HELP

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• HELP!

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Issues

• Salvage
• General Average
• Cargo recovery claim

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Owners/Insurers?
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Vessel Ownership/Insurance

• Owners - German
• HM - London lead with international following
  market
• PI West of England

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Values of Ship and Bunkers

• Ship US50,000,000
• Deductions US11,935,353
• Ship Salved US38,064,647
• Bunkers US 267,347

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Cargo Ownership/Insurance

• 29,604 tonnes 1,805 containers general cargo
• Shipped from Far East (Japan, China, Hong Kong
  Taiwan etc)
• Destined for Mexico/USA
• Insured world wide
• Total cargo value US107,557,047

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Containers Ownership/Insurance

• 1,805 boxes owned/leased by APL some slot
  charterers
• Insured mostly in Europe
• Value US3,453,350

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Total Values of Salved Property

• Ship Salved US 38,064,647
• Bunkers US 267,347
• Cargo US107,557,047
• Containers US 3,453,350
• US149,342,391

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Obtaining Salvage Assistance

• Master
• Owners
• HM brokers
• HM insurers
• Salvage brokers
• Salvors

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Cargo/Container Interests?

• 1989 International Salvage Convention
  incorporated in LOF
• Cargo/containers bound by vessel owners agreement
  per Article 6.2 (Salvage Contracts)
• The Master or Owner of the vessel shall have
  the authority to conclude such contracts on
  behalf of the owner of the property on board the
  vessel.

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Lloyds Open Form
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Lloyds Open Form 100 years old

• Sir Henry Hozier 1890
• Salvage disputes referred to Committee if Lloyd's
  London
• No Cure No Pay principle
• First LOF edition in 1908

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Purpose/Objectives of the LOF Contract

• Easily understood
• Agreed without hesitation or negotiation no
  delay
• Administrative System assessment of reward
  later
• Provision as to security should avoid arrest
• Fair to all parties
• No Cure No Pay

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No Cure - No Pay
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LOF 3 Parts

• LOF document contains 12 clauses
• Lloyds Standard Salvage (LSSA) Clauses
  incorporated
• Lloyds Procedural Rules

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LOF The 12 Clauses

• (A) Contractors best endeavours to salve
• Environmental protection
• SCOPIC
• No reference to SCOPIC in Article 13 award
• Prior works included
• Salved property to co-operate
• (G) Salvor and Ship can both terminate if no
  useful result

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LOF The 12 Clauses

• (H) Deemed Performance
• Safe condition and place of safety
• Includes period of standby
• No requirement for skilled services
• Incorporates LSSA Clauses and Procedural Rules
• English law
• Defines Masters authority to bind other
  interests
• No inducements

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LSSA Clauses

• Clause 2 Overriding objectives including
  environment
• Clause 4 Salvors Maritime lien and rights of
  arrest
• Shipowners obliged to use best endeavours
• Duty not to release all property absent
  security
• Clause 5 Appointment of Arbitrator

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LSSA Clauses (Contd)

• Clause 6
• Procedure Arbitration in London
• Clause 6 expenses usually payable by cargo
• Clause 7 UK representation
• Clause 8 - Interest

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LSSA Clauses (Contd)

• Clause 10 Appeals
• Clause 11 Payment provisions - 28 days from
  Award
• Clause 13 - Indemnity
• Clause 14 SCOPIC disputes

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Lloyds Procedural Rules

• Provides Arbitrator with power to award costs
• Procedural meetings
• Disclosure Expert evidence none unless
  ordered
• Mediation?

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Salvors Lien and Security

• Ship
• Cargo/Containers
• Guarantee requirements
• Security at Lloyds
• International Salvage Union Form 1
• Usually provided by Insurers

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Current LOF Cases
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Current LOF Cases
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Current LOF Cases
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Current LOF Cases
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General Average

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General Average

• What is General Average?
• York-Antwerp Rules
• When is General Average payable?
• York-Antwerp Rules, Rule A
• 1. There is a General Average Act when, and only
  when, any extraordinary sacrifice is
  intentionally and reasonably made or incurred for
  the common safety for the purpose of preserving
  from petrol the property involved in a common
  maritime adventure.
• 2. General Average sacrifices and expenditures
  shall be borne by the different contributing
  interests on the basis hereinafter provided.

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General Average Security

• Shipowners Lien
• Average Bond
• Average Guarantee in lieu of cash deposit

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GA Points of Discussion

• Adjustment not legally binding
• Shipowners expenses must be in the general
  interests
• Grounding/refloating damage
• Unseaworthiness exercise of due diligence (Rule
  D Defence)

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Cargo Claims against the Vessel

• Jurisdiction for Claims
• Bill of Lading Conditions
• Hague/Hague-Visby
• Claims in tort
• Security provided by PI Club

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Liability/Defence

• Hague/Hague-Visby
• If carrier exercises due diligence as to
  seaworthiness may rely on exceptions
• Defence of crew negligence

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Salvage and GA Guarantee Practicalities

• GA Adjusters appointed by vessel owners
• Requests and collects
• (a) Salvage guarantees on behalf of salvors
• (b) GA guarantees on behalf of shipowners
• Saves costs and expense

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LOF Arbitration ProceedingsAPL PANAMA

• Administered by Lloyds Salvage Branch
• Arbitrator appointed
• Lloyds panel of Arbitrators

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Arbitration Process APL PANAMA

• Similar to other forms of litigation
• Contentious
• Salvors have burden of proof
• Customarily written evidence from witnesses/
  experts

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Preparations APL PANAMA

• Witness interviews for written statements
• Statements very detailed
• Collect all relevant documents
• Appoint experts

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Role of Experts APL PANAMA

• Naval Architects
• Salvage
• Other technical issues relevant
• Must assist the Tribunal

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Written Pleadings APL PANAMA

• Not usual in LOF cases
• Parties to state case on disputed issues
• (a) Values of salved property
• (b) Dangers
• (c) Criticisms/allegations against the salvors

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LOF Arbitration Next Steps APL PANAMA

• Parties review evidence
• Majority of cases settle on negotiation
• Formal open offer
• Arbitration hearing no Trial Briefs

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Arbitration Hearing APL PANAMA

• Parties represented by leading Counsel (QCs)
• Reading of documents
• Examination of witnesses
• Submissions by leading Counsel
• Arbitrator to consider

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Assessment of Award
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General Principles

• Reward for assistance at sea

• Salvor must be volunteer

• No Cure No Pay

• Encouragement

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Recent Developments

• 1869 US Courts established BLACKWALL factors
• 6 criteria for assessing salvage reward
• Labour expended
• Promptness and skill displayed
• Value of property employed by salvor
• Risks incurred by salvor
• Value of property saved
• Degree of danger from which property rescued

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Recent Developments

• Brussels' Convention 1910
• Adopted and refined BLACKWALL factors
• Unified international law
• Ratified by worlds maritime nations
• Environmental issues led to change
• International Salvage Convention 1989

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1978 AMOCO CADIZ
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1989 EXXON VALDEZ
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Assessment of Award

• Article 13(1) 1989 Salvage Convention
• Ten criteria all relevant
• Underlying concept of encouraging salvage
  operations
• Must not be out of proportion to the services
  rendered
• Must reflect the benefit conferred

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Article 13 Criteria

• (a) The salved value of the vessel and other
  property
• The greater the fund the greater the likely
  award because the greater the benefit conferred
• The skill and efforts of the salvors in
  preventing or minimising damage to the
  environment
• Salvors have a duty to prevent damage to the
  environment
• The measure of the success obtained by the
  salvor
• must reflect benefit conferred

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Article 13 Criteria (Contd)

• (d) The nature and degree of danger
• Nature compare immobilisation to risk of
  total loss
• Degree - risk of it occurring and when.
  Can have considerable effect
• Alternative assistance reduces degree of risk
• The skill and efforts of the salvor in salving
  the vessel, other property and life

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Article 13 Criteria (Contd)

• The time used and expenses and losses incurred
  by the salvor
• the award will not necessarily equal or exceed
• The risk of liability and other risks run by
  the salvors or their equipment
• liabilities or losses
• (h) The promptness with which the service is
  rendered
• promptness is always rewarded. If on
  speculation even more meritorious.

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Article 13 Criteria (Contd)

• The availability and use of vessels or other
  equipment intended for salvage operations.
• The state of readiness of efficiency of the
  salvors equipment and value thereof.
• both clauses relate to professional salvors.
  If salvors own equipment used award level
  increased.

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Award

• Published by Lloyds
• Award documents
• Formal award
• Arbitrators Reasons
• Considerations for Appeal

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Summary

• Salvage claim negotiated settlement
• Cargo Claim
• General Average

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The Future?