Transcript UK P&I CLUB

UK P&I CLUB
UK P&I CLUB
UK P&I CLUB
SALVAGE
The introduction of SCOPIC
( The Special Compensation P&I Clause)
Graham Daines
Thomas Miller P & I Ltd.
SCOPIC
UK P&I CLUB
Circulated paper: LOF and SCOPIC
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The development of LOF
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The introduction of SCOPIC
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The role of the SCR
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SCOPIC in practice
SCOPIC
UK P&I CLUB
• LOF Contract - used for over 100 years
• Why the need for radical change?
• The Development of SCOPIC
• Advantages and Disadvantages
• The role of the SCR
• SCOPIC – a review
SCOPIC
UK P&I CLUB
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International Convention on Salvage 1989
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Extension of ‘Safety Net’ provisions
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Application beyond laden tankers
SCOPIC
UK P&I CLUB
ARTICLE 14 PROVISIONS
Special compensation payable to salvor:
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If threat of environmental damage
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Article 13 award less than special compensation
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Special compensation based upon ‘fair rate’ for
expenses
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Uplift by up to 30 per cent (or up to 100 per cent if
tribunal considers it to be fair and just)
If:
Salvor has prevented or minimised environmental
damage
SCOPIC
UK P&I CLUB
Difficulties experienced with interpretation of Article 14
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Dissatisfaction not confined to one party
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Geographical restriction to environmental threat
(compared to LOF80):
“Coastal or inland waters or areas adjacent thereto”
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Uncertain assessment of special compensation – the
uplift (Art.14.2)
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Uncertain assessment of fair rate (Art.14.3)
SCOPIC
UK P&I CLUB
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Lack of incentive for salvor due to uncertainty of reward
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Security for Art.14 awards not always available
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No P and I club involvement
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Inadequate information available from scene – no dialogue
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Lengthy Art.14 disputes – affecting cashflow
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Costly arbitrations
SCOPIC
UK P&I CLUB
SPECIAL COMPENSATION P&I CLAUSE (SCOPIC)
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Developed by all parties to the salvage contract
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An attempt to resolve problems inherent in Article 14 –
and to achieve certainty
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Not designed to replace 1989 Salvage Convention
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No geographical restriction
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Replaces Article 14 provisions
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Initial two-year trial period
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Not perfect? – but an improvement
SCOPIC
UK P&I CLUB
SCOPIC
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Voluntary agreement: Parties may contract on LOF
terms, lumpsum basis or daily rate
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SCOPIC must be invoked by salvor – ‘No cure – No
pay’ without safety net until then
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May be invoked at any time –
No geographical restriction –
No need to establish environment threat
SCOPIC
UK P&I CLUB
SCOPIC
•
SCOPIC remuneration based upon agreed tariff plus 25
per cent uplift
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Salvage services still assessed under Art.13
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SCOPIC remuneration payable by P and I club – only to
extent it exceeds Art.13 award
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Discount applies if SCOPIC invoked unnecessarily – i.e.
Art.13 award exceeds SCOPIC remuneration
SCOPIC
UK P&I CLUB
SCOPIC
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Security for SCOPIC remuneration of US$3 million to
be provided within 2 working days (adjustable later)
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Withdrawal from SCOPIC provisions
- if no security is provided salvor may request
tribunal to apply Art.14
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Payment : SCOPIC remuneration payable within 30
days
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Shipowner may terminate under SCOPIC upon giving 5
days notice
SCOPIC
UK P&I CLUB
SCOPIC
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Tariff schedule to be reviewed and agreed regularly
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Worldwide, commercial rates
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Banded tug rates based upon BHP
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Equipment rates capped at 150 per cent of
replacement cost
SCOPIC
UK P&I CLUB
SCOPIC
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Appointment of Special Casualty representative (SCR)
achieves :
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Much improved access to current information
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Available to ALL parties
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Salvage master’s daily reports and SCR final report
circulated
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SCR may record disagreement with salvor and report
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Disputes capable of being resolved earlier
SCOPIC
UK P&I CLUB
SCOPIC
Advantages and disadvantages for salvors
Advantages
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No need to prove environmental threat
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No geographical uncertainty
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Profitable tug rates apply
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Improved cashflow
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Amount payable under SCOPIC usually
guaranteed
SCOPIC
UK P&I CLUB
SCOPIC
Disadvantages for salvors
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Shipowner acquires right to terminate
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Uplift limited to 25 per cent
SCOPIC
UK P&I CLUB
SCOPIC
Advantages and disadvantages for shipowners and their P & I clubs
Advantages
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Much improved flow of information
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important when pollution threatened or ship in danger of
becoming a wreck
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Reduced legal costs
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Certainty of cost of operation
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Clear right to terminate
SCOPIC
UK P&I CLUB
Disadvantages for shipowners
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Environmental threat/location of casualty
- No longer factors
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Commercial rates plus, always apply
SCOPIC
UK P&I CLUB
SCOPIC 2000 – AMENDMENTS
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SCOPIC may be used with any LOF e.g. LOF 2000
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SCOPIC replaces Art.14 – ART.14 does not apply even if SCOPIC not
invoked
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Right of withdrawal by contractor under SCOPIC only exercisable up to
provision of initial security
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SCOPIC remuneration only payable in excess of potential Art.13 even if no
Art.13 award is sought or paid
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Termination provision re-worded to achieve clarity
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Amendments / clarification of tariff rates and application
SCOPIC
UK P&I CLUB
In the years for which figures are available there were:
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123 LOF cases in 1999; SCOPIC was invoked in 14 cases,
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133 cases in 2000; SCOPIC
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108 cases in 2001; SCOPIC
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“ 23 cases
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104 cases in 2002; SCOPIC
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“ 18 cases
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89 cases in 2003; SCOPIC
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“ 27 cases
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“ 13 cases
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91 cases in 2004; SCOPIC
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“ 16 cases
To June there have been 52 LOF cases in 2005 and SCOPIC has been
invoked in 7 cases
UK P&I CLUB
UK P&I CLUB
UK P&I CLUB
SCOPIC
UK P&I CLUB
The role of the SCR from SCOPIC and the SCR Guidelines:
“The primary duty of the SCR shall be the same as the contractor,
namely to use his best endeavours to assist in the salvage of the
vessel and the property thereon and in so doing to prevent and
minimise damage to the environment”.
SCOPIC
UK P&I CLUB
Role of the SCR
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Provider of up to date information to all parties – not just shipowner
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Salvage master in charge and responsible
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SCR has the right to consult with and be consulted by the salvage
master – and to express his views
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SCR may issue dissenting report
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SCR should receive salvage plan and notice of changes
SCOPIC
UK P&I CLUB
Role of the SCR
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Record daily expenditure based upon SCOPIC tariff
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Aim to discuss and agree calculations with salvage master
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Produce final salvage report
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Within one month
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Facts and circumstances
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Allowable tugs, personnel, equipment
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Total remuneration under SCOPIC
SCOPIC
UK P&I CLUB
Role of the SCR
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Advantages
For shipowners - knowledge and progress
For salvors
- line of communication to all parties
For insurers
- knowledge; ability to react immediately to
changing events e.g. pollution threat
SCOPIC
UK P&I CLUB
SCOPIC: A review
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Encouraging results from the first three years
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Increasing use of LOF with SCOPIC
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SCOPIC invoked in 15+ per cent of cases
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More cases capable of being settled swiftly
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Improved flow of information
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Adaptable format
SCOPIC
UK P&I CLUB
SCOPIC: A review (2)
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Structured chain of communication
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Greater certainty over expenditure
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Improved cashflow
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Earlier resolution?
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Knowledge/influence over events