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Lof Salvage Agreement

In determining the award of recovery, an arbitrator follows the English Civil Recovery Act, itself subject to the 1989 rescue agreement, which follows the original 1910 agreement. The value of the vessel, its cargo and the cargo threatened are taken into account when the arbitrator decides what the award should be, as well as the extent of the dangers and the difficulty in carrying out the rescue. Pursuing innovation is a good thing. For shipowners, new concepts of modification and/or revision of the terms of rescue contracts are always welcome. The industry should continue to work hard to end the debate over the choice of an appropriate rescue contract. But it is not easy to change this long-standing conservative mentality. Finally, it is essential to use the right contract for the right circumstances. In most situations where an onboard vessel is in danger and requires recovery services, a standard LOF is used. However, we are aware that, in certain circumstances, members (and their Hull insurers) may change the standard terms of LOF and/or SCOPIC by entering into “incidental agreements” or “incident letters” with a salvor. Specific conditions could then change the conditions of the LOF and/or the SCOPIC. The reasons for this may be uncertain at the time of the request for recovery services with respect to the nature and degree of danger and/or the desire to better manage the increase in exposure to the awards covered by section 13 of the VET.

There are significant differences between the above contracts. With the exception of the Beijing Form (CMAC 1994), “No Cure-No Pay” is the basic principle that is shared by national forms, and the term is printed on the surface of most documents. In practice, MARSALV is usually signed after a successful rescue operation. This is because its conditions can hardly be agreed in advance, especially if the danger is acute. Unlike the LOF, JSE 91 rewards the costs it incurred instead of the total value of the salted property. Overall, the above-mentioned contracts are not very common, with the exception of the Japanese form JSE 91. In the 1960s and 1970s, there were a series of aging single-moulded tankers[6] that were bereaved and released huge amounts of oil. [7] While passing ships were forced to provide adequate assistance to save lives, they were reluctant to offer salvage services on a seemingly ruthless adventure to save a low hulk value, where the risk of third-party liability could be enormous. Instead, the salvors preferred to work where there were richer crops and less danger.

This situation has alarmed coastal states (whose beaches were threatened by oil pollution) and the P-I clubs (which could be responsible for “taking the helm” and compensating for these third-party risks). [8] One of the London Maritime law firms proposed what commentators soon called the “LOF light”. The LOF light formula automatically integrated SCOPIC and then allowed the parties to perform services at the SCOPIC rate with an optional bonus. The bonus reflected incentives listed in Article 13 of the 1989 Convention, such as skill, danger, salvo value and length of service. The Salvors, through their association, the International Rescue Union (ISU), did not support the proposal. Shipowners do not like to take into account the elements of section 13 of the 1989 convention because they are unable to estimate their exposure or the total cost of the rescue operation. Uncertainty makes the proposal unattractive to shipowners. Lloyd`s Standard Form of Salvage Agreement has been in existence for more than 100 years in various iterations, the first version released in 1892. The form has been modified and simplified over the years to keep pace with industry developments, but the principles behind the contract have remained the same: to create a simple and flexible legal framework for a contractor to provide risky real estate recovery services.