Ransom Payments Could Fall Foul of Obama Order
President Barack Obama has issued an executive order that would block the US property of entities “determined to be contributing to the Somalia conflict”, which is wrapped into the declaration of a national emergency.
Under certain circumstances, entities paying ransoms to pirates could end up falling foul of this order, and see their assets frozen by the US government.
Mr. Obama said in a message to Congress on Tuesday night: “Pursuant to the International Emergency Economic Powers Act and the National Emergencies Act, I have determined that the deterioration of the security situation and the persistence of violence in Somalia, and acts of piracy and armed robbery at sea off the coast of Somalia, constitute an unusual and extraordinary threat to the national security and foreign policy of the United States.
“The order declares a national emergency to deal with this threat. The order is not targeted at the entire country of Somalia, but rather is intended to target those who threaten peace and stability in Somalia, who inhibit the delivery of humanitarian assistance to Somalia or the distribution of such assistance in Somalia, or who supply arms or related materiel in violation of the arms embargo.”
The order blocks the property and interests in property in the US of persons listed in an annex, as well as of any person determined by the Secretary of the Treasury in consultation with the Secretary of State to have conducted activities that constitute violations of the above criteria.
Blank Rome partner and piracy specialist John Kimball told Lloyd’s List that at face value, the executive order reads like a “normal blocking order” primarily aimed at the militant Islamic group Al Shabab that is linked with the insurgency in Somalia.
The executive order further authorizes the Treasury Secretary to block the property of any person “determined to have materially assisted, sponsored, or provided financial, material, logistical, or technical support for” an entity in the annex.
Mr. Kimball noted that usually in the case of ransom payments, “there is no way of knowing” the identity of the recipient.
“I do not believe the intent of this executive order, either implicitly or explicitly, is to punish shipowners for ransom payments,” Mr. Kimball added.
However, he agreed that in a peculiar case where the name of the recipient of a ransom payment were known, and if such a recipient featured in the annex, the executive order would have the effect of “blocking” the shipowner involved.
"Ransom Payments Could Fall Foul of Obama Order," by Rajesh Joshi first appeared in Lloyd's List on April 14, 2010. www.lloydslist.com.
Reprinted with permission from Lloyd's List.