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Wednesday, June 20, 2018

LOF 2000 - THE NEW LLOYD’S FORM SALVAGE CONTRACT

The new Lloyd’s standard form of salvage agreement, LOF 2000, was published on 1 September 2000.

The form appears in a new format that is both clear and concise. It is on a single sheet with a new box layout format on the front and standard conditions A-L printed on the remainder of the front cover and on the reverse. Incorporated in the contract are the Lloyd’s Standard Salvage and Arbitration Clauses and the Lloyd’s Procedural Rules. Apart from changes to the format of the form a number of substantive changes have been made, the most significant of which are:

Rights of termination

Clause G provides that both shipowners and salvors have the right to terminate the contract where there is no longer any reasonable prospect of a useful result leading to a salvage reward. The previous LOF form only gave this right to the shipowners.

Provision of technical information

Clause F includes a new provision designed to assist salvors when dealing with complex cargoes such as chemicals. The clause provides that the salvors shall be entitled to all such information as they may reasonably require provided that such information is relevant to the performance of the salvage services and is capable of being provided without undue difficulty or delay.

The SCOPIC Clause

The International Group of P&I Clubs and the International Salvage Union recommend their members to incorporate the Scopic clause in any salvage contract entered into. This clause was developed with the cooperation of salvors, P&I Clubs and property underwriters. The aim was to agree a simplified framework for special compensation where the salvors would otherwise not be entitled to an award under the basic “no cure no pay” provision.

The Scopic clause has recently been refined and the current form, Scopic 2000, was published on 1 September 2000.

In box 7 of LOF 2000 there is provision for the parties to agree to incorporate the Scopic Clause into the agreement. Clause 3.9 of the Lloyd’s Standard Salvage and Arbitration Clauses provides that the reference to the Scopic clause shall be deemed to be the version of the Scopic clause current at the date of the agreement. Therefore, if the parties to a LOF 2000 agreed to incorporate the Scopic clause into the contract then it would be the Scopic 2000 that will have been incorporated.

Currency

Box 4 of LOF 2000 provides that unless the parties agree otherwise the currency of any arbitral award and security shall be United States dollars.

Interest

Clause 8.2 of the Lloyd’s Standard Salvage and Arbitration Clauses provides that in ordinary circumstances the salvors’ interest entitlement shall be limited to simple interest. However, the arbitrator may make an award of compound interest if the salvors have been deprived of their salvage remuneration or special compensation for an excessive period as a result of owners’ misconduct or in other exceptional circumstances. This provision is somewhat narrower than the provisions under the Arbitration Act 1996.

Mediation

Many LOF cases are settled amicably. Clause 6 of the Procedural Rules encourages the use of mediation by ensuring that the arbitrator informs the parties of the benefits that may be derived from the use of mediation.

Should any member wish to obtain a copy of LOF 2000, the Lloyd’s Standard Salvage and Arbitration Clauses, the Procedural Rules or the Scopic clause 2000, these documents are available on the Lloyd’s website, the address for which is: www.lloyds.com