This post was written by Richard Gunn and Konstantinos Bachxevanis.
On 24th Oct 2014 in The Longchamp the High Court held that expenses incurred by the Owners of a Vessel hijacked in negotiating the reduction of the ransom demanded by pirates are allowable in GA as a “substitute expense” under Rule F of YAR. The Court stated in this respect that “…. the rule of contribution which has been invoked in the Adjustment under consideration has its foundation in the plainest equity and that the circumstances of this case were such that natural justice requires that all should contribute to the substituted expenses incurred by the [Owners]. The reduction in the amount of the ransom was only achieved by a process of negotiation which necessarily involved the ship-owner incurring expenditure”.
Further, as to whether under Rule A of YAR a ransom payment can be held to be excessively high and, therefore, unreasonable, the Court held that there cannot be a distinction between “reasonable” and “unreasonable” ransom as the “idea of a “reasonable ransom” is radically misconceived and an oxymoron.” There cannot be “some sort of “market” in ransom payments”. Rather the question was whether it was reasonable to pay a ransom at all.