M.L.A.A.N.Z. and A.I.M.S Seminar. Newcastle 14 March 2008 “Salvage – How Surveyors are Involved” (M.J.

Bozier)
“Ship salvage is a science of vague assumptions based on debatable figures taken from non-conclusive instruments, performed with equipment of problematic accuracy, by persons of doubtful reliability and questionable mentality.”

-author unknown
Salvage at sea has been recognized by maritime law codes for many hundreds of years. It is a concept that is unique to maritime adventures – there are no parallels in air or land transport. The current legislation is the International Salvage Convention 1989 which came into force in July 1996. This is allied with Lloyd’s Open Form 2000 and the SCOPIC 2007 Clause. Salvage can apply to vessels, mobile drilling units and any other property not permanently attached to the ‘shore line’. Certain conditions must be in place before salvage is applicable. A vessel or property must be in danger of total loss, or of physical or extensive damage from which it could not be rescued without the salvors’ help. The danger must be actual and not apparent and it must be a peril of the sea. A reward is paid if the vessel or interest is capable of being saved and there is a useful result: ‘No Cure – No Pay’. Salvage can also be carried out under a contract that is not an LOF. Compensation for efforts and expenses to prevent environmental damage is included in a salvage award unless the SCOPIC clause is invoked, when such compensation is covered by Article 14. A salvage award is based on: • the salved value of the vessel and other property • the skill and efforts of the salvors in preventing or minimizing damage to the environment • the measure of success obtained by the salvor • the nature and degree of the danger • the skill and efforts of the salvors in salving the vessel other property and life • the time used and expenses and losses incurred by the salvors • the risk of liability and other risks run by the salvors or their equipment • the promptness of the services rendered • the availability and use of vessels or other equipment intended for salvage operations • the state of readiness and efficiency of the salvor's equipment and the value thereof. The award is meant to be generous so as to encourage salvage efforts but it cannot be more than the salved value of the vessel or property. A salvage act is voluntary therefore nobody who has a duty to assist a vessel in distress, such as the crew, passengers or perhaps shore based public servants such as firemen when a vessel is at a wharf, are able to claim as a salvor. The parties who benefit from

. • The master informs the vessel’s owner or manager. based on the salved value and the other factors listed above. • If claim is not agreed by owner/manager then arbitration takes place. • Owners/managers activate the appropriate SMS plan. SCOPIC Clause (Special Compensation P&I Clause) Special Compensation was started under the 1989 Salvage Convention as a way of encouraging the prevention or reduction of environmental damage. for example fish farms etc. • Hull and machinery underwriters and P&I Club are informed. contribute to any award in proportion to the salved values of their interests. • After consultation between the owners of the interests that are at risk the terms and conditions of the salvage contract are agreed. All crew remaining on board must cooperate fully with the salvors. • Costs of permanent repairs are calculated and applied to the estimated market value of the casualty prior to the incident. • Time charterer. as per the terms of the LOF. • Control and responsibility for vessel are returned to Owners/Managers • Casualty is prepared for voyage to a repair port. shipowners and P&I Clubs agreed on the Scopic clause. • Ship’s emergency response service informed and put on stand-by. After a couple of court disputes over interpretations of the terms of the convention the salvage industry. if applicable. stable condition for the owner/manager to resume control and responsibility. cargo owner and charterer. It was open-ended in respect of expenses. the master is able to sign an LOF on behalf of the owner/manager.e. • If salvors consider that there is a valid chance of an economic return from a salvage attempt they invite owner/manager to sign an LOF. freight bunker value and cargo value make up the salved value. in the absence of any other person appointed by the owner/manager. if necessary. • Salvors assume control of and responsibility for the casualty. It came into play if a vessel threatened environmental damage to humans. • Salvors arrive on site as soon as possible to evaluate the position. i. and/or cargo interests are informed. • A casualty happens. Course of Events. • If there is insufficient time for this consultation.2 salvage. actual success and a bonus payment. • Cargo owners post salvage security in order to obtain their cargo. usually the shipowner. follow a pattern. due to imminent danger. • Salvors put the casualty into a safe. the legal entity that is responsible for the safe management of the vessel and its cargo. marine life or resources. The master remains on board as the owner’s/manager’s representative. When a salvage incident occurs events will. Class may be suspended. • Salvors make a salvage claim. • Salvors invoke the Scopic clause if appears that there will not be a salvage award. The residual value. in general. • Classification society is informed if any estimate of damage is known. to arrive at a residual value.

drawn from representatives of the ISU. in proportion to their respective salved values. . two of whom are in Australia. Even if there are many cargo underwriters only one special representative for cargo interests is allowed. When the clause is invoked the vessel owners/managers must provide a payment of or a security for US$3 million within two working days. He/she must be a member of the SCR Panel. monitor. The payment is made by the shipowner to the salvor when the salved value of the interests may be too little for a normal salvage award. there is a viable salvage award. the P&I Clubs. This amount can be varied by consent between the parties. whether or not there is an environmental threat. “The primary duty of the SCR shall be the same as the Contractor. hull and cargo underwriters involved with a casualty may appoint one special representative each at their own expense. “The Special Representatives have the right to be informed of all material facts concerning the salvage operation as the circumstances reasonably allow. in most circumstances. tugs and equipment. success is not necessary and there is 25% uplift on expenses. If a salvor invokes the clause unnecessarily. London property underwriters have agreed a code of practice with the Clubs under which those underwriters will pay 50% of the SCR's fees and expenses. comprising a number of surveyors selected by an SCR committee. namely to use his best endeavours to assist in the salvage of the vessel and the property thereon and in so doing to prevent and minimise damage to the environment. A shipowner is primarily responsible for the payment of the SCR's fees and expenses but SCOPIC provides also that the LOF arbitrator may apportion those costs and that "in doing so shall have regard to the principles set out in any market agreement in force from time to time". The SCR may not interfere with the salvage operation but may consult with the salvage master on how work should proceed.3 The Scopic clause can be invoked by a salvor at any time. A Special Representative is on board solely to investigate. There are currently 39 nominated SCRs. a penalty of 25% applies. The SCR shall co-operate with the Special Representatives and he and shipowners and salvors shall jointly permit the Special Representatives to have “full access to the vessel to observe the salvage operation and to inspect such of the ship’s documents as are relevant to the salvage operation”. The SCR is obliged to provide any Special Representative with the Salvage Master’s Daily Salvage Reports and any Dissenting Report as soon as possible after he receives or issues them or the Special Representative is appointed. whichever is the later” (Guidelines for SCR). In addition to the SCR. i. to monitor and report on the salvage operation. if they think that separate representation by an independent surveyor is required in the particular circumstances. observe and consult with the Salvage Master and produce Dissenting Reports (if necessary) and the Final Salvage Report” (Guidelines for SCR). There is an agreed tariff for the use of personnel. The SCR has a duty to report.e. ascertain and report on issues relevant to the Salvage operation and the assessment of the salvage award to be made under Article 13 of the Salvage Convention 1989 or SCOPIC remuneration. the International Chamber of Shipping and the International Union of Marine Insurers. As a shipowner (or his P&I insurer) has an interest in the costs of any work to reduce or prevent environmental damage it was agreed that they may appoint a representative at the salvage site – the Shipowner’s Casualty Representative (“SCR”).

will appoint a GA Surveyor. Try to understand what actually caused or may have caused the casualty. Watch what takes place. then every party may be asked to contribute to that cost. try to understand what is being done or attempted and take notes and photographs. workbooks etc. Owners/Managers. In the event of salvage taking place surveyors could be asked to represent the following parties: Cargo interests/underwriters. It should also be remembered that any information may become evidence if a salvage arbitration takes place. The position of the salvors and their problems must be appreciated. according to the value of their interests. Ensure that all sensitive documents are kept securely. especially if a number of bills of lading have been issued. Representative may be invited by salvors. except by a Special Cargo Representative. charts. In simple terms.4 Representation by Surveyors. P&I Club. The representation of Owners/Managers and/or their P&I Club will give a surveyor the greatest involvement with a casualty. officers and crew. If a surveyor is appointed on behalf of a party involved with a casualty he will have to liaise with the salvors. sounding records. Time charterers. Try to find when ‘quiet’ times occur. Do not pass information or documents to other parties without the permission of your legal representative. . When a GA is declared however it is normal for the shipowner to appoint an Average Adjuster to handle the resulting claims. especially if an LOF has been signed. Limited access to the casualty possible. The shipowner. Classification Society. if any party in a maritime venture incurs a cost for any action that benefits all the parties. Salvage and General Average. As for cargo interests. recorder print outs. When a casualty occurs and salvage takes place General Average (“GA”) is frequently declared. The Marine Insurance Act 1906 states: “There is a General Average Act when any extra-ordinary sacrifice or expenditure is voluntarily and reasonably made or incurred in time of peril for the purpose of preserving the property imperilled in the common adventure”. Salvors are not shrinking violets but they are very professional. when you can ask questions. on advice from the Adjuster and the vessel’s P&I Club. check sheets. Reasonable access to the casualty. Limited access to the casualty possible. Hull & Machinery underwriters No access to the casualty is normally possible. They may well be in trauma in the period immediately after the occurrence of the casualty. Protect the Master/Owners. by the vessel’s Owners. Shipowners are usually reluctant to declare a GA because of the complexities and expenses that inevitably follow. The surveyor’s main role will be the gathering of information. as material for the report to principals. The following points should be kept in mind: • • • • • Be considerate of the Master. Obtain copies of all documents – log books. usually but not always. Voyage charterers. out of ‘public’ view.

percentage of each. similar to the following: 1. commenting on any damage sustained by the cargo during those operations. in consultation with the Average Adjuster. or either of them. together with personal and office email addresses and fax numbers. normally issues guidelines on the classification of cargo damage into separate categories. 5 Smoke and water. The GA and cargo surveyors should work together. GA adjustment is governed by the York Antwerp Rules. percentage of each. including damage by beaching or scuttling a burning ship.5 Cargo underwriters and/or cargo interests will appoint surveyors to represent them if any damage has been caused to their consignments. non-General Average) to be settled. If cargo has to be discharged and re-loaded the GA surveyor will normally be required to monitor and report on all cargo that is handled. to allow particular average (i. Before jumping however make sure that lines of communication are in place. for which they seek recovery. 2. Surveyors should be conversant with the Rules. jointly surveying any damage. EXTINGUISHING FIRE ON SHIPBOARD Damage done to a ship and cargo. The report will also show the value of any GA ‘damage’ and will be used to determine GA Fund contribution and settlement. in extinguishing a fire on board the ship. Communications and Records. It is customary for the cargo surveyors to submit copies of their reports and all attached documents to the GA surveyor. depending on the specific cause of damage.e. mobile and after-hours telephone numbers are essential. by water or otherwise. Once on site it should be possible to contact the principal at any time so direct. Rule III states: “RULE III. for information and countersigning. 3 Water and/or other means of extinguishing the fire. When a surveyor receives an appointment in relation to a marine casualty it is axiomatic that the instructing principal will want a fast reaction. The GA surveyor compiles a comprehensive report that covers each bill of lading. The cargo surveyor completes a report on each claim under an insurance policy. . Smoke. except that no allowance shall be made for damage by smoke however caused or by heat of the fire” If a fire has led to the GA act the GA surveyor. office. the latest version being 2004. shall be allowed as general average. Both want the same information although they will put it to different uses. 4 Heat and water. Heat. in particular Rule C which deals with delay and Rule III which deals with extinguishing fire on a ship. This report is the basis on which the Average Adjuster assesses the contribution of each bill of lading holder to the GA fund and also the loss occasioned to each.

Keep the reports factual and do not express any opinions unless asked by the principal. In contrast. Do not include any opinions. mostly around the Australian coast. In 2007 there were approximately 100 reported salvage incidents world-wide with LOF being signed in six. There will be a chain of other people with an interest in what you are doing or monitoring. legible and in ink. Four vessels were container carriers but none included cargo damage due to the incident. times and places. so far as you are able. contractual arrangements such as charter party if available. to see if it covers all aspects in the detail needed. during the period 1997 to 2006 there were 61 salvage incidents in the Australasian area of which 3 occurred in the period 2004 to 2006. entering events as they happen or as soon as possible afterwards. as appendices. On the right side pages record the results of any meetings.. Daily progress reports should be sent to the principal even if it is a ‘nil’ report. inter-island ferries and similar craft in PNG and the western Pacific islands. This way it is easier for the reports to be forwarded as necessary and you can keep them in a file for future use.the identity of the company on whose behalf you have received instructions. the names of any other companies involved. It is recommend that a log is then started on the left side pages. address and a plea for the notebook to be returned to you if found! On the following pages record all the contact names and phone numbers as you receive them. The most important item of equipment is a new notebook that will fit into the back pocket of a pair of overalls. occur. The Australian shipping routes that are subject to bad weather. unless specifically requested to do so by the principal. Inside the front cover put your name. In only one incident were containers discharged from the casualty to assist the salvage operation. Obtain copies of all documents. Vessel information can be obtained from web-sites such as Equasis.6 Obtain the maximum information possible about the casualty . Five of the 61 incidents involved Panamax or larger sized bulk carriers and 13 involved smaller bulk carriers. Attach copies of all documents that are relied on or are mentioned. the southwestern and southern coasts are not constrained by shallow water except in the . dates. even if they have no immediate relevance. If it is not possible to do this contemporaneously then make records as soon as possible after the meetings etc. Complete a final. If possible. 21 of the incidents involved small fishing vessels. Always remember that such notebooks almost certainly are discoverable and may be used as evidence. Notes should be factual. type the reports and attach them to emails. any information about the vessel concerned and any incident information. especially on liabilities. Conclusion. Take plenty of photographs with film copies of important things as a back up. Try to use cameras that print the date on a picture – it is surprising how useful this can be later when writing a final report. Classification Societies and Port/State MOUs. The interim reports should be a big help with this. overall report as soon as possible after the work has finished. discussions etc. Send a draft of the report to the principal. giving names of those concerned. contact phone numbers.

com/Lloyds_Worldwide/Lloyds_Agents/Salvage_Arbitration_Branch www.aimsurveyors. has contributed to the relatively small number of salvage incidents.lexmercatoria.org (1989 Salvage Convention) www.htm (York Antwerp Rules) www. P&I Clubs and marine cargo insurers handle the resultant claims. combined with strict Port State controls. have little experience in handling the large volumes of claims that can be engendered by an incident such as the grounding of or fire on a large container vessel. This.au www. When such an incident does occur it will be interesting to see how H&M insurers.org/YAR. insurers and in particular marine surveyors. especially in recent years.nsf/HTML/ClubCircular2299 (+ Circular 06/01) (Scopic clause information) .usaverageadjusters.com. a lot of people in the maritime service professions.ukpandi. As a result. such as solicitors. The shipping routes on the eastern and northern coasts that are affected by coral reefs are subject only to occasional cyclones.7 approaches to ports.com/ukpandi/Infopool. Useful URLs www.lloyds.

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