The April 2017 edition of “The Bridge” printed an article I wrote in January which questioned the BIMCO amended guidance on Clause 10 of GUARDCON issued in November 2016 relating to “rented” and “borrowed” weapons. The article therefore did not reflect the further changes BIMCO made in February 2017 and in the week before his untimely death, Giles Noakes set out to “educate” me on why my observations were wrong. Not only was he a good friend but his standing in the maritime security world and in shipping generally had long since earned my respect. In his last email to me he suggested in his no-nonsense style: “A rewrite and update of the article that reflects BIMCO’s guidance would be much appreciated”. I owe it to him to do just that. Not least because he also made clear that his concerns were “…far more focused on the protection of seafarers and ships….” which was typical and was the motive for so much of what he did.  However, I also know that simply agreeing with him would be a disservice to his memory and he would expect me to fight my corner.

I am also mindful that there is to be a debate led by the UK Private Maritime Security Companies (PMSCs) about the need for an independent Registry of weapons. The intention behind this is to allow an easy check on End User Certificates and in turn to make it more difficult for PMSCs to lend and borrow weapons. This article also looks at some of the legal and insurance issues that surround the use of “illegal” weapons and questions whether a central Register is a credible solution.

Clause 10 GUARDCON

Let us start with Clause 10 of GUARDCON headed “Permits and Licences” which imposes mutual obligations on owners and PMSCs to have the right certification in place before weapons can be deployed on board. Owners are to obtain the necessary “Permits” (defined widely in Clause 1) required to allow armed guards on board which were understood by the team that drafted GUARDCON primarily to be the permissions from flag states, remembering that several key countries did not at that time allow weapons on board. The PMSCs have to obtain Permits as required by: the country of incorporation of the company; the country from where the guards came from and the country of embarkation and disembarkation. They also have to set out in Box 11 the Permits they have, under the heading “listing of national operating and trade control licenses” which reflects in the main, what was required under the UK system.  Both parties must indemnify each other for losses arising from not having those Permits in place. The legal obligations are clear. If a vessel is delayed because of deficiencies in a PMSC’s licenses or documentation then they would potentially be liable for any losses incurred by the ship owner, including those for delay.

The concern when GUARDCON was drafted (as reflected in the original Guidance Notes) was that some PMSCs were operating without the necessary trade control licenses and at the time there was significant tension between those that were operating “legitimately” and those that were not. Claims of a lack of an even playing field is a constant refrain in this sector.

As margins were squeezed, “borrowed” weapons became an issue. Companies were said to be borrowing and lending weapons to each other and there was an increase of reporting and whistle blowing from within the industry to the UK government body responsible for issuing the licenses who in turn were referring the complaints to the customs authorities. Given that many PMSCs have given up, I suspect that those still prepared to borrow weapons are in a small minority.  These complaints were often from ex-employees with a grudge or by those companies who were anxious to stop others from getting a competitive edge. Borrowing (and lending) weapons are not permitted under UK trade control licences but the same cannot be said of other countries where less stringent export control standards are required. BIMCO had already issued a handout for masters showing them where serial numbers were to be found on the commonly used weapons in an attempt to make them more vigilant. This was followed by an update in the GUARDCON guidance notes in November 2016 which stated that “it is a legal obligation [arising under a number of conventions] on flag states and they should be sighting and verifying EUCs [End User Certificates] as a matter of routine.” 

The immediate legal concern was that the commercial risk imposed on a PMSC under Clause 10, was now being shifted onto owners. This was queried by people like myself who couldn’t understand why as part of the due diligence process owners were being asked to delve ever deeper into the Contractor’s documentation. PMSCs were being given a potential defence to claims brought by owners for delay. BIMCO’s press release on the change also prompted one major PMSC to write an article about how it was incumbent on owners to stop “illegal weapons movement” and that weapon sharing exposed those on board to greater risk.

By February 2017 BIMCO recognized they had gone too far and the guidance was changed so that it now reads: “Ideally, the ship’s flag state should as a matter of routine sight EUCS and verify their authenticity prior to issuing letters of authority”.  This is much better although it maybe neater to make “not borrowing and lending weapons” one of the Clause 6 obligations on a PMSC. Having said that the obligation is probably already their by the fact that the EUCs are “Permits” as defined in Clause 1 in any event.

It follows that losses to the shipowner arising from having borrowed weapons on board,  that do not match the paper work, should be a PMSC responsibility regardless of checks done on serial numbers in the same way that a charterer can be made to be responsible for loading even where a master checks the stowage plan.   

Liability Insurance

Some in the industry believe that there is a correlation between having “illegal” weapons and poor weapon handling skills which they say then increases the risks to those on board. They would no doubt argue that a PMSC compromising on its documentation may cut corners on its training or that a man with a borrowed weapon may not know how to use it safely or that negligent discharges will arise more often. However, that argument is diluted because the industry is already being forced to compromise standards for example, by using fewer western trained personnel and is instead employing (albeit not exclusively) ex Indian and Sri Lankan military for as little as US$30 a day. As far as I am aware there is no transparency on the number of weapons negligently or accidentally discharged on board ships. I assume that such incidents are not, for example, being declared to the liability insurers on renewal of their insurances. Perhaps they do not see it as material.

Of concern to the P & I Clubs is the potential exposure they have if weapons are illegal and they cause harm. If the liability insurers do not pay then the potential loss falls on them.

Under the liability regime provided for at Clause 15 if an armed guard has a negligent discharge (with a licensed weapon) and kills another armed guard then the PMSC is liable under the knock for knock regime. If the negligent discharge kills a crew member or third party then the PMSC is liable under Clause 15 (c) (iii). It is a deliberate exception to the knock for knock regime. In those circumstances the PMSC would look to its liability insurers to indemnify them for any loss.      

The question is what would happen if the weapon was borrowed and therefore “illegal”? Would the situation change and would the illegality mean that the insurers could or would not pay? Clearly much depends on the policy wording and jurisdiction but we are assuming it is an English law policy and that the borrowed weapon is illegal as a matter of English law. It is likely in that case, that the status of the borrowed weapons would be known to the management and they would therefore be complicit in the act. However, (and in very general terms) cover under the policy would come down to an argument as to whether the weapon being borrowed led to or contributed to the incident in other words that it was sub-standard and should not have been in use. A borrowed well maintained rifle in the hands of a trained ex-marine is not the same as him having to use a sub-standard unmaintained AK47.

In other words a loss that arises out of the use of a borrowed weapon of the same or similar type in the hands of a trained operator, is unlikely to be an issue under the PMSC’s liability policy.

EUCs and the Weapons Register

The question then is what job will the EUC register be doing and for who benefits from it being set up?

Before BIMCO’s November press release (which certainly got the attention of CSOs who were alerted to the problem) I am not sure this was something that was really an issue for owners. Anecdotally there has been the odd story of issues arising in Indian ports causing delay to a vessel but as I have said above, there is a contractual answer to that and PMSCs effected have quickly developed work around solutions.  With the new guidance, questions were increasingly raised with PMSCs and P & I Clubs who suddenly found themselves fielding queries about the validity of EUCs, that they were not equipped to deal with, not least because forging such documents is seen as not difficult. Owners do not get any direct benefit from an EUC register and on the contrary there is a concern that if it is in place, then any delays caused by issues with documentation will not happen in the relative safety of a discharge or load port but in the vicinity of the floating armouries in the Red Sea.

Another unforeseen problem arose because the UK doesn’t issue “EUCs” as such although the relevant ministry has alleviated this by redesigning their export documentation so it is now called an “End User Certificate of Export”. That seems to have been well received.

There seems no chance that any Register will be run other than by a private company. That clearly concerns many, as cost and commercial confidentiality will undoubtedly be an issue with the cost having to be borne at least in the first instance by the PMSCs themselves. They will no doubt seek to pass that cost on. There is another fundamental issue in that no-one knows how many weapons are in circulation in and around the Indian Ocean. Estimates puts the total figure at between 10,000 and 15,000 with 12,000 seen as a best guess. I think it would be a surprise to anyone outside the industry that this is such an unknown. But it fatally undermines a Register if no one knows if 5000 weapons is 50% or 33% of the total. An owner who checks a weapon will not know if it’s absence is simply an administrative error or something else and if he receives assurances from his usual trusted supplier is he going to sit off a floating armoury and wait to resolve the issue or simply proceed with the voyage? My bet is on the latter.

The Register will not be something that can be compelled by say ISO 28007 and nor is the impetus coming from owners or indeed insurers and that will not change unless delays caused by having borrowed weapons become more widespread. There is clear support from BIMCO and the Clubs and pressure may fall on flag states (with IMO backing) to get more involved not least because they ultimately authorize weapons to be carried on their ships. Clearly if this goes to the safety of crew then that should be reason enough, but one is left with the feeling that the only people making that argument are PMSCs themselves (although in fairness it is one that Giles would have also made). The bigger PMSCs see that if there is a Register which they support and buy into, then they may obtain a market advantage but they are assuming that there will be some who do not, either through cost or principle. They need that to differentiate themselves. Given that the UK PMSC industry owns about 40% of the weapons in circulation they may yet give this a go but I am yet to be convinced that there is a significant problem to which this is the solution.  It may give everyone from governments down some degree of comfort and another regulatory layer and that maybe reason enough but as has happened before the impetus seems o b ecoming from within the maritime security sector.    

It was good to have had the chance to put these arguments to Giles and although he understood what I was saying he would have still pushed for a Register and I hope that in the forthcoming debate someone articulates his point of view in a way that does him justice. As I get set to post and circulate this article the great sadness is that I know I will not be subject to the usual incoming email with his “GNO” prefix and a summons to discuss the matter further in a “seamanlike manner”.