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Immediate help
Lloyd’s Form can be agreed by the Master of a ship, on behalf of the owner. The Master and owner of the ship have authority to conclude a LOF agreement on behalf of the owners of all property on board the vessel. Agreeing LOF clears the way for a prompt salvage response. The salvor has two specific obligations: to use his “best endeavours” to salve ship and cargo and, whilst salving the property, to prevent or minimise damage to the environment. LOF is the ideal contract whenever there is an immediate threat to ship, cargo and the environment. The advantages are obvious in an acute emergency, such as a fire or leakage of pollutants into the sea. LOF is the preferred contract when there is no time to lose. No delay
Lloyd's Form is a contract with a single overriding goal: a successful operational outcome through the prevention of loss and the avoidance of pollution. There is no need for commercial haggling. Immediate response reduces the risk of failure and the potential for costly pollution damage. Once LOF is agreed there is nothing, in the contractual sense, to delay the mobilisation of the salvor, his personnel and equipment. Neither party – salvor or shipowner – is placed in the uncomfortable position of having to enter into a commercial agreement on the basis of limited information. Issues such as financial aspects, law and jurisdiction and the liabilities and obligations of the parties are dealt with in LOF’s standard wording and the contract’s accompanying document, the Lloyd’s Standard Salvage and Arbitration (LSSA) Clauses. The key commercial issues, including the salvor’s reward, are dealt with on completion of services. At that point the salved values of ship, cargo and other property are established and the time spent on the services and the expenses incurred are also known. The parties can then attempt to reach an amicable settlement of the salvor’s claim. Cost-effectiveness
The ISU has collected statistical data on Lloyd's Form services rendered by members since 1978. This records 5,135 salvage operations, including 2,701 LOF cases, in the 1978-2005 period. The ships and cargoes had a total salved value of USD 32.32 billion. Property values have increased sharply over the past decade, as has the cost of performing salvage services. The salvor’s revenue, as a percentage of salved value, has also increased in recent times. During the 1996-2006 period, the average Award/settlement was 10.6% of salved value. It is important to note that the term “salved value” refers to the sound market value (NOT the insured value) of ship, cargo and other property in a damaged condition. The Council of Lloyd’s, through the Salvage Arbitration Department, administers Lloyd's Form. Under the LOF system the level of the salvor’s reward will match the nature of the services provided, the risks to the casualty and the achievement of a successful outcome. These factors are assessed in accordance with criteria set out in Article 13 of The Salvage Convention, 1989. The Article 13 criteria relate, inter alia, to: the salved value of the property; the risks from which the property was salved; the time spent on the services; the expenses incurred by the salvor; the skills applied in rendering the service; and the risks to the environment. The Lloyd’s Arbitrator is responsible for ensuring that the Salvage Award accurately reflects the scale and complexity of the services provided. It should be remembered that, even in a major case with a real potential for catastrophic pollution, the salvor’s reward will be modest in relation to the huge costs of clean-up and compensation, had a serious spill occurred. Under this impartial administration of remuneration, Salvage Awards tend to be modest when services are provided on a modest scale. Equally, a Lloyd’s Arbitrator will recognise the salvor’s achievements when prompt, decisive action prevents substantial property loss and environmental damage. It is important for this system to be impartial and fair and to be perceived as such by shipowners and insurers. They must have confidence in LOF and the ability of the system to deliver an appropriate outcome. This point is at the very heart of the LOF concept. Indeed, it was the reason why LOF was devised in the first place a century ago. ISU member salvors respect this principle. They have agreed that expectations should accurately reflect the level of service provided. An ISU Resolution states that salvage security demands should be realistic, as should settlement/Award expectations. Pollution prevention
Environmental salvage services benefit shipowners and their insurers, together with coastal communities and governments. The significance of these services is underlined by the fact that just three major spills of recent times – the Exxon Valdez, Erika and Prestige – resulted in the loss of 120,000 tonnes of oil and led to huge costs, running into billions of dollars. In contrast, the total annual casualty response and spill prevention income of the ISU’s global membership is on average barely USD 100 million. The cost of damage prevention, through timely salvage intervention, is always much lower than the cost of clean-up and compensation when a spill occurs. International Tanker Owners’ Pollution Federation statistics reveal that 520,000 tonnes of oil was lost from ship casualties in the 1994-2006 period, with several billions spent on clean-up and compensation. Over the same period ISU salvors recovered 20 times that amount – over 10 million tonnes of cargo oil – from ships in difficulty. ISU salvors recovered 1.1 million tonnes of pollutants in 2007 alone – more than double the total amount of oil spilt over the entire 1994-2006 period. In many instances, these emergency services were provided under Lloyd's Form. |  |
