo ships the Indian Ocean to the South China world’s merchant vessels and port of 500 or more gross tonnage, mobile Sea and the Pacific Ocean. The EIA facilities comply with the ISPS Code. offshore drilling units and port facilities reports that the Strait of Malacca had Vessels are no longer left to fend for serving all such vessels and units10. an estimated flow of 15.2 million b/d themselves in the face of an attack and The key objectives of the ISPS Code in 2011, with crude oil constituting port facilities are now required to take are to: approximately 90% of flows9. Should various precautions to protect vessels, for example, imposing access controls either of these areas come under n Facilitate the detection and to ensure that only individuals with attack the potential consequences prevention of security threats within genuine and legitimate business are would be devastating. an international framework. permitted access to vessels. Uncertain waters n Establish the roles and Further, given the fact that there has responsibilities of all parties Terrorist incidents involving vessels not been a 9/11 shipping equivalent, concerned. are not an unknown or a new the ISPS Code can be regarded as phenomenon. There have been several n Permit the collection and a success. However, a number of significant terrorist attacks on vessels interchange of security information. challenges remain. In a presentation in recent years. The most notable given in April 2014 entitled “After 10 incidents include the attack on the US n Provide a methodology for years of ISPS Code: Disparity in global warship the USS COLE in 2000, the assessing and measuring security. implementation”, the IMO highlighted 5-6 http://www.bp.com/content/dam/bp/pdf/Energy-economics/statistical-review-2014/BP-statistical-review-of-world-energy-2014- full-report.pdf 7-9 http://www.eia.gov/countries/regions-topics.cfm?fips=wotc&trk=p3 10 https://www.gov.uk/maritime-security#ships-that-must-comply-with-maritime-security-requirements 02 Shipping & Offshore the following challenges that the ISPS provisions allowing for the termination important exception for third party Code still faces: or suspension of the charterparty acts. Pollution caused by terrorism in the event of a terrorist attack. By may be considered as such a third 1. The lack of national legislation and way of example, the Supplytime party act and it may therefore be guidelines on implementing the 2005 charterparty contains a Force possible for owners to avoid liability ISPS Code. Majeure12 clause according to which on this basis. Finally, parties should a party may avoid liability for loss, also consider reviewing their insurance 2. Use of the ISPS Code as a means damage or delay arising out of a arrangements in order to ensure to address all maritime security terrorist attack. However, there are that they have adequate war risks threats. some important conditions imposed protection. Insurance policies may 3. The difficulty of selecting an upon the party seeking to rely on this contain awkward warranties which can appropriate risk assessment provision. In particular, the clause be breached unwittingly, causing cover methodology. makes it clear that the party must to be lost and exposure to risk. have been hindered or prevented from 4. The difficulties of disseminating performing some or all of its obligations Conclusion good practices on port facility under the charterparty. The burden The threat from Al Qaeda is a stark security. of proof will be on the invoking party reminder that the maritime community to evidence this. The party must also 5. The key question of “Who audits remains vulnerable to terrorist attacks show that it has taken reasonable the auditor?”. at sea, and vessels transporting energy steps to avoid or minimise the effects should be particularly alive to the risks. of a terrorist attack. Again, the burden 6. The difficulties encountered by While steps have been taken in the of proof will be on the invoking party to ships after calling at a high-risk last 10 years to raise awareness and 11 show that it has put in place adequate port . minimise the risk of attack within the systems and procedures to combat global maritime community at large, These challenges highlight the fact terrorist attacks. Finally, the invoking there is room for improvement and all that the ISPS Code is perhaps not as party is required to inform the other interested parties should continue to user friendly as it could be and that it party within two working days of the place emphasis on the enhancement is not a panacea for all threats posed terrorist incident. The invoking party of maritime security. Parties should to the shipping community. While the will need to comply with all of these also review the provisions contained ISPS Code has certainly succeeded in requirements in order to rely on this in their contracts of carriage and raising awareness of maritime security provision.