INTERNATIONAL CONVENTION

S.A Hosseini IRISL Maritime Training Institute

International Convention on Salvage, 1989

International Convention on Salvage 1989

International Convention on Salvage 1989

1.

Is an IMO Convention which entered into force on 14 July 1996. The main provisions are:
Salvage operation means any act or activity undertaken to assist a vessel or any other property in danger in navigable waters or in any other waters whatsoever. Vessel means any ship or craft, or any structure capable of navigation Property means any property not permanently and intentionally attached to the shoreline and includes freight at risk. The master of the salved vessel will have the authority to conclude salvage contracts on behalf of the owner, and the master or the owner will have the authority to conclude salvage contracts on behalf of the owner of property on the vessel.

2. 3. 4.

Duties of the salvor

The salvor will owe a duty to the owner of the vessel or other property in danger :
To carry out the salvage operations with due care; To exercise due care to prevent or minimise damage to the

environment;
Whenever circumstances reasonably require, to seek assistance from

other salvors; and

To accept the intervention of other salvors when reasonably

requested to do so by the owner or master of the vessel or other property in danger; provided that the amount of his reward will not be prejudiced if it is found that the request was unreasonable.

Duties of the owner and master

The owner and master of the vessel or the owner of other property in danger will owe a duty to the salvor :
To co-operate fully with him during the salvage

operations; To exercise due care to prevent or minimise damage to the environment; when the vessel or property have been brought to a place of safety, to accept redelivery when reasonably requested by the salvor. Every master must, so far as he can do so without serious danger to his vessel and persons on board, render assistance to any person in danger of being lost at sea

Rights of salvors
Salvage operations which have had a useful result give

right to a reward.
Except where special compensation is due, no

payment will be due if there is no useful result.

The salvors rights are not affected where he owns

both the salving and salved vessel.

Criteria for fixing the reward

the salved value of the vessel and other property; the skill and efforts of the salvors in preventing or minimising damage to the environment; the measure of success obtained by the salvor; the nature and degree of danger; the skill and efforts of the salvors in salving the vessel, other property and life; the time used and expenses and losses incurred by the salvors; the risk of liability and other risks run by the salvors or their equipment; the promptness of the services rendered; the availability and use of vessels or other equipment intended for salvage operations; the state of readiness and efficiency of the salvors equipment and the value thereof.

Special compensation
If the salvor has carried out salvage operations in respect of a vessel

which by itself or its cargo threatened damage to the environment, have failed to earn a reward , the salvor will be entitled to special compensation from the vessels owner equivalent to his expenses, i.e. his out-of-pocket expenses reasonably incurred in the salvage operation and a fair rate for equipment and personnel actually and reasonably used.
If the salvor has prevented or minimised damage to the environment,

the special compensation payable by the owner may be increased up to a maximum of 30% of the salvors expenses (i.e. it may be 130% of his expenses).
If it deems it fair and just to do so, may increase the special

compensation up to a maximum of 100% of the salvors expenses.

Claims and actions

Nothing in the Convention will affect the salvors maritime

lien under any international convention or national law.

The salvor may not enforce his lien when satisfactory security

for his claim, including interest and costs, has been paid.
The owner of the salved vessel must ensure that the owners of

the cargo provide satisfactory security for the claims against them including interest and costs before the cargo is released.
The salved vessel and other property must not, without the

salvors consent, be moved from the port or place where they first arrive after completion of the salvage operations until satisfactory security has been put up.

Salvage agreements
There are two main types of salvage agreement:

on the basis of ordinary tariff, fixed lump sum or daily rate; and on the basis that remuneration will be settled later, whether by agreement, court judgement or arbitration. Salvage services arranged on basis of ordinary tariff, lump sum, etc. is usually cheaper and should always be obtained if time allows, e.g. where the vessel is soft aground in a sheltered, non-tidal harbour and not in imminent danger. Salvage on the basis that remuneration will be settled later includes services rendered in times of imminent danger to the ship or environment. The agreement most often used in such cases is Lloyds Standard Form of Salvage Agreement, commonly known as Lloyds Open Form or LOF

Advantages of using LOF

agreement can be reached via radio (if witnessed) or other telecoms methods; there is no need for the form to be signed until the salvage services have been completed; the agreement is not likely to be disputed; LOF is basically a no-cure, no-pay agreement; English law applies to claims; the salvor has a maritime lien in the property salved, even after its sale to another party (e.g. where a salved ship or cargo is sold to try to avoid having to pay salvage charges); salved property can be quickly released on payment of security to the salvor; the salvor gets an interim award; disputes are referred to arbitration in London, saving legal costs; underwriters liability cannot be increased beyond that for total loss (i.e. underwriters will not be liable for sue and labour costs where a total loss occurs); and excessive claims by salvors are avoided.

LOF historical development

The first Lloyds Form of Salvage Agreement 1892 has undergone 10 revisions, the latest being LOF 2000. In its early editions (up to LOF 1970), LOF was a straight no cure, no pay contract.

The (LOF 80) provid a safety net for salvors who agreed to the salvage of loaded oil tankers. The safety net guaranteed that the salvors expenses would be paid in cases where the value of the salved property proved insufficient to provide for a normal salvage reward. In addition, the salvor could receive an an increment of up to a maximum of 15% of his expenses. special compensation, was introduced in article 14 of the International Salvage Convention, 1989. The 1990 edition of Lloyds Open Form (LOF 90) contract gave immediate effect to article 14.
The Scopic Clause came into effect in August 1999. An improved edition, Scopic 2000, was introduced in September 2000

Lloyds Open Form 2000 (LOF 2000)

Should be used where the ship or marine environment are at

risk and the master has insufficient time to request the owner to arrange salvage services on a the basis of a preagreed rate or sum.
Does not need to be on board; the masters of the vessels

involved simply need to expressly agree to its terms before the salvage services commence.
Is regarded by the International Salvage Union as a major

advance, with clear, user-friendly language and innovations.

many

Lloyds Open Form 2000 (LOF 2000) Cont

Defines the conditions under which a casualty is in a safe condition

for redelivery to the owner.

Under LOF 2000 the Contractors (salvors) agrees to use their best

endeavours to salve the property specified, and take the property to the place stated or to a place of safety.

Has a boxed front page layout with numbered boxes( 1-9 ) for information to be entered as follows: 1. Name of the salvage contractors; 2. Property to be salved 3. Agreed place of safety; 4. Agreed currency 5. Date of agreement; 6. Place of agreement; 7. Is the Scopic Clause incorporated into this agreement? Yes/No; 8. Name and signature of person signing for and on behalf of the Contractors; 9. Name and signature of Captain or other person signing for and on behalf of the property, with signature.

Special Compensation P&I Clause SCOPIC

May be invoked at the option of the salvage contractor by written

notice on the owners of the vessel being salvaged.

Determines the method of assessing special compensation where

payable Special compensation assessed in accordance with the Scopic Clause is called Scopic remuneration
Does not change the no cure no pay principle as applying to the

salvage award, since that it separate from special compensation.

Allows the vessel owners, once the Clause has been invoked, to appoint

at their sole option a Shipowners Casualty Representative (SCR) to attend the salvage operation in accordance with the terms and conditions in Appendix B to the Clause.
Scopic remuneration is payable only by the owners of the vessel.

Considerations before accepting salvage assistance

Seek advice and instructions from the shipowner, but only if time

allows.
Immediately request assistance if he thinks it necessary for the safety

of the ship, crew and cargo.

Accept the assistance that seems the most reasonable, taking into

account the possible value of the assisting ships, her ability to perform the salvage services and the amount of her deviation from her intended route.
Try to obtain agreement to Lloyds Open Form 2000 before accepting

any salvage services offered.

Give the salvor all possible assistance to enable him to do the job,

remembering, however, that the more that can be done by the ships crew, the less will be the salvors reward and the cost to the shipowner and cargo owners.

Considerations before accepting salvage assistance- Cont

If immediate assistance is not required and time allows assistance

should be arranged through the owner on a contractual basis stipulating ordinary tariff, fixed lump sum or a daily rate.
Where safety of life, the ship, the cargo or the marine environment

are in immediate peril, however (as in the case of a disabled, laden vessel drifting onto a lee shore in a densely-trafficked area), negotiations should not delay the engagement of salvors.
In cases of immediate peril there should never be a delay to negotiate

a particular form of agreement or contract terms.

In deciding whether to accept salvage assistance the master should take account of :
safety of personnel; proximity to the shore or shoal water; weather and sea conditions; current and tide; nature of sea bed and shoreline; availability of assistance; damage already sustained by ship; risk of further damage to ship; prospect of maintaining communications; threat of pollution; and manpower and material requirements.

Accepting salvage assistance

Acceptance of an offer of services on the basis of Lloyds Open Form

(LOF) may be made orally or by radio, fax, e-mail or other form of communication by sending a message as follows:
ACCEPT SALVAGE SERVICES ON BASIS LLOYDS STANDARD

FORM LOF NO CURE NO PAY. ACKNOWLEDGE REPEATING FOREGOING. MASTER (SHIPS NAME).
The authority of the master is not reduced by engagement of

salvors.
The master and crew should, however, co-operate fully with

professional salvors.
The master should ensure that he is fully aware of all salvage

actions.

place of safety,
Factors to be considered
The repair facilities at the place; The possibility of safely discharging and storing cargo and of

forwarding it to its destination;

The danger of deterioration of the cargo in the place; Whether the place is the most suitable place at which the vessel

can be repaired, with regard to nearness, convenience, cheapness and facilities; and
Whether the vessel is capable of manoeuvring under her own

power or not, and whether, therefore, she could still be regarded as being in a position of danger even though moored in a safe port.

Offering salvage assistance

There is a statutory obligation to attempt to save the

lives of persons in distress at sea but no such obligation to save maritime property in danger of being lost.
Any attempt by the master of a merchant vessel to save

property is a commercial venture and not a statutory obligation.

A vessel requiring a tow (e.g. a disabled, drifting vessel) is

not necessarily in distress.

Factor to be considered before contracting to perform a salvage service

Does the contract of carriage give the vessel the liberty to tow? Are there sufficient bunkers and/or fresh water on board for the tow,

and will sufficient reserves be maintained, throughout and after the tow, to meet the stipulations of the owner or charterers?
Is there a possibility of missing any cancelling date under a charter

party?
Does the nature of the cargo permit a lengthening of the voyage? Is the vessels machinery of adequate power and in good enough

condition for towing?

Is the value of the vessel requesting the tow, plus her cargo, of

sufficient value to merit a salvage service?

Factor to be considered before contracting to perform a salvage service- Cont

Has an agreement to salvage on Lloyds Open Form terms been

made?
Has a port of destination or place of safety been agreed?

Have the owner or manager and any time charterer been notified, so that additional hull insurance can be arranged if necessary?

Are proper records of all events and circumstances to date

being kept?

 SALVAGE
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