Executive Profile: Bruce Paulsen, Maritime Litigation Partner, Seward & Kissel

While haggling with Somali pirates may not be a typical job description for a Manhattan lawyer, Bruce Paulsen, a maritime litigation partner at law firm Seward & Kissel, knows interactions like these all too well. Check out our interview with him below where he discussed pirate ransoms, piracy trends, Captain Phillips, and more!

MarEx: Tell our readers a little bit about yourself and your background.

Paulsen: Since 1985, I have handled a combination of commercial and maritime litigation.  Because of our extensive maritime corporate practice at Seward & Kissel, where we not only represent the major banks that lend into the shipping market but also take shipping companies public, my practice involves workouts, foreclosures, restructurings, securities claims against public company shipping clients, as well as more traditional maritime matters.

MarEx: After being involved in approximately 40 piracies, describe the most memorable one.

Paulsen: The first piracy I was involved in was the most memorable.  Thanksgiving weekend 2008, M/T Biscaglia, owned by my partner Larry Rutkowski’s client ISEC, was taken by Somali pirates.  Larry and I were involved in every aspect of this piracy.  While my formal role in the piracy was to look at the legal issues, including insurance coverage, general average, liability claims and so forth, we also were engaged every day with every detail of the piracy, down to the negotiations, ransom delivery and the vessel’s release.  ISEC’s CEO handled the negotiations himself, coached by a professional hostage negotiator.  We met and worked with the negotiator and spent time strategizing every angle of that particular piracy.  To be involved in depth in a piracy was both fascinating and pressure-filled.

MarEx: What are some legal issues you’ve dealt with surrounding paying ransom to pirates?

Paulsen: The key legal issue raised by the Biscaglia was whether a U.S.-based company could pay a ransom to Somali pirates without violating the law.  The answer then was a cautious “yes.”  The Biscaglia was hijacked in 2008 and released in 2009.  In 2010, when piracy was at its height, the White House issued an Executive Order which prohibited U.S. persons from making payment to certain persons in Somalia, including two known pirates.  The 40 or so piracies I was involved in mostly involved advising shipping companies, their insurers, and banks with respect to this Executive Order.  We worked with the U.S. government on behalf of our clients to be sure that the ransoms could be paid legally.  The Maersk Alabama situation was the outlier – very few piracies were resolved with gunfire.  They were resolved by the payment of money to pirates, and that is where we stepped in with legal help.

MarEx: Describe an unusual issue that one can encounter during negotiating with pirates.

Paulsen: Piracy off Somalia is a business based on the age-old crime of kidnap for ransom.  While the pirates tend to be business-like and to negotiate much like any other transaction is negotiated, there are a number of variables involved.  Those include threats of violence to crewmembers, which are utilized to up ransom demands, as well as the fact that many of the pirates chewed khat, a mild narcotic that increased the level of danger aboard ship and, at times, made the negotiations irrational.

MarEx: Your clients include shipowners and ship insurers. What is your best advice to them on legal issues surrounding pirated ships?

Paulsen: The best advice that I can give to shipowners bringing their ships to pirate-infested waters is to be sure that you have the right insurance, that you have taken the right steps to physically secure your ship, such as non-lethal security measures as well as armed guards, and that the crew members aboard the ship know what they’re getting themselves into.

MarEx: In your opinion, how realistic is representation of piracy in the movie “Captain Phillips”?

Paulsen: Although there is clearly a high degree of artistic license taken in the “Captain Phillips” movie – it is, after all, entertainment – I thought the representation of the pirates and their tactics was accurate.  The Somali actors who played the pirates deserve a walk down the red carpet.

MarEx: Why do you think the number of pirate attacks worldwide has declined, but the violence used by pirates is intensifying?

Paulsen: There are a number of factors in the decline of piracy off East Africa, the most substantial of which is the deployment of teams of armed guards.  No ship with armed guards has been taken by pirates.  Best practices by shipowners, naval tactics and other factors are also involved in piracy’s decline.  West African piracy, on the other hand, has involved a higher degree of violence and is based on a different model.  Off West Africa, we have seen crewmembers injured or killed while the pirates steal the cargo, rather than keeping a ship and its crew and holding them for ransom.

MarEx: What is the most satisfying part of your job?

Paulsen: Although I have been involved in many piracies, I am not a piracy lawyer.  I am a corporate problem-solver.  Sometimes problems are solved by bringing a litigation or demanding arbitration and seeing that process through to a decision.  Sometimes problems are solved simply by counseling clients on what to do to avoid litigation or settle issues.  The satisfying part comes when a problem is solved, a disputed matter is over, and the client can move on.

MarEx: Any closing thoughts for our readers?

Paulsen: From the taking of the Biscaglia in the fall of 2008 to the decline of piracy off Somalia in 2011 and 2012, my piracy practice, as it were, ran for a short, intense period.  I was very happy to be involved in helping shipowners solve the problems they encountered with piracy and getting their crews home safely.  That said, the piracies themselves were a brutal business, and every case had in the background the threat of violence and physical harm.  This is not the normal stuff of commercial law, and I am happy to no longer have that as part of my everyday practice! – MarEx

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Bruce G. Paulsen is a member of Seward & Kissel’s Litigation Group.  He handles complex commercial, maritime and international disputes, including public securities cases, bankruptcy, insurance, maritime finance, and international sanctions compliance.