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International Chamber of Shipping

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SALVAGE: NEW LLOYDS STANDARD FORM OF SALVAGE AGREEMENT 2011 Action Required: Members are invited to note the report of the recent Lloyds Salvage Group and SCOPIC Committee meetings and in particular that amendments to LOF 2000 and the Lloyds Standard Salvage Arbitration (LSSA) Clauses were agreed. The new LOF will be known as LOF 2011. ICS participated in meetings of the Lloyds Salvage Group (LSG) and the SCOPIC Committee, which were held in London on 14 March. A. LSG MEETING The most significant decision from the LSG meeting was the adoption by the LSG of amendments to LOF 2000 and the Lloyds Standard Salvage and Arbitration (LSSA) Clauses. The new LOF will be known as LOF 2011 and is expected to be available on the Lloyds website shortly The main changes are that: (1) details of LOF Awards may be published on the Lloyds website; (2) salvors will be required to notify Lloyds of their engagement; and (3) special provisions will apply where the property includes laden containers. 1. Publication of Awards

LOF Awards, Appeal Awards and Reasons have traditionally been confidential to the parties involved. However, the LSG was unanimous in agreement that the Arbitrators Award (and where applicable, the Appeal Award) should be made more widely accessible. It was further agreed that such access will be via subscription to the appropriate area of Lloyds website at While the intention of the clause is to encourage publication of awards, an important caveat is included in the LSSA Clauses whereby the Award etc may not be published if good reason is given by any party for withholding or deferring publication. The intention is to give parties protection from publication if there are on-going ancillary proceedings still to be heard and publication might prejudice them and also if there are commercial
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sensitivities to justify withholding publication. The wording of the caveat has been left deliberately open to try and ensure that parties are not overly restricted in the reasons for the application to withhold publication. 2. Notification to Lloyds

The salvors will be required to report all engagements under LOF to Lloyds within 14 days of their engagement. This will assist in gauging the level of actual use of LOF. 3. Container Vessel Cases

The Special Provisions (below) are intended to reduce the cost of collecting salvage security and obtaining an Award against unrepresented cargo.
Special Provisions These Special Provisions shall apply where the salved property includes laden containers. 12 The parties agree that any correspondence or notices in respect of salved property which is not subject of representation in accordance with Clause 7 of these Rules may be sent to the party or parties who have provided salvage security in respect of that property and that this shall be deemed to constitute proper notification to the owners of such property. Subject to the express approval of the Arbitrator, where an agreement is reached between the Contractors and the owners of salved cargo comprising at least 75% by value of salved cargo represented in accordance with Clause 7 of these Rules, the same agreement shall be binding on the owners of all salved cargo who were not represented at the time of the said approval. Subject to the express approval of the Arbitrator, any salved cargo with a value below an agreed figure may be omitted from the salved fund and excused from liability for salvage where the cost of including such cargo in the process is likely to be disproportionate to its liability for salvage.



B. SCOPIC COMMITTEE MEETING The most significant decision at this meeting was in relation to the ISU proposal to amend the discount provision of the SCOPIC Clause. (See MLC(11)03/IC(11)01 of 24 January for background information.) The discount applies to the amount of the Article 13 award payable by Property interests to the salvors when the Article 13 award exceeds the total SCOPIC remuneration assessment. It is an important part of the SCOPIC mechanism, designed to discourage salvors from invoking SCOPIC in every case. Members will recall the discussion at the Maritime Law Committee meeting in February (reported in the minutes of the meeting (MLC(11)05 of 28 February)) when Members agreed that the provision should be retained as presently drafted. At the SCOPIC Committee meeting, the property underwriters representatives produced a large number of files containing documents relating to previous discussions of this issue within the SCOPIC Committee in support of their case that the issue had been discussed previously in depth and that it was clear from those discussions that the 2

wording of the provision was not an anomaly but part of an overall compromise, which should be respected. ICS noted that the documentation confirmed its understanding of the development of the provision and that no strong reason had been produced to justify overturning the compromise. In view of the lack of consensus for the ISU proposal, the Chairman confirmed that the discount provision would remain as drafted. In addition to the LSG and SCOPIC Committee meetings, the Secretary also attended the jointly hosted ISU/IG Clubs SCR Seminar the same week. The ISU took the opportunity to inform attendees that it remains intent on pursuing its proposal for additional remuneration for so-called Environmental Salvage. The discussions will continue under the auspices of the CMI, and may be promoted by ISU in other fora. ICS and national associations will need to remain vigilant. Kiran Khosla Secretary: Maritime Law Committee and Insurance Committee