ISU: Fresh Thinking Needed

Friday, April 11, 2008

International Salvage Union (ISU) President Arnold Witte had called on all sectors of the shipping and insurance industries to approach the issue of salvage and spill prevention with “fresh thinking and open minds.” Speaking at the ISU’s Associate Members’ Day conference in London on April 2, he said the cost of failure to prevent pollution can run into billions. Against this background he urged the P&I community – responsible for payment of pollution claims – to accept that new approaches to reward for salvage and spill prevention have a significant role to play in reducing the financial impact of pollution claims and, at the same time, contributing to lower levels of ecological and economic damage. Many shipowners as well as the P& I Clubs do not accept that there is any case for an Environmental Salvage Award. We will be working privately and, hopefully, with some intensity in the coming months with the P& I Clubs, as well as owners and property insurers, to convince them that there is a more beneficial approach to environmental issues.
Over 120 delegates attended the London conference. The ISU President said: “It is time to work together to review a set of outmoded legal obligations, recognising that the primary goal in most salvage operations today is to prevent pollution. These services deserve much greater recognition and we now need a more equitable system for remunerating the salvor. We also believe that more focus on environmental salvage will be financially beneficial to all concerned. An investment in Environmental Salvage Awards would be far outweighed by a reduction in pollution claims costs. The ISU would welcome the opportunity to put this to the test, by introducing Environmental Salvage Awards for a trial period.”
Witte continued: “Fears that this would mean a huge increase in salvage costs are groundless. Additional costs would apply only when significant pollution damage is avoided. In fact, we believe the Clubs would save money by backing Environmental Salvage Awards. In our view, the best way forward is to work on a new edition of Lloyd’s Form, LOF 2010, to incorporate Environmental Salvage Awards.”

Speakers at the conference also included John Reeder QC, the Appeal Arbitrator. His paper acknowledged the centenary of Lloyd’s Form and considered the contract’s 21st Century significance. In his introduction he observed: “We are now eight years into the 21st Century and things look pretty challenging at the moment.” He stressed the importance of ensuring that Awards are seen to be fair to both parties. He then made the point that LOF is a contract with inherent flexibility: “LOF can be adapted to cater for different conditions and it can be made to meet most needs of the maritime community.”
At the same time he cautioned: “Proposals for Environmental Salvage must have clear objectives. These objectives must be reflected in the text used. High sounding, woolly phrases only bring difficulties. All this, however, is capable of being done and, if done, would address a hole in the current system.”
In his report to the conference, ISU Legal Adviser Archie Bishop noted that the number of Lloyd’s Forms rose last year, from 80 in 2006 to 107 in 2007. He added that 844 LOF cases were recorded in the period 1999 (when the SCOPIC clause was introduced) to end-2007. SCOPIC is a “time and materials” safety net, which ameliorates the harshness of the no cure – no pay rule by protecting the salvor from financial loss. The SCOPIC clause was invoked in 22 per cent of the cases. Archie Bishop added: “The fact that only five SCOPIC cases have been arbitrated demonstrates how well this contract is working.”
Aspects of casualty response were considered by two further speakers. ISU Vice President Peter Lee offered some observations on major casualties in the Singapore area. He made reference to the Natuna Sea and Evoikos cases, which resulted in the two most serious oil spills experienced in Singapore. He stressed the importance of supporting professional salvors across a full range of salvage services, in order to ensure that capacity is maintained to deal with major cases – when the participation of the professional salvor is crucial.
The situation in UK waters was reviewed by Robin Middleton, who recently completed eight years as UK SOSREP (Secretary of State’s Representative). He made the point that, under the current UK approach, any appropriate location can be designated a place of refuge – even in an area of environmental sensitivity – if that is seen to be in the national interest.
The ISU conference programme was completed by a casualty simulation involving all delegates. This concerned a response to a simulated chemical tanker grounding in the Channel Islands.