several cases, because of the lack of security, and the unwillingness of the liability underwriters to pay, the salvors had to negotiate settlements substantially less than that properly found to be their due by a Form arbitrator. Lloyd’s There were and are, considerable practical problems in applying the mechanics of assessing expenses as defined in Article 14.3. While the judicial guidance given in The Nagasaki Spirit, said this assessment “is largely an accounting it is undoubtedly a major exercise. One exercise”, which is both time-consuming and expensive and there are still many uncertainties and unsettled issues on many relevant points. A proper assessment invariably requires an examination of the entire accounts of the contractor, not only in respect of the salvage equipment actually used in the salvage operation, but also of all the other equipment available for use, as well as his administrative costs. To comply with the provisions of the Convention it is necessary to consider the active and inactive periods of each one of the contractor’s main salvage units and to apportion the overall direct and indirect expenses of the contractor among each of those units, before making a judgment as to how much should form part of a special compensation assessment. The position is compounded when there is a joint salvage operation between two or more professional companies. assessment of special compensation, even in standard cases, takes a The considerable time, will nearly always involve lawyers and frequently accountants. As a result, it is very time-consuming, expensive and leaves the parties in complete uncertainty as to how much is due, until many months, sometimes years, after the services have been completed. the insurers felt they were insufficiently advised of salvage operations Finally, until well after the event by which time it was too late for any effective input on their part. All of the above problems with Articles 13 and 14 of the Salvage Convention are still potential problems when interpreting the law of all the 60 countries that have adopted the Convention.However, about one third of all of today's salvage operations, are undertaken under the standard form of salvage contract Lloyds Open Form (LOF) which has taken steps to ameliorate the position by the introduction of the SCOPIC clause. Whilst this clause is an entirely voluntary and only applicable to an LOF contract, it is worth examining for it has provided a partial solution to the problems
several cases, because of the lack of security, and the unwillingness of the liability underwriters to pay, the salvors had to negotiate settlements substantially less than that properly found to be their due by a Lloyd’s Form arbitrator. There were and are, considerable practical problems in applying the mechanics of assessing expenses as defined in Article 14.3. While the judicial guidance given in The Nagasaki Spirit, said this assessment “is largely an accounting exercise”, it is undoubtedly a major exercise. One which is both time-consuming and expensive and there are still many uncertainties and unsettled issues on many relevant points. A proper assessment invariably requires an examination of the entire accounts of the contractor, not only in respect of the salvage equipment actually used in the salvage operation, but also of all the other equipment available for use, as well as his administrative costs. To comply with the provisions of the Convention it is necessary to consider the active and inactive periods of each one of the contractor’s main salvage units and to apportion the overall direct and indirect expenses of the contractor among each of those units, before making a judgment as to how much should form part of a special compensation assessment. The position is compounded when there is a joint salvage operation between two or more professional companies. The assessment of special compensation, even in standard cases, takes a considerable time, will nearly always involve lawyers and frequently accountants. As a result, it is very time-consuming, expensive and leaves the parties in complete uncertainty as to how much is due, until many months, sometimes years, after the services have been completed. Finally, the insurers felt they were insufficiently advised of salvage operations until well after the event by which time it was too late for any effective input on their part. All of the above problems with Articles 13 and 14 of the Salvage Convention are still potential problems when interpreting the law of all the 60 countries that have adopted the Convention.However, about one third of all of today's salvage operations, are undertaken under the standard form of salvage contract Lloyds Open Form (LOF) which has taken steps to ameliorate the position by the introduction of the SCOPIC clause. Whilst this clause is an entirely voluntary and only applicable to an LOF contract, it is worth examining for it has provided a partial solution to the problems
wks_MA_31877.docx