LOF 2020 – what’s in, what’s out?

LexTrasporti
Genoa, November 2019

Richard Gunn
Partner / Master Mariner
 DISCLAIMER !!

LOF 2020 BUT

waiting final sign off from group

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 Changes

Name: LOF 2020

Lloyd’s Salvage Arbitration Clauses 2020

No Longer: Separate procedural rules

Separate Fixed Cost Arbitration Procedure
(“FCAP”)

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 Lloyd’s Standard Form

Clause H:
Small amendment following the Appeal Arbitrators’
Award on the meaning of this clause.
• Makes it easier to read, but no change in meaning.

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 Lloyd’s Standard Form

Important Notice 4
Side letters:
“A copy of any agreement that amends or varies the
provisions or terms of this agreement must also be
provided to the Council as soon as possible.”

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 Lloyd’s Salvage Arbitration Clauses 2020
Amendments made to:
Clause 1.1 : consequential
Clause 1.4 : reference to FCAP
Clause 5.3 : Arbitrator security
Clause 6(viii) : Arbitrator’s powers
Clause 7.4 : Unrepresented cargo
Clause 8 : Procedure
Clause 14 : Special cargo provisions
Clause 15 : FCAP
Clause 19 : Contractors’ special rights to terminate

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 Contractors’ Special Right to Terminate
(Clause 19; Clause 6.2(viii))

First – SCOPIC 2018

• Changes to SCOPIC termination rights (Clause 9)
• Owners terminate obligation to pay SCOPIC AT ANY TIME

• Contractors’ rights to terminate (Clause 4)

• Only where insufficient security

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 Contractors’ Special Right to Terminate

Issue:
• Owners provide security and terminate immediately
• Contractors obliged to continue with no safety net.

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 Contractors’ Special Right to Terminate
Resolution:

Clause 19:

In the event that the Owner validly terminates SCOPIC in accordance with SCOPIC
clause 9(i) but the Contractors are unable to invoke the termination provisions under
SCOPIC clause 4(ii) then the Contractors shall have the right to apply to the Arbitrator
for an order that:

(i) they are no longer bound by the terms and conditions of the Agreement and,

(ii) that the Agreement be deemed terminated without prejudice to:-

(a) The Contractors’ right to recover SCOPIC up to the date of termination thereof,
including any demobilisation payments as may be due, as may appropriate and,

(b) The Contractors’ rights to recover under Article 13.

Such application to be made within a reasonable time from the date of termination of
SCOPIC.

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 Contractors’ Special Right to Terminate

Equality:
Clause 6.2(viii):
to terminate the Agreement on application under
clause 19, where he considers it fair and just to do so,
having in mind the interests of all the interested
parties.

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 Fixed Costs Arbitration Procedure
(“FCAP”) (Clause 15)

• Previously separate document

• Included to reinforce the concept
• See also Clause 1.4
Clause 1.4:
Particular attention should be paid to the FCAP (Fixed Costs
Arbitration Procedure) provisions which are set out in clause
15.

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 Fixed Costs Arbitration Procedure
(“FCAP”)

Clause 15.1
• Security <US$2,000,000 “usually be appropriate” (i)
• Maybe where security >US$2,000,000 “if
straightforward and no physical danger” (iii)
• Not where oral hearing needed, e.g. complex (ii)
• Most be requested asap after security demand

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 Fixed Costs Arbitration Procedure
(“FCAP”)

• Costs recovery limited

• Reduced bundle size – statements, etc.
• Written submissions ≯ 4,000 words
• Award within 3 weeks of close of submissions

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 Special Cargo Provisions
Settlement Agreement

Clause 14.1:

Where:

(i) A settlement agreement has or agreements have been reached between the
Contractors and some Owners of salved cargo, and

(ii) Those Owners of salved cargo are at the time of settlement with Contractors
represented in accordance with clause 7 of these clauses, and

(iii) The total value of the cargo(es) owned by those Owners comprises at least 75%
by value of the salved cargo represented in accordance with clause 7 of these
clauses.

The Arbitrator shall have the power at any time to call for (unless privileged) and take
into account the terms of any such settlement agreement(s) and to give to it or them
such weight as seems to him to be appropriate when assessing the salvage award
against the Owners of all unrepresented cargo who have not settled at the time of the
said agreement.

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 Special Cargo Provisions
Contributing cost
Clause 14.2:
Where the cost of proceeding against a contributing
cargo interest is likely to be disproportionate to its
liability for salvage, the Arbitrator may at any stage of
the proceedings order and direct that all such
contributing cargo interests with a total salved value of
their interests (which may be estimated or actual)
below a figure to be decided by the Arbitrator shall be
omitted from the salved fund and excused from liability
for salvage.
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 LOF 2020

• Intended commencement date:

1 January 2020
(subject to final approvals)

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