Insight / Update – 01 August 2016
Are expenses incurred during negotiation of a pirate ransom recoverable in general average?
In The Longchamp [2016] EWCA Civ 708, the Court of Appeal has ruled on an issue that had not previously been considered by the English courts, namely, whether expenses incurred by a shipowner during the period of negotiation of a pirate ransom should be recoverable in general average.
Facts
The laden chemical tanker LONGCHAMP was transiting the Gulf of Aden on passage to Vietnam. The ship was subject to a pirate attack on 29 January 2009 following which she was taken, under the command of the pirates, to Eyl, Somalia.
The owners immediately formed a crisis team and, within a day, the pirate negotiator had made an initial ransom demand of US$6,000,000. This was countered with an offer from the owners of US$373,000. The day following Owners’ initial offer of payment of a ransom demand, Owners declared General Average. A payment of US$1,850,000 was finally made on 22 March after a 51 day negotiation period…
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