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Licensing the armed guards

27 March 2012

On 23 February 2012, for the first time a UK Open General Trade Control Licence (Maritime Anti Piracy) (OGTCL) became available to providers of maritime anti-piracy services in the high risk area off the Somali coast and in the surrounding waters of the Gulf of Aden and Indian Ocean (HRA).

Any UK national or entity incorporated in the UK involved in the movement of weapons and other controlled goods (including night vision goggles, LRAD, body armour and ammunition), whether in the UK or abroad, will need to be licensed in the UK under the trade control provisions of the Export Control Order 2008.

However, many UK private maritime security companies (PMSCs) have found it difficult to get to grips with the existing licence regime, whether the fixed Standard Open Individual Trade Control Licences (SIELs) or the more flexible, tailored Open Individual Export Licences (OIELs) operated by the UK Export Control Organisation (ECO), which were not drafted to consider the rapidly changing requirements of moving weapons on and off ships to provide protection against pirate attacks. The slow and bureaucratic process of applying for and complying with these licences has been a cause of frustration for the industry and has resulted in significant non-compliance within the ranks of UK PMSCs.

The number of PMSCs with a UK connection is large and growing and, with industry demands for increasingly high standards of operation and compliance, the UK Government’s latest move to simplify the legislative regime is welcome.

The new OGTCL is specifically designed for those UK PMSCs engaged in the “provision of armed onboard security services to the maritime sector, for protection against acts of piracy”. It will enable the supply, delivery or transfer by them of listed controlled goods between any two overseas territories (save those territories specifically excluded, such as Yemen, Somalia and Eretria) for the provision of onboard security services.

In essence, the distinction between the new general OGTCL licence and an individual SIEL/OIEL licence is the simplified application process. It is for the PMSC to register to use the OGTCL licence on the basis that its operations fall within the listed controlled goods and outside the excluded territories and for the ECO to approve such registration. However, there are hurdles to such approval, without which a PMSC is not licensed.

It is a condition of use of the OGTCL that the applicant PMSC’s Standard Operating Procedures, Rules of Engagement (more correctly, Rules for the Use of Force) and policy on storing firearms have been submitted to, and approved by, the ECO. The ECO will consider each of these documents in accordance with its internal guidelines. The ECO is already busy with applications from PMSCs to use the OGTCL. We understand that the timetable for processing registration applications will depend on the individual circumstances and the content of the documents submitted in each case.

Lists of third parties (including in-country representatives) who will have access to the controlled goods, and armouries where the controlled goods will be used, must also be supplied to the ECO.

Each PMSC applicant must be a signatory to the International Code of Conduct for Private Security Service Providers (ICoC). This is in any event increasingly a requirement of owners and insurers alike when appointing PMSCs and is required by the Security Association for the Maritime Industry (SAMI) for all new members.

Finally there are documentary and record keeping requirements.

Whilst the simplifications of the OGTCL are welcome, there are certain restrictions which may prove difficult for UK PMSCs. The OGTCL is designed solely for UK PMSCs operating in the HRA and it does not extend to cover the operations of PMSCs in other piracy hotspots elsewhere in the world.

In addition, the controlled goods covered by each OGTCL may only be used by the personnel of the PMSC to whom the licence has been granted (or the identified third parties who will have access). This may mean that the OGTCL is not available to those PMSCs using weapons pooling or leasing services and at this stage it is unclear how the licence will be operated where a PMSC subcontracts the security services. We understand that both these points are being considered by Government and we expect guidance to be published by the ECO, though the timing of this is not yet clear.

The requirement for pre-approved armouries may have implications for those PMSCs leaving their weapons locked in bonded storage on board a ship following its departure from the HRA.

Under the terms of the OGTCL, each member of the licensed PMSC’s personnel may carry on board ship no more than four firearms in any single transfer, of which no more than two may be rifles. The licence limits the PMSC to a maximum of 48 firearms in any approved armoury. This may impact the logistics arrangements of some PMSCs and may be restrictive for the larger operators; though the existing OIEL may be more appropriate for the latter in any event.

Any existing OIELs issued to UK PMSCs remain valid and may, in some circumstances, be more appropriate for the particular requirements of PMSCs (where these requirements fall outside the general remit of the OGTCL). A UK PMSC which has already obtained an OIEL is unlikely to need to register to use the OGTCL, though each PMSC should review its operations in order to ascertain which licence is best suited to its operations.

While some questions remain, the new licence provides a welcome opportunity for UK PMSCs to comply with the legislative requirements, if they have not done so already. It should assist the UK in upholding the high quality and standards of its burgeoning PMSC industry whilst fending off the growth of PMSCs in countries where the legislative burden is lighter. Countries such as Sri Lanka are increasingly demanding that those PMSCs operating out of their jurisdiction provide evidence of having in place all applicable trade licences. In addition, it is a requirement of many of the existing standard contracts that the contracting PMSC be in compliance with all applicable legislation and in possession of all necessary licences and approvals; unsurprisingly, this is emphasised in the new industry standard GUARDCON which was released by BIMCO on 28 March 2012. With this in mind, compliance with the UK trade control legislation should be seen as a positive step by the PMSCs, as it will provide ship owners and insurers alike with the comfort of knowing they are dealing with a fully licensed and approved operator. The industry should now look forward to the introduction of a similarly tough but practical accreditation system.

For more information, please contact Elinor Dautlich, Partner, on +44 (0)20 7264 8493 or, or William MacLachlan, Associate, on +44 (0)20 7264 8007 or, or your usual HFW contact.

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