Class 7: Maritime Salvage

It is Important to encourage people to protect life and property at sea and give help
voluntarily
-known as salvage
Courts general approach -More likely to remunerate the parties who provide salvage services, as the matter
of equity
Maritime Salvage
The law of salvage is fully developed in admiralty courts:
Definition of Salvage:
the equitable principle of remunerating private and individual services, meritorious
in their nature, which forms the foundation of salvage in accordance with the rules
of simple justice (Hill)
Difference between salvage on land and salvage at sea (Baughen)
-If a person saves another's property on land, there will be no reward for the
efforts.
-If a person saves anothers property at sea, the person can be entitled to a
reward.
Note: Historically, the value reward cannot exceed the value of the property saved.
As a matter of public policy
The Purpose of the salvage reward:
- To provide financial encouragement to vessels to assist others in distress
History:
- Originally, salvage was just about when a ship is in distress, the another ship
nearby gives help
- Nowadays, there are salvages services offered by professional salvage
companies
It is still possible for the ship is in distress and the other nearby gives help.
Key Elements of maritime salvage
Historically:
(a)Salvage services will be given to legally recognized subject of salvage

(b) Salvage services must be provided voluntarily

(c) Ship must be in danger
(d) Salvage service must be successful (known as : no cure no pay rule)
- You won't get paid if you dont success in the salvage operation
All (a) (b) (c) (d) the 4 criteria are met; the salvage remuneration will be entitled.

(a)Salvage services will be given to legally recognised subject of salvage

Key Issue: What is a legally recognized subject of salvage?
- Anything that constitutes a maritime property
- e.g. .vessel, cargo, freight
1. A vessel Salvage Convention definition
- Article 1 of the 1989 Salvage Convention
- Any ships or crafts or any structures which is capable of navigation.
- It also includes the salvage of vessels at sea peril, i.e. Lifeboats, anchor, sails ,
rigging
2. Cargo
- irrespective of whether it is owned by the ship owner or by a 3rd party , or
whether or not it is carried under f Bill of Lading, as long as the cargo is moving on
board, it will be included as the subject of salvage.
3. Freight
It will be usually at the either risk of the ship owner (vessel) , if it is payable at
destination , or the risk of cargo , if prepaid.

In both cases, it will come into account in valuing the property saved at the place
of safety.
It is done for the purpose of calculating the salvage award.

------------------------------------------Note:
1989 salvage Convention Art 1(c); Property means any property, not permanently
and intentionally attached to the shoreline and includes freight at risk.

Exception 1: -Aircraft (Civil Aviation Ordinance)

- General Rule: Aircrafts do not constitutes maritime property , but may form the
subject of salvage by virtue of s87 (1) of the Civil Aviation Act 1982.
[Alraigo]
Facts:
June 1993, a plane fall in the sea, out of fuel
Held: the salvage award has been given to the ship owner for the saving of the
aircraft
-----------------------------------------HK: This entitlement is included at the cap 448 civil aviation Ordinance, s.9.
-----------------------------Section: 9
Application of law of salvage and wreck salvage to aircraft 36 of 1999 01/07/1997
Remarks:
Adaptation amendments retroactively made - see 36 of 1999 s. 3
(1) (a) Any services rendered in assisting, or in saving life from, or in saving the
cargo or apparel of, an aircraft in, on or over the sea or any tidal water, or on or
over the shore of the sea or any tidal water, shall be deemed to be salvage
services in all cases in which they would have been salvage services if they had
been rendered in relation to a vessel; and where salvage services are rendered by
an aircraft to any property or person, the owner of the aircraft shall be entitled to
the same reward for those services as he would have been entitled to if the aircraft
had been a vessel.
(b) Paragraph (a) shall have effect notwithstanding that the aircraft concerned is
not for the time being registered in Hong Kong, and notwithstanding that the
services in question are rendered elsewhere than within the limits of the waters of
Hong Kong.
(2) The Chief Executive in Council may by regulations direct that any provisions of
any law of Hong Kong for the time being in force which relate to wreck, to salvage

of life or property or to the duty of rendering assistance to vessels in distress shall,

with such exceptions, adaptations and modifications, if any, as may be specified in
the regulations, apply in relation to aircraft as those provisions apply in relation to
vessels. (Amended 36 of 1999 s. 3)
(3) For the purposes of this section, any provisions of any law of Hong Kong which
relate to vessels laid by or neglected as unfit for sea service shall be deemed to be
provisions relating to wreck.
---------------------------

Exception 2:
Life Salvage
General Rule: Life salvage is rare on its own, as it is usually that life and property
are saved together
Exception: but where the cases that the salvor saves both life and property, Salvor
will be tended to be entitled more reward, than if the salvor just save the property.
But there is lot legislation guiding:
In the case if the salvors only save lives, they will be likely to remunerate in other
types of funds in government supported schemes.

(c) Existence of Danger

Issue: whether the ship is in danger
Burden of Proof:
Burden on salvors( person who does the saving) to prove existence of danger
The test:
1. What would a reasonably prudent and skillful person in charge of the venture
have done?
(Would they accept or refuse the help of the salvors in that situation?)
2. The court will decide whether there is sufficient danger required for the help
from the salvor, the court will see the evidence for this decision. eg the views of the
crewmembers.
What is danger?
1- Immediate physical danger or damage or destruction
e.g., typhoon, lightning, ran aground
2- Alternative test,
whether there is reasonable apprehension of future danger will suffice .
e.g. The venture will catch the danger by bad fortune, if the salvage services are
not rendered, they will be likely to be destructed.
[Aldora]
Facts: if the vessel has run aground
Held, the vessel was held to be in a position of danger.
It is unlikely to refloat unless there is a help from the salvor.

Potential problem:
The burden of proof in existence of danger may be extensive (for the salvor)
eg they have to assemble the evidence , take witness statement from the crew
So, for the sake of the Protection of the salvage industry:
Solution:
One feature of the LOF (Lloyds open form):
- When the existence of the danger is will be accepted automatically, if the ship
enters the LOF,
- The salvor is no longer necessary to proof of the danger, when the terms have
been met in LOF

Objective test
Note: If LOF agreed, existence of danger accepted automatically.

(b) Salvage services must be provided voluntarily

Who can be a salvor?
General Rule:
- A salvage claim may be made by the owners of the vessel rendering assistance.
- The crew of the salving vessel and by any other person who render personal
assistance or who allows their properties to be used in rendering assistance.
- A demise charterer: will claim in place of the ship owner.
When the vessel is chartered other than demise, the charterer will have no
entitlement to salvage, i.e. time charter, voyage charter.
--------------------------------------------Practical Approach:
Potential agreement between the charterers and ship owner for the apportionment
of any salvage award .However, this agreement will not be related to the parties
being salved.
-------------------------------------------------------------

-Cargo owner (self interest)

The SAVA STAR [1995] 2 LLR 134
- Cargo interest: work to save the ship
- Whether the saving exceeds the role as a cargo owner
- appoint salvage contractors, and
- The extent of the salvage makes the self-interest being irrelevant.
Facts:
-the vessel and cargo burnt, cargo decomposing (fire)
-After master note the cargo owner for this accident
-The cargo owner arranged and offered helps and salvage to the vessel,

- Although there is already a salvage operator, the cargo owner still takes part in
the salvage actively (work close to the salvage company)
- Success finally
Held,
There is no rigid category of salvors, as long as the party volunteer the services, if
not provided them for a duty to help (may be under contractual duty).It could
potentially be treated as salvor.

Conclusion,
In this case, as the salvors are entitled to salvage reward, the cargo owners will
also be reward for the role that they play in saving the vessels.
Multiple salvors
Apportion approach will be used in the arbitration tribunal:
- Make one salvage award, and then apportion it between different salvage parties.
End of salvage services
Salvage services is deemed to end when the ship is reached the agreed place of
safety

Exception 1: Contractual duties

As in (Sava Star), the salvor must provide the salvage services voluntarily in order
to claim salvage.
The salvor must not have any contractual duties to the ships saved before the
danger arose.

Note:
By entering into a salvage contract with a vessel in danger, the salvor doesn't lose
its status as a voluntary salvor.
Because it did not owe any duties imposed to the vessels, before any danger
arose.
Example: where the parties is already have a contractual duties to assist the ship.
Article 17( 1989 salvage convention):
No payment is due under the provisions of this Convention unless the services
exceed what can be reasonably considered as due performance of a contract
entered into before the danger arose

E.g.:
General Duty: The crew of vessel, will need to salvage the ship as ordered, they
wont be entitled the salvage award, as they have a prior duty to the vessel before
the danger arose, because of their contracts of employment.

There is one possible exception of the general rule that the contractual duty of the
ships crew: the abandonment of the ship.

General rule: When the abandonment order has been made by the master , the
employment contractual duty towards the ship will cease at that moment.

However, if they later have the opportunity to save the ship, they will be the
Salvors, as a voluntarily nature.

The SAN DEMETRIO (SD) (1941) 69 LLR 5

Facts:
-during WWII,
- Canada > UK, petrol,
In wartime convoy , fire by cargo of petrol
-the enemies attack the ships on the shore
-In SD, serious damage of the portside hull

Because of the risk of the further hit,

- The extreme danger as petrol inside:
- The master give out an order to abandon the ship, dismissed by 3 lifeboat
-Weather deteriorate, and life-boat disappear
- Frequently being attacked

- 16 ppl left
- Their last resort is back to Ship SD and finally success
- Great difficulty is mentioned:
-Petrol leakage, surround the SD
- Most equipment has been burnt
- Water kept run into the ship SD
- Lack of food
- Almost all the part is damaged ( expect the steam maker)
-Rough sea

Crew (P)
shipowner (D)
Issue 1: whether the crew of the vessel can be entitled to the reward
- D admit the crew has given salvage services to the ship, (vessel, cargo, freight)
- No dispute that the crew had salved the vessels

Issue 2: Whether the apportionment of the entitlement salvage services will be

given to the crew of the vessel ( P) ?

Held,
This class of salvage is rare
- They identified the requisites and:
1. - the ship has been properly ordered to be abandoned by the master
2. - the abandonment must have taken place on sea, not on coast.
Reasons of 2:
Prevent abuse and floodgate: as the abandoned as last resort, it is impossible to
make this order on coast. (Relatively save on coast)
- Relatively strict approach will be examined for 2.

Conclusion:
- The salvage award has made to the crew
- The apportionment will be done, in a complicated
- It would make the apportionment based on individual contribution of the crew
in the salvage

Towage contractors
General rule:
-When the ship is under towed, there is a contractual duty to the ship owner and
the towage service provider.
-Therefore the towage service provider cannot claim the salvage award .
Exception:
-If the towage contractor service provided go beyond the towage services (subject
to the contract), then the towage contractor may be entitled to a salvage reward.
[Aldora]
There is a Towage contract between the ship owner and the towage service
provider.
- The ship has run aground
- The tugs used in the towage has performed the towage used to refloat the ship
- As the ship is in danger, as mentioned
The vessel was held to be in a position of danger. It is unlikely to refloat ,unless
there is a help from the towage contractor
Conclusion:
- The court held that the towage is entitled to salvage award

(d) NO CURE, NO PAY

- The salvage services needed to be successful
- If the ship will sink anyway, there will be no remuneration for any effort
<<1989 Salvage Convention>>
-in HK through
Merchant Shipping (Collision Damage Liability and Salvage) Ordinance (cap 508)
Article 12(1) and (2) ( conditions of reward)
1. Salvage operations which have had a useful result give right to a reward.
2. Except as otherwise provided, no payment is due under this Convention if the
salvage operations have had no useful result.
3. This chapter shall apply, notwithstanding that the salved vessel and the vessel
undertaking the salvage operations belong to the same owner
Practical approach:
If salvor are concerned about the no cure no pay, it is always possible to make a
private contract with the shipowner that they will be reimbursed in an alternative
basis in the unsuccessful salvage.
Disadvantage:
the salvage award , maritime lien , private contract does not , in
admiralty jurisdiction
maritime lien
Meaning: if the salvor is entitled to a certain amount of reward, and the owner of
the ship doesn't pay.
Then the salvor rights to that amount of reward money, will be come an action for
the ship. (Further discussion in other topics)
The entitlement to pursue the salvage
In the cases when the ownership changes, the duty is stayed in the ship, not
shipowner.

Note to buy a ship: check the experience of the ship, no outstanding maritime liens
from other parties.

Exception to the No cure No pay rule :

Massive oil leakage incident ( in 70s)
Amoco Cadiz: Tremendous oil pollution
Torrey Canyon: Massive fire and cause pollution by oil leakage
International rules develop in 1989, especially for the cases if there is danger to
the environment.
- Preservation of the environment, particularly in the pollution
Approach of art 13:
-Extra consideration in fixing the salvage award
- Although there is preservation for the no cure no pay rule, the arbitrator will
consider according to:
Article 13 criteria: includes consideration of salvors skill and efforts in preventing,
minimizing damage to the environment, as one of the factor in accessing the
salvors reward.
1.(b) the skill and efforts of the salvors in preventing or minimizing damage to the
environment;

Article 14 provide special compensation for the salvor , that is saving to prevent
the damage to the environment , even if salvor is unsuccessful at last

14.1. If the salvor has carried out salvage operations in respect of a vessel which
by itself or its cargo threatened damage to the environment and has failed to earn
a reward under article 13 at least equivalent to the special compensation
assessable in accordance with this article, he shall be entitled to special
compensation from the owner of that vessel equivalent to his expenses as herein
defined.

Courts Approach in salvor dealing with the salving in environment :

1st. Art 13

2nd. art 14
------------------------------------------------1st. Fixing the award under Article 13
- 10 criteria in fixing the salvage award
------------------------------------------------1. The reward shall be fixed with a view to encouraging salvage operations, taking
into account the following criteria without regard to the order in which they are
presented below(a) The salved value of the vessel and other property;
(b) The skill and efforts of the salvors in preventing or minimizing damage to the
environment;
(c) The measure of success obtained by the salvor;
(d) The nature and degree of the danger;
(e) The skill and efforts of the salvors in salving the vessel, other property and life;
(f) The time used and expenses and losses incurred by the salvors;
(g) The risk of liability and other risks run by the salvors or their equipment;
(h) the promptness of the services rendered;
(i) The availability and use of vessels or other equipment intended for salvage
operations;
(j) The state of readiness and efficiency of the salvor's equipment and the value
thereof.
----------------------------------------------------------------------Salvage arbitrators will access the reward that, payable to the salvors, according
to these factors.
Particular attention will be given to the (b)
- But salvor still have to be successful in getting reward, (no pay no cure rule)
-------------------------Art 13(3)
The rewards, exclusive of any interest and recoverable legal costs that may be
payable thereon, shall not exceed the salved value of the vessel and other
property. (Old principle maintained)
-----------------------

Practical Approach of (from art 13 to 14) :

1st: (burden of proof by salvors):

The salvor has to prove the actions was carried out in order to protect the
environment
2nd: the arbitrators still have to carry out the calculations award under art 13.
3rd: the arbitrators then need to make a further calculation under art 14

Article 14: Salvor actual effort put in the salvage

14(1)
If the salvor has carried out salvage operations in respect of a vessel which by
itself or its cargo threatened damage to the environment and has failed to earn a
reward under article 13( not success) at least equivalent to the special
compensation assessable in accordance with this article, he shall be entitled to
special compensation from the owner of that vessel equivalent to his expenses as
herein defined.
-------------------------------Effect of 14(1): provides an exception to the no cure no pay principle : even if the
attempt of salvaging the vessels and the cargo and protecting the environment is
unsuccessful , they will be entitled to compensation.
------------------------------Reasons of the exception:
The salvors often face greater difficulty and danger with oil pollution operation, so
the salvage should be encouraged.

Article 14(2): Provides some further encouragement

-------------------------------If, in the circumstances set out in paragraph 1, the salvor by his salvage
operations has prevented or minimized damage to the environment, the special
compensation payable by the owner to the salvor under paragraph 1 may be Cap
508 - MERCHANT SHIPPING (COLLISION DAMAGE LIABILITY AND SALVAGE)

ORDINANCE 7 increased up to a maximum of 30 per cent of the expenses

incurred by the salvor.
However, the tribunal, if it deems it fair and just to do so and bearing in mind the
relevant criteria set out in article 13, paragraph 1, may increase such special
compensation further, but in no event shall the total increase be more than 100
per cent of the expenses incurred by the salvor
Effect of 14.2:
--------------------------------------If the salvors have been successful and protect the environment and minimizing
the damages , then 14.2 gives the arbitrators to power to increase the especial
compensation by up to 30% of the salvors expenses.
If the arbitrators think that is fair and just to do so, they can add a further increase
of a total 100% of the salvors expenses.
----------------------------------------

But what are salvors expenses, exactly?

: defined in 14(3)
-------------------------------------------------Article 14(3)
Salvors expenses for the purpose of paragraphs 1 and 2 mean the out of pocket
expenses reasonably incurred by the salvor in the salvage operation and a fair rate

for equipment and personnel actually and reasonably used in the salvage
operation, taking into account the criteria set out in article 13
--------------------------------------------------Meaning of 14(3):
The special compensation under article 14 is only payable when the salvor has
failed to get the award under art 13. (at least equivalent to the special
compensation accessible under art 14)
Rules for the Arbitrators:
1st: fix the art 13 salvage award:
2nd: fix whether there is any special compensation under art 14
3rd: if so, how much is it

Art14 (5)
If the salvor has been negligent and has thereby failed to prevent or minimize
damage to the environment, he may be deprived of the whole or part of any
special compensation due under this article, ie art 14.
If the arbitrators find the salvors have been negligent and failed, he can refuse any
special compensation in art 14 at all.

Most salvage services are mound under contract nowadays.

- Parties are always free to right the contract of salvage
-the most common form: LOF (Lloyds Open Form)
LOF:
- It was found on the common law principle of salvage
- Change frequently to reflect modern practices and developments
- salvors should use most up to date , sometimes they will use older
- Reasons: the most recent ones, ie 2011, is updated from the version of 1990
Lloyds Standard Form of Salvage Agreement
- Most recent one LOF 2011

-------------------------Box .7
7. Is the Scopic Clause incorporated into this agreement? State alternative: Yes/No
-------------------------Whether they wish to invoke SCOPIC Clause
History:
LOF 1990:
Has incorporated at art 13 and art 14
But 1992, Nagasaki spirit case:

NAGASAKI SPIRIT, 1992

Ship1: Nagaski Spirit, NS, oil tanker
ship2: Ocean Blessing, OB
Location: at Malacca, Malaysia
Facts:
- Sep 92, collide with the ocean blessing (OB)
- Crude oil is spilled on the sea
- ignites, and both ships caught fire (engulfed in flames)
- Serious personal injuries
- Massive salvage
- LOF, with both ship owners
- Salvage: salvage company
- took 6 days to put out fire
- agreed place to safety, in order to avoid further pollution

- Cargo transfer to another ship

- redelivered finally completed in Dec 1992

P: Salvage Company
D: shipowner of NS
held in salvage arbitration,
Salvage arbitrator made the award to P:
- As according to art 14; on the grounds that the result in the benefit to the
environment
- As the salvage company (P) has prevent further massive oil split
In addition to Ps Expense calculation:
Arbitration award: 65 % special compensation increment, under art 14(2)
Recall: the definition in art 14(3): out -of-pocket expenses :
Include fair rate of equipment and personnel reasonably used in the salvage

To calculate the compensation, the arbitrators used (what he thought):

- The fair daily rate: for tugs used
- Element of the profit of salvors is also included.
-i.e. to keep tugs and equipment continually in readiness, and for much of the
time idle, waiting for an opportunity to provide assistance
- shipowner of NS (D) ; appeal

CFI held;
- disagree the salvage arbitrator
Expenses cannot include the profit element.
- salvor appeal
CA:
The meaning of the word expenses cannot include the profit element

-salvor appeal to House of Lords

Salvors Claim:
A fair rate of for special compensation was a fair rate of remuneration in this case.
-include the type of craft actually used, time for works required
-incentive can be enhanced by including the profit elements into the salvage award
Recall 14(3)
Salvor's expenses for the purpose of paragraphs 1 and 2 means the out-of-pocket
expenses reasonably incurred by the salvor in the salvage operation and a fair rate
for equipment and personnel actually and reasonably used in the salvage
operation, taking into consideration the criteria set out in article 13, paragraph 1(h),
(i) and (j)
held in HL , by Lord MUSTILL,,
The fair rate means a Fair rate of expenses only : it should be interpreted as
expenses only .
In contrast, if profit elements is needed to be included to use the word expense
,i.e. it was intended in art 14, it would be easy to make it clear.

Conclusion, the appeal from the salvor is dismissed.

Consequences of the judgment in Nagasaki Spirit:

Professional salvage companies opposed very strongly to this decision.
They claim that:
They maintain expensive specialist equipment for serious salvage situation,
But as long as we are not compensated if doing so, their profit will be lost.

P&I clubs, shipping insurers showed their concerns:

Because they could see the salvors in future, potential problem:
The salvors may abuse art 14 and the decision made in Nagasaki Spirit, and by
the way:
They will delay the salvage, and perform the salvage services as slow as possible,
in order to get a higher amount of expenses from the daily rate calculation.
Possibly lead to a surge in litigation, which the P& I clubs will end up paying for.

Many discussion have been made

Result: Aug 1999, Scopic clause was drafted:

SCOPIC
Special Compensation P&I Clause
Parties and Unions agreed:
- International salvage union
- International group of P&I clubs
- International union of marine insurance
Purpose: To provide an alternative regime for the determination of claims under art
14 of the 1989 salvage convention.
It is a choice of the salvage agreement made under LOF, when they entered into it.
Recall in LOF:
-----------------------Box .7
7. Is the SCOPIC Clause incorporated into this agreement?
State alternative: Yes/No
-------------------------Whether they wish to invoke SCOPIC Clause

If yes: it means the salvor will receive compensation based on commercial

realistic rates that can reflect the specialist of the equipment.

Main feature of Scopic Clause:

1st:
It has to be included in the salvage agreement and in order for it to operate, the
salvor must invoke it
2nd:
The salvor no longer needs to prove there is a threat to the environment , unlike
the discussion in art 14(the part of: burden of proof by the salvors)
3rd:
If the salvor invokes the SCOPIC clause, then the ship owner has to put up
security.
4th:
The salvor remuneration will then be calculated according to a special agreed tariff
of expenses, with a fixed 25% uplift. (In clause 5 of SCOPIC Clause)

Tariff of expenses :
It is regularly updated to be a realistic level.
Once the arbitrator has calculated the award based on that tariff.

The arbitrator will then follow the 25 % uplift.

It is considered to be the profit elements to the measurement of salvors expenses.

This also leads to the comfort of the shipowners:

If the salvors is found :
- As to be abused by the salvor to increase the remuneration,
Recalled :
They will delay the salvage, and perform the salvage services as slow as
possible, in order to get a higher amount of expenses from the daily rate
calculation.
-The ship owner can terminate the salvage services with a 5 days notice

Conclusion: Art 13 continued to be the basis that the salvors can be awarded,
using the factor listed in art 13, including the No cure No pay principle.

SCOPIC remuneration will be used only: exceed the amount of the art 13 reward,
ie in art 14.

SCOPIC is also only be used in the incident that causing a threat to the
environment

Other key sections

Article 6(2)
6.2. The master shall have the authority to conclude contracts for salvage
operations on behalf of the owner of the vessel.
The master or the owner of the vessel shall have the authority to conclude such
contracts on behalf of the owner of the property on board the vessel

Meaning - the master of the ships in distress has the authority to bind the
shipowners, cargo owners, when entering the salvage agreement with salvors.
Article 7
A contract or any terms thereof may be annulled or modified if(a) The contract has been entered into under undue influence or the influence of
danger and its terms are inequitable; or
(b) The payment under the contract is in an excessive degree too large or too
small for the services actually rendered.
Meaning-Any salvage agreement; will be annulled or changed when the payer
amount is excessive.

Article 8
Duties of the salvor and of the owner and master
1. The salvor shall owe a duty to the owner of the vessel or other property in
danger(a) To carry out the salvage operations with due care;
(b) In performing the duty specified in subparagraph (a), to exercise due care to
prevent or minimize damage to the environment;
(c) Whenever circumstances reasonably require, to seek assistance from other
salvors; and

(d) To accept the intervention of other salvors when reasonably requested to do so

by the owner or master of the vessel or other property in danger; provided
however that the amount of his reward shall not be prejudiced should it be found
that such a request was unreasonable.
2. The owner and master of the vessel or the owner of other property in danger
shall owe a duty to the salvor(a) To co-operate fully with him during the course of the salvage operations;
(b) In so doing, to exercise due care to prevent or minimize damage to the
environment; and
(c) When the vessel or other property has been brought to a place of safety, to
accept redelivery when reasonably requested by the salvor to do so.
Meaning -the duty of each party

Determining the award

LOF Clause I
- The quantum of the value will be left open to be determined subsequently in
London before Lloyds arbitrators, applying English laws.

Clause I: Arbitration and the LSSA Clauses: The Contractor's remuneration and/or
special compensation shall be determined by arbitration in London in the manner

prescribed by Lloyds Standard Salvage and Arbitration Clauses (the LSSA

Clauses) and Lloyds Procedural Rules in force at the date of this agreement.

The provisions of the said LSSA Clauses and Lloyds Procedural Rules are
deemed to be incorporated in this agreement and form an integral part hereof. Any
other difference arising out of this agreement or the operations hereunder shall be
referred to arbitration in the same way.

2005,
Another procedure - in determining the salvage award:
- Fixed costs document only after arbitration procedure
- FIXED COST ARBITRATION PROCEDURE (FCAP)
Aim:
Limit costs of obtaining an award particularly in cases where the amount of the
salved fund is small or where no point of law arises and the facts are
uncomplicated.
FCAP
- Parties don't have to appear in the courts only on documents
The judges will decide whether it is appropriate
Advantages of FCAP:
-Fast and inexpensive procedure
-Limits the cost of the salvage reward, particularly when the amount is small and
no law disputes, and simple facts in the case.
-Arbitrators will decide whether the case is suitable for the FCAP procedure.

Contributors to the award:

All those have been benefit in the salvage:
Calculating the award
Cannot exceed the value of the salved property, recall 13(3)
First task that the arbitrators:
: fixed the value of what has been salved and until they have moved to the
agreed place of safety.

Value of the ship

General Rule: the cost of accessing the value of the ship may be expensive
- Limit to the cost that used in repair
- cost of the survey
- Sound and damaged condition
- Any associated clause

Other deduction may be made:

- running expenses in the repair period, cost of the survey
Value of the cargo
- Either the value similar goods in the port destination
- Or either the value of the similar goods at the loading port
-Subject to an adjustment of whether - the cargo is CIF or FOB

Value of the freight

- General Rule: it will be included as part of the value of vessel, if there is a prepayment at the moment then it will be included in accessing the cargo values.

Practical apportionment: Further discussion in workshop.