TECNICAL UNIVERSITY OF CATALONIA (BARCELONA TECH UPC) BARCELONA NAUTICAL FACULTY (FNB) MASTER’S THESIS ( pre Bologna period ) AN INTRODUCTORY VIEW OF SALVAGE CLAIMS A theoretical and practical analysis of a real case scenario DIRECTOR: DR. JAIME RODRIGO DE LARRUCEA AUTHOR: ALBA TRULLENQUE PARDO BARCELONA, JUNE 2013 ACKNOWLEDGEMENTS First of all, I would like to specially thank my director, Dr. Jaime Rodrigo de Larrucea, for his support, advice and guidance throughout the development of this paper. I really appreciate his availability and quick response to all of my questions always. I also thank my boss Ardna Delissen-Curran who gave me a life opportunity at Dolphin Maritime & Aviation Services, Ltd. and gave me a position as claims executive. There, I learnt about Salvage and General Average claims in their specialized department managed by Matthew Robinson. I really want to thank Matt for his time and patience. Furthermore, I want to give special mention to my friends and University colleagues: Alexander Martinez Conesa, Helena Inglés Muñoz, and Marta Wilson. For their support, not letting me give up, always being there, helping me throughout my critical moments, and understanding me as no one else could. Finally, I thank my parents for giving me the opportunity of studying this amazing and lovely career, in Barcelona, where I learnt, not only about the nautical world, but also how to manage my life. Together they created an invincible team which encouraged me to finish the whole 5 year degree program. Their love, kindness and technical knowledge gave me all I needed to succeed in my purposes. 4 CONTENTS ABBREVIATIONS ..................................................................................................................................... 9 FIGURES ............................................................................................................................................... 11 INTRODUCTION .................................................................................................................................... 13 I. NATURE OF SALVAGE .................................................................................................................. 17 A. Definition of Salvage ........................................................................................................... 18 B. Underlying principles .......................................................................................................... 20 1. Subject of salvage ................................................................................................................ 21 2. Real danger .......................................................................................................................... 24 3. Voluntary Nature ................................................................................................................ 27 4. Success .................................................................................................................................. 30 C. International Convention on Salvage, 1989 .................................................................. 33 1. Implementation ................................................................................................................... 33 2. Content ................................................................................................................................. 34 3. Denunciation ........................................................................................................................ 41 II. THE SALVAGE AGREEMENT ....................................................................................................... 43 A. Lloyd’s Open Form .............................................................................................................. 44 1. Main obligations of contractors (salvors) ......................................................................... 47 2. Nature of services contracted ............................................................................................. 47 3. Duties of property owners .................................................................................................. 48 4. After the salvage operation has ended .............................................................................. 48 5. Other clauses and important notices ................................................................................. 49 6. LOF process ......................................................................................................................... 50 5 B. LSSA Clauses and Procedural Rules ............................................................................. 51 1. L.S.S.A.C .............................................................................................................................. 51 2. L.P.R. .................................................................................................................................... 53 C. Special Compensation P&I Clause (SCOPIC) ............................................................... 56 1. Practical difficulties ............................................................................................................ 57 2. Forces behind ...................................................................................................................... 58 3. Invoking & termination ...................................................................................................... 60 4. Daily rate payments and tariff ........................................................................................... 61 5. Effect on the Article 13 Award .......................................................................................... 62 6. Advantages & disadvantages ............................................................................................. 63 7. SCOPIC case example ........................................................................................................ 65 D. Special Representatives ..................................................................................................... 67 III. CASE STUDY SCENARIO ............................................................................................................... 71 A. Background ........................................................................................................................... 73 B. Providing Security ............................................................................................................... 77 C. Basis of likely Salvage Award .......................................................................................... 79 a) the salved value of the vessel and other property; ................................................................ 80 b) the skill and efforts of the salvors in preventing or minimizing damage to the environment; 80 c) the measure of success obtained by the salvor; .................................................................... 81 d) the nature and degree of the danger; .................................................................................... 82 e) the skill and efforts of the salvors in salving the vessel, other property and life; ................. 83 f) the time used and expenses and losses incurred by the salvors; ........................................... 83 g) the risk of liability and other risks run by the salvors or their equipment; ........................... 84 h) the promptness of the services rendered; .............................................................................. 84 6 j) the state of readiness and efficiency of the salvor's equipment and the value thereof. ......... 84 D. Contributory values/ salved fund .................................................................................... 85 E. Settlement Discussion ........................................................................................................ 88 F. Open Offer .............................................................................................................................. 89 G. Arbitration .............................................................................................................................. 90 H. Appeal Award ........................................................................................................................ 92 CONCLUSIONS ...................................................................................................................................... 93 APPENDICES ......................................................................................................................................... 97 Appendix A – LOF 2011 .............................................................................................................. 97 Appendix B – LSSA clauses and Procedural Rules .................................................................. 99 Appendix C –SCOPIC Clause .................................................................................................... 106 Appendix D – Guidelines for SDRs ........................................................................................... 111 Appendix E – Code of Practice between ISU and International group of P&I clubs ........... 117 Appendix F – LOF Salvage Guarantee ..................................................................................... 118 Appendix G – Salvage Guarantee Form ISU 5 ........................................................................