MARINE SALVAGE

LLOYD’S OPEN FORM (LOF 2011)

AND
SCOPIC

Capt. Mukesh Gautama

Managing Director
Wilson Surveyors & Adjusters Pvt. Ltd.
 INTRODUCTION

 MARINE SALVAGE IS THE PROCESS OF

RESCUING A SHIP, ITS CARGO, OR OTHER
PROPERTY FROM PERIL.

 SALVORS ARE PERSONS WHO CARRY OUT

SALVAGE TO VESSELS THAT ARE NOT
OWNED BY THEMSELVES.
 DEFINITION
• A RIGHT TO SALVAGE ARISES WHEN A
PERSON ACTING AS A VOLUNTEER (
THAT IS WITHOUT ANY PRE EXISTING
CONTRACT OR LEGAL DUTY TO ACT)
PRESERVES OR CONTRIBUTES TO
PRESERVING AT SEA ANY VESSEL,
CARGO, FREIGHT OR ANY OTHER
SUBJECT OF SALVAGE FROM DANGER
 GENERAL PRINCIPLES OF SALVAGE

 FOUR ESSENTIAL CHARACTERISTICS OF SALVAGE

• VOLUNTEER

• SUBJECT OF SALVAGE

• DANGER

• SUCCESS
CLASSIFICATION OF SALVAGE
• OFFSHORE SALVAGE
• HARBOR SALVAGE
• CARGO AND EQUIPMENT SALVAGE
• WRECK REMOVAL
• AFLOAT SALVAGE
• CLEARANCE SALVAGE
 TYPES OF SALVAGE
• CONTRACT SALVAGE –: The owner of
the property and salvor enter into contract
prior to commencement of salvage
operation
• PURE SALVAGE –: It is also called Merit
salvage. No contract between owner of the
vessel and the salvor.
 1967- TORREY CANYON
 1978 – AMOCO CADIZ
 1989-EXXON VALDEZ
 92 – NAGASAKI SPIRIT AND AEGEAN SEA

 HNS CONVENTION – HAZARDOUS & NOXIOUS

SUBSTANCES
 INTERNATIONAL CONVENTION ON LIABILITY &
COMPENSATION FOR DAMAGE IN CONNECTION
WITH THE CARRIAGE OF HAZARDOUS & NOXIOUS
SUBSTANCES BY SEA 1996
 SALVAGE AND SALVAGE OPERATION
BRUSSEL CONVENTION NOR LONDON SALVAGE
CONVENTION DEFINE SALVAGE BUT DEFINE
SALVAGE OPERATION

“SALVAGE OPERATION MEANS ANY ACT OR

ACTIVITY UNDERTAKEN TO ASSIST A VESSEL OR
ANY OTHER PROERTY IN DANGER IN NAVIGABLE
WATER OR IN ANY OTHER WATER WHATSOEVER.”
 TOWAGE
 TOWAGE SERVICE IS CONFINED TO VESSEL
THAT HAVE RECEIVED NO INJURY OR DAMAGE
AND THAT MERE TOWAGE IS PAYABLE IN THOSE
CASES.

 EMPLOYMENT OF ONE VESSEL TO EXPEDITE

THE VOYAGE OF ANOTHER WHEN NOTHING
MORE IS REQUIRED THAN THE ACCELERATING
OF HER PROGRESS.
 TOWAGE TO SALVAGE
 TO CONSTITUTE A SALVAGE SERVICE BY A TUG
UNDER CONTRACT TO TOW TWO ELEMENTS ARE
NECESSARY

 THAT THE TOW IS IN DANGER BY REASON OF

CIRCUMSTANCES WHICH COULD NOT
REASONABLY HAVE BEEN CONTEMPLATED BY THE
PARTIES.
 THAT RISKS ARE INCURRED OR DUTIES
PERFORMED BY THE TUG WHICH COULD NOT
REASONABLY BE HELD WITHIN THE SCOPE OF THE
TOWAGE CONTRACT.
 ARBITRATION MUST CONSIDER THREE ISSUES
WHEN DECIDING WHETHER TO AWARD SALVAGE
REMUNERATION TO A TUG.
 DANGER WHICH ARISES
 RELATIONSHIP BETWEEN DANGER & NORMAL
SERVICE OF TOWAGE
 BURDEN OF PROOF TO BE SATISFIED
 THE CLAIMANT MUST PROVE THEIR OWN CASE
 THE SHIP BEING IN DANGER FROM NO FAULT OF
THE TUG
 THEY PERFORMED SERVICES WHICH WERE NOT
COVERED BY THEIR TOWAGE CONTRACT
 DID ALL THEY COULD TO PREVENT THE DANGER

 TOWAGE EXAMPLE: PERFORMED IN A HARBOUR

OR AT A BERTH TO A SHIP WITH MOTIVE POWER.
 PERFORMED ON THE HIGH SEAS TO A SHIP WHICH
MAY HAVE NO MOTIVE POWER AND WHICH MAY
BE DAMAGED OR UNMANNED.
 When assistance has been found and terms of contracts
have been agreed the casualty can be towed to the next
safe port or a place of convenience for further assistance,
repairs as necessary.

Or…
THE INTERNATIONAL CONVENTION ON
SALVAGE
 IMO CONVENTION INTODUCED -1ST JULY 89
 CAME INTO EFFECT ON 1ST. JULY 1995
 CONTAINS 34 ARTICLES
 IMPORTANT ARTICLES
 ART.6 – SALVAGE CONTRACT
 ART.8 - DUTY OF SALVOR AND MASTER
 ART.10 – DUTY TO RENDER ASSISTANCE
 ART 13 – SALVAGE AWARD
 ART. 14 – SPECIAL COMPENSATION
 ART.15 – APPORTIONMENT OF REWARD
 ARTICLE 6 – SALVAGE CONTRACT
 THE MASTER SHALL HAVE THE AUTHORITY
TO CONCLUDE CONTRACT OR BEHALF OF
THE OWNER.
 THE MASTER OR THE OWNER SHALL HAVE
THE AUTHORITY TO CONCLUDE CONTRACT
ON BEHALF OF THE CARGO OWNER.
 ARTICLE 8
 DUTY OF SALVOR AND MASTER
SEEK ASSISTANCE OF OTHER
SALVORS
INTERVENTION OF OTHER SALVORS
WHEN REASONABLY REQUESTED BY
MASTER
 ARTICLE 10 –DUTY TO RENDER
ASSISTANCE

 EVERY MASTER IS BOUND TO RENDER

ASSISTANCE TO ANY PERSON IN DANGER
OF BEING LOST AT SEE.

 STATE PARTIES SHALL ADOPT MEASURES

TO ENFORCE DUTY OUT ABOVE
ARTICLE 15 – APPORTIONMENT
OF REWARD
APPORTIONMENT OF REWARD
BEHA OWNER, MASTER AND
OTHER PERSONS IN THE SERVICE
OF THE SALVAGE VESSEL SHALL
BE DETERMINED BY THE LAW OF
THAT FLAG.
SALVAGE REMUNERATION
 ARTICLE 13 – SALVAGE AWARD –BASED ON
DEGREE OF DANGER AND SALVED VALUE

 ARTICLE 14 – SPECIAL COMPENSATION. –

THREAT TO ENVIRNOMENT . A POINTS A GUN
TO B. AND MAKES A THREAT TO SHOOT B. B
IS THREATENED. IT MAY TRANSPIRE THAT
THE PISTOL HAD NO BULLETS. B WAS NEVER
IN FACT OF DANGER.
LLOYD’S OPEN FORM
 ORIGIN

 NO CURE NO PAY.

 ADMINISTERED BY LLOYD’S.

 SALVAGE SECURITY.

 REVISED 10 TIMES

 MAJOR REVISION IN 1980.

 AMOCO CADIZ.

 “THE BLACK TIDE RISING”

LOF 1980 – ‘SAFETY NET’ – ENHANCEMENT BY 15%
LADEN OR PARTIALY LADEN TANKERS
LOF 1990 – SPECIAL COMPENSATION – 30% TO 100%
OF THE EXPENSES INCURRED BY THE
SALVOR
LOF 2000 – SCOPIC
LOF 2011 – ADDITIONAL CLAUSES ADDED

ARTICLE 14.2 - PREVENTED OR MINIMISED

DAMAGE TO THE ENVIRONMENT
 WHEN LOF IS NEEDED?

 IS THE SITUATION OUT OF CONTROL.

 HOW RAPIDLY THINGS ARE DETERIOTING
 THREAT TO LIFE.
 THREAT TO ENVIRONMENT.
 CAN LEAD TO CRIMINALISATION OF MASTER.
 MASTER’S RESPONSIBILITY
• However in a case of emergency and
imminent danger to crew and ship, safety
has absolute priority and the master is
obliged to act as necessary under the given
circumstances !!

No one will blame him if he acted

reasonably and had no other choice !!
 CAUSE OF MARINE
EMERGENCIES
 ACTS OF GOD – NATURAL PERILS OF
OCEAN.

 HUMAN ERROR.

 MECHANICAL FAILURE.

 “TUNNEL VISION”
 TYPES OF CASUALTY
WARRANTING LOF
 COLLISION

 GROUNDING

 STRUCTURAL FAILURE – HEAVY WEATHER

 FIRE

 MACHINERY BREAKDOWN

 THREAT OF POLLUTION – ZERO TOLERANCE

CASUALITIES FROM
1996-2010

Ship-ship collision Machinery damage

Grounding Collision w. fixed a. float. objects

GROUNDING
GROUNDING
 COLLISION

Photo AHIS
COLLISION
 LAST 30 YEARS – 2801 LOF AGREEMENTS
 SALVED VALUE : USD 35.2 BILLION

 14 MILLION TONNES OF OIL AND

POLLUTANTS RECOVERED
 EXXON VALDEZ
 ERIKA

 PRESTIGE
LLOYD’S OPEN FORM
 SALIENT FEATURES OF LOF 2011
 SIMPLE DOCUMENT
 SEVEN BOXES TO BE COMPLETED
 NO ARREST OF VESSEL
 FORM SIGNED SALVAGE COMMENCES
 FAIR AND JUST AWARD
 NO RECOVERY NO PAYMENT
 NO PRECONTRACT DISCUSSIONS
 MASTER AUTHORISED TO SIGN ON BEHALF OF
CARGO INTEREST
 REASONS FOR REVISION

• SAFETY NET

• SPECIAL COMPENSATION – LOF 1990

• SCOPIC – LOF 2000 NAGASAKI SPIRIT

• SPECIAL CASUALTY REPRESENTATIVE (SCR)

 LOF 2000
• NAGASAKI SPIRIT House of Lords 1997
• FAIR RATE IS BASED ON ACTUAL
EXPENSES
• Sp. Compensation to be paid for the entire
duration of salvage operations.
• LOF 2000 Scopic included in LOF. SP.
COMP. REMOVED.
 WHEN SCOPIC IS INVOKED?
 LOW PROPERTY VALUES

 HIGH RISK

 NO GAURANTEE OF SUCCESS

 POLLUTION RISK
GROUNDING
 SCOPIC - 2011
 16 CLAUSES
 SECURITY – 3 MILLION USD
 INVOKING SCOPIC – WRITTEN NOTICE TO
OWNERS
 WITHDRAWAL – WITHIN 2 WORKING DAYS, CAN
WITHDRAWN IF SECURITY NOT PAID
 TARIFF RATES – MEN, TUGS, CRAFT & OTHER
EQUIPMENT PLUS 25% OF THE TARIFF RATE
 SCOPIC REMUNERATION – WITHIN 30 DAYS OF
PRESENTATION OF CLAIM.
 In conjunction with a LOF Contract the salvor has the
option to invoke SCOPIC (Special Compensation PandI
Clause).
 When SCOPIC is invoked all activities of the salvor will be
valued on fixed rates, and the consequential sum is the
SCOPIC Reward (+ 25% uplift). This reward is covered by
the vessel’s P&I Club.
 Therefore the P&I Club will send a SCR (Special Casualty
Representative) on the scene. His job is to monitor the
operation and to record all activities of the salvor in order
to calculate the forthcoming SCOPIC Reward.
 Nevertheless a LOF Reward will be negotiated in any
case. This reward is covered by the H&M Underwriters.
KEY INFORMATION TO PROVIDE TO
SALVORS
CURRENT PROBLEM
POSITION, COURSE, SPEED, DRIFT
TOTAL COMPLEMENT ON BOARD
VESSEL’S PARTICULARS
LIST -- PORT OR STARBOARD STATIC OR
CHANGING
 KEY INFORMATION TO PROVIDE TO
SALVORS

 WEATHER CONDITION AND SEA STATE

 LAST PORT – NEXT PORT – VOYAGE DETAILS
 POLLUTION HAZARD
 CARGO
 BUNKERS
 COMMUNICATION DETAILS
 SALVAGE AWARD
 SALVED VALUE OF PROPERTY (SHIP, CARGO AND
BUNKERS)
 SKILL AND EFFORTS OF SALVOR
 MEASURE OF SUCCESS.
 NATURE AND DEGREE OF DANGER.
 EXPENSES OF SALVOR.
 EQUIPMENT USED.
 VESSEL’S EQUIPMENT USED.
 TIME TAKEN TO COMPLETE THE SALVAGE OPERATION.
 PREVENTING OR MINIMISING THE DAMAGE TO
ENVIRONMENT.
 MASTER’S REPORT
• Especially in cases where a salvage contract
has been signed, it is important for ship‘s
command to take detailed notes of the activities
of the salvor and his own crew.

• A salvor, by nature of his business, tends to

dramatise the danger in which the vessel was and
what he actually did.
 MASTER’S REPORT
• Good, reliable and detailed evidence from the ship will
help to give the arbitrator or judge a realistic picture of
what actually happened during the salvage operations.

• Good, reliable and detailed evidence from the ship will

help to keep the quote on liability / and/ or salvage award
within reasonable limits.

• Don‘t forget - it is the underwriters who pay the bill - but

eventually it is the money of your owner - it is him who
pays the insurance premium .
 IMPORTANT DOCUMENTS
 “WITHOUT PREJUDICE” SURVEYS
 DAMAGE REPORT
 NO ASSUMPTIONS OR GUESSES
 WHERE? WHEN? WHAT? WHY?
 PRIVILEGE DOCUMENT
 DIGITAL PHOTOGRAPHS
 SKETCHES
ALTERNATIVE SALVAGE CONTRACTS

THE JAPANESE FORM

THE TURKESH FORM
THE CHINESE FORM
THE MOSCOW FORM
THE GERMAN FORM
WRECK REMOVAL CONTRACTS
WRECKFIXED 2010
WRECKSTAGE 2010
WRECKHIRE 2010
TOWAGE CONTRACTS
TOWCON 2008
TOWHIRE 2008
LIABILITY “ KNOCK FOR KNOCK”
THANKS FOR
YOUR ATTENTION !