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Specialists in Shipping, Marine Insurance & Transit Law, London |
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WINTER NEWSLETTERA commentary by Michael Buckley
The Lloyd’s Form Working Party.This group, which comprises representatives of not only Lloyd’s and marine insurers but also salvage contractors, shipowners, adjusters and lawyers involved with the resolution of claims for salvage arising under LOF, met at Lloyd’s on 15th November 2002. It was reported that Lloyd’s was aware of 91 LOF contracts that had been signed so far this year. The total for the whole of 2001 had been 108 and there was, therefore, a reasonable chance that the year-end figure will be much the same as last year. It was further reported that LOF 2000 continues to work well and that there were, currently, no plans to amend it. Nevertheless, it was hoped that there were means by which costs could be reduced. In particular, Lloyd’s appreciated that the need for the owners and underwriters of salved property to provide security satisfactory to Lloyd’s or the salvors often caused difficulty, particularly in cases involving laden container vessels, and that, if something could be done to alleviate those problems, costs should reduce. At present, Lloyd’s Salvage Arbitration Branch will only accept uninsured guarantees from Lloyd’s underwriters and certain major banks. Uninsured security from any other guarantor is not accepted unless the salvors agree. Lloyd’s has concluded that these requirements may be too restrictive and has, therefore, taken an initiative to facilitate the provision of acceptable security. The proposal outlined at the meeting was that, in future, Lloyd’s would accept uninsured guarantees offered by any UK guarantor to which Standard & Poor’s or Best’s attribute a credit rating which is equivalent to, or better than, the credit rating given to Lloyd’s itself. A number of insurance companies have credit ratings which match or exceed the “A” rating Lloyd’s currently enjoys. This suggestion, which would not involve any need to amend LOF 2000 or the incorporated provisions, cannot be put into effect until approved by the ISU, representing the leading salvage contractors. However, their decision should be known shortly. They are expected to agree. If that happens, the uninsured guarantees of UK insurers with a satisfactory credit rating will become acceptable to Lloyd’s. The extent to which this change in the procedure will benefit property underwriters outside the UK will depend on whether they have a UK subsidiary or associated company, with the required credit rating, which is willing to provide the guarantee to Lloyd’s. Due to the problems connected with the enforcement of guarantees given by companies outside the UK, there is at present no suggestion that Lloyd’s should accept such guarantees on an uninsured basis (unless Lloyd’s is authorised by the relevant salvage contractor to do so). Details of the new arrangements will be finalised and announced if the ISU confirms that, in principle, they are acceptable to its professional salvor membership. The concern regarding cost resulted in a decision to appoint a committee to consider the expense of LOF arbitrations in general. This will include review of a radical suggestion that each party to a LOF contract should bear its own costs and that property interests should not have to pay the salvor’s costs, as at present. Apart from the fact that any such change is bound to be strenuously opposed by the salvage industry, it would involve the need to amend LOF and, in those circumstances, no decisions are likely to be taken until the Working Party next meets in November 2003. The Salvage Liaison Group.This Group, whose function is to consider practical problems which arise in connection with salvage operations and, in particular, the operation of the SCOPIC agreement, also met in November under my chairmanship. It was reported that in the year to date there had been 14 LOF cases in which the salvor had invoked SCOPIC. The total for 2001 was 24. Only one SCOPIC case had proceeded to arbitration so far this year, which indicated that SCOPIC was achieving its purpose. Claims which would otherwise have to be dealt with under Article 14 of the 1989 Salvage Convention are now capable of being settled in accordance with the SCOPIC provisions when SCOPIC is invoked. There was a lengthy debate regarding the Special Casualty Representatives (SCRs) who are appointed to attend casualties when SCOPIC is invoked. At present, there is a panel of 42 surveyors and other suitably qualified persons comprising the SCRs. It was, however, reported that only 17 of them had ever received an appointment and that, of those 17, only 3 had been appointed more than three times. As membership of the SCR panel has not been reviewed for 3 years, steps are now being taken to ascertain each member’s recent salvage experience and a review of the SCR panel will be undertaken early in the New Year. It was agreed that, in future, this review should be carried out every 2 years and that persons applying for membership of the panel should be sponsored by at least two sectors of the industries represented on the Salvage Liaison Group. SCRs are expected to be impartial and independent in their dealings with salvors and shipowners. However concern was expressed that, in some instances, the nature of the SCR’s regular employment could create a conflict of interest. Nobody was able to propose a ready solution. It is unrealistic to expect any SCR to abandon other sources of income. However, if a SCR has too close a connection with any particular industry interest, it was thought that he should probably not be on the panel. The problem of conflicts of interest will, therefore, be considered further in the context of the review of the SCR panel. A proposal to amend SCOPIC was put forward by ISU representatives to enable salvors to recover mobilisation costs incurred prior to SCOPIC being invoked. A delay in invoking SCOPIC is often due to factors outside the salvors’ control as, for example, occurs when a Master delays signing the LOF. The ISU were requested to provide both some facts and figures to illustrate the extent of this problem and a draft clause, since there was concern to ensure that this right should be restricted to cases of genuine delay and should not be used to recover speculative mobilisation expenses. BMLA Salvage Committee.(1) Places of Refuge. At the 83rd session of the IMO Legal Committee, it was agreed to adopt a CMI proposal to conduct an investigation amongst national associations to ascertain the extent to which their domestic laws dealt with the problem of vessels in distress and seeking refuge. A questionnaire devised for that purpose was subsequently sent to the UK national association, the British Maritime Law Association (BMLA). A response was prepared on behalf of the BMLA Salvage Committee and submitted earlier this year to the CMI Working Group co-ordinating the responses. Their report was debated at the IMO Legal Committee session in October and was well received. The CMI has now been commissioned to follow this up with a study of the liabilities which may attach to governments which grant refuge and find they have a spill on their hands and those which may arise from a refusal to grant access. A further questionnaire is, therefore, being prepared in consultation with IMO, which should be referred to the BMLA Salvage Committee shortly. (2) UNESCO Convention on the Protection of Underwater Cultural Heritage. When the draft of this convention came before the UNESCO General Conference last year it was approved by 94 votes to 5, with 17 countries abstaining. The BMLA Salvage Committee and other bodies had urged HM Government to vote against the adoption of the draft but, in the event, the UK delegation abstained. HM Government had two concerns. First, they felt that the rights of States in relation to the wrecks of warships and other government-owned non-commercial vessels would be altered in a manner which was unacceptable and, in any event, contrary to UNCLOS. Second, States would be required to extend protection to all underwater archaeology over 100 years old. This was unrealistic in relation to the UK as there are estimated to be about 10,000 wrecks of that vintage on the seabed below UK territorial waters. Unfortunately, however, HM Government’s view that it would be preferable to focus on identifying the most important and unique examples of underwater cultural heritage was not supported by the majority of the UNESCO delegates. In the circumstances, the draft convention was formally adopted and will, therefore, come into force when ratified by 20 States. That has not yet happened Return to News |
Casualty Reports
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