Employers owe a duty of care to their employees, and how far this duty extends in order to ensure the safety of individuals is brought sharply into focus when employees of a business find themselves victims of a kidnap event.

As the kidnap landscape continues to evolve and global businesses particularly in the mining and engineering fields seek to develop new revenue streams by entering potentially hostile areas, owners face an unenviable task of ensuring their business assets and employees are suitably protected against such risks as kidnap, extortion, hijack and detention, whilst operating in high-risk locations.

Employers will want to give careful thought to the areas in which employees are expected to operate or travel, and consider adequate education and training to personnel regarding both personal and commercial security. A range of response consultants and security companies offer training on threat avoidance and evasion.

Despite such steps, kidnap incidents can and do occur, whether at the workplace, travelling to or from it, or remotely. In such circumstances, conventional commercial businesses are increasingly relying on kidnap and ransom insurance to offer protection and failing to have such cover may well result in litigation from families of those held.

Litigation by insured persons

When an event occurs, even where businesses have purchased kidnap and ransom insurance, they are finding themselves recipients of lawsuits. It is often argued that legal liability for such litigation and associated legal costs are provided for under a standard kidnap and ransom cover. Thus, kidnap and ransom insurers are finding their policies have a longer tail and a greater exposure than perhaps first anticipated.

Such situations are not uncommon. For example, In 2011, an American aid worker, Flavia Wagner, filed a claim against Samaritan's Purse, a North Carolina-based charity group who sent her to the Abu Ajura region in Darfur, where she was kidnapped and spent 3 months in captivity. Wagner claimed that the charity failed to train its security personnel adequately and further failed to act on warning signs that indicated a growing threat of kidnap. Clayton Consultants, a crisis-management consulting firm appointed by Samaritan's Purse to negotiate her release, was also sued.

In another incident, litigation was commenced against the owner of a pipe-laying barge from which a number of employees were kidnapped by militants and detained whilst operating in the Niger Delta. The employees, who were released after a few weeks, alleged that the employer had failed to provide adequate security briefing.

Claims may also arise out of marine hijack where vessels are attacked by pirates for ransom. In 2012, some of the crew members aboard the hijacked Maersk Alabama, which was made famous by the success of the film Captain Philips, commenced legal action against the vessel's charterer. The crew members argue that multiple piracy warnings were ignored and the vessel wilfully sailed across an area of known Somali piracy activity, without adequate counter-measures or defence mechanisms in place.

Similar law suits by crew members of other hijacked vessels have been intimated or pursued.

Although in our experience claims in America have led the way, more recently we have been instructed in relation to such suits in Europe, apparently reflecting an increasing trend.

In our view a liability claim arising from a kidnap event is more likely to arise when the kidnap situation is badly managed and becomes prolonged, and the involvement of good quality response consultants through a kidnap and ransom policy should reduce this risk. Indeed a kidnap and ransom policy may only cover legal liability and costs in such circumstances.

Further, a potential claim is certainly a concern where the victim is unfortunately killed or physically and emotionally maltreated. However, even where a safe release is achieved, a claim may arise if, for example, no adequate post-release briefing and/ or care is provided, leading to a sense of abandonment and feelings of resentment.

Kidnap and ransom insurers will wish to encourage their insureds to use the cover under their policy relating to rest and rehabilitation of victims, which typically includes psychological counselling and time away, as well as other potential benefits, rather than risk an expensive law suit.

Any litigation can be expensive for a business, and suits arising out of a kidnap event are no exception. Where cover is available kidnap and ransom insurers usually have the right to appoint lawyers and control such proceedings, indeed it is possible to nominate lawyers prior to an incident, as is common in the cyber or professional lines arena, to ensure that any such claims are dealt with swiftly, and if possible prior to legal proceedings being commenced.

Where suits are brought by local employees, it is also important to bear in mind the different limitation periods that may apply. In certain countries, claims against employers can have an exceptionally long limitation period, in which case businesses could be faced with a claim many years after the kidnap incident has concluded.

Minimising the risk of litigation

As a kidnap event is a traumatic experience for all involved, there is always a risk of litigation being commenced by insured person(s) or their families who feel dissatisfied with the business's handling of the kidnap situation.

Nevertheless, one of the best ways to minimise the risk of litigation is to ensure that the kidnap and ransom insurance provides for a high quality specialist response consultant service. Access to such a service is usually one of the primary motivations for businesses to seek kidnap and ransom cover.

Where the negotiations for release become prolonged, the risk consultant's fees and expenses could be substantial, especially where such fees are often unlimited and payable directly to the risk consultant by the insurer. In the long term, however, offering a high quality response service would ensure a more satisfactory outcome and ultimately reduce the likelihood of a suit from insured persons and legal costs involved. This should be an incentive for all kidnap and ransom insurers to ensure the quality of the response consultants they appoint and/or nominate under the policy.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.