Question 1

What is Lloyd's Open Form (LOF) salvage agreement?

Accepted Answer

A standard 'no cure, no pay' salvage contract, with rewards agreed or determined by Lloyd's arbitration and provision for special compensation or SCOPIC remuneration where applicable.. Lloyd's Open Form (LOF) is an internationally recognised standard salvage contract based on 'no cure, no pay'. A salvage reward normally depends on a useful result, but special compensation or SCOPIC remuneration may be payable without successful property salvage. The reward may be agreed between the parties or determined through Lloyd's arbitration, taking account of factors including salved value, degree of success, danger, salvors' skill and efforts, environmental protection and risks incurred. Article 14 special compensation concerns salvage operations involving a vessel which, itself or through its cargo, threatened environmental damage. SCOPIC (Special Compensation P&I Club Clause), when incorporated and invoked, provides tariff-based remuneration in place of Article 14 special compensation and does not require a threat of environmental damage or successful prevention of it. Under Article 6 of the Salvage Convention, given force in UK law, the master has authority to conclude salvage contracts on behalf of the vessel's owner; the master or owner also has authority to conclude them on behalf of the owner of property on board.

Question 2

Your vessel is in distress. A salvage vessel stands by and demands you sign Lloyd's Open Form before they assist. You cannot reach the owner. What is your authority?

Accepted Answer

The Master has implied authority to sign LOF without prior owner consent in emergencies; sign if genuinely endangered and the salvor can help.. MASTER'S AUTHORITY IN EMERGENCIES: the common law principle of agency of necessity gives the master implied authority to take any action to save the ship, cargo and lives, including signing a salvage contract. Courts have consistently upheld LOF signed by masters in distress without owner authority. However: assess the risk genuinely (if in real danger, sign); try to contact owner/manager first; ensure the LOF terms are standard (not modified); record your decision-making in the log.

Question 3

Under the International Salvage Convention 1989, what is the special compensation provision in Article 14, how does it differ from SCOPIC, and why does it matter for a Master?

Accepted Answer

Salvors preventing or minimising environmental damage may recover costs plus uplift despite vessel loss, without a salved-value cap, encouraging responses to pollution risks.. Article 14 provides special compensation from the shipowner for salvage operations involving a vessel which, by itself or its cargo, threatens damage to the environment. Qualifying expenses may be recovered even without successful salvage. If the salvor prevents or minimises environmental damage, those expenses may be increased by up to 30%, or up to 100% where the tribunal considers it fair and just. Special compensation is payable to the extent that it exceeds the Article 13 salvage reward and is not capped by salved value. SCOPIC, the Special Compensation P&I Club Clause, is a contractual alternative to Article 14, commonly incorporated into Lloyd’s Open Form. Once invoked, it provides tariff-based remuneration and qualifying expenses with a 25% uplift, without requiring a threat of environmental damage or successful environmental protection. Payment is the shipowner’s responsibility, generally covered by P&I insurance. A Master should understand that these arrangements encourage salvage assistance where property recovery may be insufficient to reward the salvor, but do not guarantee a response.

Salvage, questions and explanations

What is Lloyd's Open Form (LOF) salvage agreement?

Your vessel is in distress. A salvage vessel stands by and demands you sign Lloyd's Open Form before they assist. You cannot reach the owner. What is your authority?

Under the International Salvage Convention 1989, what is the special compensation provision in Article 14, how does it differ from SCOPIC, and why does it matter for a Master?

Practise this properly

Salvage, questions and explanations

Questions

What is Lloyd's Open Form (LOF) salvage agreement?

Your vessel is in distress. A salvage vessel stands by and demands you sign Lloyd's Open Form before they assist. You cannot reach the owner. What is your authority?

Under the International Salvage Convention 1989, what is the special compensation provision in Article 14, how does it differ from SCOPIC, and why does it matter for a Master?

Practise this properly