Section 8 Flashcards
What is Salvage?
It is an obligation on every ship’s Master to render assistance to persons in distress at sea.
4 elements of Salvage.
- The property or life saved must have been in real danger.
- Must be in real danger.
- The property saved must fall within the categories of capable of being salved.
- Must be a Maritime
Property.
- Must be a Maritime
- The service rendered must be voluntary in nature.
- If an agreement is in place, no salvage award.
- The salvage must have resulted in some level of success.
LOF and it’s advantages
Definition:
The Lloyd’s Open Form (LOF), is a standard form of contract for a proposed marine salvage operation.
The LOF is called “open” because it specifies no particular sum for the salvage job but agrees to provide the salvage services.
How LOF works:
- No need for a formal salvage agreement, if 4 basic factors are present award will be made.
- Often, time is too short to negotiate the terms. This agreement was developed as a standard agreement to use.
- The Master can agree to LOF on behalf of the ship owners & cargo owners.
- Must be reasonable for the Master to enter into an agreement.
Not necessary to sign LOF provided there is good evidence that both parties have agreed to use it. If master actually signs, important to sign it “for and on behalf of” the owners –as Master of [name of vessel]”. - Provides regime for determining the amount of remuneration to be awarded.
- Most widely used international salvage agreement.
Advantages:
- Salvor benefits by being able to obtain a quick agreement which is well understood & accepted internationally.
- All parties benefit from the provision of referring the reward calculations/any disputes to independent arbitration.
- Through SCOPIC Clause encourages salvors to undertake salvage, protecting the environment
SCOPIC clause.
Special Compensation P&I Clause (SCOPIC)
- not automatically part of LOF but remains as an optional addition.
- only included if the parties record on the contract that SCOPIC is incorporated.
- If SCOPIC is incorporated, then it replaces Article 14, if not incorporated then the Salvage Convention’s Article 14 will continue to apply.
The SCOPIC payment is made by the Owners or P&I club to the Salvor.
- only the sum that is over and above the traditional salvage award.
- Under the rules, the shipowner or his insurers must pay $3 million in bank security within two working days of the clause being invoked.
- payment due is assessed in US dollars.
- There is a mechanism to stop salvors invoking SCOPIC in every case. If the traditional salvage award is higher than the assessed SCOPIC payment, then not only is no SCOPIC award payable but the traditional property-based award is reduced by 25% of the difference between it and the SCOPIC payment.
The Owner is entitled to terminate the SCOPIC clause if they give five days’ notice and is free to appoint a Special Casualty Representative (SCR) that reports daily about the casualty.
Master’s decision on rendering salvage assistance.
- The safety of own crew, passengers, the ship and the cargo compared to the risk.
- Is it allowed by the charter party/bill of lading?
- Enough bunkers as per C/P.
- Will you miss a cancellation date?
- Can it create a problem to the cargo on-board?
- Do I have enough machinery power/correct equipment?
- Is the vessel plus cargo value less than the service value?
Master’s decision on receiving salvage assistance.
- Safety of Personnel
- Proximity to shore
- Weather and sea condition
- Potential for safe anchorage
- Availability of assistance
- Damage sustained by the ship
- Risk of further damage
- Threat of pollution
- Man-power and material required
When selecting a service:
- The distance away of potential assistance.
- E.T.A. of potential assistance
- Quality of help available - professional or amateur
- Capability and power of assistance V/L’s
What the obligations of the Salvor to the Owner and vice versa?
Obligations of the Salvor
a. to carry out the salvage operations with due care;
b. in performing the duty, to minimize damage to the environment
c. to seek assistance from other salvors
d. to accept the intervention of other salvors
Owner’s Obligations towards the Salvor
a. to co-operate fully with the Salvor during operations.
b. in so doing, to minimize damage to the environment.
c. when the vessel or other property has been brought to a place of safety, to accept redelivery.
Place of Safety
A place that the Salvor and Owner agree on to bring the vessel.
Factors taken into account when assessing salvage rewards.
a. the salved value of the vessel and other property.
b. the skill and efforts of the salvors in minimizing damage to the environment.
c. the skill and efforts of the salvors in salving the vessel, other property and life.
d. the success obtained by the salvor.
e. the nature and degree of the danger.
f. the time used and expenses and losses incurred by the salvors.
g. the risk of liability and other risks run by the salvors or their equipment.
h. the promptness of the services rendered.
i. the availability and use of vessels or other equipment intended for salvage operations.
j. the state of readiness and efficiency of the salvor’s equipment and the value thereof.
What is the difference between Towage and Salvage?
Towage is a contract, if there is no contract there will be no payment and towage claims have no priority.
Salvage is not a contract, once the 4 Elements are established the reward is based on factors set out. Salvage claim takes precedence over many other claims.
Can tugs and pilots claim salvage?
Yes, when the services rendered goes beyong what is expected in the contract.
Can a vessel in danger enter into a standard towage contract?
Yes, there is a freedom to contract. This would benefit the owner as cost are predetermined but terms would need to be generous before a towing vessel would accept.
