SPOTLIGHT ON SALVAGE AND WRECK REMOVAL

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A TECHNICAL VIEWPOINT

By Ros Blazejczyk, naval architect and member of the Lloyd’s Panel of Special Casualty Representatives (SCR)

Disasters, incidents and accidents at sea require an immediate emergency response, regardless of the remoteness of the location, to save lives, prevent damage to the environment and potential loss of cargo and vessel.

The role of the SCR, who is appointed when the SCOPIC clause is invoked, is to represent all the salved interests as a technical consultant, so that all of the parties involved have a direct point of contact and know what is happening on the ground at all times. In the same way as the salvor, the SCR is required to use “best endeavours.”

Suitably experienced professionals apply to become members of the Lloyd’s Panel, based on the work that they have conducted on various salvage operations. Their application has to be supported by a member of the International Group of P & I Clubs and a member of the International Salvage Union (ISU) before the panel determines whether the applicant is accepted. An SCR can then be selected from the Panel and appointed when SCOPIC is invoked on a salvage operation under an LOF contract.

Lloyds Open Form (LOF) and the SCOPIC clause

High risk salvage operations are governed by historic conventions which are based around the question of what the salved amount is and when and how much monetary reward the salvage company involved should receive for its efforts.

The LOF is a very simple and short two page contract. The idea being that the master of the ship in trouble signs the LOF contract with the salvage master and the salvage company can then proceed with trying to save the ship. The basis is the “No Cure No Pay” principle which means if there is no salved value from the cargo, and / or the ship, then the salvors receive nothing. If they are successful then they are entitled to an award based on the salved value which is determined under Article 13 of the 1989 Salvage Convention.

However, there is always a potential case where there is no value in the vessel due to the damage caused and there may be no cargo, or the cargo is also worthless due to damage. Circumstances can also change but a risk of considerable environmental damage from perhaps bunkers, or other pollutants potentially, or actually, spilling into the sea remains. There is no financial incentive for the salvors to use their best endeavours to try and prevent that pollution, but there is the moral dilemma. Article 14 was designed to provide a safety net for the contractor in this situation but ultimately proved ineffective. That is where the Special Compensation P&I (Protection and Indemnity) Clause comes in and replaces Article 14 if incorporated by salvors who can then invoke the clause in the event that there is insufficient value to be salved.

Introduced in 1999, the SCOPIC clause guarantees the salvor that all craft, personnel and equipment reasonably mobilised and utilised is covered by a fixed tariff cost along with a 25 percent uplift accorded over the period of the salvage operation from mobilisation to demobilisation. This means that the salvor knows they will receive a minimum financial cover for their efforts even if not successful with little or no Article 13 award. The SCOPIC payment will only be the sum over and above the traditional Article 13 award. Of course there also needs to be a mechanism to ensure that the SCOPIC clause is not invoked for every incident.

There is therefore a further provision that says if the salvor invokes the SCOPIC clause and it is found that the Article 13 award is higher, then the salvor is penalised by a reduction of 25 percent of the difference between the two.

A key part of the SCOPIC clause is that the salved interests, including the ship owner, insurers, cargo owners and charterers are allowed to have a representative on site and that is where the Special Casualty Representative comes in, representing the interests of all parties.

CASE STUDY – CHESHIRE

LOF SCOPIC salvage Gran Canaria 2017

A chemical reaction in the fertiliser cargo of the bulk carrier led to decomposition and release of toxic fumes and steam and heat. The reaction built up pressure and blew open the covers of one cargo hold. The heat spread from one hold to another and the adjacent holds started decomposing. As soon as the fertiliser starts decomposing in this way it has no commercial value, and with heat spreading across the whole of the vessel it was unlikely it would be possible to repair the damage caused to the vessel structure.

This was precisely the kind of situation that SCOPIC was designed to deal with and without any delay caused to the mobilisation of salvage services. I was appointed as the SCR. The salvors mobilised two large salvage tugs, a harbour tug and salvage and firefighting teams from the US and Europe. Initially they had difficulty getting on board due to the sea conditions and the toxic fumes from the cargo which made it too dangerous to approach the ship.

Eventually a tow connection was established and the casualty towed to a place of safety in Spain after which the LOF contract could be terminated.

The Role of the SCR

The SCR has the same duty as the salvage master and must use their best endeavours to assist with the salvage of the property and protection of the environment.

Other key points of the SCOPIC clause are that salvors are to keep the SCR fully informed throughout operations and the SCR can offer advice to the salvage master but cannot override a decision made by the salvage master. On a daily basis, the SCR endorses and circulates the salvor’s DPRs and usually produces their own Daily Situation Report (Sitrep) with further information from site. These reports are provided to all involved parties.

The SCR also monitors the daily cost sheets so that the SCOPIC clauses are recorded, the idea being that if there is any dispute, perhaps because a piece of non-urgent equipment is to be mobilised and flown in by air freight for $200,000, when there are more cost effective options that would not impact on the efficiency of the project, then that discussion is had on site and either resolved or temporarily put to one side. It is still added to the cost sheet with a note for it to be returned to after the job is completed. This ensures that the issue does not get in the way of immediate operations.

If there is a serious disagreement then the SCR does have the option to write a dissenting report with all parties notified. When the work is completed, including demobilisation, the cost sheets have to be reconciled. The SCR is supplied with, and checks, all the supporting documentation to ensure that everything is accounted for and the hire periods confirmed after which their final report is written and copies provided to all parties including the Lloyd’s Salvage Arbitration Branch.

In all cases, the technical experience of the SCR is important and they must provide a big picture outlook. In a situation where the dynamics of an emergency changes, the insurers and vessel owners need to have the earliest indication. For example, if a ship can no longer be saved and is likely to become a wreck removal operation, then it is important they are aware so that the changes can be addressed and if a transition from salvage to wreck removal is necessary then it is carried out in a seamless manner to avoid any issues with the authorities, owners and insurers.

With an SCR on site it is often the case that help can be given to the salvors to assist in managing the expectations of the different authorities involved, which can sometimes require a great deal of time and delicate negotiation.

Solis Marine has three Special Casualty Representatives on the Lloyd’s Panel in addition to experienced naval architects, engineers and support personnel. For further information about our services or to book a presentation, please visit https://solis-marine.com/salvage-and-wreck-removal/

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