Places of refuge
Places of refuge
Legal Adviser to the International Salvage Union
One of the main difficulties with IMO’s Guidelines for Places of Refuge is the lack of any incentive, to any relevant governing body, to grant a place of refuge to a casualty. Authorities responsible for granting a place of refuge have everything to lose and nothing to gain. Part of this problem may be resolved by the Wreck Removal Convention 2007,1 together with the Civil Liability2 and HNS3 Conventions, there will at least be a liability regime to compensate them if things should go awry. While in the view of some, these regimes may not provide a large enough fund for a catastrophe they will at least make a generous start and, I suspect, cover 99 per cent of all casualty situations. There will however still be no incentive to grant a place of refuge – nothing to encourage relevant authorities to do so more readily. If they were to benefit materially by granting a place of refuge, they might well be so encouraged.
Erik von Hooydonk in his paper that was before the 2004 CMI Vancouver Conference, suggested authorities that granted a place of refuge should be entitled to claim salvage and that the possibility of such a claim might encourage them to do so. The International Salvage Union (ISU), said then and since, that in principle, it had no problem with such claims being made and expressed the view that the right of an appropriate authority to make such a claim for salvage in respect of its contribution to the overall service, already existed under current law. After all, the essential elements of a successful salvage claim would be present, being a volunteer, contributing to the overall success, salving property capable of being salved, and danger. However, a major stumbling block to any such claims would be the current limit to any salvage award – the value of the property salved. In most major casualties, necessitating a place of refuge, the ships and their cargoes are usually so badly damaged that their values are likely to be insufficient to adequately reward all those involved in the salvage operation. To make the
1 Nairobi International Convention on the Removal of Wrecks, 2007.
2 International Convention on Civil Liability for Oil Pollution Damage, 1969 and Protocol of 1992 to amend the International Convention on Civil Liability for Oil Pollution Damage, 1969.
3 International Convention on Liability and Compensation for Damage in Connection with the Carriage of Hazardous and Noxious Substances by Sea, 1996.
possibility of a salvage claim a real incentive would require a change in the existing law – one which provided for environmental salvage. Something which, for reasons later made in this chapter, the ISU feels is essential in any event.
Before suggesting how environmental salvage could be achieved, I would like first to review the present position insofar as it affects traditional salvors, and, second, explain why a change in the current law is needed.
Review of the present position
For centuries, salvors have salved property at sea on a ‘no-cure – no-pay’ basis, and when successful the law – as a matter of public policy – has rewarded them generously to encourage them, and others, to do so again.
The environment was not of great concern until the late 1960s when oil transportation began to boom and the public became environmentally sensitive to the damage that could be caused by a huge oil spill. Driven by casualties such as the Torrey Canyon and Amoco Cadiz, it began to be appreciated that salvors had a large part to play in the prevention of oil spills and needed to be encouraged to go to the assistance of those ships that threatened it.
At that particular time encouragement was very much needed. The Intervention Convention of 19694 had caused greater governmental interference in casualties resulting in some ships being refused refuge and being sent to sea to be scuttled which defeated the prime objective of a salvor, to save property, and prevented him from earning a salvage award. In addition, large environmental casualties, even when permitted, often resulted in greater work and risk and a lower value which restricted the amount that could be recovered. This, together with an increase in expense – which was not recoverable in the event of failure – made many salvors think twice before entering into what might well prove to be a commercially unacceptable contract.
How best to reverse this trend and encourage salvors? Professor Selvig, the Chairman of a special committee set up by the CMI following the Amoco Cadiz disaster, recommended the adoption of a new concept, liability salvage – under which the salvor, in addition to being paid by the property interests in the traditional way for saving property, would also be paid for the benefit he had conferred on the shipowner by preventing what would otherwise be a liability. This proposal was much wider than the concept of environmental salvage currently proposed, and the conventions of that time only capped a shipowner’s liability for cargo oil pollution under the Civil Liability Convention. The HNS and Bunker5 Conventions, imposing and capping a limit to a shipowner’s liability for other pollutants, did not exist. As a consequence, his proposal was rejected by the CMI in favour of the two remedies, each of which is discussed in turn below.
4 International Convention Relating to Intervention on the High Seas in Cases of Oil Pollution Casualties, 1969.
5 International Convention on Civil Liability for Bunker Oil Pollution Damage, 2001.
The safety net
Lloyd’s, in an attempt to give the necessary encouragement, had devised a new clause that was incorporated into LOF 80. This provided that whenever salvage services were rendered to a laden tanker, the salvor even if unsuccessful or only partially successful, would at least recover his expenses plus an uplift of up to 15 per cent of those expenses. The idea was developed by the CMI and replaced by what is now Article 14 of the Salvage Convention 19896 which provides that whenever there is a threat of damage to the environment, the salvor should at least recover his expenses and an uplift, which could be up to a 100 per cent of those expenses, if he actually succeeds in protecting the environment.
In 1990 Lloyd’s adopted the essential provisions of the Salvage Convention 1989, including Article 14, and incorporated them into LOF 90, long before the Convention was given the force of law in 1995. Thereafter a series of LOF cases tested the new provisions and ultimately found them be wanting. Article 14 proved to be time consuming, expensive to operate, uncertain in outcome, and a deterrent rather than an encouragement to the salvor. After several years of dissatisfaction, in 1999 it was contractually replaced by the industry-led SCOPIC clause, which in essence, has the same effect as Article 14 but avoids its legal complications.
It is important to note that the ‘safety net’ principle does not encourage the salvor by the prospect of a pot of gold but simply encourages him to enter into a traditional salvage contract by ameliorating the full rigour of the ancient salvage principle, of ‘no cure – no pay’. In essence it ensures the salvor is not at risk of losing money, which would otherwise be the case in the event of failure. It is even possible that he may also earn a little profit but not sufficient to itself justify, in terms of profitability as opposed to risk, his entering into the contract. In short, the salvor does not stand to earn more from the safety net, but he does gain greater security against loss. Under SCOPIC, unlike Article 14, there is a price to pay for this security – the possibility of a reduction in the traditional salvage award.
The safety net provisions apply, on average, in 20 per cent of all LOF cases. The age-old public policy of encouraging salvors to salve again and invest in salvage equipment for future salvage, by granting them a generous award, is therefore left to the other 80 per cent of cases and the traditional Article 13 salvage award.
Enhancement of the traditional salvage award
The second encouragement given to salvors to go to the assistance of ships which threatened damage to the environment was a new criterion to be weighed in the balance with the other nine other criteria, when assessing a salvage award under Article 13. ‘The skill and effort of the salvors in preventing damage to the environment’. However, while this new element can enhance an award, it is subject to
the same cap that has prevailed for centuries – the value of the property salved. It has therefore not made a major impact on the amount of remuneration received by salvors.
Why change is needed
Change is necessary because: (a) much has changed since the Salvage Convention 1989 was first drafted in 1980; and (b) while salvors currently do much to protect the environment, they could do more and confer even greater benefit to the environment if they were rewarded for so doing.