Page 20: of Marine News Magazine (August 2011)

20MNAugust 2011LEGAL determined by the court based upon several factors. On the other hand, parties negotiate contract salvage for fixed terms for services rendered. Just because a ship owner requests and salvers in response furnish it, standing alone, does not create an implied contract. Salvors can still argue that they are enti- tled to a pure salvage award. The distressed vessel should make sure to negotiate the terms for the salvors work to ensure that the salvor is not proceeding on a pure salvage basis. Vessel owners and charterers should also be aware of the Lloyds Open Form (LOF), which is the most popular standard salvage contract. Many towage vessels have blank LOFs in their wheelhouse and often push for the dis- tressed vessel to sign the LOF. However, the distressed vessel should negotiate a rate for the salvage services rather than signing the LOF. Although the LOF is a contract, salvage services per- formed pursuant to the LOF are considered to be pure sal- vage, not contract salvage, because the LOF provides that the contract salvor is engaged on a no cure, no pay? basis, and it leaves the reward amount open in the event of suc- cess. Accordingly, ship owners and charterers should avoid signing an LOF unless they are in a catastrophic situation and have no time to negotiate a fixed compensation con- tractual agreement. The LOF also contains a choice of law provision for English law and an arbitration provision in London for contract disputes. However, U.S. courts have declined to enforce the arbitration provision when the salvage occurred in U.S. waters between U.S. citizens. Unfortunately, incidents that place vessels in distress do happen. Therefore, vessel operators must have a plan in place to deal with these unplanned events. As vessel oper- ators crave certainty and prefer to avoid litigation, they should, at all costs, avoid pure salvage situations where the salvage award is beyond the companys control. The nego- tiation of contractual terms prior to the salvage operation will save the company and its underwriters a potential headache on the back end. - MN Mr. DeMarcay is a partner in the law firm of Fowler Rodriguez Valdes-Fauli. Based in New Orleans, LA, Larry is admitted to practice in Louisiana, Texas and Florida. His areas of practice include Commercial Litigation, Admiralty, Personal Injury, Transportation, Real Estate, Construction and Corporate Law. Mr. DeMarcay received his B.A. from the University of Florida, M.B.A. from The George Washington University and his law degree from Loyola University. Prior to attending law school, Mr. DeMarcay served on the Washington based legislative staff of Congressman Jimmy Hayes. On the WEB: www.frvf-law.com For a salvor to bring a pure salvage claim under the general maritime law, three elements must be satisfied.?