Hijacked Ship Costs Ruling

In a landmark decision last week, the US Supreme Court upheld an original ruling that ‘General Average’ should apply to costs incurred when ships are hijacked by pirates.

The dispute relates to the vessel ‘Longchamp’, a petroleum gas carrier, that was taken by Somali pirates in January 2009 and released two months later. The case was brought to decide whether the operating costs for the 51 day period of ransom negotiation, was subject to general average.

The original ruling, that general average was applicable, was overturned by the Court of Appeal before the US Supreme Court reinstated it.

General Average (GA) is a maritime law that has been in place since the nineteenth century. A GA act is any extraordinary sacrifice made or incurred in time of peril, that successfully saves the rest of the ships contents. The financial loss of the sacrificed cargo is apportioned between all parties with cargo on board.

GA cases in the past have related more to jettisoned cargo, where freight is offloaded overboard for the purpose of lightening or saving a ship, although these days it is rarely acted upon.

Somali pirates were also responsible for the hijacking of the Maersk Alabama container ship in 2009.  The US registered vessel was captured and its captain taken hostage, which inspired the 2013 movie Captain Phillips starring Tom Hanks

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