Page 21: of Maritime Reporter Magazine (September 1997)

P&I Pressure Helps Push Salvage Contract Changes

Leading marine salvors have backed plans to formulate a new, standard salvage contract in response to pressure for an alter- native system from Protection &

Indemnity (P&I) insurers. It would not be the industry's inten- tion, though, to dispense with the

Lloyd's Open Form (LOF).

Members of the International

Salvage Union (ISU) have given the body a mandate to develop new arrangements through discussion with the property (ship and cargo) insurers, shipowners and P&I

Clubs. The idesa is to provide a further option, rather than a replacement, to existing salvage contracts. The move addresses concerns within the P&I communi- ty related to salvage costs and par- ticipation. There is a view in P&I circles that Clubs should assume liability for all salvage, involving property as well as pollution.

As a result of the decision at the recent Gothenburg meeting of the

ISU, detailed talks will be set in motion, with the International

Group of P&I Clubs, property insurers and other parties.

Salvors feel that LOF should be retained for most casualty situa- tions, but acknowledge that there is scope for a new basis for casual- ty response in situations where a spill has occurred and rapid inter- vention is needed to minimize environmental damage.

The ISU is advocating a new approach designed to meld what are seen as the best features of the existing LOF, the world's most commonly used salvage agree- ment, with the 'Salvage 2000' con- cept advanced by the P&I sector.

ISU president Arnold Witte said, "The LOF system still offers many advantages to the interna- tional shipping community and its underwriters. Nevertheless, the

P&I Clubs, who have financial responsibility for pollution claims arising from shipping accidents have a number of legitimate claims which cannot be ignored by the sal- vage industry." "Equally, the property insur- ers... are strong supporters of the existing system. Their interests must be taken into account as they meet almost the entire cost of sal- vage services rendered on a global basis," observed Witte.

In recognition of concerns in the

P&I business, the ISU said it was prepared to offer an agreed rate

By David Tinsley, technical editor structure for salvage services deployed to deal with direct pollu- tion threats, and to support the

P&I desire for separate represen- tation at associated salvage arbi- trations. The marine salvage con- tractors' body also believes that a new LOF Salvage 2000 contract should be drafted in such a way as to "maximize opportunities for amicable settlement and prompt payment, without recourse to arbi- tration." Total values under the various "no cure, no pay" agree- ments worldwide declined in 1996 by one-third from the preceding year's all-time high of $1.7 million, to $1.2 million.

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