Hijacked: Somalia sanctions hold U.S. ship owners hostage.

• Author: Abbott, Christopher J.

"Commandeer. We 're going to commandeer that ship. Nautical term. "--Captain Jack Sparrow, PIRATES OF THE Caribbean: The Curse of the Black Pearl.

1. INTRODUCTION

   Somali pirates fired grapnel hooks from their bouncing speedboats high onto the deck of the massive, lumbering ship, and ascended rope ladders with automatic weapons strapped to their backs--the hijacking of the Sirius Star was underway. (1) The oil tanker, three times bigger than a U.S. aircraft carrier, had been sailing through the Indian Ocean south of the Gulf of Aden. (2) Because the ship was on autopilot, the bridge was unmanned and the pirates boarded without serious opposition. (3) They quickly subdued the twenty-five unarmed crewmembers and took control of the ship, along with the $100 million worth of crude oil in its hold. (4) They anchored the ship off Hardhere, a Somali port city. (5) It took two months of negotiation and a $3 million cash ransom--dropped to the pirates from a small plane--before the Sirius Star and her crew were finally released. (6)

   This Note analyzes how recent export control regulations promulgated by the Office of Foreign Assets Control affect the ability of U.S. ship owners to pay ransom to retrieve a ship hijacked in the Gulf of Aden. (7) Piracy on the high seas is hardly a new phenomenon, so Part II of the Note presents a brief history of public and private responses to the scourge. (8) Part III outlines the Somali sanctions regime introduced by Executive Order 13,536, signed by President Barack Obama on April 12, 2010, and implemented by regulations promulgated by the Office of Foreign Assets Control. (9) It also details the relevant case law governing enforcement of U.S. sanctions regimes. (10) Part IV argues that the Somali sanctions regime is an effective ban on ransom payments to all Somali pirates, not just those named in the sanctions. (11) This would put a U.S. ship owner in an immensely difficult position should his ship be hijacked, so Part V concludes that the Office of Foreign Assets Control should clarify the regulations by issuing a general license allowing ransom payments when necessary to preserve life. (12)

2. HISTORY: PUBLIC VERSUS PRIVATE RESPONSES TO SEA PIRACY

   1. An Ancient Problem

      Piracy is an ancient criminal enterprise. (13) In his biography of Julius Caesar, Plutarch tells of Cilician pirates who captured Caesar on the Mediterranean, holding him captive for thirty-eight days until ransom was paid. (14) Caesar played card games with the pirates, and it was over one of these games that he plainly informed his captors that after he was ransomed he would return with his navy to crucify them. (15) Ignorant of Caesar's true identity, the pirates laughed. (16) The Emperor kept his promise. (17)

   2. The Barbary Pirates: From Ransom to War

      The first known incident of piracy against a colonial American ship was the 1625 hijacking of a merchant vessel in the Mediterranean Sea by Barbary pirates based out of Morocco. (18) Scattered attacks followed, but the legendary British Navy provided protection that deterred most would-be hijackers. (19) When the American colonies declared independence, however, the British navy went from ally to enemy and hijackings of American ships increased dramatically. (20)

      Because the Barbary pirates were state-sponsored, debate in the nascent United States over the proper response involved two options: either pay some form of ransom, or wage war against the sponsoring states. (21) While the majority supported using force, for a time this option was a practical impossibility because the colonies lacked both a strong navy and the power to raise one under the Articles of Confederation. (22) Then, in 1784, Moroccans seized the Betsey. (23) "Armed only with innocence and the olive branch," Thomas Jefferson, John Adams, and Benjamin Franklin negotiated the release of the ship and a treaty of peace in exchange for a $20,000 "gift." (24) The one-sided negotiation was such a loss of face for the colonies that it strengthened the case of those who advocated replacing the Articles of Confederation with a stronger central government, one that could raise and support a proper navy. (25)

      The proponents of a strong federal government got their Constitution, but many years passed before a robust navy followed; in the meantime the government prevented hijackings by spending upwards of 20% of annual revenue on "tribute" payments to the Barbary States. (26) In fact, the payments were so substantial that they inflated the cost of ransom worldwide, triggering complaints from European diplomats. (27) The higher cost of ransom also resulted in higher insurance rates. (28) It was President Jefferson who finally responded to the demands of American traders; he built up the navy, and in 1801 he attacked the pirate bases in Morocco, bringing the demise of large-scale Barbary piracy. (29)

   3. Contemporary Piracy in the Gulf of Aden

      1. Origins and Scope of the Problem

         Whereas the piracy that President Jefferson battled was state-sponsored, most contemporary piracy arises directly out of a state that barely exists. (30) Two decades of civil war, anarchy, and the resulting failed economy have made Somalia the capital of modern-day sea piracy. (31) While piracy exists in other waters, nowhere are hijackings as prevalent as in the Gulf of Aden and off the coast of Somalia, and the geographic reach of Somali pirates continues to increase. (32) Today's Somali pirates may have a very different relationship with their home state, but they do bear a similarity to their Barbary forbears: their business model centers around ransoming back the ship and crew. (33) Unfortunately, the similarities do not end there; contemporary Somali pirates will kill hostages. (34)

      2. Public Response

         Because hijackings in the Gulf of Aden threaten a major commercial shipping route, the international community has aggressively pursued a public solution. (35) More than twenty nations created Combined Task Force 151 in January 2009, providing two-dozen ships for the "mission of conducting anti-piracy operations in the Gulf of Aden and the waters off the Somali coast." (36) Since 2008, NATO has deployed multiple Maritime Groups to the Horn of Africa to conduct anti-piracy operations, and the European Union has contributed Operation ATALANTA to the efforts. (37) This flotilla cut incidents of piracy in the Gulf of Aden in half between 2009 and 2010. (38) But these efforts can hardly be called a success. (39) The pirates simply expanded their territory to include waters beyond the Gulf of Aden, and as a result "more people were taken hostage at sea in 2010 than in any year on record." (40) Fifty-three ships were hijacked in 2010, with 1,181 crewmembers taken hostage, an increase in both for the fourth straight year. (41) Of those ships, forty-nine were hijacked off the coast of Somalia. (42) With each hijacking Somali pirates are forcing companies to decide how to secure the safe return of their ships and crew. (43)

      3. Ransom as Surest Way to Preserve Life

         Paying ransom has been the most effective means of securing safe return of a hijacked ship and crew from Somali pirates. (44) One obvious reason companies are willing to make these payments is the incalculable value of the lives of the crew. (45) An equally compelling motivation-albeit less altruistic-is the "sue and labor" clause in most maritime insurance contracts, which allows insurers to deny indemnification for a loss the assured does not reasonably attempt to minimize. (46) The clause cuts both ways, allowing for reimbursement of expenses incurred preventing a loss, making most ransom payments a covered expense under maritime insurance policies. (47)

3. FACTS: OFAC REGULATIONS

   1. Office of Foreign Assets Control

      The Office of Foreign Assets Control (OFAC) is the agency within the Treasury Department responsible for administering and enforcing trade sanctions. (48) Its regulations give legal effect to executive orders naming the target of the sanctions, usually a country or a group of individual persons referred to as Specially Designated Nationals (SDN).

      (49) The regulations freeze the targets' assets and ban certain transactions with them. (50) OFAC's authority to promulgate such regulations derives from the power given to the President under the International Emergency Economic Powers Act (IEEPA). (51)

      There are two ways to circumvent the sanctions legally: general and specific licenses. (52) General licenses are written into the regulations and exempt entire categories of transactions. (53) The Cuban Assets Control Regulations, for example, include a general license allowing the provision of certain information and informational material to Cuba. (54) Specific licenses, on the other hand, are granted on a case-by-case basis and involve a formal application process. (55)

   2. The Somalia Executive Order and Resulting Regulation

      On April 12, 2010, President Barack Obama issued Executive Order 13,536 (Executive Order) declaring a national emergency to deal with "acts of piracy and armed robbery at sea off the coast of Somalia," and empowering the U.S. Treasury Department to regulate the assets of eleven named Somalis, as well as anyone who has "engaged in acts that directly or indirectly threaten the peace, security, or stability of Somalia ..." (56) Pursuant to this order OFAC promulgated the Somalia Sanctions Regulations. (57) Those regulations incorporate the Executive Order by reference, including two provisions that implicate the payment of ransom to Somali pirates. (58) The first bars "any contribution or provision of funds, goods, or services by, to, or for the benefit of any person" named in the Executive Order. (59) The second is the operative language of the asset freeze, providing that "all property and interests in property that are in the United States ... or that are or hereafter come within the possession or control of any United States person ... of the...