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Ensuring the end of terror?

04 December 2014

Last week, the Counter-Terrorism and Security Bill was published, so providing the detail behind Theresa May's bid to outlaw insurers from indemnifying ransom payments to terrorists.

If successful she will go some way to restoring the Ransom Act of 1782 which made the payment of any ransom illegal (until it was repealed in 1864). The relevant clause in the Bill is set out below.

(1) The insurer under an insurance contract commits an offence if –

(a) the insurer makes a payment under the contract, or purportedly under it,

(b) the payment is made in respect of any money or other property that has been, or is to be, handed over in response to a demand made wholly or partly for the purposes of terrorism, and

(c) the insurer or the person authorising the payment on the insurer's behalf knows or has reasonable cause to suspect that the money or other property has been, or is to be, handed over in response to such a demand.

Terrorism is defined, for these purposes, in the Terrorism Act 2000, which is clear enough, but how would the new provisions work in practice? To take an example, would this apply to ransoms paid to pirates? On the East Coast of Africa it may be easy to find a link with the religious/political terrorism which Theresa May intends to capture. But otherwise do the terrifying activities of pirates themselves constitute terrorism? This may not always be clear, particularly given the opacity of many terrorist organisations. In a 2010 case, it was held that payment of a ransom to Somali pirates was neither illegal nor contrary to public policy, and further there was no public policy which would prevent an insured from recovering a ransom payment from his insurer. How would this case be decided under the proposed legislation? It will be important to get clarity on these points, not least because the clause goes on to extend culpability to a director, manager, secretary or similar, as well as the insurer itself.

We will monitor the progress of the bill with interest.

Counter-Terrorism and Security Bill