TNAG-2893-FCO40-4166-Hong-Kong-localisation-of-laws-merchant-shipping-and-carria-1993 — Page 11

The Salvage Convention

Salvage has traditionally been on a "no cure no pay" basis. Often this has resulted in salvors recovering only a fraction of their actual costs; and has led them to seek to negotiate contracts with stricken ships before intervening, to ensure an adequate return even if their efforts fail. These negotiations delay intervention. Worse, they have led to major pollution (Amoco Cadiz), and even loss of life (Union Star).

Concerned over the effects of oil pollution, insurers amended the Lloyds Open Form (LOF), the standard salvage contract, to provide an incentive to salvors to continue or engage in salvage efforts when there was a threat of oil pollution. The amended LOF formed the basis for the discussions which eventually led to the 1989 Salvage Convention. The Convention represents a major overhaul of the international law on salvage. While retaining the basic 'no cure no pay" principle, it provides exceptions in cases where salvors efforts eliminate or reduce the risk of marine pollution. In such cases salvors receive an enhanced reward based on the value of the property salved or their actual expenses plus an uplift. The intention was to encourage salvors to get and to stay involved in difficult salvage operations when there was a threat of marine pollution by assuring them that they would at least recover their expenses, with the prospect of additional reward if they were successful in preventing or keeping to a minimum damage to the environment.

The insurance industry already applies some of the key provisions of the 1989 Salvage Convention through a revised LOF (LOF 90). So in commercial terms the key provisions of the Salvage Convention already apply in cases where there is a LOF 90 contract. LOF 90 applied for the Braer and demonstrates one of the key strengths of the 1989 Salvage Convention in that the salvors continued their efforts even though they had no real prospect of salving property. Had LOF 90 not applied, and the "no cure no pay" rule applied, it is likely that they would have withdrawn and not offered the equipment and support they did.

Bermuda, Cayman Islands, Falkland Islands, Gibraltar,, Hong Kong, Turks and Caicos Islands, British Virgin Islands, Montserrat, and St Helena are Party to the 1910 Salvage Convention.

The 1992 Paris Declaration

This Declaration is concerned with furthering cooperation in the North Sea and is therefore not relevant to overseas dependent territories.