Insurance for Private Maritime Security Companies: Liability Relating to Misuse of Lethal Force Remains Unclear

As the International Organization for Standardization reviews the issue of insurance for private maritime security companies, liability in key circumstances such as the misuse of lethal force remains unclear and untested.

The most pressing issue, as highlighted by the Enrica Lexie case, is the potential for misuse of lethal force, in which a ship’s armed guard kills someone who was not a pirate. Holman Fenwick Wilan partner Elinor Dautlich explains that in the case of misuse of lethal force the individual guard, the PMSC and the shipowner could be sued by dead third party’s estate in a civil and criminal claim. The merits of arguing self defence, she says, would depend on jurisdiction.

Ms Dautlich suggests that there may be a question mark over whether P&I cover would respond. There may be express exclusion of piracy, whether exclusion of cover because of presence of weapons of war or an exclusion of cover because liabilities arise from terrorism.

In relation to negligent discharge in which a guard injures or kills a crew member, BIMCO’s Guardcon’s “knock for knock” principle (clause 15), establishes that each party is responsible for the death and injury of its own personnel. However, there is an exception, whereby the PMSC is liable for “all claims liabilities… to crew and third parties... whatsoever and howsoever, arising out of and in connection with the accidental and negligent discharge of any firearm by the security personnel”.

Under the knock for knock principle, negligent discharge damaging the vessel would result in owners being liable for vessel damage, but this does not cover cargo, unless the cargo is owned by an owners’ group.

Debate continues as to whether unlicensed weapons on board a vessel could prove problematic for a shipowner, with a risk that their presence prejudices insurance cover.

For the full article, please see Lloyd’s List.