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CONTENTS

ABSTRACT p.4

CHAPTER 1 p.4

INTRODUCTION p.4

CHAPTER 2 p.5

METHODOLOGY p.5

CHAPTER 3 p.7

LITERATURE REVIEW p.7

1910 BRUSSELS CONVENTION p.7

LLOYDS OPEN FORM 80 p.8

THE REOAD TO THE 1989 SALVAGE CONVENTION-LIABILITY SALVAGE p.10

CHAPTER 4 p.11

THE SALVAGE CONVENTION 1989 p.11

THE NAGASAKI SPIRIT CASE p.12

SCOPIC p.13

CHAPTER 5 p.14

BUREAU VERITAS REPORT p.14

LOF 2011 – LSSA p.15

CHAPTER 6 p.16

DISCUSSION AND ANALYSIS p.16

ARTICLE 1 (d) p.19

ARTICLE 13 p.19

REVISED ARTICLE 14 p.20

OBJECTIONS RAISED p.23

CURRENT CLUBS‟ POSITION p.25

ICS‟S POSITION p.26

OUTCOME OF THE BEIJING CONFERENCE 2012 p.28



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WHY SHOULD THE SALVAGE CONVENTION 1989 BE AMENDED? ABSTRACT

This dissertation‟s aim it to critically evaluate the International Salvage Union‟sproposals for amendment of the 1989 Salvage Convention. After explaining the ISU‟s

proposals for amendment and identifying and examining any objections raised bythose who are against the amendments, the author is going to evaluate all argumentsprovided and come up with the answer as to why the Convention should be amended.The environmental aspect of the Convention will be mostly discussed, as Article 14seems to be the most discussed of all, and the one in which salvors are mostlyinterested in amending. Along with Article 14, Articles 1 and 13 will be furtheranalysed.

Chapter One

INTRODUCTION

The Salvage Convention 1989, which was held in London, was adopted on the 28

th

of April 1989, but came into force seven years later, on the 14th of July 1996 (IMO,

2013). The term „salvage‟ refers to any action taken by a salver, when intervening in

any casualty situation to salve the ship and the property and most particularly to save

human lives and last but not least, to prevent any environmental damage by pollution

(MARINE-SALVAGE, 2013).

Until 1989, the existing legislation regarding salvage, was the Assistance and Salvage

Convention 1910, held in Brussels, Belgium (CIL, 2009). A salver would only be

rewarded for their operations, if their salvage was successful. If they did not manageto save either the property or the cargo, then they would receive no reward, a model

known as “no cure-no pay” (IMO, 2013). A payment under this salvage contract can

only be made, if the salvers‟ party makes a successful claim (USLEGAL, 2013).

The most widely used “no cure-no pay” contract is the Lloyd‟s Form of Salvage

Agreement, universally known as Lloyd‟s Open Form, or LOF. Originating from the

late 1800‟s, this form has been used more than any other in salvage cases (LLOYDS,

2013). Since its standardization in 1908, it has undergone eleven revisions, with the

most recent to be located in January 2011. Other contracts used, are the Beijing

Form, the Japanese Form and the Turkish Form, yet the LOF remains the mostly

preferred contract worldwide (MARINE-SALVAGE, 2013). Under the LOF, the salvers

receive a proportion of the salved value, in return for the salvage services

(SHIPSBUSINESS, 2010).

In the Salvage Convention 1989, two new incentives were given to the salvers.

Special Compensation is payable to the salvers when they have minimized, or

prevented damage to the environment, but the value of the salved property is

insufficient for a whole salvage reward. The second choice the salvers have, is to



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choose the Special Compensation P&I Club Clause (SCOPIC), under which the

remuneration is based on pre-agreed tariffs (COMITEMARITIME, 2013).

The International Salvage Union (ISU), considers that the present system under the

Salvage Convention 1989, along with the commercial arrangements of Lloyd‟s Open

Form and the SCOPIC, provide insufficient recognition for the salvors‟ efforts to

minimise or avoid damage to the environment. Therefore, the ISU has come up with a

proposal regarding the Salvage Convention 1989. The Union is of the opinion that the

Salvage Convention 1989 needs to be brought up to date. The ISU requires both an

award for salvage services to the maritime property and an award for the degree of

success achieved by the salvors in minimising or even avoiding any damage to the

environment t during their salvage services (MARINE-SALVAGE, 2013).

This dissertation‟s aim is to critically evaluate the International Salvage Union‟s

proposals for the amendment of the Salvage Convention 1989. This aim is going to be

achieved by discussing and analysing the two main objectives of this dissertation. The

first objective is to explain the ISU‟s proposals to amend the Salvage Convention

1989. With the appropriate methodology and data, this dissertation is going to define

the reasons why the Union requests for this amendment and which are the arguments

which will be used for the amendment. The second objective is going to identify and

examine any objections raised to the ISU‟s proposals and by whom. The Committee

Maritime International (CMI), for example, has been opposite to the Union‟s proposals

for extra funding.

After identifying, explaining and examining the arguments and the counter arguments

for the Union‟s proposals, this dissertation will have the evidence and will be able to

provide an answer as to why the Salvage Convention 1989 should be amended.

Chapter Two

METHODOLOGY

After specifying the aim and the objectives of the dissertation, the author is going to

analyse and justify the methods of approach, data collection and research which will

be used throughout this paper.

The two methods of approach are deductive and inductive. The first one works from

the more general to the more specific reasoning, also known as a “top-down

approach”. On the top of this scheme, there is a theory which the author uses as a

start point. The next step is to narrow this theory and extract one or even more

hypotheses, which need to be tested. The outcomes of these hypotheses are the



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semi-structured. The author asked some pre-arranged questions, but the answers

given, raised some new questions which were then asked.

Chapter Three

LITERATURE REVIEW

The life of a vessel is usually long enough to take her through all the troubles and

pleasures of life, but perhaps the most interesting part of her career is rescuing or

being rescued (James & Dewell, 1912).

The International Convention on Salvage 1989 starts with a chapter on general

provisions that after giving definitions cover different aspects to which this convention

is applicable and provide a hand full of areas where it is applicable. The second

chapter deals with performance of participating parties and this also gives details of

the cooperation among the parties. Third chapter actually gives details of rights of

salvors that mean what are conditions for reward, criteria for fixing reward and other

such matters. Fourth chapter explains what claims and actions may involve in the

course of action and how to deal with such cases. This is lengthiest chapter of the

whole convention as it explains wide areas of the actions.

The extent to which the language is concerned it is well knitted, easy to understand,

poignant and simple. Proper headings, articles and numbering make the data sorting,

searching and citing well organized and time saving. It very logically starts with

definition and ends with the maximum point of action. Thus it can be asserted that the

argument is developed logically and each decision is defended with rational reason.

The next step in literature review is comparison of different works of the same kind of

the literature.

It is interesting to know that American Admiralty law gives more reward materially to

the salvor of material as compared to the salvor of human beings. So, if a man saves

vessel full of cattle he would be rewarded highly but if he saves all the human beings

present in the vessel and cannot save the vessel. He is not entitled to a single penny.The life saving activity here is left on the part of morality and it is supposed that every

man would do everything possible to save humanity. This was until the 1910 when the

great maritime nations of the world agreed to put the legal compulsion against this

obvious moral obligation. (Lawrence, 1954)

The traditional laws regarding salvage of ships and property in danger of being lost at

sea have served ship-owners and salvors into the twentieth century (Binney, 1990).

The Brussels Convention for the Unification of Certain Rules to Assistance and

Salvage at Sea 1910 is the name of a treaty that is logical basis of International

Convention on Salvage 1989. It was concluded on 23 September 1910 in Brussels,



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which is why it is called Brussels Convention. It provided basic frame for the

legislation of Salvage. However this convention was limited regarding the uniformity

regarding the salvage operations for example its rules were limited and did not explain

much about the compensation and liability of salvors.

After determining the meaning of salvage operation and the geographical area in

which a salvage operation can take place, the Convention specified whether an

operation can be subject to remuneration or not, and which should be the amount of

the reward. Article 2 clarifies that the right to equitable remuneration can only be

claimed by every act of assistance or salvage, which has had a useful result.

Therefore lack of beneficial result, leads to no remuneration. Additionally, in no case

should the sum paid to the salvors exceed the value of the property salved.

Reference to the amount of money that should be paid to the salvors is made in article

6 of the 1910 Convnetion. This amount is fixed by agreement between the two parties

and, failing agreement, by the court. The same applies also to the proportion in which

the remuneration is to be distributed amongst the salvors. In any case of agreement

vitiation by either party, regarding the services, or the remuneration paid, the court is

responsible to provide the final solution, at request of the party affected.

Moreover, it lacked articles regarding environmental protection and measures to

minimize the damage to environment. Its basis can be traced in the general

awareness regarding environmental protection prevailing at that time. The revolution

in industrial world was still at its peak and new innovations and inventions were being

made in every field of life. Human thought had not developed to the extent that it

might see the danger that the environment was exposed to by these ships or vessels.

No doubt some individual thoughts were prevailing at that time but proper legislation

was not present anywhere till some incidents made it clear for the world that it was far

more dangerous than a man can think of.

The first amendment in the 1910 convention was made in 1967. This amendment did

not change anything except the addition of warships or other military vessels werealso included in the salvage list. Thus Convention on salvage is one step forward

towards more environment friendly laws and regulations. Amoco Cadiz disaster

became the major reason to update the old convention in the form of convention on

salvage 1989. Amoco Cadiz was a supertanker on its journey to Europe carrying

crude oil from Iran and Arabian countries and was wrecked at northern Brittany coast

in April 1978. The result was disastrous as 223000 tons of crude oil spilled out

polluting the area of almost 360 km. the huge population of bivalves, limpets, sea

birds, periwinkles and limpets severely affected by this impact. Life cycles havechanged. Short living creatures have been replaced by the long living species. The



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effect is both long term and short term, no one is surely how long will it take neutralize

(G, G, & D, 1982).

One of Many changes that enhanced the scope of convention on salvage 1989 from

previous conventions include environmental protection as leakage of oil or other such

material from ships had a disastrous affect on sea environment thus many changes

were made for this purpose. A special compensation was awarded to encourage the

salvors to make attempts to preserve and protect environment from oil and fuel spills.

The special compensation was also offered to the salvor if he protects the ship or

vessel from the real danger or threat of loss or actual loss to the environment. On the

basis of above discussion it can be asserted that with the passage of time convention

on salvage has become more environment friendly and provides a synthesis between

environment and human activity.

If the conventions like 1910 and 1989 are compared, it can be observed that behind

these had been special factors that made concerned men to amend according to the

requirement of the time. At the time of Brussels convention, it was a time of new

technological changes and new discoveries, it was necessary to take steps in order to

secure the safety and sustainability of ships and vessels. Thus a reward was offered

to the salvor. Moreover, new technology was also available to everyone what so ever

intent that may have. So, this convention also got safety from such kind of dangers.

Actually at that time, it was a reward to the salvor in response to the danger that he

undertook to save the ship or vessel from danger. The amendment made in this

convention in 1967 was also due to some social factors. After the Second World War

there was huge increase in the sea weapons, in the shape of vessels and warships,

as huge money was used to build such gigantic weapons and weapon carriers, thus

governments also took steps to offer salvage for protection. Many incidents proved

that these ships and vessels were huge dangers to the environment and there were

some discrepancies in previous conventions. So in order to remove the danger and

make everything more save 1989 convention came into being.No doubt, salvage conventions belong to the same category however convention on

salvage 1989 is more convincing as compared to the previous one as many

provisions prove it to be more helpful and beneficial for both the man and the

environment.

There is a huge discrepancy between law of savage and UNESCO convention on the

prevention of underwater heritage. This institution of UN aims at saving the heritage

buried at the bottom of the seas in the form of ancient and historical shipwrecks. The

issue arises from an article of convention which states that reward of the salvageoperations would depend upon the nature and degree of the danger (Organization,



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2010), on the other hand, these shipwreck heritages cannot bear the loss caused by

any danger thus liquid gas and oil spills in the sea harm not only harm living creatures

but also death remaining of the sunken. The dispute is on the point that law of salvage

does not offer any kind of reward in the case of preventive measures to protect the

environment. However recent changes have been made in the law. Now the salvor

that first discovers the wreck not only gets the ownership of the wreck but also the

ownership of all the artifacts that are recovered from the vessel. (Brooke, 2008).

The traditional definition of salvage says that it is a benefit that is conferred on salvor

for saving or for helping in the process of saving in a recognized condition of danger

from which one cannot extract oneself unaided. Forrest recognizes that there are four

criteria that are necessary to be satisfied before the salvage law to be applied. The

property and carrier should be on navigable waters, the rescue efforts to save

property should be voluntarily rendered, success that might be total or partial and

conduct with the interest of saving the owner's property. (Craig, 2002) Thus the

element of danger is essential in the salvage service. Under this condition many

questions are arise when it is compared with the convention of UCH. The question

that how is the law of salvage applicable to the recovery of UCH under any

circumstance? There are two opinions in answer to this question. Those who want to

the application of salvage law preserved for UCH recovery give broader definition.

They include both physical threats to artifacts and economic realization loss. In

contrary to this others give a narrower approach. In both cases there is not a single

detailed interpretation from the court in either way. Court has left it to the legal system

of adjacent country for example in England such an abandoned ship becomes the

property of the Crown while in USA it becomes the property of the person who finds it

and reduces it to his possession. And these days recovery of artifacts located on the

floor of the sea is increasingly feasible due to technological advances in underwater

survey and recovery techniques (U.S. Concerns Regarding UNESCO Convention on

Underwater Heritage, 2002)No doubt this convention was designed to facilitate and remove those drawbacks that

were present in the convention for the unification of Certain Rules Relating to

Assistance and Salvage at Sea 1910. However with the changes in technology, new

methodologies and gigantic sizes of vessels have made the process of salvation very

difficult and very expensive. Moreover, there is also needed a large vessel that might

save the vessel in danger. (Gaskell, 1989)

As the time has become faster and usage of internet and other hi-tech equipments

has made some articles of convention on salvage 1989 ineffective in today's world. Adire need is felt these days for modification, revision and up gradation of this



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convention. A major issue in this regard is that the world will have to live many years

without any certainty and this period will surely mark as a period of unpredictability as

opposed to this period of prediction and relaxation as was the case in 1989 where

until the last hour there was read danger that agreement would not be reached in

time. (Michael, 1990)

As the time progresses, everything develops and it becomes necessary to update the

current paradigms according to the challenges of the world. Same is the case with the

convention on salvation. There have been many articles that are forcefully discussed.

There may be some elements of incontinence among these parties but one thing is

real important that this is kind of war of interests. Everybody tries to get maximum

share in this war.

Moreover there are two types of salvors. One those who are professionally providing

salvage services to the sea vessels and ships are earning healthy earning in the form

of rewards and got from the ships and governments whose ships and vessels are

being saved from danger. The second group comprises of those treasure hunters that

are looking for treasures in the seabed of the oceans. According to UN report there

are almost three million shipwrecks in the seabed. Nobody knows how much treasure

these wrecked vessels and ships have in their hearts. These treasure hunters do not

pay attention to the preservation of underwater cultural heritage. These along with

many other challenges combine to make a whole series of challenges that the

convention on salvage 1989 is facing in 21st century.

The remuneration is offered after observing the measure of success obtained, the

efforts and deserts of the salvors, the danger run by the salved vessel, crew,

passengers and her cargo, by her salvors, and by the salving vessel, expenses

incurred and losses suffered, time expended, risks of liability and the value of the

property salved, are some of the considerations which will be taken in mind by the

court for the determination of the remuneration to the salvors. In cases of fraud,

rendering the salvage or assistance necessary, or have been guilty of fraud, thesalvors may be deprived by the court to remuneration, or may be awarded reduced

remuneration.

The Lloyd's Open Forum is a company that provides the remuneration amount to the

salvors for their services at the sea. It was started in 1980 when the services of a

salvor rendered on the basis that the amount of remuneration would be fixed by the

decision of the committee of the Lloyd o the arbitrators appointed by the committee.

Thus Lloyd became a mean of standard and can be a neutral party whenever there is

any kind of dispute between the parties regarding the remuneration of services. It hasgot high praise regarding its final modification regarding the oil pollution in seas and



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open waters. Lloyd has offered a safety net provision in this regard, which means the

salvors, while operating their services, are required to use their best endeavors to

prevent oil spill from all types of vessels and not just laden or partially laden tankers. A

point can be raised at this point that the provision does not bind the salvors to take

any specific kind of measure to prevent the environment from the danger of the oil that

has already escaped or still escaping. It just tries to save the material on the ship or

vessel. However, the salvor‟s efforts, regardless the success, are then compensated.

(Donald & O'May, 1983).

Oil is the only cargo to which the “safety net” applies, and as a result, it does not

relate to any other hazardous and noxious cargoes, many of which are carried in large

quantities, such as liquefied gas and chemicals. Under this scheme, the ship-owner

should reimburse the salvors for their expenses, plus a supplement up to an additional

15 %, which would depend upon the value of the results coming from the salvors‟

efforts. This newly introduced scheme reflected an ever-increasing worldwide

awareness of the effects of oil pollution on the environment.

1910 BRUSSELS CONVENTION

The 1910 Brussels Convention for the Unification of Certain Rules of Law respecting

Assistance and Salvage at Sea was the first ever convention to determine a salvage

operation and the remuneration which should be given if certain criteria were met.

Under article 1 of the 1910 Convention “Assistance of seagoing vessels in danger, of

any things on board, of freight and passage money, and also services of the same

nature rendered by seagoing vessels to vessels of inland navigation or vice versa, are

subject to the following provisions, without any distinction being drawn between these

two kinds of service (viz, assistance and salvage), and in whatever waters the

services have been rendered” (ADMIRALTYLAWGUIDE, 2010).

After determining the meaning of salvage operation and the geographical area in

which a salvage operation can take place, the Convention specified whether an

operation can be subject to remuneration or not, and which should be the amount ofthe reward. Article 2 clarifies that the right to equitable remuneration can only be

claimed by every act of assistance or salvage, which has had a useful result.

Therefore lack of beneficial result, leads to no remuneration. Additionally, in no case

should the sum paid to the salvors exceed the value of the property salved.

Reference to the amount of money that should be paid to the salvors is made in article

6 of the 1910 Convnetion. This amount is fixed by agreement between the two parties

and, failing agreement, by the court. The same applies also to the proportion in which

the remuneration is to be distributed amongst the salvors. In any case of agreement



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vitiation by either party, regarding the services, or the remuneration paid, the court is

responsible to provide the final solution, at request of the party affected.

The measure of success obtained, the efforts and deserts of the salvors, the danger

run by the salved vessel, crew, passengers and her cargo, by her salvors, and by the

salving vessel, expenses incurred and losses suffered, time expended, risks of liability

and the value of the property salved, are some of the considerations which will be

taken in mind by the court for the determination of the remuneration to the salvors. In

cases of fraud, rendering the salvage or assistance necessary, or have been guilty of

fraud, the salvors may be deprived by the court to remuneration, or may be awarded

reduced remuneration.

The last articles of the Convention (19 in total) are referring to the bureaucratic

procedures and the exact time of it entering into force. One year after signing the

Convention (23rd of September 1910), the States interested would ratify it and when

ratifying, the Convention would need one more year before coming into force

(ADMIRALTYLAWGUIDE, 2010). The Convention came into force on the first of

March, 1913 and its first amendment took place fifty four years later, with the 1967

Protocol to amend the Convention for the Unification of Certain Rules of Law relating

to Assistance and Salvage at Sea of 23 September 1910 (CIL.NUS, 2009).

What can be noticed, after having addressed the most important parts of the 1910

Convention, is that at no place is there a reference to environmental issues regarding

remuneration. The strict character of the Convention as to no cure-no pay scheme,

leaves little scope to environmental concerns. Environmental awareness was not of

high standards at the beginning of the 20th century and as a result, maritime subjects

prioritised their concerns on a completely different way than present times. No cure-no

pay scheme, as introduced under Article 2, was depriving salvors from concerning

themselves with some salvage operations that seemed difficult to handle and cope

with. The risk of earning a big remuneration was far less than actually failing with the

operation, and not receiving any reward, despite their effort costs.The amendment Protocol of 1967, changed nothing in particular, regarding the

environmental issues, or the no cure-no pay basis. All amendments decided,

concerned the war ships or any other State or Public Authority vessels, which were

excluded by the 1910 Convnetion. In other words, salvage operations could now take

place in these types of vessels also (ADMIRALTYLAWGUIDE, 2010). As a result the

incentive for the salvors to take on such operations as mentioned above, remained

little.

LLOYD’s OPEN FORM 80



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The Lloyd‟s Standard Form of Salvage Agreement, or Lloyd‟s Open Form (LOF), as it

is commonly recognized, provides a regime for the determination of the remuneration

amount to be awarded to salvors for their services in saving property at sea (Lloyds,

2013). “The first Lloyd's salvage agreement goes back to 1890 when, at the

instigation of a salvor in the Dardanelles, a salvage service was rendered on the basis

that his remuneration would be fixed by the decision of the Committee of Lloyd's, or of

arbitrators appointed by the Committee”( O‟May, 1983). Having its origins back in

1892, the first standard form was approved by the Committee of Lloyd‟s. After a

number of revisions, the contract took its final form in 1908. Since then, various further

revisions have taken place, but the most significant occurred in 1980, with the

publication of Lloyd‟s Open Form 1980, or LOF 80 (COMITEMARITIME, 2013). Until

then, the no cure-no pay principle existed in all LOFs and as a result, no specific

discussion about environmental issues had taken place. As environmental concerns

came increasingly to the fore in salvage operations towards the end of the last

century, the commercial parties to the salvage contract addressed this difficult issue

through the contractual provisions of LOF 80. The most important features of LOF 80

relate to the prevention of oil pollution, and the remuneration for this act, and the so

called “safety net” provision.

The salvors, while operating their services, are required to use their best endeavours

to prevent oil spill from all types of vessels and not just laden or partially laden

tankers. The clause, whatsoever, does not cover the taking of measures to reduce or

prevent oil pollution which has already escaped and moreover that the duty to use

best endeavours extends to prevent the escape of a vessel‟s bunkers which are made

subject of salvage.

The “safety net” provision requires the salvor to exercise a certain degree of skills and

care in order to prevent or minimize oil pollution when performing a salvage operation

on laden or partly laden vessels. The salvor‟s efforts, regardless the success, are then

compensated. In order for the “safety net” provisions to apply, the salvors there mustbe no negligence from them, their servants, agents, or any other persons related to

the salvage operation, which contributes to the rendered operations not being

successful, partially successful, or preventing the salvors from completing their work.

Oil is the only cargo to which the “safety net” applies, and as a result, it does not

relate to any other hazardous and noxious cargoes, many of which are carried in large

quantities, such as liquefied gas and chemicals (MARITIMEJOURNAL, 2013).

Under this scheme, the shipowner should reimburse the salvors for their expenses,

plus a supplement up to an additional 15 per cent, which would depend upon thevalue of the results coming from the salvors‟ efforts. This newly introduced scheme,



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reflected an ever-increasing worldwide awareness of the effects of oil pollution on the

environment. Although LOF 80 introduced significant changes to the existing salvage

contracts and to the way environmental awareness was seen, major pollution

incidents during the 1980‟s, like the EXXON VALDEZ incident in 1989 when 10.8

million gallons of oil were spilled into the marine environment (GCAPTAIN, 2013),

ensured increasing pressure from the environmentalists, which eventually led to

further significant change in the salvage industry (COMITEMARITIME, 2013).

THE ROAD TO THE 1989 SALVAGE CONVENTION – LIABILITY SALVAGE

In September 1979, the Comite Maritime International (CMI) established an

International Subcommittee under the chairmanship of Professor Erving Selvig. The

Subcommittee‟s task was to study the subject of salvage and prepare a report with

any worth mentioning issues for the upcoming Montreal Conference in 1981. For the

replacement of the 1910 Salvage Convention, a new Salvage Convention was drafted

by an International Working Group (IWG). At the 1981 Montreal Conference a draft

text was approved by the Assembly and forwarded to the Intergovernmental Maritime

Consultative Organisation (IMCO), which in 1982 was renamed to IMO

(CMIBEIJING2012, 2012).

Professor Selvig‟s report, discussing the salvage operations, emphasized on the

inadequate number of machineries held and established on international level by each

State. National machineries will be probably tailor-made to the needs of each coastal

state. Subsequently, most States will not be able to maintain or establish on a regional

level a salvage machinery with the overall capacity required. Therefore national

machinery role can only be supplementary. A system under which the private salvage

industry retains a main role, will be more cost effective than a system based only on

State organised salvage.Later in his report, Professor Selvig referred to the liability salvage. He mentioned that

the salvage concept should be extended and what should be taken into account is the

fact that damage to third party interests has been prevented. As the ship which

created the danger is taking measures to avoid such damage, salvage should then

refer to the ship‟s interest to avoid third party liabilities also. Hence, the insurers of the

ship‟s liability who have benefit from the salvage operation, should be involved in the

salvage settlement and payment procedures.

Ship and cargo insurers cannot be held responsible to pay for the salvage operationby themselves, when another group (liability insurers) is also benefited from the



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operation. Under this scope, the overall costs of a salvage operation are covered

more equitably. This tactic is likely to encourage salvors to engage in salvage

operations when third party interests are in danger, especially in cases when either

the ship‟s or cargo‟s salvage is rather remote. These contributions from new sources

are likely to enable international salvage capacity to remain at an adequate level

(CMI, 2010).

Later on his report, Professor Selvig specified the limitations on the award earned by

the salvors and the proportion each party would have to cover. In cases where the

shipowner would not have been liable, the salvors may only recover the cost of

preventive measures, but in cases of either liability salvage or ship and/or cargo

salvage, the reward will be fixed in two stages. First the total amount and then the

amount each party has to pay.

Chapter Four

THE SALVAGE CONVENTION 1989

Almost eighty years after the Convention on the law of salvage held in Brussels in

1910, which introduced the “no cure-no pay” scheme, the need for a change was

more than imperative. The 1910 Convention was regarded to be outdated and the

environmental concerns and awareness had significantly increased since then. On

April 28 1989, the Salvage Convention was concluded in London, but it was not after

July of 1996 that it came into force after being ratified by 15 States as mentioned in

Article 29 (JUS, 2013).The 1989 Convention sought to remedy the “no cure-no pay”

deficiency by making provisions for an enhanced salvage award taking into

consideration both skill and efforts of the salvors operating in preventing or minimising

damage to the environment (IMO, 2013).

After describing the general provisions in Article 1, as to what is considered to be a

salvage operation (“Art.1 a. salavage operation means any act or activity undertaken

to assist a vessel or any other property in danger in navigable waters or in any otherwaters whatsoever” (JUS, 2013)) and also determining what vessel means, the

Convnetion makes its first reference to the environment in article 1 (d). “Damage to

the environment means substantial physical damage to human health or to marine life

or resources in coastal or inland waters or areas adjacent thereto, caused by

pollution, contamination, fire, explosion, or similar major incidents” (JUS, 2013). At this

point there is the first ever reference in a salvage convention to environmental

damage. Further references are made in articles 6(3), 8 (1)(b), 8(2)(b), 11, 13(b),

14(2), 14(5) and 16.



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In article 8(1)(b), it is specified that within the duties of the salvor is to exercise due

care to prevent or minimise damage to the environment, when carrying out a salvage

operation, where in subparagraph (2)(b) of the same article, the same duties are held

upon the master and the owner of the ship. Article 11 refers to the co-operation that

needs to be achieved between salvors and public authorities, whenever a vessel is in

distress for purpose of saving human lives as well as protecting the environment in

general. Moving in to the reward fixation, article 13(b) clarifies that the reward should

be such, to encourage salvage operations, taking into account, among others, the skill

and efforts of the salvors in preventing or minimising damage to the environment

(CMI, 2010).

Casualties such as the Amoco Cadiz (1978), Atlantic Empress (1979) and the

Christos Bitas (1978), that resulted in huge oil spills, resulted in governments refusing

a place of refuge for salvage work to be completed. As a result, salvors were towing

the vessels and led them to the open sea to be sunk. No cure-no pay scheme

prevented them from earning even their expensing costs and moreover discouraged

them to assist ships in such situations (MARINE-SALVAGE, 2013).

Those results led to the most controversial and most discussed article of the

Convention is article 14. In paragraph two the term “special compensation” appears

for the first time ever, in a salvage convention script. When salvors are operating

taking into account the prevention or minimisation of environmental damage, special

compensation is payable by the owner to them, which may be increased up to a

maximum of 30 per cent of the expenses. However, the tribunal if it deems it fair may

increase special compensation further, but in no case should it be more than 100 per

cent of the expenses incurred by the salvor. Paragraph 5 determines that no special

compensation or just part of it will be awarded, if the salvor has been negligent and as

a result has failed to minimise or prevent pollution to the environment (JUS, 2013).

In article 16 the salvors of human lives are entitled to a fair share of the payment

awarded to salvors for salving property, the vessel, minimising or preventing damageto the environment.

These new facts, changed the salvage industry and its provisions, because under

them, salvors would at least recover their expenses whenever there was a threat of

damage to the environment.

The 1989 Salvage Convention in its final clauses of chapter five clarified that it should

come into force only after the date 15 States have expressed their consent to be

bound by it, as this happened on July 14 1996. Finally, in article 32, any revision or

amendment may be convened by the Organisation through a conference by request



17

of at least eight States Parties, or one fourth of the States Parties, whichever is the

higher figure.

THE NAGASAKI SPIRIT CASE

On the 19th of September 1992, the tanker “NAGASAKI SPIRIT” part laden with

40,154 tons of crude oil, collided in the northern part of the Malacca Straits with the

container ship “OCEAN BLESSING”. It was a classic T-Bone collision and as a result

a massive fire ensued and approximately 12,000 tons of crude oil spilled in the

Malaysian waters (GILIGAN, 1998).

The salvage company involved in the case agreed to intervene under the LOF 90

contract and managed to tow the vessel away from the Malaysian waters, after

concerns by the authorities about environmental damage. Ten days later the ship was

anchored in Indonesia. The two sides (salvage company and the ship and cargo

owners/insurers) did not manage to come to a deal and therefore they appealed to the

High Court in 1997 (DIGILIB, 2009). The House of Lords held that under the 1989

Salvage Convention‟s article 14.3, fair rate for equipment, personnel actually and

reasonably used in salvage operation, meant a fair rate of expenditure and did not

include any elements of profit (CMI, 2010).

Lord Mustill in his judgment said: “...the promoters of the Convention did not choose,

as they might have done, to create an entirely new and distinct category of

environmental salvage, which would finance the owners of vessels and gear to keep

them in readiness simply for the purposes of preventing damage to the environment.

Paragraphs 1, 2 and 3 of article 14 all make it clear that the right to special

compensation depends on the performance of "salvage operations" which ... are

defined by article 1(a) as operations to assist a vessel in distress. Thus although

article 14 is undoubtedly concerned to encourage professional salvors to keep vessels

readily available, this is still for the purposes of a salvage, for which the primary

incentive remains a traditional salvage award” (IPSOFACTOJ, nd).

The problems occurring interpreting Article 14 of the 1989 Salvage Convention, led todissatisfaction and uncertainty. Among other problems, it was found that under Article

14.2, claims for an uplift over actual cost necessitated proof that the environmental

damage would have resulted but for the salvors‟ intervention, but also the extent of

the damage had the operation been unsuccessful. Naval architectures, drift experts

and a variety of other experts were needed. Additionally the accounting exercise

referred to in the “Nagasaki Spirit” case by the House of Lords was found to be both

expensive and time consuming (CMI, 2010).

SCOPIC



18

As a result from all these deficiencies mentioned above, a new clause was designed

in order to replace, but keep the same effect as Article 14 of the 1989 Salvage

Convention (CMI, 2010). The SCOPIC (Special Compensation P&I Club) clause

endorsed the concept that contractors could receive Special Compensation (expenses

plus a fair rate for any tugs and equipment used) only in circumstances where the

salved fund was not sufficient to allow them to recover adequate award provided by

Article 13, but its innovation was that it introduced a tariff to calculate the contractors‟

Special Compensation along with an uplift fixed at 25 per cent (Lloyds, 2013). Article

13 awards will be discounted by 25 per cent of the amount by which any such award

exceeds the SCOPIC remuneration.

SCOPIC clause was warmly embraced by the maritime community, but through its

use in a number of cases, some matters emerged, that needed clarification to confirm

the original intent behind SCOPIC and a number of gaps which needed to be filled in

the wording of the clause, like the “Tariff Rates”. The drafting sub-committee of

SCOPIC, towards this end, produced the amended SCOPIC 2000, which came into

effect in September 2000 (IMCBROKERS, 2013).

SCOPIC clause is an optional clause to LOF and is only included as part of that

contract if specially agreed in writing.

Shipowners‟ liability for special compensation is insured in the P&I market and

subsequently such developments may not be thought by property underwriters to

have any immediate relevance. Thus, there are aspects of SCOPIC which will

concern all property underwriters if the shipowners and the contractors involved agree

to add a SCOPIC clause to their LOF contract (Lloyds, 2013).

The ISU has expressed its oppositions to the current use of SCOPIC clause, stressing

that it is nothing more than a safety net and is not a method for remuneration. The

Union has also characterised it to be a rather LOF contract solution than an

international one and has claimed that problems, such as who would be the negotiator

for the rates and how would they be determined, sought to apply it as a matter of lawrather than contract. As a result it gives no incentive to the salvors to intervene and

the problems of Article 14 remain.

On the other hand, the International Chamber of Shipping (ICS), suggests that the

SCOPIC clause is more than just a safety net (as this term appears in the LOF 80 for

any changes made, to provide compensation for the salvors because of the no cure-

no pay principle) and it does positively encourage salvors to intervene, where

otherwise they might not do and therefore it is an improvement over Article 14.

Moreover, the ICS points out that as LOF contracts are used around the world andthey have a global recognition, the same is likely to happen with the SCOPIC clause.



19

The Chamber believes that salvors are generously awarded under SCOPIC, whilst the

ISU representatives believe that was the original intention, but inflation and currency

changes over the past years have diminished the generosity, and as a result, salvors

are discouraged from intervening under these circumstances (CMI, 2010).

Chapter Five

BUREAU VERITAS REPORT

The Bureau Veritas investigation in the early 1990‟s is a strong ally of the ISU in terms

of proof that the industry along with its resources are in decline. The indicators of such

results are reduction in casualty rates, falling levels of remuneration and competition

created by the availability of offshore support vessels and other ancillary craft leading

to the withdrawal of professional salvors from the market, the reduction of dedicated

salvage craft and lastly, the closure of additional salvage stations

(COMITEMARITIME, 2010).

What arose by this report and is considered to be the cause of all those problems, is

that international salvage industry is in the hands of comparatively few companies.

The Union points out that these companies have shareholders seeking profit. As a

result, if the industry is generously awarded, then they would keep on sticking with it

and they will accept the risk, but if the industry is not sufficiently awarded, then they

are most likely to move their assets to a less risk orientated business. Taking into

consideration the very few international players, such an act could be a problem for

both the shipping industry and the environment.

The ICS, on the other hand, does not accept these claims to be real and points out

that new entries have been made in the salvage industry. Reduction in the number of

salvage companies can be a reflection of mergers and the greater range of operations

being performed.

LOF 2011 – LSSA After lengthy and constructive debate at the Lloyd‟s Salvage Group‟s meeting in 2010

and 2011, a number of amendments to the existing LOF have been agreed. The new

LOF is known as LOF 2011.Two new clauses have been added to the existing LOF.

The first one refers to the wider accessibility of the Arbitrator‟s Award and the Appeal

Award. Therefore such access will be via subscription from the Lloyd‟s website. The

second change has to do with the notification of LOFs to Lloyd‟s. The Contractor shall,

within two weeks, notify the Council of Lloyd‟s of their engagement and forward the

original agreement to the Council as soon as possible (LONDONPANDI, 2013).



20

The Lloyd‟s Standard Salvage and Arbitration (LSSA) Clauses went through some

amendments as well. Under the new clause 13 for container vessels, it is provided

that any correspondence or notices in respected of salved property may be sent to the

party or parties who have provided salvage security in respect of that property. Clause

14 provides that 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 the

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.

Finally, the new clause 15 provides that 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 (LLOYDS,

2013).

Chapter Six

DISCUSSION & ANALYSIS

After having seen what has taken place in the salvage industry since its beginning in

the late 19th century and what changes have occurred, it is easy to realise that there

are two different opinions and strategies coming from two different parts of the

industry. From the one side it is the ISU, which is looking forward to the amendment of

the 1989 Salvage Convention, in order for them to be able to increase their revenues

and also, be able to remain competitive and updated in terms of technology and

equipment. On the opposite side, there are the shipowners and the insurers, who are

struggling to keep their expenses as low as possible, in order to gain the greatest

profit possible.

As a result, both sides have come up with arguments in order to support their thesis

and try to convince the opposite side to undertake and accept their proposals. At thispart of the dissertation, the author is going to refer to the two objectives mentioned in

the introduction part and analyse them. First, regarding to the ISU‟s proposals, there

is going to be an extensive explanation of the Union‟s proposals in favour of the

amendment of the 1989 Salvage Convention. Secondly, the author is going to bring to

light the objections raising from the parties who are against this amendment (CMI –

ICS). On the last part of this section, there is going to be an analysis in terms of

critical evaluation, of the Union‟s proposals, which will lead to the final conclusion of

this dissertation, as to why the 1989 SC should be amended.



21

Apart from the award given for salving the maritime property, the ISU suggests a

second award that should be given to those who are taking action in a salvage

operation. This award will be given for the degree of success obtained by a salvor in

minimising or avoiding any damage to the environment during the salvage operation.

This thesis is formulated by the ISU, because the Union believes that the current

awarding system for salvors under the 1989 Salvage Convention and the commercial

arrangments under Lloyd‟s Open Form 2011, and where applicable, the SCOPIC

2011, does not properly recognise the salvors‟ efforts in carrying out their obligations

under the 1989 Salvage Convention in minimising or avoiding environmental damage

(MARINE-SALVAGE, 2013).

As Archie Bishop, the Legal Adviser to the International Salvage Union (HFW. 2013)

writes in one of his papers, that the ISU raised the issue for the update of the 1989

Salvage Convnetion with the Lloyd‟s Form Salvage Group, which is responsible for

keeping the LOF contract up to date and in tune with the needs of the marine industry.

A subcommittee was set up by the Group whose members were representatives from

the London Property Underwriters, the International Group of P&I Clubs, the

International Chamber of Shipping and the International Salvage Union. The issue for

change of the present conditions regarding the salvage award under the 1989

Salvage Convention was discussed at a number of meetings between 2007 and 2008,

but unfortunately unanimity required could not be achieved. The idea that the change

was necessary was supported by the ISU and the London Property Underwriters,

whilst the shipowners and the ICS were implacably against and content with the

current system (LAW.TULANE, 2013).

After their first failure, the Union then approached the Committee Maritime

International, which had previously drafted both the 1910 and the 1989 Salvage

Conventions and requested from them a review of the 1989 Convention to be put in

their work schedule. After accepting this request, the CMI‟s Council set up an

International Working Group (IWG) to examine the issue. The IWG then used the wayof questionnaire, with some 56 national maritime law associations and the subject was

discussed at two venues, an exploratory meeting held in London in May 2010 and a

CMI Colloquium held in Buenos Aires in October 2010 at which all sides of the

industry presented their positions and all issues were debated. Later on a second

questionnaire was sent to the 56 maritime law associations and its report was

prepared for the Beijing Conference which was held in October 2012


At the CMI Colloquium in Buenos Aires, the ISU president Todd Busch, when givingexplanations as to why the salvage industry felt it was not being properly awarded for



22

preventing environmental damage, said: “"Let me say straight away we recognise

salvors are in many cases rewarded for protecting the environment by virtue of the

Salvage Convention‟s Article 13.1 (b). However, all too often the tribunal is unable to

give full effect to this provision because of the low value of the salved property. Cases

that give rise to a material threat to the environment are often of low value compared

to the cost and effort involved and it is in these cases that we feel inadequately

rewarded. In such cases Article 14 (subsequently replaced by SCOPIC - which has its

own problems) ameliorated the problem by providing compensation so salvors were

not 'out of pocket' but it has always been a 'safety net' rather than a method of

remuneration. SCOPIC (which only applies to Lloyd‟s Open Form cases) is the same,

a safety net. Statistically, SCOPIC is applicable in 25% of all LOF cases so, in 25% of

cases, salvors are receiving just the „bare minimum‟. In other cases the effect will

diminish as values rise, until the value is high enough to fairly reward the salvor for

what he has actually done. The break-even point is uncertain but it could be as much

as 50% of all cases. It is the injustice of being inadequately paid for the benefit

conferred that we seek to correct"(SOYER and TETTENBORN, 2012).

Later in his speech, regarding the Special Compensation, he added: "We recognize

the introduction of the SCOPIC Clause substantially improved the mechanism of

assessing „special compensation‟, as compared to the 1989 Salvage Convention‟s

Article 14, in LOF cases. But I emphasize, SCOPIC, like Article 14 is a method of

compensation when an award to cover cost cannot be made. It is not a method of

remuneration which is what we seek. Salvors would not be in the salvage business if

their remuneration was restricted to an Article 14 or SCOPIC award"(SOYER and

TETTENBORN, 2012).

After identifying problems in article 14, referring to SCOPIC as a safety net and finally

saying that remuneration is not what salvors seed, the ISU president went on to give

three reasons as to why the present system has to change.

"Firstly, much has changed since the Salvage Convention was first drafted in 1981.Environmental issues now dominate every salvage case and what may have been a

satisfactory “encouragement” then is no longer so today. Further, there is more risk to

the salvor from tougher regimes which can criminalize the actions of well-meaning

salvors.

Secondly, while salvors always work to protect the environment whilst carrying out

salvage operations, they are not fully rewarded for the benefit they confer. They are

rewarded for saving the ship and cargo, but not the environment.

Thirdly, salvors and marine property insurers believe it is not fair that the traditionalsalvage reward that currently, but inadequately, reflects the salvors‟ efforts in



23

protecting the environment is wholly paid by the ship and cargo owners and their

insurers without any contribution from the liability insurers, who cover the shipowners‟

exposure to claims for pollution and environmental damage"(SOYER and

TETTENBORN, 2012).

The Union‟s president, Todd Busch used the date problem in order to support his

positions. Thirty years since the Convention‟s drafting in 1981 is quite some time,

especially when taking into consideration that the environmental issues tend to

dominate all salvage operations. Therefore, the environmental perspective has to be

taken into more serious consideration. On his second argument, Mr. Busch,

emphasized on the awards given. He claimed that the awards were given in a ship

and cargo orientation and clearly not in an environmental one. Again, the

environmental factor had not been taken into consideration. Lastly, the liability

insurers should be included in the salvage reward, along with the current players

(shipowners, cargo owners and insurers).

The Union‟s next step was to clearly identify and put forward the existing problems,

along with the proposed amendments that needed to be made. The ISU focused on

three articles, which should be amended and proposed the following changes.

ARTICLE 1(d)

In the whole convention, the provisions which have an environmental concern, apply

when there is “damage to the environment”, or a threat of it, as def ined in article 14.1.

The term “damage to the environment” is defined as follows: d) "‟Damage to the

environment‟ means substantial physical damage to human health or to marine life or

resources in coastal or inland waters or areas adjacent thereto, caused by pollution,

contamination, fire, explosion or similar major incidents”(COMITEMARITIME 2013).

The ISU‟s thesis is that there is no limitation for the environment to coastal waters and

therefore there should be no restriction. What should be removed is the words “in

coastal or inland waters or areas adjacent thereto”. According to the present wording,

no geographical limit is needed. The word “substantial” also needs to be taken intoconsideration, as something that may be substantial to one area, may not be in

another. For example, an oil spill of one ton escaped in the River Plate, would

undoubtedly be substantial. The same, numerical oil spill in the middle of the Atlantic

Ocean is not likely to be considered substantial. The Union‟s feeling is that “any

informed tribunal would be capable of making up its mind in the light of all the

circumstances and in the interest of simplicity, sees no purpose in imposing any

geographical limit. That said, it could accept a limit of the Economic Zone which is

used in later conventions such as the 1992 Protocol, the HNS Convention and theBunker Convention, which all refer to the economic zone” (COMITEMARITIME, 2013).



24

ARTICLE 13.

Very little change is required to the current Article 13, according to the ISU proposal.

The main change has to do with the removal of 13.1 (b). This article will be later on

incorporated into the new article 14. Below, there is the current article 13, with the

proposed amendments bolded.

13.1. The reward shall be fixed with a view to encouraging salvage operations, taking

into account the following criteria without regard to the order in which they are

presented below:

(a) the salved value of the vessel and other property

(b) the skill and efforts of the salvors in preventing or minimising damage to the

environment, is changing to the new article (b)

(b) the measure of success obtained by the salvor

(c) the nature and degree of the danger;

(d) the skill and efforts of the salvors in salving the vessel, other

property and life;

(e) the time used and expenses and losses incurred by the salvors;

(f) the risk of liability and other risks run by the salvors or their

equipment;

(g) the promptness of the services rendered;

(h) the availability and use of vessels or other equipment intended for

salvage operations;

(i) the state of readiness and efficiency of the salvor's equipment and

the value thereof.

(j) Any award under the revised Article 14.

13.2. Payment of a reward fixed according to paragraph 1 shall be made by all of the

vessel and other property interests in proportion to their respective salved values.

However, a State Party may in its national law provide that the payment of a rewardhas to be made by one of these interests, subject to the right of recourse of this

interest against other interests for their respective shares. Nothing in this article shall

prevent any right of defence.

13.3. The rewards, exclusive of interest and recoverable legal costs that may be

payable theron, shall not exceed the salved value of the vessel and other property.

13.4. For the avoidance of doubt no account shall be taken under this article of

the skill and effort of the salvor in preventing or minimising damage to the

environment (LAW.TULANE, 2013).



25

The ISU in this new proposed article wants to clarify that the reward will be given to

the salvors, regarding the measure of success in their operation. The newly

introduced (j) paragraph, adds any other awards under the new Article 14. Salvors are

seeking for economical motivations to intervene in salvage operations and as a result,

greater profit. Therefore, the introduction of paragraph 13.4, clarifies emphatically that

the current Article 13.1. (b), is something that should be put out of the conversation.

Under article 13, no account of the salvor‟s effort in preventing or minimising

environmental damage, shall be taken into consideration.

REVISED ARTICLE 14

Article 14, as it has been previously clarified on this paper through LOF, Nagasaki

Spirit case, SCOPIC, tends to be the most controversial article of the whole 1989

Salvage Convnetion. Following numerous decisions industry reached the conclusion

that Article 14‟s outcome was uncertain, expensive to implement and cumbersome to

operate. It was replaced by SCOPIC, in LOF cases in 1999, but is still the law in 60

countries. The Union‟s proposal is to strike it out completely, and to replace it with the

following in bold.

1. If the salvor has carried out salvage operations in respect of a vessel which

by itself or its bunkers or its cargo threatened damage to the environment he

shall in addition to the reward to which he may be entitled under article 13, be

entitled to an environmental award. The environmental award shall be fixed with

a view to encouraging the prevention and minimisation of damage to the

environment whilst carrying out salvage operations, taking into account the

following criteria without regard to the order in which they are presented below.

(a) any reward made under the revised Article 13

(b) the criteria set out in the revised Article 13.1 (b) (c) (d) (e) (f) (g) (h) and (i)

(c) the extent to which the salvor has prevented or minimised damage to the

environment and the resultant benefit conferred (COMITEMARITME, 2010).Under this proposal made by the ISU, a tribunal could make an environmental award

every time there has been a „threat to the environment‟. With the new criteria set in

the proposed Article 14, the salvor does not have to actually prevent damage to the

environment. The new environmental award is no longer limited to expenses as in the

present Article 14.1, nor does it depend on proof that the damage to the environment

has been prevented, as required by the current Article 14.2. The amount of the award

is left entirely to the tribunal‟s decision, after taking into consideration such factors

when reaching its assessment.



26

As Archie Bishop points out: “The suggested criteria emulate Article 13 save for (c)

which gives the tribunal the power to take into account the degree of success in

preventing damage and the benefit thereby conferred. So, if there was a threat of

pollution in waters that would impose a liability on the owner, the award would be

more than if it had been in waters which did not impose such a liability, for the benefit

conferred would be that much greater (SOYER and TETTENBORN, 20012).

The Union accepted that there should be some form of cap on any environmental

award and therefore proposed that:

14.2 “An environmental award shall not exceed the amount of the ship owner’s

limitation fund under the CLC 1992, the HNS Convention 1996, the Bunker

Convnetion 2001, or the 1996 LLMC Protocol or their respective successors,

whichever may be appropriate to the circumstances of their case”

(LAW.TULANE, 2013).

Due to the fact that the Conventions mentioned above have no relevance to an

environmental award, except from establishing the amount of the appropriate cap,

some were unhappy with this involvement. Therefore an alternative proposal has

been made.

14.2. An environmental award shall not exceed

(a) In relation to a ship not exceeding 5000 tons gross “x” special drawing

rights

(b) in relation to a ship exceeding 5000 tons “y” special drawing rights per

gross ton subject to a maximum of “z” special drawing rights.

14.3. For the avoidance of doubt, an environmental award shall be paid in

addition to any liability the shipowner may have for damage caused to other

parties.

This provision is very beneficial for the salvors, as they do not want to be put in a

position of competing with third party claimants, something which will lead toinevitable delays. In most such cases, it is not likely to be relevant to the owner for if a

limitation fund is relevant. In addition, the salvor is not likely to have been successful

in preventing damage and entitled to an environmental award.

14.4 Any environmental award shall be paid by the shipowners.

Just like the present Article 14, the Union‟s proposal puts the shipowner to the liability

position for an environmental award rather than the cargo, as he is the one who is

liable for any pollution under modern Convnetions and Laws. The proposed

amendment to Article 14, concludes with two Articles that are in use under the currentconvention.



27

14.5 “If the salvor has been negligent and has thereby failed to prevent or minimise

damage to the environment, he may be deprived of the whole or part of any

environmental award under this article”.

14.6. “Nothing in this article shall affect any right of recourse on the part of the owner

of the vessel” (LAW.TULANE, 2013).

The proposed amendments of Article 14 result in the tribunal to be the only

responsible body for setting an environmental award. According to Archie Bishop, the

experience of more than 100 years has shown that a properly informed tribunal has

the capability to weight up all factors set out in Article 13 and provide a just and fair

decision regarding the environmental award, which is high likely to satisfy the industry.

Lloyds Open Form deals with approximately 100 cases each year, many of enormous

proportions. Almost one century, courts worldwide have been dealing with such

cases, therefore this system is proven to be tried and tested. Mr. Bishop concludes

that under these circumstances “there is no reason why a tribunal cannot do the same

when assessing an environmental award” (SOYER and TETTENBORN). Although,

the difference lies to the point that instead of examining the loss of cargo or the

possible damage, the tribunal will now have to examine and settle the danger of

damage to the environment. P&I Clubs have expressed their doubts by saying that

such a system includes high percentages of uncertainty and is very complicated

(COMITEMARITIME, 2013). According to Archie Bishop though, the proposed system

is no more complicated or uncertain than the current system with which the P&I Clubs

are happy with. The present assessment of a salvage award under Article 13 is very

similar to what is proposed by the ISU for assessment of environmental salvage and

has to be done in almost all cases even when SCOPIC is involved.

“London Arbitrators are said to have already taken into account the potential liability

from which cargo and ship are saved. Such potential liability does not have to be

proven to the last dollar. It is sufficient to know of the risk and to weigh in the balance

the degree of that risk. It will be the same for an environmental award. A threat will besufficient for an award to be made but clearly the degree of that threat and the likely

consequences will have a bearing on the amount that is awarded. That is for the

tribunal” (SOYER and TETTENBORN, 2012).

The ISU‟s president said in Buenos Aires "salvors do not expect to be paid unless

there is a benefit conferred and they fully expect an environmental award to be

commensurate with that benefit. They do not expect anything unless it has been

earned and are happy for an appropriate tribunal to make the judgment of what is fair

and reasonable" (LAW.TULANE, 2013).



28

The Union‟s proposals for amendments to Articles 13 and 14 are the only proposals

put forward to date but alternative solutions are likely to be presented in the future.

The ISU is resilient to an extent, due to the fact that they are looking forward to

change the existing standards in salvage industry and achieve their goals, but in no

sense are they willing to abandon their basic principles and proposals.

OBJECTIONS RAISED

As mentioned above, there were two sides on the amendment issue. Those for the

amendment, the ISU and the London Property Underwriters, and those against it, the

P&I Clubs and the ICS, who both represent the shipowners‟ interests. The chairman

of the International Working Groups, Stuart Hetherington, in December 2011 at the

U.S. Maritime Law Association meeting in Hawaii, summarised on an excellent way

the CMI‟s current position on the subject.

On his paper, Hetherington explained that of the twenty-four responses to the

questionnaires, which were previously mentioned on this paper, filled out by the

National Maritime Law Associations (NMLAs) regarding the environment issue, the

vast majority wants an amendment to the definition of damage to the environment,

nevertheless not the exact and whole proposal made by the ISU. “There seems to be

support for extending the geographical scope of „damage to the environment‟ to at

least the exclusive economic zone. The NMLAs seem fairly relaxed as to whether the

word „substantial‟ should be changed. The ISU has recently suggested „substantial‟ be

replaced by the word „significant‟, which might be more appealing to the NMLAs.

While there is a more even split, the majority feel some change is needed to articles

13 and 14 to reflect the environmental issue (though not necessarily in the way

suggested by the ISU)” (BISHOP, 2006).

Charles Hume, the Chairman of the Salvage Sub-Committee of the International

Group of P&I Clubs in his paper on the Hawaii meeting strongly opposes to the

proposed amendments by the ISU.“It is easy to paint the P&I Clubs as the bad guys because they don't like

'environmental salvage'. Surely, people say, it must be 'a good thing' - a bit like

'corporate social responsibility'; how could anyone possibly gainsay the importance of

preventing or minimising damage to the environment or the taking of practical steps to

do so? Well the answer is that we don't” (MLAUS, 2013). The Chairman went on

saying that the P&I Clubs have previously expressed that there should be an

encouragement to salvors, specifically to avoid environmental damage, when the

prospects of a low or no award would otherwise discourage them from doing so.



29

Firstly, “The discussions which led to the introduction of LOF 80, and the original

exception to 'no cure no pay' by means of the safety net for laden tankers, secondly

the discussions which led to the Salvage Convention 1989 and the extension of the

exception to „no cure no pay' to encompass the 'special compensation' provisions of

Article 14 of the Convention - providing a greater incentive to salvors to prevent or

minimise damage to the environment, or so it was thought at the time and lastly the

discussions with the ISU and property underwriters between 1997 and 1999 which

were triggered by the case of the 'Nagasaki Spirit' and led to the introduction of

SCOPIC on 15` August1999. Apart from the many other benefits for salvors, property

underwriters and Clubs which SCOPIC provides, it should be remembered that one of

the drivers so far as the Clubs were concerned was enabling them to take an

increasingly participative role in casualty management to ensure that their exposure to

environmental damage claims was minimised. SCOPIC has delivered on that

objective as well” (COMITEMARITIME, 2010).

Therefore, the Clubs claim that they are not opposed to the salvors being fairly

remunerated for their efforts in preventing or minimising damage to the environment

and in addition the Clubs emphasize that the salvors already are fairly remunerated.

Mr. Humes adds: “What then is this concept of an 'environmental salvage' award

which the ISU, and others who believe it to be a 'good thing', get so excited about?

Well, we wish we knew - its outlines are so vague and imprecise, its suggested

mechanisms so potentially uncertain and unwieldy that we have yet to comprehend it”

(MLAUS, 2013).

Later in his paper Charles Hume underlines that even if the Clubs were of the idea

that the SCOPIC could provide everything that the environmental salvage needed,

they participated in the Environmental Salvage Working Group of the Lloyd‟s Salvage

Group to hear the ISU‟s articulation of it. After the meeting, the Clubs sent an email to

the ISU and the property underwriters to which they received no actual response.

“To summarise the extensive notes that we took, we understood that the ISU andproperty underwriters would get together to formulate a proposal to the ICS and Clubs

• which would, by way of worked examples, be sufficiently clear, substantial and

tangible for us to understand, and

• which would demonstrably improve casualty response and confer benefit on those

currently paying for casualty response, and

• which would identify what, if any, elements of the current casualty response regime,

specifically the notable practical benefits and certainties of SCOPIC, would be either

retained or adjusted, and



30

• which would address the ISU's concern that they are not adequately remunerated for

what they do to `salve' the environment, and

• which would address the property underwriters' concern that there is unfairness in

the allocation between property and P&I of the current cost of environment protection.

For our part, we undertook to consider seriously any proposal which fulfilled these

criteria with an open and constructive mind. You accepted that if the proposal did not

at least satisfy the second bullet point above, the ISU saw no purpose in pursuing ES

as an idea in any event." (COMITEMARITIME, 2013).

CURRENT CLUB’s POSITION

The P&I Clubs consist on the SCOPIC as being the solution, which has developed a

successful 12 year track record, for the unworkable conditions of Article 14. Moreover,

they claim that it is not the sates‟ concern as to who pays. From their provision, the

1989 Salvage Convention, operates in an effective and satisfactory way with

mechanism to prevent damage to the environment. According to the Clubs, it seems

highly unlikely that someone will be able to demonstrate “a clear and well-documented

compelling need” to amend the Convention. As far as Article 13.1 (b) is concerned, it

requires that “the reward shall be fixed with a view to encouraging salvage operations”

and what should arbitrators take into account “the skill and efforts of the salvors in

preventing or minimising damage to the environment”. The Clubs insist that the

mechanism already exists and salvors should use it and therefore, they do not see

why a change in the wording is needed (MLAUS, 2013). Hume accuses the Union of

not being truly environmentally altruists and what they really want is an additional

revenue stream.

Right before his conclusion, the Chairman says that many commentators have

pointed to the inherent practical difficulties of an environmental salvage award. As a

result, if Article 14 is said to be commercially impractical, then the environmental

salvage is likely to be much worse “There is an inherent and intellectually fatal flaw intrying to align environmental salvage with property salvage: if it is to be done it must

logically be proportional to quantifiable savings in liability for environmental damage.

This is impossible to demonstrate” (MLAUS, 2013).

At his conclusion, Mr. Hume finds it difficult to believe how the ISU has beguiled the

CMI into spending so much time on the remote possibility of revision of the Salvage

Convention. It is also disappointing to him that the ISU stopped the dialogue with the

Clubs regarding the environmental salvage issue. The P&I Clubs at the paper‟s last

paragraph, emphasize on their commitment to the salvage industry by agreeing to

increase SCOPIC rates (COMITEMARITIME, 2013).



31

It is quite obvious that the P&I Clubs are strongly against any amendment proposed

by the ISU and as it is clearly understood by the style Mr. Hume‟s paper, they are

willing to remain opposed to the Union for their own profit.

ICS’s POSITION

The International Chamber of Shipping, which represents 80% of the world‟s

merchant fleet (GCAPTAIN, 2013) at its paper on the Union‟s proposal, is focusing on

the financial difficulties claimed by the ISU. Shipowners and their insurers are seeking

to maintain a “vibrant and viable salvage industry” (words used by the ISU) for their

own benefit as well. The Union‟s strongest argument when trying to persuade the

other players of salvage is that the industry is having financial problems and in order

for the problems to be overcome, more funding is needed. The ICS, as well as the P&I

Clubs, requested detailed information but the ISU could not verify their claim.

Salvors‟ second rationale for introducing the concept is that over the past decades

environmental awareness when there is casualty has risen and quite often this

situation takes priority over simple salvage operations for saving property. The

Union‟s claim is that under this scheme, the operations performed for protecting and

saving the environment give an enormous benefit to the liability insurers, as the

pollution liability is then reduced or minimised. Yet the salvors are not entitled to anenvironmental award, which would reflect benefit of the P&I Clubs‟ interests.

Consequently, the salvors claim that they are not properly rewarded under the present

LOF and the 1989 Salvage Convention.

The ICS though, is yet not persuaded that there is a need for a separate

environmental salvage award. “ICS remains deeply skeptical about the proposal for a

separate environmental salvage award, especially as salvage services are already

generously rewarded under the present system.” said the ICS Insurance Committee

Chairman, Matheos Los (GCAPTAIN, 2013). The Chamber claims that the conceptdiscussed is quite similar to the “liability salvage” concept which was discussed during

the negotiation of the 1989 Salvage Convention and was finally rejected in favour of

Articles 13 and 14 and also SCOPIC. The ICS after briefly referring to SCOPIC,

mentions that the tariff rates increased significantly in July 2007 and as a result,

“SCOPIC provides salvors with the certainty of a reasonable and profitable reward for

preventing or minimising damage to the environment in cases which might otherwise

not be financially attractive i.e. where prospects for success (and therefore the

earning of a traditional Article 13 award) are slight” (COMITEMARITIME, 2013).



32

After giving a short background of Articles 13 and 14, the paper of the ICS

emphasizes the fact that negotiated compromises were made between the various

interests in a salvage operation. It is apparent from this that to unravel one part would

entail unraveling all aspects. All principles taken into consideration when negotiating

the Salvage Convention reflect the present concepts in public law Conventions where

all parties share responsibility for the environment and at the same time, they seek to

ensure that salvors are given an incentive to assist ships which may be considered as

a threat to the environment.

The Chamber notes that in the ISU‟s paper to the LSG Working Group, the

environmental salvage award proposal is likely to alter the basis of salvage

operations, as the prime concern would no longer be to salve property. As Lord Mustill

explained in the Nagasaki Spirit case in 1997, the Convention should by no means

create a new distinct category of environmental salvage, which would finance salvors

to keep their vessels in readiness for saving the environment. The primary purpose for

salvors would be the assistance to ships being in distress, for which the primary

incentive is a traditional salvage reward. Prevention of damage to the environment is

an incidental benefit of some operations which deserves financial recognition by way

of special compensations and not by a freestanding reward.

Concluding, the Chamber believes that the basis proposed by the ISU for assessment

of environmental salvage awards “threatened damage to the environment” is very

broad. Given the presence of bunkers on all ships, this basis could be then used in all

salvage operations. Quantifying an environmental award would be quite difficult and

as a result any method of assessment based on the extent to which a salvor has

minimised or prevented damage to the environment would inevitably be hypothetical


The ICS stands clearly against any amendment of the existing Salvage Convention,

just like the P&I Clubs have already done. Their paper includes proofs that any

amendment is not of their profit and interest and the language used is much softerthan the one used in the Clubs‟ paper by Charles Hume. By invoking Lord Mustill‟s

sayings on the Nagasaki Spirit case, the Chamber makes their position even stronger

and well documented. In order to keep a bond with the salvage industry and not have

them totally against them the Chamber adds: “ICS notes that the International Union

of Marine Insurance (IUMI) also believes that the proposals require further detailed

consideration, not least to ensure shipowners‟ agreement, and that the discussion

should therefore be put back until 2016” (GCAPTAIN, 2013).



33

THE OUTCOME OF THE BEIJING CONFERENCE 2012

Back in December 2008, the ISU wrote to the CMI and, after reminding them that the

1989 Conventions was almost 20 years old and 30 years had already passed since its

drafting begun, suggested that a revision of certain aspects was necessary. The CMI

set up an International Working Group and sent two questionnaires to the NMLAs in

2009 and 2010. There have also been two IWG meetings and a Colloqium at Buenos

Aires in 2010.

The first questionnaire regarding Article 13 is as follows:

1.2 Do you consider that the words contained in Article 1(d) of the Salvage

Convention ("in coastal or inland waters or areas adjacent thereto") should be

deleted?

1.3 Alternatively do you think words such as those used in the other Conventions (eg

"where ever such may occur"/"exclusive economic zone"/"territorial sea") should

replace those words in Article 1(d) of the Salvage Convention?

1.4 Have there been any reported cases in your jurisdiction in which the word

"substantial" (which is contained in Article 1(d) of the Salvage Convention), as used in

that definition, have been interpreted?

1.4.1 If so, could you provide a copy of the decision?

1.4.2 If there have been no such cases in your jurisdiction do you think it likely that

the word "substantial" could create difficulties of interpretation?

1.4.3 If so, do you consider that there is any other word or group of words that could

better identify what is intended by the definition? (COMITEMARITIME, 2013).

Sixteen out of twenty-four NMLAs who responded the questionnaire were in favour of

the change of words “in coastal or inland waters or areas adjacent thereto” with words

which refer to the exclusive economic zone. Two did not express an opinion, and of

six who did not want to amend the present wording, four recognised that the wording

could be improved.

Regarding the alteration of the word “substantial” referring to the damage to theenvironment, two NMLAs did not express an opinion, whether the word should be

deleted, seven were in favour of the deletion and the remaining fifteen considered that

the tribunals wre well able to interpret the word satisfactorily. The Chinese MLA

favoured the deletion on the basis that its use is contrary to the trend of strengthening

environment protection, fails to reward the ordinary, non-substantial physical damage,

and finally because of the lack of clarity as to what was intended by use of the word

“substantial”. The Slovenian, Italian and Swedish MLAS suggested that both the

words “major” and “substabtial” should be deleted. The South Af rican MLA whichfavoured the deletion, was uncertain whether the word should be replaced and



34

queried if it was whether such words such as “not trifling nor insignificant” should

qualify damage to the environment (COMITEMARITIME, 2013).

Questions asked for Article 13 are:

4.2 Has your jurisdiction made any provision, as provided for in Article 13 paragraph 2

for the payment of a reward by one of the interests referred to in the opening sentence

of this paragraph?

4.3 Do you think it would be appropriate to specify in this Article that in containership

cases the vessel only is responsible for the payment of claims (and therefore would

be responsible for the provision of security) subject to a right of recourse against the

other interests for their respective shares?

Article 13 paragraph 2 provides that:

"Payment of a reward fixed according to paragraph 1 shall be made by all of the

vessel and other property interests in proportion to their respective salved values.

However, a State Party may in its national law provide that the payment of a reward

has to be made by one of these interests, subject to a right of recourse of this interest

against the other interests for their respective shares. Nothing in this article shall

prevent any right of defence" (COMITEMARITIME, 2013).

Three NMLAs reported that in their countries their legislation provides liability to the

shipowners. Four NMLAs claimed that it would benefit the Convention to identify theshipowner as the one who is responsible to pay claims and the provision of security in

container cases. The rest of the NMLAs did not consider ot necessary to make special

provisions for the container ships.

As far as Article 14 is concerned, the questionnaire sent was the following.

5.2 Do you consider that consideration should be given to amending article 14 in order

to create an entitlement to an environmental award? (It is recognised that there are

"political" issues involved as to who would pay for such an award but the IWG would

be interested to know whether your MLA would be in favour of an investigation of this

issue. It is also recognised that if you answer this question in the affirmative,

consequential changes may need to be made to the definition of "damage to the

environment" in article 1(d), to article 13, article 15 and article 20).

Ten NMLAs were for the consideration of the environmental salvage issue and seven

were against. Two of the remaining expressed no opinion and four recognized that

some change may be necessary. Only one was open to persuasion. The German

MLA hoped that the competing parties would first negotiate a resolution. The



35

Norwegian MLA pointed out that the increased focus on environmental side of

casualties suggested that Article 14 needed to be drafted to encourage professional

salvors to maintain vessels and equipment dedicated and in awareness to prevent

environmental damage. Some NMLAs pointed out that SCOPIC is the indication that

Article 14 had not worked. The arguments in favour of the amendment are based on

the changing face of salvage, and on the fact that salvors are not properly rewarded

when there is low salved value. Those against the amendment, mainly focused on the

unpredictability of an environmental award and the need to share with the property

owners and their insurers the liability for any such award.

Regarding the second questionnaire that was given to the NMLAs, information was

sought with a view to seeking to ascertain how much empirical data was available to

support the salvors proposals. Data was sought as to the number of claims made by

salvors that had resulted in a modest reward by reason of the low salved value. Until

today, eleven NMLAs have responded and none of them is able to provide an

example of an instance where a salvor declined to be involved because of the low

value of the property to be salved. Similarly no examples have been reported in which

authorities prevented the completion of a salvage operation and consequently

deprived the salvor of a possible award. Same responses, also suggest that Article 14

awards do not permit a profit element to be incorporated and there are no examples of

any uplift being applied to an Article 14 award.

The conclusion of the Beijing Conference is that some matters should be put forward

to the IMO as amendments worthy of consideration to the Salvage Convention.

“Forwarding a draft Protocol to the Salvage Convention to the IMO (bearing in mind

IMO Resolutions A500(XII) and A777(18)).

Forwarding a report to the IMO identifying the issues which have been debated and

the conclusions reached.

Alternatively the Conference may wish CMI to suggest that in the light of the debate at

the Conference, consideration needs to be given to amending the LOF to take

account of these discussions.

The Conference may on the other hand consider that no further action should be

taken by CMI on the issue of salvage at the present time” (COMITEMARITIME, 2013).



36

The final sentence summarises the outcome of the Beijing Conference. The ISU

proposals regarding the environmental award were not accepted by the CMI and

therefore no further action has been taken.

ISU’s RESPONSE

The Union, after the unforeseen outcome of the Beijing Conference, responded

through the following statement.

“The International Salvage Union (ISU) is disappointed that the CMI Conference in

Beijing did not support its proposals for modest change to the 1989 Salvage

Convention. ISU is nevertheless grateful to those countries which did support change.

The proposals were intended to introduce a salvage award that recognises salvors‟

efforts to protect the environment during salvage operations.

Members of the ISU provide a vital service to the shipping industry, often working in

challenging and dangerous conditions. ISU will continue to work with shipowners, the

insurance community, maritime lawyers and other relevant parties and pursue all

avenues in order to ensure that salvors are properly rewarded and that the framework

within which salvage operations are conducted encourages innovation, investment

and global readiness to intervene in casualty situations.

Ends” (COMITEMARITIME, 2013).

CRITICAL EVALUATION OF BOTH POSITIONS

After having seen and examined both sides‟ positions about the amendment of the

1989 Salvage Convention, concerning Articles 1, 13 and 14, the author is now going

to critically evaluate the arguments set by both sides for and against the amendment,

use the data provided by the interview taken from the current ISU president Mr.

Andreas Tsavliris and finally, give an answer as to if the ISU is right in asking for

amendment of the 1989 Salvage Convention.

The P&I Clubs, the ICS and the CMI are those who stand against the proposed

amendments by the ISU. Their basic argument is that any problematic provisions of

Article 14, has already been settled with the introduction of SCOPIC. Under this

scheme, salvors are generously rewarded and the environmental factor is also

considered (MARSECREVIEW, 2013). It is more than obvious, that the P&I Clubs by

accepting the SCOPIC solution, realized that Article 14 had some issues regarding itsproper function. By introducing the SCOPIC they feel that salvors are now “generously



37

rewarded” (MARSECREVIEW, 2013) and all incentives are given to them to intervene

in salvage operations when there is a threat to the environment (COMITEMARITIME,

2013).

The ISU, on the other hand keeps on referring to SCOPIC as a “safety net”, ratherthan a remuneration method. Problems rising, concern the person who will be the

negotiator and the tariff rate (CMI, 2010). Such provisions, tend to make SCOPIC

more of a law, than an actual contract and therefore, it gives no extra incentive to

salvors to intervene in operations were environmental damage is happening and

success is not guaranteed. The Clubs and the ICS insist on its use by using the

argument of LOF, being a worldwide recognised and used contract (Lloyds, 2013).

The Union answers by saying that currency rates have changed over the past years

and therefore the generosity is diminished. Subsequently, salvors are discouraged in

intervening to operation when SCOPIC is agreed and is going to be their

remuneration method.

According to Archie Bishop, there is another tricky provision regarding SCOPIC. “If

SCOPIC is incorporated then it replaces Article 14 which will no longer apply. This is a

crucial point for the salvor, for if SCOPIC is included but not invoked (or is later

terminated), the salvor will not be covered by either Article 14 or SCOPIC” (MARINE-

SALVAGE, 2013).

Nevertheless, SCOPIC seems to be working well in terms of use (between 1999-

2010, there have been 1008 LOF cases, in which SCOPIC was incorporated into the

contract in 30% of those cases, and invoked on 24%. At the same time there were

only seven SCOPIC-related arbitrations) (MARINE-SALVAGE, 2013). But as

mentioned above, it is considered to be a “safety net” provision for salvors, who feel

that they are not properly rewarded. This fact can be easily concluded by the following

numbers. The total gross income of the world salvage industry was $250 million in

2008 earned from 250 operations. $300 million was gained from wreck removals. The

salvage industry estimated that rewards are adequate in about 50% of salvage cases

and too low in the other half. Rewards are highlighted as too low in 25% of cases

where SCOPIC has been used and bare minimum paid (BISHOP, 2006).

Wording of Article 1, does not seem to be a problem or a ground for conflict between

the ISU and those opposed to the amendments. As it was concluded from the

questionnaires sent, the NMLAs were in favour of the proposed change of wording in



38

Article 1. The same applies to the CMI, the P&I Clubs and the ICS. What have been

the, so called, causes of the problem are the proposed Articles 13 and 14.

The three allies, against the proposed amendments, mainly focus to their strongest

argument that salvors are already generously paid under SCOPIC and LOF. CharlesHume, finds it difficult to understand why the salvors request for a separate

environmental award, when they are paid under LOF or SCOPIC even if prospects of

low or no award exist. It is unlikely for them, that the Union can really prove that the

current system is not working well. The common belief between the Clubs is that the

ISU are not environmentally altruist, but they seek for more revenues. Moreover, the

ICS, give another dimension to their counter arguments. The Chamber claims that by

the introduction of a separate environmental award, the prime incentive of salvage is

missing and is likely to be extinct. Salvors would then have as their priority to gain the

award and not salve property. The ICS uses Lord Mustill‟s decision on the Nagasaki

Spirit case, where he concluded saying that primary concern in salvage should be

helping the ships in distress. Anything more than that (salving the environment) is

already recognized under Special Compensation and should not be altered by a

freestanding award.

Something that is also used as an argument by the Chamber, is that the wording used

by the ISU “threatened damage to the environment” regarding the environmentalaward, is very broad. What should be accounted as threat to the environment? All

ships carry bunker fuels. Under this scope, all salvage operations can claim am

environmental award. Nevertheless, the ICS remains conciliatory and leaves a room

for discussion, after 2016. Finally, the CMI, is using the outcome of the Beijing

Conference as its opinion. No further action should be taken, regarding the ISU‟s

proposal for amendment.

Basically, all key players who do not wish Articles 13 and 14 be amended, do not want

to pay more money, especially in present time. An environmental award is likely to be

added to their expenses. They all feel that SCOPIC is the solution that already exists

to what the salvors are asking for and as a result there is no reason for an extra

award. Moreover, the prime incentive of saving cargo and ships in distress will be lost

and salvors would only intervene in cases where environmental threat will exist, so

that they will be able to gain more money.

Salvors, on the other hand, invoke that their revenues are little and they can no longer

remain competitive in terms of equipment and effectiveness. SCOPIC is not enough



39

for them, as it is considered to be a “safety net”, rather than a remuneration method,

nevertheless it has worked extremely well. Tribunal, too often, is unable to give full

effect to this provision because of the low value of the salved property from which

award is made (MARINE-SALVAGE, 2013).

According to Mr. Andreas Tsavliris, the current president of the ISU, the Union would

like to see a number of changes to SCOPIC, however these amendments are

opposed by shipowners and insurers. SCOPIC has worked well since its introduction

in 1999, but it is not perfect (TSAVLIRIS, 2013). Another issue raised by those

against to the amendments is that LOF is working well and there is no decline in

cases. The ISU have recently stated though, that the number of LOF cases is

declining. Mr. Tsavliris adds that: “The data from Lloyd‟s speaks for itself.

Year by year trend of vessels involved in LOF services. Source: Lloyds, 2013

Analysis of LOFs, including the stripping out of numerous small yacht salvages

undertaken on LOF, shows that the use of LOF is still in decline. Modern

communication is the most influential factor on the decline of LOF. Prior to satellite

and mobile communication the Master had autonomy in deciding whether to accept

LOF; this decision is now made by the ship owner and/or his underwriters. A

secondary reason is that LOF is perceived by many as expensive, both in terms of

award and legal costs. However, it is a fact that 75% of LOF cases are settled and do

not go to arbitration whereby keeping legal costs low”(TSAVLIRIS, 2013).

As stated above by the ICS, revenues from LOF and SCOPIC have increased

substantially for the ISU. Mr. Tsavliris denies this specific statement. ” Lloyd‟s own



40

data on LOF awards from 2000 shows that LOF revenue has significantly decreased

(TSAVLIRIS, 2013)”.

Amounts awarded. Source: Lloyds, 2013

Seeing that the revenues have decreased, along with the significant decrease in LOF

cases, the author realizes that there should have been a new way for salvors to retain,

if not increase their, revenues. Both sides have numerous of times stated that strong

and updated salvage industry is what they are seeking for. But on the other hand,

numbers show that LOF cases and revenues do not seem to follow this perspective.

The Union has also settled three basic principles which command changes. Unlike in

the past, environment is now relevant in every salvage case and an enormous

regulatory control by the involved coastal state on salvage operations. Quite often,

local officers are being given the power to determine precisely what work is done.

Back then, the main concern was oil cargoes. Nowdays, other pollutants can be

regarded as more damaging. Almost every ship is carrying pollutants (bunkers,cargoes) and therefore, hardly is there a casualty in which environmental

considerations are not relevant. Public environmental concerns dictate the way in

which salvage operations should be carried out and have to be the first consideration

of every salvor.

Governments, on their side, are legislating by imposing potential criminal liabilities on

a salvor, and not only to increase potential civil rights. Salvors have accepted their

liability for negligence during a salvage operation, but before 2001 they had the so

called “responder immunity”. The Bunker Convention 2001 removed this immunity,



41

opening up the salvors to third party claims. Despite the good defence that exists, it is

likely that the salvors will be drawn into expensive, time-consuming ligitation subject to

the vagaries of a variety of jurisdictions. Nevertheless, the IMO recommended to

Member States that they should make provisions for “responder immunity”. It remains

to see how many States will accept this recommendation made by the IMO. The

potential criminal and civil liabilities of a salvor are very different than those in the

1980, when the Salvage Convention was being developed. Moreover, they are a

definite disincentive to the salvor to involve in other people‟s problems (MARINE-

SALVAGE, 2013). By risking, the salvors are hopefully searching for a proper and

better reward.

To continue, in many shipping casualties where a coastal state is involved it is

frequently required that the bunker fuel is removed by the salvor, before they are

allowed to operate. This requirement arises even in cases when salvors feel it is an

unnecessary precaution. These concerns are well illustrated by the “Prestige” case.

Refusal to the “Prestige” for a port of refuge may have been understandable to the

authorities back then, but it is commonly accepted that if the port of refuge had been

given, the ship and much of her cargo could have been salved. Consequently, the

environmental disaster would be reduced. It is accepted that the award for the salvors

would have been around $10 to $12 million, the award would have been paid out of

the salved property fund, without intervention of SCOPIC, the remaining cargo oil on

board would have been contained and finally, the cleaning up of the spill cost, would

have been in the region of $40 to $50 million.

As the salvors could not operate, because the ship was not given a place of refuge,

she finally sank. The environmental damage caused is estimated in around $1 billion.

Had the ship and cargo been salved, claims of $1 billion would have been avoided. An

enhanced award would have been given to the salvors, yet very little to the benefit

conferred. The “Prestige” lost approximately 70,000 tons of oil, the “Erika” almost the

same amount and the “Exxon Valdez” lost some 37,000 tons. Claims of about $5

billion were made by these incidents. In contrast, during the 2009, ISU members

salved 1,022,730 tons of pollutants and to take things even earlier, in the last 15 years

they have salved almost 16 tons of pollutants, many of which could have ended up in

the sea and coastlines. If a SCOPIC clause is used, due to the ship and cargo‟s little

value, its tariff basis does not have a reward mechanism for the salvor‟s work to

prevent damage to the environment. “A change in the law to provide the possibility of



42

a reward for protecting the environment would provide additional encouragement for

the salvor (MARINE-SALVAGE, 2013).

Lastly, salvors‟ efforts in environmental protection are currently taken into

consideration, to a certain degree, as those efforts are one of the criteria taken intoaccount when assessing an award under Article 13. But, the reward under Article 13

is paid wholly by the ship and cargo insurers and their respective underwriters pro rata

to value and there isn‟t any contribution from the shipowners‟ liability underwriters who

would normally bear the cost of pollution claims and therefore are a direct benefit from

the work carried out by a salvor. It is easy for someone to understand, that this is far

from unjust. As highlighted by Mr. Andreas Tsavliris in his interview to the author: The

advantages of clearly identifying environmental services within a salvage contract are

as follows:

“• It will identify to property underwriters the amount of an Article 13 award that

they currently pay and which should be attributable to liability underwriters

• It will demonstrate the growing importance and value of environmental

services within an Article 13 award

• It will clearly identify the returns to the salvage business on its investment in

environmental services (equipment and personnel) and ensure that future investment

is appropriately targeted”(TSAVLIRIS, 2013).

Chapter Seven

CONCLUSION



43

After presenting, analysing and finally, evaluating the thesis taken by the ISU and the

CMI-ICS-P&I Clubs, the author has clearly made it clear, why should the 1989

Salvage Convention be amended. Arguments set by the Salvage Union based on

data, examples and critical evaluation seem to be much stronger than those set by the

opposite side. Salvors seem not to be properly awarded under the present scheme,

as environmental concerns have risen over the past years. SCOPIC works well, but it

is a tariff rate. Money spent on claims, could have been prevented, like the “Prestige”

case, if salvors had an environmental award.

The ISU believes that its “case for change” mentioned above, is persuasive and fair

given the way concern for the environment has rightly increased. The salvage industry

faces numerous challenges in a shipping world that has changed significantly.

Commercial pressures increase and society requires good environmental outcomes.

Yet the current regime does not fairly reward salvors for their operations. There is also

increased involvement and demands from shore-based authorities and incidents are

played out in the risk that a salvor may be regarded to be a criminal if pollution

happens during the operation. By adding the large cruise ships and container ships

and bulkers, it is easy to understand what the salvage industry has to think of.

According to the author, salvors are not seeking any environmental award unless a

benefit has been conferred and it should be in proportion to that benefit. Salvors are

problem solvers and are not likely to hide from a challenge. The Union requests that

the assessment to this award will be made by the appropriate tribunal, guided by

principles that have worked well for years.

The next step is the ratification of the proposed arguments stressed by the ISU, which

are likely to lead to a safer, modern, fair and well-structured shipping industry.



44

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APPENDIX

final dissertation gennen xwris

Documents