Salvage Convention

Salvage mean “rescue a wrecked or disabled ship or its cargo from loss at sea”. The party rescuing is called “Salvor” and the wrecked or disabled ship is called “Property being salvaged”. Simply put, as per salvage convention Salvor does a work to salvage the property and he gets a reward / Compensation for his efforts to save the property.

The introduction and historical developments in salvage convention apart from listing the duties of various parties, has been based upon the question of when and how much monetary benefits the salvor should get for his efforts.

History has seen three major developments in the salvage law

  1. Brussel Convention
  2. Salvage convention in 1989 and
  3. SCOPIC Clause in the LOF.

The Brussels convention was the first official convention to talk about salvage at sea and was based upon the “NO CURE, NO PAY” principle. The major problem with the Brussels convention was that salvors would not touch a high risk property as because of being high risk, their chances of getting monetary benefits as well as to recover their expenses were minimal.

In the late 80s, with few of the infamous oil pollution incidents, it became a necessity to encourage salvor to take up the high risk salvage contract where potential oil pollution and marine environment was involved and for this reason a special compensation under article 14 was introduced in salvage convention which was also the main distinguishing thing from Brussel’s convention.

As per Article 14 “if the salvor by his salvage operations has prevented or minimised damage to the environment, salvor is entitled for a special compensation equivalent to his expenses which can be increased up to 30%  to 100% of the expenses under certain circumstances. These expenses were to be born by ship owners and this was the first time when P&I clubs were also involved in salvage operation as they had to pay these expenses on owners behalf.”

Both Salvor and the ship owners had few concerns with Article 14. Shipowners and P&I clubs were concerned that Salvor could unnecessarily prolong the salvage operation to claim more expenses under special compensation. Also the the Hull underwriters might delay the decision to declare the vessel as “Total Constructive loss” as they would have nothing to loose by delaying their decision.

Salvor’s concerns mainly were to the applicability of article 14 as this was only applicable in coastal and inland waters and it only applied if there was a threat to the environment which they had to prove.

That is when SCOPIC clause came into play.

There were number of discussions to solve the limitations of article 14 and various solutions were discussed including a revision of existing salvage convention but it was finally decided to incorporate SCOPIC clause in the Lloyds open form (LOF) with no changes in the salvage convention. LOF is the contract form between the salvor and owner of the ship.

SCOPIC clause once invoked substitutes article 14. SCOPIC clause solved two concerns for salvors. One, SCOPIC once invoked was applicable in all geographical locations and was not limited to coastal and inland sea. Also SCOPIC was applicable even if there was no threat to the environment and second, SCOPIC clause required security of USD 2 millions which made the salvor sure of the payments.

The developments in salvage conventions has been to encourage Salvors to perform even the high risk salvage operation and at same time to ensure that Salvors do not take advantage of their rights as per Salvage conventions and introducing SCOPIC clause in LOF was one such step.

As per para 2 of SCOPIC clause “The Contractor shall have the option to invoke by written notice to the owners of the vessel the SCOPIC clause set out hereafter at any time of his choosing regardless of the circumstances and, in particular, regardless of whether or not there is a “threat of damage to the environment”.

So It is upto Salvor if he wants to invoke SCOPIC or not and he can invoke it at any time. The question is what will make Salvor decide if he should invoke SCOPIC or not ?

With SCOPIC clause the Salvor is absolutely certain of at least recovering his expenses. If at any time the salvor feels that he might not be able to save the property, he would want to invoke SCOPIC clause as if he doesn’t , he will not get any compensation on the principal of “NO CURE NO PAY”. He would get to recover his expenses under article 14 only if there is threat to environment, which again he has to prove. But then the question is what is stopping him to invoke SCOPIC at the start of the contract ? and the answer lies in the para 7 of the SCOPIC clause which states

“If the SCOPIC clause is invoked under sub-clause 2 hereof and the Article 13 Award or settlement under the Main Agreement is greater than the assessed SCOPIC remuneration then, notwithstanding the actual date on which the SCOPIC remuneration provisions were invoked, the said Article 13 Award or settlement shall be discounted by 25% of the difference between the said Article 13 Award or settlement and the amount of SCOPIC remuneration that would have been assessed had the SCOPIC remuneration provisions been invoked on the first day of the services”.

Which mean that if SCOPIC clause is invoked and the salvor was able to save property and hence was eligible for award as per article 13, his reward would be reduced by 25%. So if the salvor is very much certain for success of salvage, he would not invoke SCOPIC clause.

I would come back with a blog on what Masters and ship staff are supposed to know and do in salvage operations.

Wishing you all fair winds and following seas…

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Capt Rajeev Jassal

About Capt Rajeev Jassal

Capt. Rajeev Jassal has sailed for over 19 years mainly on crude oil, product and chemical tankers. He holds MBA in shipping & Logistics degree from London. He has done extensive research on quantitatively measuring Safety culture onboard and safety climate ashore which he believes is the most important element for safer shipping.

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48 Comments

nikhil
nikhil
Jun 26, 2016

thank you capt saab

Rajeev Jassal
Rajeev Jassal
Jun 29, 2016

Thanks for reading Nikhil..

Sharad Duggal
Sharad Duggal
Mar 23, 2017

First of thanx alot for ur precious guiding.. its short n sweet n provided info which is easy to digest.Just a small input from my side Under LOF 2011 P&I needs to deposit 3 MILLION wdn 3 days instead of 2 million which u hv mentioned.Thanx again.

Sid
Sid
Jul 1, 2016

Well explained short and sweet Thanks

Rajeev Jassal
Rajeev Jassal
Jul 1, 2016

Glad you liked it Sid..

Anosh Patel
Anosh Patel
Jul 2, 2016

brilliant read... using it for the ASM exams

Rajeev Jassal
Rajeev Jassal
Jul 2, 2016

Glad that you found it useful Anosh. Let me know if you have any question during your ASM exams. All the best.

Anosh
Anosh
Jul 8, 2016

haha yeah just one.... how to pass them hehe. Really appreciate the effort you have put into this blog. found all of them extremely interesting....

Rajeev Jassal
Rajeev Jassal
Jul 8, 2016

Haha.. That is the most difficult question you have asked..

Prashant Chand
Prashant Chand
Jul 29, 2016

Explained in the easiest possible manner. Saved a lot of time. Thanks.

Rajeev Jassal
Rajeev Jassal
Jul 29, 2016

Glad you found it useful Prashant..

Zone
Zone
Aug 3, 2016

Hello Capt Rajeev, thank you for taking out time to give this explanation. Is it possible to request for your email to contact you on a salvage issue.

Rajeev Jassal
Rajeev Jassal
Aug 3, 2016

Hi Zone, Feel free to contact me at support@myseatime.com or you can use the "contact us" section to contact me anytime.

Nithin
Nithin
Aug 16, 2016

Thank you captain for the write up.short and well explained.Is there any forms other than LOF?

Rajeev Jassal
Rajeev Jassal
Aug 21, 2016

LOF had many changes and so there are older versions of LOF which are still being used sometimes. But except LOF there are no other forms that I am aware of.

Rahul
Rahul
Aug 25, 2016

Hello sir. Could you explain the 25% reduction in the article 13 reward with an example?

Rajeev Jassal
Rajeev Jassal
Aug 27, 2016

Suppose Reward as per Article 13 is $ 300000. Reward as per SCOPIC if it was invoked on first day is 20000. Now there will be two condition. If the property was not saved and Salvor has invoked SCOPIC, the salvor will get $20000 to cover the expenses. If the property was saved and SCOPIC was invoked, the Salvor will get (300000 - 20000) x 3/4. Which is equal to $210000.

avinash
avinash
Aug 30, 2016

sir, i am confused is it as said above or (300000-20000)x0.25= 70000 and this amount be deducted from 300000 so the the salver wil get 230000.

Rajeev Jassal
Rajeev Jassal
Sep 1, 2016

Yes you are right Avinash. It will be 230000.

Shahid Reza
Shahid Reza
Nov 12, 2016

No it will 210000,because 75 % of the difference...will go to salvor....you are right captain..

Kaustav Chakravarty
Kaustav Chakravarty
Aug 10, 2017

Captain Saab,jst to confirm,reward will reduce to 25%.So that will be (300000-20000)*.25=70000 plus 20000 expense so total 90000

Prashant choudhary
Prashant choudhary
Aug 28, 2016

Good day sir...just from your blog.. I fully understood scopic clause...thanks alot...if any more doubt in law...i will post here.....regards..

Rajeev Jassal
Rajeev Jassal
Sep 1, 2016

Glad you found it useful Prashant. Yes post your any doubt here anytime.

avinash
avinash
Aug 30, 2016

thank you very much.. this blog has helped me a lot in understanding scopic.

Rajeev Jassal
Rajeev Jassal
Sep 1, 2016

Thanks for reading Avinash..

avinash
avinash
Aug 30, 2016

when contractor invokes scpoic can ship owner deny it?

Rajeev Jassal
Rajeev Jassal
Sep 1, 2016

No Ship owner cannot deny it.

Mbali
Mbali
Sep 18, 2016

Thank you so much...this blog has help me to understand salvage as well as scopic clause. It is very easy to understand

Rajeev Jassal
Rajeev Jassal
Nov 11, 2016

Thanks Mbali.. Glad it could be of some help to you..

Buddhika Karunarathne
Buddhika Karunarathne
Oct 28, 2016

Dear sir,your effort is very much useful.thank you

Buddhika Karunarathne.
Buddhika Karunarathne.
Oct 28, 2016

Dear sir ,Can we sign the negotiable BL?if so under which circumstances?

Rajeev Jassal
Rajeev Jassal
Oct 31, 2016

Yes, Master can sign the negotiable bill of lading. You can read the detailed guide on bill of lading by clicking here. Hope that will answer your question.

Abdul jabbar khan
Abdul jabbar khan
Nov 1, 2016

I m so happy easy way to understand the scopi clause I'm going fr master oral exam and scopic clause is one question now I get answer thanks capt rajeev

Rajeev Jassal
Rajeev Jassal
Nov 1, 2016

Glad it was of some help to you Abdul.. All the best for your exams. If you have any question don't hesitate to post on our new sections "Questions".

KUNAL KANTI JHA
KUNAL KANTI JHA
Nov 15, 2016

well explained in simple words. we need such explanations during our courses and preparatory. thankyou.

Rajeev Jassal
Rajeev Jassal
Nov 17, 2016

Thank you Kunal..

SADAT
SADAT
Nov 20, 2016

CAN U PLEASE TELL ME WHAT IS THE MASTERS CONCERN OF SCOPIC CLAUSE

omid karimi
omid karimi
Dec 17, 2016

thanks for such professional explanation, saved a lot f time.

Rajeev Jassal
Rajeev Jassal
Dec 29, 2016

Glad you liked it Omid..

Alok Mallick
Alok Mallick
Jan 8, 2017

very good explanation about scopic, it is the most simplest way to remember. thanks lot.

Rajeev Jassal
Rajeev Jassal
Jan 10, 2017

Thanks Alok..

Tushar Gupta
Tushar Gupta
Jan 10, 2017

Very Nicely explained , can we have an answer to this question ? what to do as master if the first , second and now even third port of call is not accepting the stoway onboard ??

Ajay Sanga
Ajay Sanga
Feb 11, 2017

Simply wow

nandkishore gitte
nandkishore gitte
Mar 20, 2017

the security under SCOPIC IS $2 million as you mentioned or $3 million as shown in SCOPIC 2014 or its am-mended now,

Ajay Kumar
Ajay Kumar
Apr 19, 2017

Dear sir nice explanation but failed to locate full form of SCOPIC. Is it special compensation of P&I clause?

Lau
Lau
Apr 20, 2017

excellent blog, very well explained, structured and easy to gain a good understanding on maritime law!

Gokul
Gokul
Apr 30, 2017

Dear Sir, thank you for the simple interpretation of the SCOPIC clause... going for my mates ORALS in a week. An absolutely brief and to the point explanation. Thanks a lot.

Madhukant Sawant
Madhukant Sawant
Sep 13, 2017

I find most of your articles very much interesting , the way you simplify it is the best way to connect to complicated sections. Thanks

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