TERRORISM, SECURITY

1
TERRORISM, SECURITY THE ALLOCATION OF
CONTRACTUAL RISK

• Rajeev Philip
• Athens, April 2005

2
Introduction

• The impact of 9/11.
• Transport industries in the spotlight.
• Threefold risk
• The Ship as a Weapon
• The Ship as a Target
• The Ship as a Means of Transporting Terror
• The ACHILLE LAURO and The U.S.S. COLE.
• The IMO Response ISPS Code
• The U.S. Response MTSA 2002 and USCG Regs.

3
The ISPS Code

• In force 1 July 2004
• As at September 2004
• 89.5 of Port Facilities ISPS Compliant
• Over 90 of vessels ISPS Compliant
• The purpose of the Code is to provide a
  standardized, consistent framework for evaluation
  risk, enabling governments to offset changes in
  threat with changes in vulnerability for ships
  and port facilities.
• Shipside

Company Ship Security Officers
Ship Security Assessment
Ship Security Plan
International Ship Security Certificate
4
The ISPS Code in Operation

• ISM vs. ISPS
• The Interface between Ship Shore
• Security Levels

• Security level 1 means the level for which
  minimum appropriate protective security measures
  shall be maintained at all times.
• Security level 2 means the level for which
  appropriate additional protective security
  measures shall be maintained for a period of time
  as result of heightened risk of a security
  incident.
• Security level 3 means the level for which
  further specific protective security measures
  shall be maintained for a limited period of time
  when a security incident is probable or imminent,
  although it may not be possible to identify the
  specific target.

5
The ISPS Code in Operation

• Relevant National Authority Declares Security
  Level.
• Very Wide Discretion
• Reasonableness?
• Proportionality?
• Predictability?

6
The ISPS Code in Operation

• Example
• A tanker loads a cargo in Nigeria for carriage
  to the Far East. Two days before she arrives at
  her discharge port an Al-Qaeda cell is discovered
  in Berlin. Amongst the papers seized by the
  German Authorities are plans of the Nigerian oil
  terminals. At the discharge port, the local
  authorities refuse to allow the vessel to berth.
  Security Level 3 is declared, the vessel is
  ordered to keep five security guards on board,
  along with an escort tug all at the vessels
  expense. The vessel is delayed for a week, during
  which time she is thoroughly searched, and the
  crew interrogated.
• The total cost to the owner, in respect of time
  and expenses is approximately US 500,000.

7
The ISPS Code in Operation

• Who should bear this loss?
• Where do the parties stand in the absence of
  express contractual terms allocating security
  risk?
• Should the type of charter be determinative?

8
The Allocation of Risk

• War Risk Clauses?
• Unavailability of Information.
• The various potential delays and expenses are
  very difficult to shoehorn into traditional time
  and voyage charter frameworks of duties and
  liabilities.
• Example The English Law position on who bears
  the cost of security guards.

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The Allocation of Risk

• THE TIME CHARTERPARTY
• The BIMCO and INTERTANKO Clauses
• Duty to nominate Safe Ports?
• THE VOYAGE CHARTERPARTY
• The BIMCO and INTERTANKO Clauses
• Unquantifiable risk
• Alternative Ports and Frustration
• THE BILL OF LADING

10
The Allocation of Risk

• The BIMCO Approach vs. The INTERTANKO Approach
• Wider application?
• The Basrah Example

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The Allocation of Risk

• THE U.S. AUTOMATED MANIFEST SYSTEM REGULATIONS.
• Electronic Filing
• Standard Carrier Alpha Code
• International Carrier Bond
• Who is the carrier?
• The BIMCO approach.

12

• Conclusion