There is nothing new about maritime crime as a phenomenon, but recent years have seen a constant flux
in the dynamics of maritime fraud. The fashionable fraud of yesterday, may or may not be perpetrated
without any variation today, depending almost entirely on the state of the world economy.
This flux strongly suggests some form of concerted action on the part of an organised syndicated group. Maritime crime has become an area of large scale organised activity and will be closely examined in a follow-up article.
It may be said that here is no existing universal legal definition of maritime fraud, largely due to the fact that rather than being a specific entity, maritime fraud is a collective term easier to recognise than to define. Yet, defining maritime fraud is necessary to provide some guidance in this journey into the murky depths of the world of international maritime fraud.
One possible way of defining maritime fraud will involve defining fraud in general, and then applying a specific maritime case to such a definition. But to view maritime fraud merely as an aspect of fraud is not as simple as at first appears, since the danger exists that one may lose sight of the complexities of the peculiar world of shipping. Any discussion on the topic of maritime fraud must of necessity take these complexities into account.
Investigating some of the existing definitions would, not only be prudent but very necessary. The International Maritime Bureau (I.M.B.) defines maritime fraud as follows:
'An international trade transaction involves several parties - buyer, seller, shipowner, charterer, ship's master or crew, insurer, banker or agent. Maritime fraud occurs when one of these parties succeeds, unjustly and illegally, in obtaining money or goods from another party to whom, on the face of it, he has undertaken specific trade, transport and financial obligations.'Quoting a number of decisions, Peter Kapoor identifies some of the elements of fraud as follows:
'a) loss or injury to, prejudice or deprivation of property or proprietary rights,Kapoor then goes on to define maritime fraud as follows:
'Maritime fraud is a generic term commonly used to describe the obtaining of money, or services, or property in the goods, or a pecuniary advantage by one or more parties to a transaction from the other party or parties, by unjust or illegal means.'These definitions provide excellent guidance, but are wide enough to include maritime crime as well as maritime fraud. They cover, in addition to fraud the commission of a wide array of potential crimes such as theft, duress, undue influence and even extortion. For the purpose of this study, it is necessary to narrow the scope of the above definition to include fraud only. Central to a true fraudulent act must inevitably be the presence of deceit or misrepresentation.
And it is this element of deceit, of convincing the victim party to do, or to abstain from doing something resulting in the latter's pecuniary loss which distinguishes fraud from theft and other related crimes.
In the light of the above, and as a general guide, it would be better to define maritime fraud as follows:
Maritime fraud occurs when, in a maritime context, one party knowing it to be false, and with the intention of obtaining an illegal benefit, makes a misrepresentation to another party who, believing it to be true, acts upon the misrepresentation to his or her potential detriment, or to the potential detriment of an innocent third party or parties.The misrepresentation may take any form, it may be by word or deed, written or implied, by way of affirmation or denial and may even be constituted by an omission in appropriate circumstances.
It is of paramount importance to couch any definition in as wide a term as possible, in an attempt to cover the great diversity of acts amounting to maritime fraud. At the same time, it is necessary to narrow the definition, so as to exclude any act not amounting to fraud. In terms of the above definition, the basic requirement establishing fraud is the making of a fraudulent misrepresentation.
This could be by way of a positive act or omission knowingly made, which could lead to the potential detriment of any innocent party. It is submitted that this definition is both specific and wide enough to include all possible acts of maritime fraud. It is in addition, fully in step with the law of misrepresentation as applied in England.
It cannot be emphasised enough however, that any definition of maritime fraud should have the sole function of clarifying issues and creating a better understanding of the topic, rather than providing some kind of a legal test. Maritime fraud should be seen as a collective term covering phenomenon which may or may not be defined as an offence in a given legal system. Alternatively, its occurrence may simply expose the limitations of another legal system.
Carl Smit, 31 July 2012
|See for example Barbara Conway The Piracy Business (1981) at 9 - 11.|
|As many writers indeed point out, for example D.G. Powles and S.J. Hazelwood `Maritime Fraud I' (1984) Journal of Business Law 31 at 31.|
|Guide to prevention of maritime fraud (1980) I.C.C. Publication No. 370. 3.|
|Peter Kapoor `Definition and classification of Maritime Fraud' (1983) Lloyd's Maritime and Commercial Law Quarterly 33.|
|In England the matter is complicated by the fact that there exists no definition of fraud at hand, the closest statutory definition being that of a `taking' which is defined in s 1 of the Larceny Act of 1916. In terms of this definition, however, a taking will include situations of simple theft - s 1 (2) (i) (d), and the obtaining of possessions by intimidation - s 1 (2) (b). See also the comments by Mustil J in the Salem case.|
|Since in the case of theft the victim will of necessity be an unwilling party.|
|For a general discussion on misrepresentation, see Lord Hacking `Protection under common law against fraud and misrepresentation' (1980) The Shipbroker 44.|